Half-year Report - Part 3 of 3

RNS Number : 3261V

abrdn PLC

09 August 2022

 

abrdn plc

Half year results 2022

Part 3 of 3

9 August 2022

5. Supplementary information

5.1    Alternative performance measures   APM

We assess our performance using a variety of measures that are not defined under IFRS and are therefore termed alternative performance measures (APMs). The APMs that we use may not be directly comparable with similarly named measures used by other companies. We have presented below reconciliations from these APMs to the most appropriate measure prepared in accordance with IFRS. All APMs should be read together with the condensed consolidated income statement, condensed consolidated statement of financial position and condensed consolidated statement of cash flows, which are presented in the Financial information section of this report and related metrics. Adjusted operating profit excludes certain items which are likely to be recurring such as restructuring costs, amortisation of certain intangibles, dividends from significant listed investments and the share of profit or loss from joint ventures.

Definition			Purpose
Adjusted operating profit  APM
A d justed operating profit before tax is the Group's key APM. Adjusted operating profit includes the results of the Group's three growth vectors: Investments, Adviser and Personal, along with Corporate/strategic. It excludes the Group's adjusted net financing costs and investment return, and discontinued operations. Adjusted operating profit also 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. · Share of profit or loss from associates and joint ventures. · Impairment loss/reversal of impairment loss recognised on investments in associates and joint ventures accounted for using the equity method. · Fair value movements in contingent consideration. · Items which are one-off and, due to their size or nature, are not indicative of the long-term operating performance of the Group. Further details are included in Note 4.9 of the Financial information section.			Adjusted operating profit has replaced adjusted profit before tax as the Group's key APM. Adjusted operating profit reporting provides further analysis of the results reported under IFRS and the Directors believe it helps to give shareholders a fuller understanding of the performance of the business by identifying and analysing adjusting items. Segment reporting used in management information is reported to the level of adjusted operating profit.
Fee based revenue  APM
Fee based revenue includes revenue we generate from asset management charges (AMCs), platform charges, treasury income and other transactional charges. AMCs are earned on products such as mutual funds, and are calculated as a percentage fee based on the assets held. Investment risk on these products rests principally with the client, with our major indirect exposure to rising or falling markets coming from higher or lower AMCs. Fee based revenue is shown net of costs of sale, such as commissions and similar charges.			Fee based revenue is a component of adjusted operating profit and provides the basis for reporting of the fee revenue yield financial ratio. Fee based revenue is also used to calculate the cost/income ratio.
Adjusted operating expenses  APM
Adjusted operating expenses is a component of adjusted operating profit and relates to the day-to-day expenses of managing our business. Adjusted operating expenses excludes restructuring and corporate transaction expenses. Adjusted operating expenses also excludes amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts.			Adjusted operating expenses is a component of adjusted operating profit and is used to calculate the cost/income ratio.
Adjusted profit before tax  APM
In addition to the results included in adjusted operating profit above, adjusted profit before tax includes adjusted net financing costs and investment return.			Adjusted profit before tax is a key input to the adjusted earnings per share measure.
Adjusted net financing costs and investment return  APM
Adjusted net financing costs and investment return relates to the return from the net assets of the shareholder business, net of costs of financing. This includes the net assets in defined benefit staff pension plans and net assets relating to the financing of subordinated liabilities.			Adjusted net financing costs and investment return is a component of adjusted profit before tax.
Cost/income ratio  APM
This is an efficiency measure that is calculated as adjusted operating expenses divided by fee based revenue in the period.			This ratio is used by management to assess efficiency and reported to the Board and executive leadership team.
Fee revenue yield (bps)  APM
The fee revenue yield is calculated as annualised fee based revenue (excluding performance fees, interactive investor and revenue for which there are no attributable assets) divided by monthly average fee based assets. interactive investor is excluded from the calculation of Personal and total fee revenue yield as fees charged for this business are primarily from subscriptions and trading transactions.			The average revenue yield on fee based business is a measure that illustrates the average margin being earned on the assets that we manage, administer or advise our clients on excluding interactive investor.
Adjusted diluted earnings per share  APM
Adjusted diluted earnings per share is calculated on adjusted profit after tax. The weighted average number of ordinary shares in issue is adjusted during the period to assume the conversion of all dilutive potential ordinary shares, such as share options granted to employees. Details on the calculation of adjusted diluted earnings per share are set out in Note 4.8 of the Financial information section.			Earnings per share is a commonly used financial metric which can be used to measure the profitability and capital efficiency of a company over time. We also calculate adjusted diluted earnings per share to illustrate the impact of adjusting items on the metric. This ratio is used by management to assess performance and reported to the Board and executive leadership team.
Adjusted capital generation  APM
Adjusted capital generation is part of the analysis of movements in IFPR regulatory capital. Adjusted capital generation is calculated as adjusted profit after tax less returns relating to pension schemes in surplus and interest paid on other equity, which do not benefit regulatory capital. It also includes dividends from associates, joint ventures and significant listed investments.			This measure aims to show how adjusted profit contributes to regulatory capital, and therefore provides insight into our ability to generate capital that is deployed to support value for shareholders.
Adjusted diluted capital generation per share  APM
Adjusted diluted capital generation per share is calculated as adjusted capital generation divided by the weighted average number of diluted ordinary shares outstanding.			This ratio is a measure used to assess performance for remuneration purposes.
Cash and liquid resources  APM
Cash and liquid resources are IFRS cash and cash equivalents (netted down for overdrafts), money market instruments and holdings in money market funds. It also includes surplus cash that has been invested in liquid assets such as high quality corporate bonds, gilts and pooled investment funds. Seed capital and co-investments are excluded.			The purpose of this measure is to demonstrate how much cash and invested assets we hold and can be readily accessed.

