Half-year Report - Part 2 of 3

abrdn PLC

08 August 2023

 

abrdn plc

Half year results 2023

Part 2 of 3

8 August 2023

2. Statement of Directors' responsibilities

Each of the Directors, whose names and functions are listed on the abrdn plc website, www.abrdn.com, confirms to the best of his or her knowledge and belief that:

·    The condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows and associated notes, have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK.

·    The interim management report includes a fair review of the information required by:

·      DTR 4.2.7R of the FCA's Disclosure Guidance and Transparency Rules Sourcebook, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated financial information and a description of the principal risks and uncertainties for the remaining six months of the year.

·      DTR 4.2.8R of the FCA's Disclosure Guidance and Transparency Rules Sourcebook, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

·    As per principle N of the UK Corporate Governance Code, the Half year results 2023 taken as a whole, present a fair, balanced and understandable assessment of the Company's position and prospects.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Changes to Directors during the period

As announced on 28 February and 9 March respectively, Brian McBride and Stephanie Bruce retired from the Board at the conclusion of the AGM on 10 May.

By order of the Board

Sir Douglas Flint Chairman 7 August 2023	Stephen Bird Chief Executive Officer 7 August 2023

3. Independent review report to abrdn plc

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the Half year results for the six months ended 30 June 2023 which comprises the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity, condensed consolidated statement of cash flows and the related explanatory notes. 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half year results for the six months ended 30 June 2023 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules ('the DTR') of the UK's Financial Conduct Authority ('the UK FCA').

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ('ISRE (UK) 2410') issued for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the Half year results and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.  

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention that causes us to believe that the directors have inappropriately adopted the going concern basis of accounting, or that the directors have identified material uncertainties relating to going concern that have not been appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern, and the above conclusions are not a guarantee that the group will continue in operation.

Directors' responsibilities 

The Half year results is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Half year results in accordance with the DTR of the UK FCA. 

The annual financial statements of the group are prepared in accordance with UK-adopted international accounting standards.

The directors are responsible for preparing the condensed set of financial statements included in the Half year results in accordance with IAS 34 as adopted for use in the UK.

In preparing the condensed set of financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the Half year results based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion section of this report.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

Richard Faulkner

for and on behalf of KPMG LLP

Chartered Accountants Saltire Court 20 Castle Terrace Edinburgh EH1 2EG 7 August 2023

4. Financial Information

Condensed consolidated income statement

For the six months ended 30 June 2023

		6 months	6 months	Full Year
		2023	2022	2022
			restated1	restated1
	Notes	£m	£m	£m
Revenue from contracts with customers	4.4(a)	763	731	1,538
Cost of sales	4.4(b)	(42)	(35)	(82)
Net operating revenue		721	696	1,456
Restructuring and corporate transaction expenses	4.6	(113)	(88)	(214)
Impairment of intangibles acquired in business combinations and through the purchase of customer contracts	4.6	(37)	-	(369)
Amortisation of intangibles acquired in business combinations and through the purchase of customer contracts	4.6	(65)	(52)	(125)
Staff costs and other employee-related costs	4.6	(275)	(266)	(549)
Other administrative expenses	4.6	(274)	(300)	(662)
Total administrative and other expenses		(764)	(706)	(1,919)
Net gains or losses on financial instruments and other income
Fair value movements and dividend income on significant listed investments	4.5	(144)	(271)	(119)
Other net gains or losses on financial instruments and other income	4.5	26	(27)	(3)
Total net gains or losses on financial instruments and other income		(118)	(298)	(122)
Finance costs		(12)	(15)	(29)
Profit on disposal of interests in associates	4.2(b)	-	6	6
Loss on impairment of interests in associates	4.13	-	(9)	(9)
Share of profit or loss from associates and joint ventures	4.13	4	-	5
Loss before tax		(169)	(326)	(612)
Tax credit	4.7	24	31	66
Loss for the period		(145)	(295)	(546)
Attributable to:
Equity shareholders of abrdn plc		(151)	(302)	(558)
Other equity holders		6	6	11
Non-controlling interests - ordinary shares		-	1	1
		(145)	(295)	(546)
Earnings per share
Basic (pence per share)	4.8	(7.7)	(14.2)	(26.6)
Diluted (pence per share)	4.8	(7.7)	(14.2)	(26.6)

1. Comparatives for the six months ended 30 June 2022 and the 12 months ended 31 December 2022 have been restated for the implementation of IFRS 17. Refer Note 4.1(a)(i).

The Notes on pages 24 to 52 are an integral part of this condensed consolidated financial information.

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2023

		6 months	6 months	Full Year
		2023	2022	2022
			restated1	restated1
	Notes	£m	£m	£m
Loss for the period		(145)	(295)	(546)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement losses on defined benefit pension plans	4.16	(81)	(386)	(793)
Total items that will not be reclassified subsequently to profit or loss		(81)	(386)	(793)
Items that may be reclassified subsequently to profit or loss:
Fair value (losses)/gains on cash flow hedges		(13)	61	85
Exchange differences on translating foreign operations		(42)	37	36
Share of other comprehensive income of associates and joint ventures	4.13	(18)	(21)	(57)
Items transferred to the condensed consolidated income statement
Fair value losses/(gains) on cash flow hedges		30	(68)	(78)
Equity holder tax effect of items that may be reclassified subsequently to profit or loss	4.7	(4)	2	(2)
Total items that may be reclassified subsequently to profit or loss		(47)	11	(16)
Other comprehensive income for the period		(128)	(375)	(809)
Total comprehensive income for the period		(273)	(670)	(1,355)
Attributable to:
Equity shareholders of abrdn plc		(279)	(677)		(1,367)
Other equity holders		6	6		11
Non-controlling interests - ordinary shares		-	1		1
		(273)	(670)		(1,355)

1. Comparatives for the six months ended 30 June 2022 and the 12 months ended 31 December 2022 have been restated for the implementation of IFRS 17. Refer Note 4.1(a)(i).

The Notes on pages 24 to 52 are an integral part of this condensed consolidated financial information.

Condensed consolidated statement of financial position

As at 30 June 2023

		6 months	6 months	Full Year
		2023	2022	2022
			restated1	restated1
	Notes	£m	£m	£m
Assets
Intangible assets	4.12	1,548	2,116	1,619
Pension and other post-retirement benefit assets	4.16	772	1,221	831
Investments in associates and joint ventures accounted for using the equity method	4.13	245	253	232
Property, plant and equipment	4.11	162	193	201
Deferred tax assets		220	184	212
Financial investments	4.18	2,080	2,940	2,939
Receivables and other financial assets		1,238	1,237	907
Current tax recoverable		11	2	7
Other assets		100	115	92
Assets of operations held for sale	4.14	83	-	87
Cash and cash equivalents		1,407	1,433	1,133
		7,866	9,694	8,260
Assets backing unit linked liabilities	4.18
Financial investments		873	1,114	924
Receivables and other unit linked assets		8	17	5
Cash and cash equivalents		13	25	23
		894	1,156	952
Total assets		8,760	10,850	9,212
Liabilities
Third party interest in consolidated funds	4.18	212	130	242
Subordinated liabilities		588	707	621
Pension and other post-retirement benefit provisions	4.16	9	17	12
Deferred income		3	6	3
Deferred tax liabilities		145	248	211
Current tax liabilities		6	21	11
Derivative financial liabilities	4.18	2	17	1
Other financial liabilities		1,458	1,507	1,198
Provisions	4.17	58	52	97
Other liabilities		10	11	8
Liabilities of operations held for sale	4.14	6	-	14
		2,497	2,716	2,418
Unit linked liabilities	4.18
Investment contract liabilities		724	890	773
Third party interest in consolidated funds		165	256	173
Other unit linked liabilities		5	10	6
		894	1,156	952
Total liabilities		3,391	3,872	3,370
Equity
Share capital	4.15(a)	274	305	280
Shares held by trusts	4.15(b)	(147)	(152)	(149)
Share premium reserve	4.15(a)	640	640	640
Retained earnings		4,547	4,877	4,986
Other reserves		(159)	1,094	(129)
Equity attributable to equity shareholders of abrdn plc		5,155	6,764	5,628
Other equity		207	207	207
Non-controlling interests - ordinary shares		7	7	7
Total equity		5,369	6,978	5,842
Total equity and liabilities		8,760	10,850	9,212

1. Comparatives for 30 June 2022 and 31 December 2022 have been restated for the implementation of IFRS 17. Refer Note 4.1(a)(i).

The Notes on pages 24 to 52 are an integral part of this condensed consolidated financial information.

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2023

		Share capital	Shares held by trusts	Share premium reserve	Retained earnings1	Other reserves	Total equity attributable to equity shareholders of abrdn plc1	Other equity	Non-controlling interests - ordinary shares	Total equity1
	Notes	£m	£m	£m	£m	£m	£m	£m	£m	£m
31 December 2022		280	(149)	640	4,986	(129)	5,628	207	7	5,842
Effect of application of IFRS 9 on Investments in associates and joint ventures accounted for using the equity method1		-	-	-	51	-	51	-	-	51
1 January 2023		280	(149)	640	5,037	(129)	5,679	207	7	5,893
(Loss)/profit for the period		-	-	-	(151)	-	(151)	6	-	(145)
Other comprehensive income for the period		-	-	-	(99)	(29)	(128)	-	-	(128)
Total comprehensive income for the period		-	-	-	(250)	(29)	(279)	6	-	(273)
Issue of share capital	4.15(a)	-	-	-	-	-	-	-	-	-
Dividends paid on ordinary shares	4.10	-	-	-	(142)	-	(142)	-	-	(142)
Interest paid on other equity		-	-	-	-	-	-	(6)	-	(6)
Share buyback	4.15(a)	(6)	-	-	(98)	6	(98)	-	-	(98)
Reserves credit for employee share-based payments		-	-	-	-	13	13	-	-	13
Transfer to retained earnings for vested employee share-based payments		-	-	-	20	(20)	-	-	-	-
Shares acquired by employee trusts		-	(19)	-	-	-	(19)	-	-	(19)
Shares distributed by employee and other trusts and related dividend equivalents		-	21	-	(22)	-	(1)	-	-	(1)
Aggregate tax effect of items recognised directly in equity	4.7	-	-	-	2	-	2	-	-	2
30 June 2023		274	(147)	640	4,547	(159)	5,155	207	7	5,369

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 Note 4.1(a)(i).

		Share capital	Shares held by trusts	Share premium reserve	Retained earnings restated1, 2	Other reserves2	Total equity attributable to equity shareholders of abrdn plc restated1	Other equity	Non-controlling interests - ordinary shares	Total equity restated1
	Notes	£m	£m	£m	£m	£m	£m	£m	£m	£m
1 January 2022		305	(171)	640	5,766	1,094	7,634	207	6	7,847
(Loss)/profit for the period		-	-	-	(302)	-	(302)	6	1	(295)
Other comprehensive income for the period		-	-	-	(407)	32	(375)	-	-	(375)
Total comprehensive income for the period		-	-	-	(709)	32	(677)	6	1	(670)
Issue of share capital	4.15(a)	-	-	-	-	-	-	-	-	-
Dividends paid on ordinary shares	4.10	-	-	-	(154)	-	(154)	-	-	(154)
Interest paid on other equity		-	-	-	-	-	-	(6)	-	(6)
Reserves credit for employee share-based payments		-	-	-	-	11	11	-	-	11
Transfer to retained earnings for vested employee share-based payments		-	-	-	60	(60)	-	-	-	-
Shares acquired by employee trusts		-	(41)	-	-	-	(41)	-	-	(41)
Shares distributed by employee and other trusts and related dividend equivalents		-	60	-	(62)	-	(2)	-	-	(2)
Other movements2		-	-	-	(23)	17	(6)	-	-	(6)
Aggregate tax effect of items recognised directly in equity	4.7	-	-	-	(1)	-	(1)	-	-	(1)
30 June 2022		305	(152)	640	4,877	1,094	6,764	207	7	6,978

1. Comparatives for the six months ended 30 June 2022 have been restated for the implementation of IFRS 17. Refer Note 4.1(a)(i).

2. Other movements for the six months ended 30 June 2022 and the 12 months ended 31 December 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 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 in the six months ended 30 June 2022. 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.

		Share capital	Shares held by trusts	Share premium reserve	Retained earnings restated1, 2	Other reserves2	Total equity attributable to equity shareholders of abrdn plc restated1	Other equity	Non-controlling interests - ordinary shares	Total equity restated1
	Notes	£m	£m	£m	£m	£m	£m	£m	£m	£m
1 January 2022		305	(171)	640	5,766	1,094	7,634	207	6	7,847
(Loss)/profit for the year		-	-	-	(558)	-	(558)	11	1	(546)
Other comprehensive income for the year		-	-	-	(850)	41	(809)	-	-	(809)
Total comprehensive income for the year		-	-	-	(1,408)	41	(1,367)	11	1	(1,355)
Issue of share capital	4.15(a)	-	-	-	-	-	-	-	-	-
Dividends paid on ordinary shares	4.10	-	-	-	(307)	-	(307)	-	-	(307)
Interest paid on other equity		-	-	-	-	-	-	(11)	-	(11)
Share buyback	4.15(a)	(25)	-	-	(302)	25	(302)	-	-	(302)
Cancellation of capital redemption reserve	4.15(c)	-	-	-	1,059	(1,059)	-	-	-	-
Other movements in non-controlling interests in the year		-	-	-	-	-	-	-	-	-
Reserves credit for employee share-based payments		-	-	-	-	24	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	4.15(c)	-	-	-	207	(207)	-	-	-	-
Shares acquired by employee trusts		-	(46)	-	-	-	(46)	-	-	(46)
Shares distributed by employee and other trusts and related dividend equivalents		-	68	-	(70)	-	(2)	-	-	(2)
Other movements2		-	-	-	(23)	17	(6)	-	-	(6)
31 December 2022		280	(149)	640	4,986	(129)	5,628	207	7	5,842

1. Comparatives for the 12 months ended 31 December 2022 have been restated for the implementation of IFRS 17. Refer Note 4.1(a)(i).

2. Other movements for the six months ended 30 June 2022 and the 12 months ended 31 December 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 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 in the 12 months ended 31 December 2022. 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 24 to 52 are an integral part of this condensed consolidated financial information.

Condensed consolidated statement of cash flows

For the six months ended 30 June 2023

		6 months	6 months	Full Year
		2023	2022	2022
			restated1	restated1
	Notes	£m	£m	£m
Cash flows from operating activities
Loss before tax		(169)	(326)	(612)
Change in operating assets		(86)	581	916
Change in operating liabilities		181	(272)	(725)
Adjustment for non-cash movements in investment income		(1)	(7)	-
Other non-cash and non-operating items		175	98	567
Taxation paid2		(23)	(18)	(36)
Net cash flows from operating activities		77	56	110
Cash flows from investing activities
Purchase of property, plant and equipment		(9)	(12)	(21)
Acquisition of subsidiaries and unincorporated businesses net of cash acquired		-	(1,378)	(1,378)
Acquisition of investments in associates and joint ventures		(2)	(2)	(20)
Proceeds in relation to contingent consideration		2	-	18
Payments in relation to contingent consideration		(4)	(4)	(7)
Disposal of investments in associates and joint ventures		-	6	6
Purchase of financial investments		(291)	(90)	(297)
Proceeds from sale or redemption of financial investments		871	1,151	1,633
Taxation paid on sale or redemption of financial investments2		(41)	-	(28)
Prepayment in respect of potential acquisition of customer contracts	4.20(b)	13	5	14
Acquisition of intangible assets		(35)	(1)	(6)
Net cash flows from investing activities		504	(325)	(86)
Cash flows from financing activities
Repayment of subordinated liabilities		-	-	(92)
Payment of lease liabilities - principal		(13)	(15)	(46)
Payment of lease liabilities - interest		(3)	(3)	(6)
Shares acquired by trusts		(19)	(41)	(46)
Interest paid on subordinated liabilities and other equity		(16)	(21)	(34)
Other interest paid		(2)	-	(2)
Cash received relating to collateral held in respect of derivatives hedging subordinated liabilities		(11)	-	74
Share buyback		(98)	-	(302)
Ordinary dividends paid	4.10	(142)	(154)	(307)
Net cash flows from financing activities		(304)	(234)	(761)
Net increase/(decrease) in cash and cash equivalents		277	(503)	(737)
Cash and cash equivalents at the beginning of the period		1,166	1,875	1,875
Effects of exchange rate changes on cash and cash equivalents		(16)	23	28
Cash and cash equivalents at the end of the period3		1,427	1,395	1,166
Supplemental disclosures on cash flows from operating activities
Interest paid		-	1	-
Interest received		37	16	38
Dividends received		53	61	110
Rental income received on investment property		2	2	2

1. Comparatives for the six months ended 30 June 2022 and the 12 months ended 31 December 2022 have been restated for the implementation of IFRS 17. Refer Note 4.1(a)(i).

2. Total taxation paid for the six months ended 30 June 2023 was £64m (six months ended 30 June 2022: £18m, 12 months ended 31 December 2022: £64m).

3. Comprises cash and cash equivalents, including cash and cash equivalents backing unit linked liabilities, and overdrafts which are reported in other financial liabilities in the condensed consolidated statement of financial position. Cash and cash equivalents at 30 June 2023 were £1,427m (30 June 2022: £1,458m, 31 December 2022: £1,169m) of which £7m (30 June 2022: £nil, 31 December 2022: £13m) is included in assets of operations held for sale in the condensed consolidated statement of financial position (refer Note 4.14). The Group had no overdrafts at 30 June 2023 (30 June 2022: (£63m), 31 December 2022: (£3m)).

The Notes on pages 24 to 52 are an integral part of this condensed consolidated financial information.

Notes to the condensed consolidated financial statements

4.1    Presentation of the condensed consolidated financial statements

(a)      Basis of preparation

The condensed consolidated half year financial information has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules of the UK's Financial Conduct Authority.

The accounting policies for recognition, measurement, consolidation and presentation as set out in the Annual report and accounts for the year ended 31 December 2022 have been applied in the preparation of the condensed consolidated half year financial information except as noted below.

(a)(i) New standards, interpretations and amendments to existing standards that have been adopted by the Group

The Group has adopted the following new International Financial Reporting Standards (IFRSs), interpretations and amendments to existing standards, which are effective for annual periods beginning on or after 1 January 2023.

IFRS 17 Insurance Contracts

On 1 January 2023, the Group adopted IFRS 17 Insurance Contracts. IFRS 17 replaces IFRS 4 Insurance Contracts which was an interim standard which permitted the continued application of accounting policies, for insurance contracts and contracts with discretionary participation features, which were being used at transition to IFRS except where a change satisfied criteria set out in IFRS 4. IFRS 17 introduces new required measurement and presentation accounting policies for such contracts which reflect the view that these contracts combine features of a financial instrument and a service contract.

IFRS 17's measurement model, which applies to groups of contracts, combines a risk-adjusted present value of future cash flows and an amount representing unearned profit. IFRS 17 introduces a new approach to presentation in the income statement and statement of comprehensive income in relation to direct exposure to insurance contracts.

The Group has no material direct exposure to insurance contracts and contracts with discretionary participating features and the adoption of this standard has had no significant direct impact on the measurement or presentation of insurance contracts and therefore no restatement of prior periods was required in relation to direct exposure.

However, the results of the Group's joint venture Heng An Standard Life Insurance Company Limited (HASL) have been impacted by the adoption of IFRS 17 on 1 January 2023. HASL has also applied IFRS 9 Financial Instruments on 1 January 2023. While the Group had adopted IFRS 9 on 1 January 2019 following the sale of its UK and European insurance in 2018, HASL had continued to take the permitted temporary exemption granted to insurers in IFRS 4 to defer the implementation of IFRS 9 until the implementation of IFRS 17.

As IFRS 17 is applied retrospectively and IFRS 9 is applied prospectively, the combined impact of the change of accounting policy comes through at 1 January 2023. The net impact of the changes is an increase in the carrying value of HASL, the Group's retained earnings and net assets of £16m, comprising a decrease of £35m for IFRS 17 offset by an increase of £51m for IFRS 9.

IFRS 17 has three main valuation models: the general measurement model; the variable fee approach and the premium allocation approach. HASL is primarily using the general measurement model for its traditional insurance business and the variable fee approach for its direct participating contracts and investment contracts with direct participation features with some use of the premium allocation approach. The results reflect the election to take the other comprehensive income (OCI) options under IFRS 17 to take elements of the movements in insurance contract valuations through OCI to minimise income statement volatility.

The impact of the restatement in 2022 below partly reflects that the valuation of investment contracts under the variable fee approach reflect the fair value of the underlying assets from 1 January 2022 but a number of these assets were not accounted for at fair value until 1 January 2023 upon HASL's adoption of IFRS 9 (see below). The valuation of the insurance contracts is also impacted by the use of lower discount rates to discount liabilities under IFRS 17 as compared to those used under IFRS 4 and higher liabilities for financial related guarantees within some products.

In relation to IFRS 9, the largest impact relates to its debt investments which were classified as held to maturity under IAS 39 and subsequently accounted for at amortised cost but are now classified as fair value through OCI under IFRS 9.