5.1.1  Adjusted operating profit and adjusted profit

Reconciliation of adjusted operating profit and adjusted profit to IFRS profit by component

The key components of adjusted operating profit are fee based revenue and adjusted operating expenses. These components provide a meaningful analysis of our adjusted results. The table below provides a reconciliation of movements between adjusted operating profit component measures and relevant IFRS terms. A reconciliation of Fee based revenue to the IFRS item Revenue from contracts with customers is provided in Note 4.4 of the Financial information section.

IFRS term	IFRS	Presentation differences	Adjusting items	Adjusted profit		Adjusted profit term
H1 2022	£m	£m	£m	£m
Net operating revenue	696	-	-	696		Fee based revenue
Total administrative and other expenses	(706)	(22)	147	(581)		Adjusted operating expenses1
	(10)	(22)	147	115		Adjusted operating profit
Net gains or losses on financial instruments and other income	(298)	8	274	(16)		Adjusted net financing costs and investment return
Finance costs	(15)	14	1	-		N/A
Profit on disposal of interests in associates	6	-	(6)	-		N/A
Share of profit or loss from associates and joint ventures	6	-	(6)	-		N/A
Impairment of interests in associates	(9)	-	9	-		N/A
Loss before tax	(320)	-	419	99		Adjusted profit before tax
Total tax expense	31	-	(44)	(13)		Tax on adjusted profit
Loss for the period	(289)	-	375	86		Adjusted profit after tax

1. Adjusted operating expenses includes staff and other related costs of £303m compared with IFRS staff costs and other employee-related costs of £266m. The difference primarily relates to the inclusion of contractor, temporary agency staff and recruitment and training costs of £14m (IFRS basis: Reported within other administrative expenses) and losses on funds to hedge deferred bonus awards of £8m (IFRS basis: Reported within other net gains on financial instruments and other income) within staff and other related costs. IFRS staff costs and other employee-related costs includes the benefit from the net interest credit relating to the staff pension schemes of £15m (Adjusted profit basis: Reported within adjusted net financing costs and investment return).