As noted above, IFRS 17 is applied retrospectively. However, it was not practicable for HASL to apply a full retrospective approach. Depending on the nature and start date of the insurance contract, HASL has applied either a modified retrospective approach or a fair value approach. The choice of transition approach is not expected to have a significant impact on future periods.

The carrying value of the joint venture and opening retained earnings as at 1 January 2022 have been restated for IFRS 17.

	31 December 2021 as previously presented	Impact of IFRS 17	1 January 2022 as restated
	£m	£m	£m
Condensed consolidated statement of financial position
Carrying value of HASL	258	(9)	249
Investments in associates and joint ventures accounted for using the equity method	274	(9)	265
Total assets	11,418	(9)	11,409
Retained 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 equity and liabilities	11,418	(9)	11,409

The carrying value of HASL at 30 June 2022 and 31 December 2022 and the movements in the carrying value for the six months ended 30 June 2022 and the 12 months ended 31 December 2022 have also been restated.

	6 months 2022 as previously presented	Impact of IFRS 17	6 months 2022 as restated
	£m	£m	£m
Condensed consolidated income statement
Share of profit or loss from associates and joint ventures	6	(6)	-
Loss before tax	(320)	(6)	(326)
Loss for the period	(289)	(6)	(295)
Attributable to:
Equity shareholders of abrdn plc	(296)	(6)	(302)
Earnings per share
Basic (pence per share)	(13.9)	(0.3)	(14.2)
Diluted (pence per share)	(13.9)	(0.3)	(14.2)
Condensed consolidated statement of comprehensive income
Loss for the period	(289)	(6)	(295)
Share of other comprehensive income of associates and joint ventures	(7)	(14)	(21)
Total items that may be reclassified subsequently to profit or loss	25	(14)	11
Other comprehensive income for the period	(361)	(14)	(375)
Total comprehensive income for the period	(650)	(20)	(670)
Attributable to:
Equity shareholders of abrdn plc	(657)	(20)	(677)
Analysis of adjusted profit
Adjusted for the following items
Share of profit or loss from associates and joint ventures	6	(6)	-
Total adjusting items including results of associates and joint ventures	(419)	(6)	(425)
Loss for the period attributable to equity shareholders of abrdn plc	(296)	(6)	(302)
Loss for the period	(289)	(6)	(295)

	30 June 2022 as previously presented	Impact of IFRS 17	30 June 2022 as restated
	£m	£m	£m
Condensed consolidated statement of financial position
Carrying value of HASL	275	(29)	246
Investments in associates and joint ventures accounted for using the equity method	282	(29)	253
Total assets	10,879	(29)	10,850
Retained earnings	4,906	(29)	4,877
Total equity attributable to equity shareholders of abrdn plc	6,793	(29)	6,764
Total equity	7,007	(29)	6,978
Total equity and liabilities	10,879	(29)	10,850
Condensed consolidated statement of changes in equity
Opening retained earnings	5,775	(9)	5,766
Loss for the period	(296)	(6)	(302)
Other comprehensive income for the period	(393)	(14)	(407)
Total comprehensive income for the period	(689)	(20)	(709)
Closing retained earnings	4,906	(29)	4,877
Opening total equity attributable to equity shareholders of abrdn plc	7,643	(9)	7,634
Loss for the period	(296)	(6)	(302)
Other comprehensive income for the period	(361)	(14)	(375)
Total comprehensive income for the period	(657)	(20)	(677)
Closing total equity attributable to equity shareholders of abrdn plc	6,793	(29)	6,764
Opening total equity	7,856	(9)	7,847
Loss for the period	(289)	(6)	(295)
Other comprehensive income for the period	(361)	(14)	(375)
Total comprehensive income for the period	(650)	(20)	(670)
Closing total equity	7,007	(29)	6,978

	Full Year 2022 as previously presented	Impact of IFRS 17	Full Year 2022 as restated
	£m	£m	£m
Condensed consolidated income statement
Share of profit or loss from associates and joint ventures	2	3	5
Loss before tax	(615)	3	(612)
Loss for the year	(549)	3	(546)
Attributable to:
Equity shareholders of abrdn plc	(561)	3	(558)
Earnings per share
Basic (pence per share)	(26.8)	0.2	(26.6)
Diluted (pence per share)	(26.8)	0.2	(26.6)
Condensed 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)
Attributable to:
Equity shareholders of abrdn plc	(1,341)	(26)	(1,367)
Analysis of adjusted profit
Adjusted for the following items
Share 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)
Loss for the year attributable to equity shareholders of abrdn plc	(561)	3	(558)
Loss for the year	(549)	3	(546)

	31 December 2022 as previously presented	Impact of IFRS 17	31 December 2022 as restated
	£m	£m	£m
Condensed consolidated statement of financial position
Carrying value of HASL	245	(35)	210
Investments in associates and joint ventures accounted for using the equity method	267	(35)	232
Total assets	9,247	(35)	9,212
Retained 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 equity and liabilities	9,247	(35)	9,212
Condensed consolidated statement of changes in equity
Opening retained earnings	5,775	(9)	5,766
Loss for the year	(561)	3	(558)
Other 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
Opening total equity attributable to equity shareholders of abrdn plc	7,643	(9)	7,634
Loss for the year	(561)	3	(558)
Other 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
Opening total equity	7,856	(9)	7,847
Loss for the year	(549)	3	(546)
Other 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 condensed consolidated statement of cash flows:

	30 June 2022 as previously presented	Impact of IFRS 17	30 June 2022 as restated
	£m	£m	£m
Condensed consolidated statement of cash flows
Loss before tax	(320)	(6)	(326)
Other non-cash and non-operating items	92	6	98

	31 December 2022 as previously presented	Impact of IFRS 17	31 December 2022 as restated
	£m	£m	£m
Condensed consolidated statement of cash flows
Loss before tax	(615)	3	(612)
Other non-cash and non-operating items	570	(3)	567

In line with the approach adopted by the Group on its implementation of IFRS 9 on 1 January 2019, the comparatives have not been restated for HASL's adoption of IFRS 9. The impact of HASL adopting IFRS 9 is recognised in retained earnings at 1 January 2023.

	31 December 2022 as restated for IFRS 17	Impact of IFRS 9	1 January 2023
	£m	£m	£m
Condensed consolidated statement of financial position
Carrying value of HASL	210	51	261
Investments in associates and joint ventures accounted for using the equity method	232	51	283
Total assets	9,212	51	9,263
Retained 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

Amendments to existing standards

·   Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2.

·   Definition of Accounting Estimates - Amendments to IAS 8.

·   Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12.

The Group's accounting policies have been updated to reflect these amendments. Management considers the implementation of the above amendments to have no significant impact on the Group's financial statements.

 (b)     Going concern               

The Group's business activities, together with the factors likely to affect its future development, performance and financial position, are set out in the Management report and in the Annual report and accounts 2022 Strategic report. This includes details on our liquidity and capital positions and our principal risks, including the impacts of the macroeconomic environment and rising inflation and the Ukraine conflict on these principal risks.

In preparing these half year results on a going concern basis, the Directors have considered the following matters and have taken into account market uncertainty.

·    The Group has cash and liquid resources of £1.9bn at 30 June 2023. In addition, the Company has a revolving credit facility of £400m as part of our contingency funding plans which is due to mature in 2026 and remains undrawn.

·    The Group's indicative regulatory capital surplus on an IFPR basis was £1bn in excess of capital requirements at 30 June 2023. The regulatory capital surplus does not include the value of the Group's significant listed investment in Phoenix.

·    The Group performs regular stress and scenario analysis as described in the Annual report and accounts 2022 Viability statement. The diverse range of management actions available meant the Group was able to withstand these extreme stresses.

·    The Group's operational resilience processes have operated effectively during the period including the provision of services by key outsource providers.

Based on a review of the above factors the Directors are satisfied that the Group and Company have and will maintain sufficient resources to enable them to continue operating for at least 12 months from the date of approval of the condensed consolidated financial statements. Accordingly, the financial statements have been prepared on a going concern basis. There were no material uncertainties relating to this going concern conclusion.

(c)      Condensed consolidated half year financial information

This condensed consolidated half year financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Additionally, the comparative figures for the financial year ended 31 December 2022 are not the Company's statutory accounts for that financial year. The statutory accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The condensed consolidated half year financial information has been reviewed, not audited.

4.2    Acquisitions and disposals

(a)      Acquisitions

(a)(i)   Prior period acquisitions of subsidiaries

Interactive Investor (ii)

On 27 May 2022, abrdn plc purchased 100% of the issued share capital of Antler Holdco Limited (Antler), the parent company for the Interactive Investor group of companies. The cash outflow at the completion of the acquisition was £1,496m, which comprised consideration of £1,485m and payments of £11m made by abrdn to fund the settlement of ii transaction liabilities as part of the transaction. The acquisition of ii provides abrdn with direct entry to the high-growth digitally enabled direct investing market, accessing new customer segments and capabilities. This allows abrdn customers to choose from a wide spectrum of wealth services, spanning self-directed investing through to high-touch financial advice, depending on their specific needs over their financial life.

On 1 September 2022, Antler made a dividend in specie to abrdn plc of its investment in Interactive Investor Limited which is now a direct subsidiary of abrdn plc.

(b)      Disposals

(b)(i) Prior period disposal of associates

Profit on disposal of interests in associates for the six months ended 30 June 2022 and the 12 months ended 31 December 2022 of £6m related to the sale of the Group's interest in Origo Services Limited in May 2022.

4.3    Segmental analysis

The Group's reportable segments have been identified in accordance with the way in which the Group is structured and managed. IFRS 8 Operating Segments requires that the information presented in the financial statements is based on information provided to the 'Chief Operating Decision Maker' which for the Group is the executive leadership team.

(a)      Basis of segmentation

(a)(i)   Current reportable segments

Investments

Our global asset management business which provides investment solutions for Institutional, Retail Wealth (previously named Wholesale) and Insurance Partners (previously named Insurance) clients.

Adviser

Our UK financial adviser business which provides platform services to wealth managers and advisers and from January 2023 and May 2023 respectively, threesixty and our Managed Portfolio Service business, both of which were previously reported within the Personal segment.

Personal

Our Personal business comprises Personal Wealth which combines our financial planning business abrdn Financial Planning, our digital direct-to-consumer services and discretionary fund management services provided by abrdn Capital and ii following the completion of the acquisition in 2022. Refer Note 4.2(a)(i) for further details. abrdn Capital is currently held for sale - refer Note 4.14.

In addition to the Group reportable segments above, the analysis of adjusted profit in Section 4.3(b)(i) below also reports the following:

Corporate/strategic

Corporate/strategic mainly comprises certain corporate costs.

The segments are reported to the level of adjusted operating profit.