IFRS term	IFRS	Presentation differences	Adjusting items	Adjusted  profit		Adjusted profit term
H1 2021	£m	£m	£m	£m
Net operating revenue	777	3	(25)	755		Fee based revenue
Total administrative and other expenses	(759)	(7)	171	(595)		Adjusted operating expenses
	18	(4)	146	160		Adjusted operating profit
Net gains or losses on financial instruments and other income	(9)	(11)	23	3		Adjusted net financing costs and investment return
Finance costs	(15)	15	-	-		N/A
Profit on disposal of subsidiaries and other operations	84	-	(84)	-		N/A
Profit on disposal of interests in associates	68	-	(68)	-		N/A
Share of profit or loss from associates and joint ventures	(33)	-	33	-		N/A
Profit before tax	113	-	50	163		Adjusted profit before tax
Total tax expense	(11)	-	(2)	(13)		Tax on adjusted profit
Profit for the period	102	-	48	150		Adjusted profit after tax

Presentation differences primarily relate to amounts presented in a different line item of the consolidated income statement.

5.1.2  Cost/income ratio

	H1 2022	H1 2021
Adjusted operating expenses (£m)	(581)	(595)
Fee based revenue (£m)	696	755
Cost/income ratio (%)	83	79

5.1.3  Fee revenue yield (bps)

	Average AUMA (£bn)			Fee based revenue (£m)			Fee revenue yield (bps)
	H1 2022	H1 2021		H1 2022	H1 2021		H1 2022	H1 2021
Institutional and Wholesale1	239.4	249.4		446	490		37.1	39.4
Insurance	184.3	202.0		90	101		9.9	10.1
Investments1	423.7	451.4		536	591		25.3	26.3
Adviser	72.3	69.0		92	87		25.5	25.3
Personal Wealth1	13.8	13.7		45	41		60.0	55.9
Parmenion2	-	7.2		-	14		-	38.1
Eliminations	(11.8)	(10.9)		N/A	N/A		N/A	N/A
Fee revenue yield1	498.0	530.4		673	733		26.9	27.6
interactive investor3				13	-
Performance fees				10	22
Fee based revenue				696	755

Analysis of Institutional and Wholesale by asset class¹

	Average AUM (£bn)			Fee based revenue (£m)			Fee revenue yield (bps)
	H1 2022	H1 2021		H1 2022	H1 2021		H1 2022	H1 2021
Equities	60.7	69.7		193	225		64.0	64.8
Fixed income	43.4	47.4		60	67		27.9	28.7
Multi-asset	33.4	34.4		52	58		31.5	34.1
Private equity	12.3	11.0		25	31		40.5	56.1
Real assets	40.9	34.2		89	82		44.0	48.5
Alternatives	21.9	20.0		14	12		12.9	12.6
Quantitative	6.2	6.0		2	2		6.5	6.5
Liquidity	20.6	26.7		6	10		6.0	7.8
Institutional and Wholesale	239.4	249.4		441	487		37.1	39.4

1. Institutional and Wholesale fee revenue yield excludes revenue of £5m (H1 2021: £3m) and Personal Wealth fee revenue yield excludes revenue of £4m (H1 2021: £3m) for which there are no attributable assets.

2. Parmenion is included in the Corporate/strategic vector. The sale of Parmenion completed on 30 June 2021 and the fee revenue yield reflects the position as at the date of disposal.

3. interactive investor is excluded from the calculation of Personal and total fee revenue yield as fees charged for this business are primarily from subscriptions and trading transactions.

5.1.4  Additional ii information

The results for ii are included in the Group's results following the completion of the acquisition on 27 May 2022. The adjusted operating profit for ii for the one month to 30 June 2022 of £6m is included in our overall H1 2022 adjusted operating profit of £115m.

The tables below provides detail of the performance of ii for the full six months ended 30 June 2022 and the full 12 months ended 31 December 2021 to provide a fuller understanding of the performance of this business. Adjusted operating profit has also been presented excluding losses relating to Share Limited to provide a more meaningful comparison to the go-forward position.

Analysis of ii profit	H1 2022 6 months £m	FY 2021 12 months £m Excl Share1	FY 2021 12 months £m Incl Share1
Fee based revenue	75	128	135
Adjusted operating expenses	(42)	(83)	(99)
Adjusted operating profit	33	45	36

The FY 2021 adjusted operating profit of £36m included losses relating to Share Limited of £9m while part of this business was wound down. Excluding losses from Share Limited, the FY 2021 adjusted operating profit was £45m. The H1 2022 impact was £nil.