(b)      Reportable segments - adjusted profit and revenue information

(b)(i)   Analysis of adjusted profit

Adjusted operating profit is presented by reportable segment in the table below.

		Investments	Adviser	Personal	Corporate/ strategic	Total
6 months 2023	Notes	£m	£m	£m	£m	£m
Net operating revenue		466	103	152	-	721
Adjusted operating expenses		(440)	(54)	(91)	(9)	(594)
Adjusted operating profit		26	49	61	(9)	127
Adjusted net financing costs and investment return						24
Adjusted profit before tax						151
Tax on adjusted profit						(24)
Adjusted profit after tax						127
Adjusted for the following items
Restructuring and corporate transaction expenses	4.6					(113)
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts	4.6					(102)
Change in fair value of significant listed investments	4.5					(181)
Dividends from significant listed investments	4.5					37
Share of profit or loss from associates and joint ventures1						4
Other	4.9					35
Total adjusting items including results of associates and joint ventures						(320)
Tax on adjusting items						48
Profit attributable to other equity holders						(6)
Profit attributable to non-controlling interests - ordinary shares						-
Loss for the period attributable to equity shareholders of abrdn plc						(151)
Profit attributable to other equity holders						6
Profit attributable to non-controlling interests - ordinary shares						-
Loss for the period						(145)

1. Share of profit or loss from associates and joint ventures primarily comprises the Group's share of results of HASL, Virgin Money Unit Trust Managers (Virgin Money UTM), Tenet and Archax.

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.

		Investments	Adviser	Personal	Corporate/ strategic	Total restated1
6 months 2022	Notes	£m	£m	£m	£m	£m
Net operating revenue2		546	92	58	-	696
Adjusted operating expenses		(470)	(54)	(51)	(6)	(581)
Adjusted operating profit		76	38	7	(6)	115
Adjusted net financing costs and investment return						(16)
Adjusted profit before tax						99
Tax on adjusted profit						(13)
Adjusted profit after tax						86
Adjusted for the following items
Restructuring and corporate transaction expenses	4.6					(88)
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts	4.6					(52)
Profit on disposal of interests in associates	4.2(b)					6
Change in fair value of significant listed investments	4.5					(313)
Dividends from significant listed investments	4.5					42
Share of profit or loss from associates and joint ventures1,3						-
Impairment of interests in associates	4.13					(9)
Other	4.9					(11)
Total adjusting items including results of associates and joint ventures						(425)
Tax on adjusting items						44
Profit attributable to other equity holders						(6)
Profit attributable to non-controlling interests - ordinary shares						(1)
Loss for the period attributable to equity shareholders of abrdn plc						(302)
Profit attributable to other equity holders						6
Profit attributable to non-controlling interests - ordinary shares						1
Loss for the period						(295)

1. Comparatives for the six months ended 30 June 2022 have been restated for the implementation of IFRS 17. Refer Note 4.1(a)(i).

2. The Group's measure of segmental revenue was renamed from fee based revenue to net operating revenue during 2022.

3. Share of profit or loss from associates and joint ventures primarily comprises the Group's share of results of HASL and Virgin Money UTM.

		Investments	Adviser	Personal	Corporate/ strategic	Total restated1
Full Year 2022	Notes	£m	£m	£m	£m	£m
Net operating revenue		1,070	185	201	-	1,456
Adjusted operating expenses		(956)	(99)	(129)	(9)	(1,193)
Adjusted operating profit		114	86	72	(9)	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	4.6					(214)
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts	4.6					(494)
Profit on disposal of interests in associates	4.2(b)					6
Change in fair value of significant listed investments	4.5					(187)
Dividends from significant listed investments	4.5					68
Share of profit or loss from associates and joint ventures1,2						5
Impairment of interests in associates	4.13					(9)
Other	4.9					(40)
Total adjusting items including results of associates 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)

1. Comparatives for the 12 months ended 31 December 2022 have been restated for the implementation of IFRS 17. Refer Note 4.1(a)(i).

2. Share of profit or loss from associates and joint ventures primarily comprises the Group's share of results of HASL, Virgin Money UTM and Tenet.

4.4    Net operating revenue

(a)      Revenue from contracts with customers

The following table provides a breakdown of total revenue from contracts with customers.

	6 months 2023	6 months 2022	Full Year  2022
	£m	£m	£m
Investments
Management fee income - Institutional and Retail Wealth1,2	399	463	901
Management fee income - Insurance Partners1,3	75	89	167
Performance fees and carried interest	12	12	41
Other revenue from contracts with customers	18	16	38
Revenue from contracts with customers for the Investments segment	504	580	1,147
Adviser
Platform charges	85	90	176
Treasury income	15	3	11
Other revenue from contracts with customers	4	-	-
Revenue from contracts with customers for the Adviser segment	104	93	187
Personal
Fee income - Advice and Discretionary	37	45	87
Account fees	27	4	32
Trading transactions	25	4	27
Treasury income	66	5	58
Revenue from contracts with customers for the Personal segment	155	58	204
Total revenue from contracts with customers	763	731	1,538

1. In addition to revenues earned as a percentage of AUM, management fee income includes certain other revenues such as registration fees.

2. Previously named Institutional and Wholesale.

3. Previously named Insurance.

(b)      Cost of sales

The following table provides a breakdown of total cost of sales.

	6 months 2023	6 months 2022	Full Year  2022
	£m	£m	£m
Cost of sales
Commission expenses	33	32	66
Other cost of sales	9	3	16
Total cost of sales	42	35	82

Other cost of sales includes amounts payable to employees and others relating to carried interest and performance fee revenue.

(c)      Reconciliation of revenue from contracts with customers to net operating revenue as presented in the analysis of adjusted operating profit

The following table provides a reconciliation of revenue from contracts with customers as presented in the condensed consolidated income statement to net operating revenue, as presented in the analysis of adjusted operating profit (refer Note 4.3(b)(i) for each of the Group's reportable segments).

	Investments			Adviser			Personal			Total
	30 Jun 2023	30 Jun 2022	31 Dec 2022	30 Jun 2023	30 Jun 2022	31 Dec 2022	30 Jun 2023	30 Jun 2022	31 Dec 2022	30 Jun 2023	30 Jun 2022	31 Dec 2022
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue from contracts with customers	504	580	1,147	104	93	187	155	58	204	763	731	1,538
Cost of sales	(38)	(34)	(77)	(1)	(1)	(2)	(3)	-	(3)	(42)	(35)	(82)
Net operating revenue	466	546	1,070	103	92	185	152	58	201	721	696	1,456

There are no differences between net operating revenue as presented in the condensed consolidated income statement and the analysis of Group adjusted profit by segment.

4.5    Net gains or losses on financial instruments and other income

	6 months 2023	6 months 2022	Full Year  2022
	£m	£m	£m
Fair value movements and dividend income on significant listed investments
Fair value movements on significant listed investments (other than dividend income)	(181)	(313)	(187)
Dividend income from significant listed investments	37	42	68
Total fair value movements and dividend income on significant listed investments	(144)	(271)	(119)
Non-unit linked business - excluding significant listed investments
Net gains or losses on financial instruments at fair value through profit or loss	(11)	(54)	(83)
Interest and similar income from financial instruments at amortised cost	30	8	25
Foreign exchange gain or losses on financial instruments at amortised cost	(5)	10	9
Other income	9	6	41
Net gains or losses on financial instruments and other income - non-unit linked business - excluding significant listed investments	23	(30)	(8)
Unit linked business
Net gains or losses on financial instruments at fair value through profit or loss
Net gains or losses on financial assets at fair value through profit or loss	44	(156)	(130)
Change in non-participating investment contract financial liabilities	(36)	129	112
Change in liability for third party interests in consolidated funds	(6)	30	23
Total net gains or losses on financial instruments at fair value through profit or loss	2	3	5
Interest and similar income from financial instruments at amortised cost	1	-	-
Net gains or losses on financial instruments and other income - unit linked business1	3	3	5
Total other net gains or losses on financial instruments and other income	26	(27)	(3)
Total net gains or losses on financial instruments and other income	(118)	(298)	(122)

1. In addition to the Net gains or losses on financial instruments and other income - unit linked business of £3m (six months ended 30 June 2022: £3m, 12 months ended 31 December 2022: £5m), there are administrative expenses and policyholder tax of less than £1m (six months ended 30 June 2022: £1m, 12 months ended 31 December 2022: £1m) and £3m (six months ended 30 June 2022: £2m, 12 months ended 31 December 2022: £4m) respectively. The result attributable to unit linked business for the period is therefore £nil (six months ended 30 June 2022: £nil, 12 months ended 31 December 2022: £nil).

4.6    Administrative and other expenses

	6 months 2023	6 months 2022	Full Year  2022
	£m	£m	£m
Restructuring and corporate transaction expenses	113	88	214
Impairment of intangibles acquired in business combinations and through the purchase of customer contracts
Impairment of intangibles acquired in business combinations	37	-	368
Impairment of intangibles acquired through the purchase of customer contracts	-	-	1
Total impairment of intangibles acquired in business combinations and through the purchase of customer contracts	37	-	369
Amortisation of intangibles acquired in business combinations and through the purchase of customer contracts
Amortisation of intangibles acquired in business combinations	59	47	115
Amortisation of intangibles acquired through the purchase of customer contracts	6	5	10
Total amortisation of intangibles acquired in business combinations and through the purchase of customer contracts	65	52	125
Staff costs and other employee-related costs	275	266	549
Other administrative expenses	274	300	662
Total administrative and other expenses1	764	706	1,919

1. Total administrative and other expenses includes less than £1m (six months ended 30 June 2022: £1m, 12 months ended 31 December 2022: £1m) relating to unit linked business.

There were restructuring expenses of £90m (six months ended 30 June 2022: £70m, 12 months ended 31 December 2022: £169m), mainly consisting of property related impairments, severance, platform transformation and specific costs to effect savings in Investments. Corporate transaction expenses were £23m (six months ended 30 June 2022: £18m, 12 months ended 31 December 2022: £45m). Corporate transaction expenses for the six months ended 30 June 2022 and the 12 months ended 31 December 2022 included £13m and £14m respectively of deal costs relating to acquisitions, primarily for ii.

4.7    Tax expense

	6 months 2023	6 months 2022	Full Year  2022
	£m	£m	£m
Current tax:
UK	8	2	5
Overseas	47	11	45
Adjustment to tax expense in respect of prior years	-	(3)	(8)
Total current tax	55	10	42
Deferred tax:
Deferred tax credit arising from the current period	(65)	(42)	(104)
Adjustment to deferred tax in respect of prior years	(14)	1	(4)
Total deferred tax	(79)	(41)	(108)
Total tax credit1	(24)	(31)	(66)

1. The tax credit of £24m (six months ended 30 June 2022: tax credit of £31m, 12 months ended 31 December 2022: tax credit of £66m) includes a tax expense of £3m (six months ended 30 June 2022: £2m, 12 months ended 31 December 2022: £4m) relating to unit linked business.