Analysis of ii fee based revenue	H1 2022 6 months £m	FY 2021 12 months £m Excl Share1	FY 2021 12 months £m Incl Share1
Trading transactions	34	79	84
Account fees (subscription based revenue)	27	48	50
Treasury income	17	9	9
Less: Cost of sales	(3)	(8)	(8)
Fee based revenue	75	128	135

1. Losses were incurred in Share Limited and its subsidiaries (Share) as part of this business was wound down.

5.1.5  Adjusted capital generation

The table below provides a reconciliation of movements between adjusted profit after tax and adjusted capital generation. A reconciliation of adjusted profit after tax to IFRS profit/loss for the period is included earlier in this section.

	H1 2022	H1 2021
	£m	£m
Adjusted profit after tax	86	150
Less net interest credit relating to the staff pension schemes	(15)	(9)
Less interest paid on other equity	(6)	-
Add dividends received from associates, joint ventures and significant listed investments	42	35
Adjusted capital generation	107	176

Net interest credit relating to the staff pension schemes

The net interest credit relating to the staff pension schemes is the contribution to adjusted profit before tax from defined benefit pension schemes which are in surplus.

Dividends received from associates, joint ventures and significant listed investments

An analysis is provided below:

	H1 2022	H1 2021
	£m	£m
Phoenix	26	35
HDFC Life	1	-
HDFC Asset Management	15	-
Dividends received from associates, joint ventures and significant listed investme nts	42	35

The table below provides detail of dividend coverage on an adjusted capital generation basis.

	H1 2022	H1 2021
Adjusted capital generation (£m)	107	176
Interim dividend (£m)	153	154
Dividend cover on an adjusted capital generation basis (times)	0.70	1.14

5.1.6  Adjusted diluted capital generation per share

A reconciliation of adjusted capital generation to adjusted profit after tax is included in 5.1.5 above.

	H1 2022	H1 2021
Adjusted capital generation (£m)	107	176
Weighted average number of diluted ordinary shares outstanding (millions) - Note 4.8	2,1301	2,156
Adjusted diluted capital generation per share (pence)	5.0	8.2

1. In accordance with IAS 33, no share options and awards have been treated as dilutive for the six months ended 30 June 2022 due to the loss attributable to equity holders of abrdn plc in that period. See Note 4.8 for further details.

5.1.7  Cash and liquid resources

The table below provides a reconciliation between IFRS cash and cash equivalents and cash and liquid resources. Seed capital and co-investments are excluded.

	H1 2022	FY 2021
	£bn	£bn
Cash and cash equivalents per the condensed consolidated statement of financial position	1.4	1.9
Bank overdrafts	(0.1)	(0.1)
Debt securities excluding third party interests2	0.3	1.1
Corporate funds held in absolute return funds	0.2	0.2
Other3	(0.1)	-
Cash and liquid resources	1.7	3.1

2. Excludes £71m (FY 2021: £76m) relating to seeding.

3. Cash collateral, cash held for charitable funds and cash held in employee benefit trusts are excluded from cash and liquid resources.

5.2    Investment performance

Definition			Purpose
Investment performance
Investment performance has been aggregated using a money weighted average of our assets under management which are outperforming their respective benchmark. Calculations for investment performance are made gross of fees with the exception of those for which the stated comparator is net of fees. Benchmarks differ by fund and are defined in the relevant investment management agreement or prospectus, as appropriate. The investment performance calculation covers all funds that aim to outperform a benchmark, with certain assets excluded where this measure of performance is not appropriate or expected, such as private markets and execution only mandates, as well as replication tracker funds which aim to perform in line with a given index.			As an asset managing business this measure demonstrates our ability to generate investment returns for our clients.