Tax relating to components of other comprehensive income is as follows:

	6 months 2023	6 months 2022	Full Year  2022
	£m	£m	£m
Tax relating to fair value gains and losses recognised on cash flow hedges	(3)	15	21
Tax relating to cash flow hedge gains and losses transferred to condensed consolidated income statement	7	(17)	(19)
Equity holder tax effect relating to items that may be reclassified subsequently to profit or loss	4	(2)	2
Tax relating to other comprehensive income	4	(2)	2

All of the amounts presented above are in respect of equity holders of abrdn plc.

Tax relating to items taken directly to equity is as follows:

	6 months 2023	6 months 2022	Full Year  2022
	£m	£m	£m
Tax relating to share-based payments	(2)	1	-
Tax relating to items taken directly to equity	(2)	1	-

4.8    Earnings per share

Basic earnings per share is calculated by dividing profit or loss attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the period excluding shares owned by the employee trusts that have not vested unconditionally to employees.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue during the period to assume the conversion of all dilutive potential ordinary shares, such as share options granted to employees.

Adjusted earnings per share is calculated on adjusted profit after tax attributable to ordinary equity holders of the Company.

The following table shows details of basic, diluted and adjusted earnings per share.

	6 months 2023	6 months 2022	Full Year  2022
		restated1	restated1
	£m	£m	£m
Adjusted profit before tax	151	99	253
Tax on adjusted profit	(24)	(13)	(22)
Adjusted profit after tax	127	86	231
Attributable to:
Other equity holders	(6)	(6)	(11)
Non-controlling interests - ordinary shares	-	(1)	(1)
Adjusted profit after tax attributable to equity shareholders of abrdn plc	121	79	219
Total adjusting items including results of associates and joint ventures	(320)	(425)	(865)
Tax on adjusting items	48	44	88
Loss attributable to equity shareholders of abrdn plc	(151)	(302)	(558)

	6 months 2023	6 months 2022	Full Year  2022
	Millions	Millions	Millions
Weighted average number of ordinary shares outstanding	1,949	2,130	2,094
Dilutive effect of share options and awards	25	17	16
Weighted average number of diluted ordinary shares outstanding	1,974	2,147	2,110

In accordance with IAS 33, no share options and awards were treated as dilutive for the six months ended 30 June 2023, the six months ended 30 June 2022 and the 12 months ended 31 December 2022 due to the loss attributable to equity holders of abrdn plc in those periods. This resulted in the adjusted diluted earnings per share for the six months ended 30 June 2023 being calculated using a weighted average number of ordinary shares of 1,949 million (six months ended 30 June 2022: 2,130 million, 12 months ended 31 December 2022: 2,094 million).

	6 months 2023	6 months 2022	Full Year  2022
		restated1	restated1
	Pence	Pence	Pence
Basic earnings per share	(7.7)	(14.2)	(26.6)
Diluted earnings per share	(7.7)	(14.2)	(26.6)
Adjusted earnings per share	6.2	3.7	10.5
Adjusted diluted earnings per share	6.2	3.7	10.5

1. Comparatives for the six months ended 30 June 2022 and the 12 months ended 31 December 2022 have been restated for the implementation of IFRS 17. Refer Note 4.1(a)(i).

4.9    Adjusted profit and adjusting items

Adjusted profit excludes the impact of the following items:

·   Restructuring costs and corporate transaction expenses. Restructuring includes the impact of major regulatory change.

·   Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts.

·   Profit or loss arising on the disposal of a subsidiary, joint venture or equity accounted associate.

·   Change in fair value of/dividends from significant listed investments (refer Section 4.9(a) below).

·   Share of profit or loss from associates and joint ventures.

·   Impairment loss/reversal of impairment loss recognised on investments in associates and joint ventures accounted for using the equity method.

·   Fair value movements in contingent consideration.

·   Items which are one-off and, due to their size or nature, are not indicative of the long-term operating performance of the Group.

The tax charge or credit allocated to adjusting items is based on the tax treatment of each adjusting item.

The operating, investing and financing cash flows presented in the condensed consolidated statement of cash flows are for both adjusting and non-adjusting items.

(a)      Significant listed investments

During 2020 and 2021, the Group's investments in HDFC Life, Phoenix and HDFC Asset Management were reclassified from associates to equity securities and considered significant listed investments of the Group. Fair value movements on these investments are included as adjusting items, which is aligned with our treatment of gains on disposal for these holdings when they were classified as associates. Dividends from significant listed investments are also included as adjusting items, as these result in fair value movements.

During the six months ended 30 June 2023:

·    The Group's holding in HDFC Life reduced by 1.7% following the sale of 35,694,105 equity shares through a Bulk Sale on 31 May 2023 and the Group now has no remaining shareholding in HDFC Life. The total consideration net of taxes, expenses and related foreign exchange hedging was £198m.

·    The Group's holding in HDFC Asset Management reduced by 10.2% following the sale of 21,778, 305 equity shares through a Bulk Sale on 20 June 2023 and the Group now has no remaining shareholding in HDFC Asset Management. The total consideration net of taxes, expenses and related foreign exchange hedging was £337m.

Following the sales, the Group has one remaining significant listed investment, Phoenix.

(b)      Other

Other adjusting items for the six months ended 30 June 2023 primarily relates to the insurance liability recovery of £36m in relation to a single process execution event in 2022 (refer Note 4.17). The £41m provision expense was included in other adjusting items for the 12 months ended 31 December 2022 (£nil for the six months ended 30 June 2022).

Other adjusting items for the six months ended 30 June 2023 includes a gain of £5m (six months ended 30 June 2022: gain of £6m, 12 months ended 31 December 2022: gain of £35m) for net fair value movements in contingent consideration and a fair value loss of £5m (six months ended 30 June 2022: loss of £nil, 12 months ended 31 December 2022: loss of £11m) on a financial instrument liability related to a prior period acquisition. Further information on the valuation of the contingent consideration and related sensitivities is included in Note 4.18.

Other adjusting items for the six months ended 30 June 2022 and 12 months ended 31 December 2022 also included a loss of £12m and £13m respectively (six months ended 30 June 2023: £nil) in relation to market losses on the investments held by the abrdn Financial Fairness Trust which is consolidated by the Group. The assets of the abrdn Financial Fairness Trust are restricted to be used for charitable purposes.

4.10 Dividends on ordinary shares

	6 months 2023		6 months 2022		Full Year 2022
	Pence per share	£m1	Pence per share	£m	Pence per share	£m
Dividends paid in reporting period
Current year interim dividend	-	-	-	-	7.30	153
Final dividend for prior year	7.30	142	7.30	154	7.30	154
Total dividends paid in reporting period		142		154		307
Dividends relating to reporting period
Interim dividend	7.30	137	7.30	153	7.30	153
Final dividend	-	-	-	-	7.30	142
Total dividends relating to reporting period		137		153		295

1. Estimated for the current period interim recommended dividend.

Subsequent to 30 June 2023, the Board has declared an interim dividend for 2023 of 7.30 pence per ordinary share (interim 2022: 7.30 pence), an estimated £137m in total (interim 2022: £153m). The dividend is expected to be paid on 26 September 2023 and will be recorded as an appropriation of retained earnings in the financial statements for the year ended 31 December 2023.

4.11  Property, plant and equipment

	30 Jun 2023	30 Jun 2022	31 Dec  2022
	£m	£m	£m
Owner occupied property	1	1	1
Equipment	45	56	55
Right-of-use assets - property	115	135	144
Right-of-use assets - equipment	1	1	1
Total property, plant and equipment	162	193	201

Impairments of right-of-use assets for property of £35m have been recognised in the six months ended 30 June 2023 (six months ended 30 June 2022: £2m, 12 months ended 31 December 2022: £7m). The impairments 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 are related to the Investments segment (£27m impairment), Personal segment (£1m impairment) and Corporate/strategic (£7m impairment).

The recoverable amount for the properties in the UK, which was based on value in use, was £26m using a pre-tax discount rate of 7.01%. The recoverable amount for the properties in the US, which was based on value in use, was £6m using a pre-tax discount rate of 6.81%. 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. It is not based on valuations by an independent valuer.

The Group has also recognised a reversal of impairment of £3m in the six months ended 30 June 2023 (six months ended 30 June 2022: £nil, 12 months ended 31 December 2022: £nil) in relation 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 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.

4.12  Intangible assets

	30 Jun 2023	30 Jun 2022	31 Dec  2022
	£m	£m	£m
Acquired through business combinations
Goodwill	898	1,324	935
Brand	12	18	14
Customer relationships and investment management contracts	555	701	609
Technology and other	20	36	27
Internally developed software	12	3	7
Purchased software and other	-	1	-
Cost of obtaining customer contracts	51	33	27
Total intangible assets	1,548	2,116	1,619

Goodwill at 30 June 2023 comprises a gross carrying value of £4,665m (30 June 2022: £4,714m, 31 December 2022: £4,665m) and accumulated impairment of £3,767m (30 June 2022: £3,390m, 31 December 2022: £3,730m).

There were no additions to goodwill in the six months ended 30 June 2023. Impairments of goodwill of £37m have been recognised in this period. The goodwill impairment comprises £23m relating to the abrdn Financial Planning Limited (aFPL) cash-generating unit which is included in the Personal segment and £14m relating to the Finimize cash-generating unit which is included in the Investments segment. The impairments are included within Impairment of intangibles acquired in business combinations and through the purchase of customer contracts in the condensed consolidated income statement.

The impairment of goodwill allocated to the aFPL cash-generating unit, which comprises the Group's financial planning business, was £23m. The impairment resulted from lower projected revenues as a result of lower markets and macroeconomic conditions and the impact of business restructuring. Following the impairment, the goodwill allocated to the aFPL cash-generating unit was £37m (30 June 2022: £60m, 31 December 2022: £60m).

The recoverable amount of the aFPL cash-generating unit which is its fair value less cost of disposal (FVLCD) at 30 June 2023 was £68m. This was also the carrying value of the cash-generating unit at 30 June 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 recent transactions, adjusted to take into account profitability where appropriate, and were benchmarked against trading multiples for aFPL's peer companies. Revenue was based on forecast 2023 revenue and AUAdv were based on current AUAdv. The expected cost of disposal was based on past experience of previous transactions.

As the carrying value of the cash-generating unit is now equal to 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 £14m. A 20% reduction in market transaction multiples, adjusted to be appropriate to the Group's financial planning business, would result in a further impairment of £14m.