	1 year			3 years			5 years
% of AUM ahead of benchmark	H1 2022	FY 2021		H1 2022	FY 2021		H1 2022	FY 2021
Equities	30	36		51	72		34	61
Fixed income	44	59		63	82		76	87
Multi-asset	53	41		54	39		50	44
Real assets	87	83		75	52		69	50
Alternatives	97	87		100	98		100	98
Quantitative	21	98		45	44		57	68
Liquidity	82	88		85	87		70	84
Total	53	57		63	67		61	67

5.3    Assets under management and administration and flows

Definition	Purpose
AUMA
AUMA is a measure of the total assets we manage, administer or advise on behalf of our clients. It includes assets under management (AUM), assets under administration (AUA) and assets under advice (AUAdv). AUM is a measure of the total assets that we manage on behalf of individual and institutional clients. AUM also includes fee generating assets managed for corporate purposes. AUA is a measure of the total assets we administer for clients through platform products such as ISAs, SIPPs and general trading accounts. AUAdv is a measure of the total assets we advise our clients on, for which there is an ongoing charge.	The amount of funds that we manage, administer or advise directly impacts the level of fee based revenue that we receive.
Net flows
Net flows represent gross flows less redemptions. Gross flows are new funds from clients. Redemptions are the money withdrawn by clients during the period.	The level of net flows that we generate directly impacts the level of fee based revenue that we receive.

5.3.1  Analysis of AUMA

	Opening AUMA at 1 Jan 2022	Gross inflows	Redemptions	Net flows	Market and other movements2	Corporate actions3	Closing AUMA at 30 Jun 2022
6 months ended 30 June 2022	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Institutional	174.0	7.7	(16.8)	(9.1)	(4.1)	-	160.8
Wholesale	79.1	8.9	(10.8)	(1.9)	(5.7)	-	71.5
Insurance	210.5	8.8	(35.1)	(26.3)	(30.2)	-	154.0
Investments	463.6	25.4	(62.7)	(37.3)	(40.0)	-	386.3
Adviser	76.2	4.0	(2.6)	1.4	(9.3)	-	68.3
interactive investor	-	0.6	(0.4)	0.2	(3.3)	55.4	52.3
Personal Wealth	14.4	0.8	(0.7)	0.1	(1.2)	-	13.3
Personal1	14.4	1.4	(1.1)	0.3	(4.5)	55.4	65.6
Eliminations1	(12.1)	(1.4)	1.1	(0.3)	1.5	(0.9)	(11.8)
Total AUMA	542.1	29.4	(65.3)	(35.9)	(52.3)	54.5	508.4

	Opening AUMA at 1 Jan 2021	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions4	Closing AUMA at 30 Jun 2021
6 months ended 30 June 2021	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Institutional	171.7	9.1	(12.5)	(3.4)	0.8	2.5	171.6
Wholesale	80.0	12.9	(14.0)	(1.1)	1.6	-	80.5
Insurance	205.2	9.1	(12.9)	(3.8)	3.1	-	204.5
Investments	456.9	31.1	(39.4)	(8.3)	5.5	2.5	456.6
Adviser	67.0	4.6	(2.6)	2.0	3.3	-	72.3
interactive investor	-	-	-	-	-	-	-
Personal Wealth	13.3	1.0	(0.5)	0.5	0.6	-	14.4
Personal1	13.3	1.0	(0.5)	0.5	0.6	-	14.4
Parmenion	8.1	0.7	(0.4)	0.3	0.3	(8.7)	-
Eliminations1	(10.7)	(1.4)	1.3	(0.1)	(0.7)	-	(11.5)
Total AUMA	534.6	36.0	(41.6)	(5.6)	9.0	(6.2)	531.8

1. Eliminations remove the double count reflected in Investments, Adviser and Personal. The Personal vector includes assets that are reflected in both the discretionary investment management and financial planning businesses. This double count is also removed within Eliminations.

2. Market and other movements include the transfer of retained LBG AUM of c£7.5bn from Insurance into Institutional (quantitatives), to better reflect how the relationship is being managed.

3. Corporate actions in H1 2022 relate to the acquisition of interactive investor on 27 May 2022. The eliminations are to remove the double count for the assets that are reflected in both interactive investor and Investments.