The impairment of goodwill allocated to the Finimize cash-generating unit, which comprises the Finimize business, was £14m. The impairment resulted from lower short-term projected growth following a strategic shift that prioritises profitability over revenue growth in the pursuit of a sustainable, resilient if lower growing business in the short term and broader market conditions. Following the impairment, the goodwill allocated to the Finimize cash-generating unit was £17m (30 June 2022: £72m, 31 December 2022: £31m).

The recoverable amount of the Finimize cash-generating unit at 30 June 2023 was £23m which was based on FVLCD. This was also the carrying value of the cash-generating unit at 30 June 2023. The FVLCD considered a number of valuation approaches, with the primary approach being a revenue multiple approach. The key assumptions used in determining the revenue multiple valuation were future revenue projections, which were based on management forecasts and assumed a continued level of revenue growth, and market multiples. Market multiples were based on broadly comparable listed companies, with appropriate discounts applied to take into account profitability, track record, revenue growth potential, and net premiums for control.

The residual goodwill allocated to the Finimize cash-generating unit is not significant in comparison to the total carrying amount of goodwill.

These are level 3 measurements as they are measured using inputs which are not based on observable market data.

During the six months ended 30 June 2022 and the 12 months ended 31 December 2022, there were additions to goodwill of £993m. The additions in intangible assets acquired through business combinations in the six months ended 30 June 2022 predominately related to the acquisition of ii. Refer Note 4.2(a)(i) for further details. In addition, during the 12 months ended 31 December 2022, there was an impairment of the Group's goodwill of £340m of which £299m related to the asset management group of cash-generating units and £41m related to the Finimize cash-generating unit. There was also goodwill of £49m relating to the Personal segment which was classified as held for sale (refer Note 4.14).

4.13  Investments in associates and joint ventures accounted for using the equity method

	30 Jun 2023	30 Jun 2022	31 Dec  2022
		restated1	restated1
	£m	£m	£m
Associates
Other	15	-	14
Joint ventures
HASL	223	246	210
Other	7	7	8
Total investments in associates and joint ventures accounted for using the equity method	245	253	232

1. Comparatives for 30 June 2022 and 31 December 2022 have been restated for the implementation of IFRS 17. Refer Note 4.1(a)(i).

During the six months ended 30 June 2023, the Group made additions to Other associates accounted for using the equity method of £2m (six months ended 30 June 2022: £nil, 12 months ended 31 December 2022: £18m). There were no additions to joint ventures accounted for using the equity method (six months ended 30 June 2022: £2m, 12 months ended 31 December 2022: £2m).

There were no impairments of associates or joint ventures during the six months ended 30 June 2023. During the six months ended 30 June 2022 and the 12 months ended 31 December 2022, the Group recognised an impairment of £9m in relation to its interest in Tenet Group Limited which is included in Other associates accounted for using the equity method.

4.14  Assets and liabilities held for sale

On 26 February 2023, the Group agreed the sale of abrdn Capital Limited (aCL), its discretionary fund management business, to LGT UK Holdings Limited. aCL, which is in the Personal segment, was classified as an operation held for sale at 31 December 2022 as a sale of the business was considered highly probable at this date. The sale is expected to complete in H2 2023, following satisfaction of certain conditions so aCL was still classified as an operation held for sale at 30 June 2023.

	30 Jun 2023	31 Dec 2022
	£m	£m
Assets of operations held for sale
Intangible assets	58	58
Property, plant and equipment	1	-
Receivables and other financial assets	16	15
Other assets	1	1
Cash and cash equivalents	7	13
Total assets of operations held for sale	83	87
Liabilities of operations held for sale
Other financial liabilities	6	14
Total liabilities of operations held for sale	6	14
Net assets of operations held for sale	77	73

Net assets of operations held for sale are net of intercompany balances between aCL and other group entities, the net assets of aCL on a gross basis as at 30 June 2023 are £75m (31 December 2022: £70m).

4.15  Issued share capital and share premium, shares held by trusts, retained earnings and other reserves

(a)      Issued share capital and share premium

The movement in the issued ordinary share capital and share premium of the Company was:

	6 months 2023				6 months 2022				Full Year 2022
	Ordinary share capital			Share premium	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		13 61/63p each	£m	£m
At start of period	2,001,891,899	280	640		2,180,724,786	305		640	2,180,724,786	305	640
Shares issued in respect of share incentive plans	1,023	-	-		1,174	-		-	2,381	-	-
Shares bought back on-market and cancelled	(39,587,562)	(6)	-		-	-		-	(178,835,268)	(25)	-
At end of period	1,962,305,360	274	640		2,180,725,960	305		640	2,001,891,899	280	640

All ordinary shares in issue in the Company rank pari passu and carry the same voting rights and entitlement to receive dividends and other distributions declared or paid by the Company.

On 5 June 2023, the Company announced that it would initiate a £150m return to shareholders. This commenced on 5 June 2023. As at 30 June 2023, the Company had bought back and cancelled 39,587,562 shares as part of this programme. The total consideration for the six months ended 30 June 2023 was £98m which includes transaction costs and any unsettled purchases. At 30 June 2023, there were unsettled purchases for 6,138,236 shares.

During the 12 months ended 31 December 2022, the Company bought back and cancelled 178,835,268 shares. The total consideration was £302m which included transaction costs. No shares were bought back during the six months ended 30 June 2022.

The share buyback has resulted in a reduction in retained earnings of £98m (six months ended 30 June 2022: £nil, 12 months ended 31 December 2022: £302m).

An amount of £6m has been credited to the capital redemption reserve relating to the nominal value of the shares cancelled (six months ended 30 June 2022: £nil, 12 months ended 31 December 2022: £25m).

The Company can issue shares to satisfy awards granted under employee incentive plans which have been approved by shareholders.

(b)      Shares held by trusts

Shares held by trusts relates to shares in abrdn plc that are held by the abrdn Employee Benefit Trust (abrdn EBT), Standard Life Employee Trust (ET) and the Aberdeen Asset Management Employee Benefit Trust 2003 (AAM EBT).

The abrdn EBT, ET and AAM EBT purchase shares in the Company for delivery to employees under employee incentive plans. Purchased shares are recognised as a deduction from equity at the price paid for them. Where new shares are issued to the arbdn EBT, ET or AAM EBT the price paid is the nominal value of the shares. When shares are distributed from the trust their corresponding value is released to retained earnings.

The number of shares held by trusts was as follows:

		6 months 2023	6 months 2022	Full Year  2022
Number of shares held by trusts
abrdn Employee Benefit Trust		35,540,771	36,702,940	36,112,240
Standard Life Employee Trust		22,270,081	22,635,206	22,629,035
Aberdeen Asset Management Employee Benefit Trust 2003		2,194,934	2,316,847	2,264,591

(c)      Retained earnings and other reserves

The merger reserve includes £263m (30 June 2022: £470m, 31 December 2022: £263m) in relation to the Group's asset management businesses. 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 during the 12 months ended 31 December 2022.

In addition, 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 during the 12 months ended 31 December 2022.

There were no transfers from these reserves to retained earnings during the six months ended 30 June 2022 and 2023.

4.16  Pension and other post-retirement benefit provisions

The Group operates a number of defined benefit pension plans, the largest of which is the abrdn UK Group plan (principal plan) which is closed to future accrual. The Group also operates two other UK defined benefit plans, which are closed to future accrual, the abrdn ROI plan, which has fewer than 10 employees accruing future benefits, and a number of smaller funded and unfunded defined benefit plans in other countries.

For the UK plans, the trustees set the plan investment strategies to protect the ratio of plan assets to the trustees' measure of the value of assets needed to meet the trustees' objectives. The investment strategies do not aim to protect an IAS 19 surplus or ratio of plan assets to the IAS 19 measure of liabilities.

(a)      Analysis of amounts recognised in the condensed consolidated income statement

The amounts recognised in the condensed consolidated income statement for defined contribution and defined benefit plans are as follows:

	6 months 2023	6 months 2022	Full Year  2022
	£m	£m	£m
Current service cost	28	26	56
Past service cost	(5)	-	-
Net interest income	(18)	(16)	(32)
Administrative expenses	2	2	3
Expense recognised in the condensed consolidated income statement	7	12	27

In addition, for the six months ended 30 June 2023, losses of £81m (six months ended 30 June 2022: losses of £386m, 12 months ended 31 December 2022: losses of £793m) have been recognised in other comprehensive income in the condensed consolidated statement of comprehensive income in relation to remeasurement of the defined benefit plans.

(b)      Analysis of amounts recognised in the condensed consolidated statement of financial position

Pension and other post-retirement benefit assets at 30 June 2023 of £772m (30 June 2022: £1,221m, 31 December 2022: £831m) includes the following amounts in relation to the principal plan:

	6 months 2023	6 months 2022	Full Year  2022
	£m	£m	£m
Present value of funded obligation	(1,664)	(1,932)	(1,755)
Fair value of plan assets	2,819	3,763	3,001
Net asset before the limit on plan surplus	1,155	1,831	1,246
Effect of limit on plan surplus1	(404)	(641)	(436)
Net asset	751	1,190	810

1. UK recoverable surpluses are reduced to reflect an authorised surplus payments charge of 35% that would arise on a refund.

A pension plan surplus is considered to be recoverable where an unconditional right to a refund exists. The principal plan surplus had reduced significantly in 2022 due to market movements, primarily driven by the increase in UK high quality bond yields with a smaller impact from UK inflation changes during 2022. There was further impact from these in the six months ended 30 June 2023 but this was less significant.

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.

(c)      Principal assumptions

Determination of the valuation of principal plan liabilities is a key estimate as a result of the assumptions made relating to both economic and non-economic factors.

The key economic assumptions for the principal plan, which are based in part on current market conditions, are shown below:

	30 Jun 2023	30 Jun 2022	31 Dec  2022
	%	%	%
Discount rate	5.25	4.00	4.85
Rates of inflation
Consumer Price Index (CPI)	2.80	2.60	2.75
Retail Price Index (RPI)	3.15	3.00	3.10

The changes in economic assumptions over the period reflect changes in both corporate bond prices and market implied inflation. The population of corporate bond prices excludes bonds issued by UK universities. The inflation assumption reflects the future reform of RPI effective from 2030. 

4.17  Provisions

	30 Jun 2023	30 Jun 2022	31 Dec  2022
	£m	£m	£m
Provisions
Separation costs	32	34	33
Process execution	-	-	41
Other provisions	26	18	23
Total provisions	58	52	97

The process execution provision recognised at 31 December 2022 for £41m in respect of a payment required to compensate an asset management client relating to the provision of certain services has been fully utilised in the six months ended 30 June 2023 to fully settle the compensation.

Following the settlement, the Group has agreed a recovery of £36m from its liability insurance, being the cost of the compensation net of a £5m excess of which £25m had been received by 30 June 2023 with a reimbursement asset of £11m recognised within Receivables and other financial assets in the condensed consolidated statement of financial position. The recovery has been credited against Other administrative expenses in the condensed consolidated income statement.

4.18  Fair value of assets and liabilities

(a)      Fair value hierarchy

In determining fair value, the following fair value hierarchy categorisation has been used:

·   Level 1: Fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities. An active market exists where transactions take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

·   Level 2: Fair values measured using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

·   Level 3: Fair values measured using inputs that are not based on observable market data (unobservable inputs).

Information on the methods and assumptions used to determine fair values for equity securities and interests in pooled investment funds, debt securities and derivatives measured at fair value is given below:

	Equities and interests in pooled investment funds1,2	Debt securities	Derivatives3
Level 1	Equity instruments listed on a recognised exchange valued using prices sourced from their primary exchange.	Debt securities listed on a recognised exchange valued using prices sourced from their primary exchange.	Exchange traded derivatives valued using prices sourced from the relevant exchange.
Level 2	Pooled investment funds where daily unit prices are available and reference is made to observable market data.	Debt securities valued using prices received from external pricing providers based on quotes received from a number of market participants. Debt securities valued using models and standard valuation formulas based on observable market data4.	Over-the-counter derivatives measured using a range of valuation models including discounting future cash flows and option valuation techniques.
Level 3	These relate primarily to interests in private equity, real estate and infrastructure funds which are valued at net asset value. Underlying real estate and private equity investments are generally valued in accordance with independent professional valuation reports or International Private Equity and Venture Capital Valuation Guidelines where relevant. The underlying investments in infrastructure funds are generally valued based on the phase of individual projects forming the overall investment and discounted cash flow techniques based on project earnings. Where net asset values are not available at the same date as the reporting date, these valuations are reviewed and, where appropriate, adjustments are made to reflect the impact of changes in market conditions between the date of the valuation and the end of the reporting period. Other unlisted equity securities are generally valued at indicative share prices from off market transactions.	Debt securities valued using prices received from external pricing providers based on a single broker indicative quote. Debt securities valued using models and standard valuation formulas based on unobservable market data4.	N/A

1. Investments in associates at fair value through profit or loss are valued in the same manner as the Group's equity securities and interests in pooled investment funds.

2. Where pooled investment funds have been seeded and the investment in the funds have been classified as held for sale, the costs to sell are assumed to be negligible. The fair value of pooled investment funds held for sale is calculated as equal to the observable unit price.

3. Non-performance risk arising from the credit risk of each counterparty is also considered on a net exposure basis in line with the Group's risk management policies. At 30 June 2023, 30 June 2022 and 31 December 2022, the residual credit risk is considered immaterial and no credit risk adjustment has been made.

4. If prices are not available from the external pricing providers or are considered to be stale, the Group has established procedures to arrive at an internal assessment of the fair value.

The fair value of liabilities in respect of third party interest in consolidated funds and non-participating investment contracts are calculated equal to the fair value of the underlying assets and liabilities.

Thus, the value of these liabilities is dependent on the methods and assumptions set out above in relation to the underlying assets and liabilities:

·   For third party interest in consolidated funds, when the underlying assets and liabilities are valued using readily available market information the liabilities in respect of third party interest in consolidated funds are treated as level 2. Where the underlying assets and liabilities are not valued using readily available market information the liabilities in respect of third party interest in consolidated funds are treated as level 3.

·   For non-participating investment contracts, the underlying assets and liabilities are predominately categorised as level 1 or 2 and as such, the inputs into the valuation of the liabilities are observable and these liabilities are predominately categorised within level 2 of the fair value hierarchy. Where the underlying assets are categorised as level 3, the liabilities are also categorised as level 3.

In addition, contingent consideration assets and contingent consideration liabilities are also categorised as level 3 in the fair value hierarchy. Contingent consideration assets and liabilities have been recognised in respect of acquisitions and disposals. Generally valuations are based on unobservable assumptions regarding the probability weighted cash flows and, where relevant, discount rate.

(b)      Fair value hierarchy for assets and liabilities measured at fair value other than assets backing unit linked liabilities and unit linked liabilities

(b)(i)   Fair value hierarchy for assets measured at fair value in the statement of financial position other than assets backing unit linked liabilities

The table below presents the Group's non-unit linked assets measured at fair value by level of the fair value hierarchy (refer Section 4.18(c) for fair value analysis in relation to assets backing unit linked liabilities).

					Fair value hierarchy
	Total				Level 1			Level 2			Level 3
	30 Jun 2023	30 Jun 2022		31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022
	£m	£m		£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Derivative financial assets	78	70		104	-	2	3	78	68	101	-	-	-
Equity securities and interests in pooled investment vehicles1	1,167	2,513		2,033	808	2,057	1,621	128	340	181	231	116	231
Debt securities2	734	218		592	2	1	2	731	216	588	1	1	2
Financial investments	1,979	2,801		2,729	810	2,060	1,626	937	624	870	232	117	233
Owner occupied property3	1	1		1	-	-	-	-	-	-	1	1	1
Contingent consideration assets4	24	35		19	-	-	-	-	-	-	24	35	19
Total assets at fair value	2,004	2,837		2,749	810	2,060	1,626	937	624	870	257	153	253

1. Includes £554m (30 June 2022: £615m, 31 December 2022: £634m) for the Group's listed equity investment in Phoenix which is classified as a significant listed investment. The Group's listed equity investments in HDFC Asset Management and HDFC Life which were also classified as significant listed investments were sold in the six months ended 30 June 2023 (HDFC Asset Management: 30 June 2022: £646m, 31 December 2022: £477m, HDFC Life: 30 June 2022: £451m, 31 December 2022: £203m).

2. Excludes debt securities measured at amortised cost of £101m (30 June 2022: £139m, 31 December 2022: £210m) - refer Section 4.18(d).

3. Presented in Property, plant and equipment in the condensed consolidated statement of financial position.

4. Presented in Receivables and other financial assets in the condensed consolidated statement of financial position.

There were no significant transfers between level 1 and level 2 during the period ended 30 June 2023 (30 June 2022: none, 31 December 2022: none). Transfers are deemed to have occurred at the end of the calendar quarter in which they arose.

Refer Section 4.18(b)(iii) below for details of movements in level 3.

(b)(ii)  Fair value hierarchy for liabilities measured at fair value in the statement of financial position other than unit linked liabilities

The table below presents the Group's non-unit linked liabilities measured at fair value by level of the fair value hierarchy.

				Fair value hierarchy
	Total			Level 1			Level 2			Level 3
	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Liabilities in respect of third party interest in consolidated funds1	212	130	242	-	-	-	141	130	168	71	-	74
Derivative financial liabilities	2	17	1	1	-	-	1	17	1	-	-	-
Contingent consideration liabilities2	129	163	132	-	-	-	-	-	-	129	163	132
Other financial liabilities3	16	-	11	-	-	-	-	-	-	16	-	11
Total liabilities at fair value	359	310	386	1	-	-	142	147	169	216	163	217

1. Liabilities in respect of third party interest in consolidated funds at 31 December 2022 were previously all disclosed as Level 2 (£242m). £74m of the liability at this date has been represented in the table above as Level 3 to be consistent with the categorisation of the underlying assets.

2. Presented in Other financial liabilities in the condensed consolidated statement of financial position.

3. Excluding contingent consideration liabilities.

There were no significant transfers between levels 1 and 2 during the period (30 June 2022: none, 31 December 2022: none). Refer Section 4.18(b)(iii) below for details of movements in level 3.

(b)(iii)    Reconciliation of movements in level 3 instruments

The movements during the period of level 3 assets and liabilities held at fair value, excluding unit linked assets and liabilities and assets and liabilities held for sale, are analysed below.

	Owner occupied property			Equity securities and interests in pooled investment funds			Debt securities			Liabilities in respect of third party interest in consolidated funds
	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At start of period	1	1	1	231	106	106	2	1	1	(74)	-	-
Total gains/(losses) recognised in the condensed consolidated income statement	-	-	-	1	4	2	-	-	(2)	-	-	-
Purchases	-	-	-	7	17	139	-	-	3	-	-	(70)
Sales and other adjustments	-	-	-	(2)	(16)	(16)	(1)	-	-	3	-	(4)
Foreign exchange adjustment	-	-	-	(6)	5	-	-	-	-	-	-	-
At end of period	1	1	1	231	116	231	1	1	2	(71)	-	(74)

	Contingent consideration assets			Contingent consideration liabilities			Other financial liabilities1
	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022
	£m	£m	£m	£m	£m	£m	£m	£m	£m
At start of period	19	31	31	(132)	(165)	(165)	(11)	-	-
Total amounts recognised in the condensed consolidated income statement	7	2	3	(2)	4	32	(5)	-	(11)
Additions	-	1	1	-	(6)	(6)	-	-	-
Settlements	(2)	-	(18)	4	4	7	-	-	-
Other movements	-	1	2	1	-	-	-	-	-
At end of period	24	35	19	(129)	(163)	(132)	(16)	-	(11)

1. Excluding contingent consideration liabilities.

For the six months ended 30 June 2023, gains of £1m (30 June 2022: gains of £10m, 31 December 2022: gains of £24m) were recognised in the condensed consolidated income statement in respect of non-unit linked assets and liabilities held at fair value classified as level 3 at the period end, excluding assets and liabilities held for sale. All gains were recognised in net gains or losses on financial instruments and other income.

Transfers of equity securities and interests in pooled investment funds and debt securities into level 3 generally arise when external pricing providers stop providing a price or where the price provided is considered stale. Transfers of equity securities and interests in pooled investment funds and debt securities out of level 3 arise when acceptable prices become available from external pricing providers.

(b)(iv)   Significant unobservable inputs in level 3 instrument valuations

The table below identifies the significant unobservable inputs in relation to equity securities and interests in pooled investment funds categorised as level 3 instruments at 30 June 2023 with a fair value of £231m (30 June 2022: £116m, 31 December 2022: £231m).

	Fair value
	30 Jun 2023 £m	30 Jun 2022 £m	31 Dec 2022 £m	Valuation technique	Unobservable input	Range (weighted average)
Private equity, real estate and infrastructure funds	219	104	219	Net asset value	Net asset value statements provided for seven significant funds (fair value >£5m) and a large number of smaller funds	A range of unobservable inputs is not applicable as we have determined that the reported NAV represents fair value at the end of the reporting period
Other unlisted equity securities	12	12	12	Indicative share price	Recent off market capital raising transactions	A range of unobservable inputs is not applicable as we have determined that the indicative share price from off market transactions represents fair value at the end of the reporting period

The table below identifies the significant unobservable inputs in relation to contingent consideration assets and liabilities and other financial instrument liabilities categorised as level 3 instruments at 30 June 2023 with a fair value of (£121m) (30 June 2022: (£128m), 31 December 2022: (£124m)).

	Fair value
	30 Jun 2023 £m	30 Jun 2022 £m	31 Dec 2022 £m	Valuation technique	Unobservable input	Range (weighted average)
Contingent consideration assets and liabilities and other financial instrument liabilities	(121)	(128)	(124)	Probability weighted cash flow and where applicable discount rates	Unobservable inputs relate to probability weighted cash flows and, where relevant, discount rates. The most significant unobservable inputs relate to assumptions used to value the contingent consideration liability related to the acquisition of Tritax of £109m (30 June 2022: £148m, 31 December 2022: £112m). For Tritax a number of scenarios were prepared, around a base case, with probabilities assigned to each scenario (based on an assessment of the likelihood of each scenario). The value of the contingent consideration was determined for each scenario, and these were then probability weighted, with this probability weighted valuation then discounted from the payment date to the balance sheet date. It was assumed that the timing of the exercise of the earn out put options between 2024, 2025 and 2026 would be that which is most beneficial to the holders of the put options.	The base scenario for Tritax contingent consideration used a revenue compound annual growth rate (CAGR) from 31 March 2022 to 31 March 2026 of 14% (30 June 2022: CAGR from 31 March 2021 to 31 March 2026 of 21% and 31 December 2022: CAGR from 31 March 2022 to 31 March 2026 of 14%) with other scenarios using a range of revenue growth rates around this base. The base scenario used a cost/income ratio of c52% (30 June 2022: c50% and 31 December 2022: c52%) with other scenarios using a range of cost/income ratios around this base. The risk adjusted contingent consideration cash flows have been discounted using a primary discount rate of 5% (30 June 2022: 3.1% and 31 December 2022: 4.5%).

(b)(v)    Sensitivity of the fair value of level 3 instruments to changes in key assumptions

At 30 June 2023, the shareholder is directly exposed to movements in the value of all non-unit linked level 3 instruments. No level 3 instruments are held in consolidated structured entities. Refer Section 4.18(c) for unit linked level 3 instruments.

Sensitivities for material level 3 assets and liabilities are provided below. Changing unobservable inputs in the measurement of the fair value of the other level 3 financial assets and financial liabilities to reasonably possible alternative assumptions would not have a significant impact on profit attributable to equity holders or on total assets.

(b)(v)(i) Equity securities and interests in pooled investment funds

As noted above, of the level 3 equity securities and interests in pooled investment funds, £219m relates to private equity, real estate and infrastructure funds (30 June 2022: £104m, 31 December 2022: £219m) which are valued using net asset value statements. A 10% increase or decrease in the net asset value of these investments would increase or decrease the fair value of the investments by £22m.

(b)(v)(ii) Contingent consideration assets and liabilities and other financial instrument liabilities

As noted above, the most significant unobservable inputs for level 3 instruments relate to assumptions used to value the contingent consideration related to the purchase of Tritax. Sensitivities for reasonably possible changes to key assumptions are provided in the table below.

Assumption	Change in assumption	Consequential increase/(decrease) in contingent consideration liability
		30 Jun 2023 £m
Revenue compound annual growth rate (CAGR) from 31 March 2022 to 31 March 2026	Decreased by 10%	(41)
	Increased by 10%	38
Cost/income ratio	Decreased by 5%	12
	Increased by 5%	(13)
Discount rate	Decreased by 2%	6
	Increased by 2%	(5)

(c)      Fair value hierarchy for assets backing unit linked liabilities and unit linked liabilities measured at fair value

The table below presents the Group's assets backing unit linked liabilities and unit linked liabilities measured at fair value by level of the fair value hierarchy.

	Total			Fair value hierarchy
				Level 1			Level 2			Level 3
	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Financial investments	873	1,114	924	590	844	601	283	269	322	-	1	1
Total assets at fair value backing unit linked liabilities	873	1,114	924	590	844	601	283	269	322	-	1	1
Investment contract liabilities	724	890	773	-	-	-	724	889	772	-	1	1
Third party interest in consolidated funds	165	256	173	-	-	-	165	256	173	-	-	-
Other unit linked liabilities1	1	5	2	-	-	-	1	5	2	-	-	-
Total unit linked liabilities at fair value	890	1,151	948	-	-	-	890	1,150	947	-	1	1

1. Excludes other unit linked liabilities not measured at fair value of £4m (30 June 2022: £5m, 31 December 2022: £4m).

The financial investments backing unit linked liabilities comprise equity securities and interests in pooled investment funds of £764m (30 June 2022: £977m, 31 December 2022: £811m), debt securities of £107m (30 June 2022: £135m, 31 December 2022: £112m) and derivative financial assets of £2m (30 June 2022: £2m, 31 December 2022: £1m).

There were no significant transfers from level 1 to level 2 during the six months ended 30 June 2023 (six months ended 30 June 2022: none). There were transfers from level 1 to level 2 of £52m during the 12 months ended 31 December 2022. The Group now considers government bonds not issued by the G7 countries or the European Union as level 2. There were no significant transfers from level 2 to level 1 during the six months ended 30 June 2023 (six months ended 30 June 2022: none, 12 months ended 31 December 2022: none).

The movements during the period of level 3 unit linked assets and liabilities held at fair value are analysed below.

	Equity securities and interests in pooled investment funds				Investment contract liabilities
	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023		30 Jun 2022	31 Dec  2022
	£m	£m	£m	£m		£m	£m
At start of period	1	1	1	(1)		(1)	(1)
Sales	(1)	-	-	1		-	-
At end of period	-	1	1	-		(1)	(1)

Unit linked level 3 assets related to holdings in real estate funds.

(d)      Assets and liabilities not carried at fair value

The table below presents estimated fair values of non-unit linked financial assets and liabilities whose carrying value does not approximate fair value. Fair values of assets and liabilities are based on observable market inputs where available, or are estimated using other valuation techniques.

	As recognised in condensed consolidated statement of financial position line item			Fair value
	30 Jun 2023	30 Jun 2022	31 Dec  2022	30 Jun 2023	30 Jun 2022	31 Dec  2022
	£m	£m	£m	£m	£m	£m
Assets
Debt securities	101	139	210	101	140	211
Liabilities
Subordinated liabilities	588	707	621	515	671	550

The estimated fair values for subordinated liabilities are based on the quoted market offer price. The carrying value of all other financial assets and liabilities measured at amortised cost approximates their fair value.

4.19  Contingent liabilities and contingent assets

Legal proceedings, complaints and regulations

The Group is subject to regulation in all of the territories in which it operates investment management and insurance businesses. In the UK, where the Group primarily operates, the FCA has broad powers, including powers to investigate marketing and sales practices.

The Group, like other financial organisations, is subject to legal proceedings, complaints and regulatory discussions, reviews and challenges in the normal course of its business. All such material matters are periodically reassessed, with the assistance of external professional advisers where appropriate, to determine the likelihood of the Group incurring a liability. Where it is concluded that it is more likely than not that a material outflow will be made a provision is established based on management's best estimate of the amount that will be payable. At 30 June 2023, there are no identified contingent liabilities expected to lead to a material exposure.

4.20  Commitments

(a)      Unrecognised financial instruments

As at 30 June 2023, the Group has committed to investing an additional £74m (30 June 2022: £112m, 31 December 2022: £72m) into funds in which it holds a co-investment interest.

(b)      Capital and other commitments

As at 30 June 2023, the Group has no capital commitments other than in relation to financial instruments (30 June 2022: £nil, 31 December 2022: £2m).

In addition, the Group has commitments relating to future acquisitions.

·    In June 2023, the Group announced the proposed acquisition of the healthcare fund management capabilities of Tekla Capital Management, including the closed-end funds they currently advise, through an asset purchase agreement for a total consideration of up to US$160m (initial consideration of US$140m and contingent consideration of up to US$20m if revenues exceed an agreed hurdle level above current revenues). The acquisition is expected to complete in H2 2023, following satisfaction of certain conditions.

·    In February 2021, the Group announced the purchase of certain products in the Phoenix Group's savings business offered through abrdn's Wrap platform, comprising a self-invested pension plan (SIPP) and an onshore bond product; together with the Phoenix Group's trustee investment plan (TIP) business for UK pension scheme clients. The transaction is not expected to fully complete before 2025 and is subject to regulatory and court approvals. The upfront consideration paid by the Group in February 2021 was £62.5m, which is offset in part by payments from Phoenix to the Group relating to profits of the products prior to completion of the legal transfer. The net amount of consideration paid is included in prepayments in the condensed consolidated statement of financial position with cash movements in relation to the consideration included in prepayment in respect of potential acquisition of customer contracts in the condensed consolidated statement of cash flows.

4.21  Related party transactions

In the normal course of business, the Group enters into transactions with related parties that relate to investment management and insurance businesses. There have been no changes in the nature of these transactions during the period to those reported in the Annual report and accounts for the year ended 31 December 2022.

During the six months ended 30 June 2023, there were no sales to associates accounted for using the equity method (six months ended 30 June 2022: £nil, 12 months ended 31 December 2022: £nil) and no purchases in relation to services received (six months ended 30 June 2022: £nil, 12 months ended 31 December 2022: £nil). During this period, the Group contributed capital of £2m to an associate (six months ended 30 June 2022: £nil, 12 months ended 31 December 2022: £3m). At 30 June 2023, there were no outstanding commitments to make capital contributions to associates accounted for using the equity method (30 June 2022: £nil, 31 December 2022: £2m).

During the six months ended 30 June 2023, there were sales to joint ventures accounted for using the equity method of £2m, (six months ended 30 June 2022: £2m, 12 months ended 31 December 2022: £4m). There were no purchases from joint ventures (six months ended 30 June 2022: £nil, 12 months ended 31 December 2022: £nil). During this period, the Group made no capital contributions to joint ventures accounted for using the equity method (six months ended 30 June 2022: £2m, 12 months ended 31 December 2022: £2m). At 30 June 2023, there were no outstanding commitments to make capital contributions to joint ventures accounted for using the equity method (30 June 2022: £nil, 31 December 2022: £nil).

4.22  Events after the reporting period

On 20 July 2023, the Group agreed the sale of US Private Equity and Venture Capital capabilities to HighVista Strategies. The Group's US Private Equity and Venture Capital capabilities are currently within our Investments segment. The sale is expected to complete in H2 2023, following satisfaction of certain conditions. The sale involves the transfer of approximately US$4bn in assets under management (as at 31 December 2022) and approximately 30 employees. The sale is expected to result in an IFRS profit on disposal of subsidiaries and other operations of approximately £17m.

 

END