4. Corporate actions relate to the acquisition of a majority interest in Tritax on 1 April 2021 supplementing Institutional AUM by c£6bn at the acquisition date. This is partially offset by the disposal of our domestic real estate business in the Nordics region on 31 May 2021 which reduced AUM by c£3bn. The sale of Parmenion completed on 30 June 2021.

5.3.2  Quarterly net flows

	3 months to 30 Jun 22	3 months to 31 Mar 22	3 months to 31 Dec 21	3 months to 30 Sep 21	3 months to 30 Jun 21
15 months ended 30 June 2022	£bn	£bn	£bn	£bn	£bn
Institutional	(7.8)	(1.3)	2.5	(2.0)	(0.7)
Wholesale	-	(1.9)	(0.8)	(0.3)	(0.5)
Insurance	(4.6)	(21.7)	(0.4)	(1.3)	(1.5)
Investments	(12.4)	(24.9)	1.3	(3.6)	(2.7)
Adviser	0.5	0.9	1.1	0.8	0.9
interactive investor	0.2	-	-	-	-
Personal Wealth	-	0.1	-	0.1	0.3
Personal	0.2	0.1	-	0.1	0.3
Parmenion	-	-	-	-	0.2
Eliminations	(0.1)	(0.2)	(0.2)	(0.1)	-
Total net flows	(11.8)	(24.1)	2.2	(2.8)	(1.3)

5.4    Institutional and Wholesale AUM

Detailed asset class split

	Opening AUM at 1 Jan 2022	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions	Closing AUM at 30 Jun 2022
6 months ended 30 June 2022	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Developed markets equities	17.0	1.1	(1.6)	(0.5)	(4.8)	-	11.7
Emerging markets equities	16.4	1.1	(1.5)	(0.4)	(2.4)	-	13.6
Asia Pacific equities	25.3	1.4	(2.6)	(1.2)	(2.9)	-	21.2
Global equities	10.3	0.7	(0.8)	(0.1)	(2.1)	-	8.1
Total equities	69.0	4.3	(6.5)	(2.2)	(12.2)	-	54.6
Developed markets credit	28.3	1.6	(2.8)	(1.2)	(2.9)	-	24.2
Developed markets rates	2.9	0.2	(0.3)	(0.1)	(0.6)	-	2.2
Emerging markets fixed income	12.2	1.6	(1.4)	0.2	(1.0)	-	11.4
Private credit	2.4	0.2	(0.1)	0.1	0.4	-	2.9
Total fixed income	45.8	3.6	(4.6)	(1.0)	(4.1)	-	40.7
Absolute return	10.0	0.2	(0.7)	(0.5)	(2.0)	-	7.5
Diversified growth/income	0.5	0.1	(0.1)	-	(0.1)	-	0.4
MyFolio	17.7	0.9	(1.0)	(0.1)	(1.8)	-	15.8
Other multi-asset	7.8	0.5	(0.4)	0.1	(1.5)	-	6.4
Total multi-asset	36.0	1.7	(2.2)	(0.5)	(5.4)	-	30.1
Total private equity	12.3	0.2	(0.5)	(0.3)	0.7	-	12.7
UK real estate	19.9	0.2	(0.5)	(0.3)	0.8	-	20.4
European real estate	10.3	0.2	-	0.2	2.8	-	13.3
Global real estate	1.8	0.1	(0.1)	-	(0.1)	-	1.7
Real estate multi-manager	1.2	0.1	(0.1)	-	-	-	1.2
Infrastructure equity	6.2	0.3	(0.5)	(0.2)	0.1	-	6.1
Total real assets	39.4	0.9	(1.2)	(0.3)	3.6	-	42.7
Total alternatives	20.8	1.3	(0.7)	0.6	1.2	-	22.6
Total quantitative1	5.5	1.5	(1.1)	0.4	6.4	-	12.3
Total liquidity	24.3	3.1	(10.8)	(7.7)	-	-	16.6
Total1	253.1	16.6	(27.6)	(11.0)	(9.8)	-	232.3

1. Market and other movements include the transfer of retained LBG AUM of c£7.5bn from Insurance into Institutional (quantitatives), to better reflect how the relationship is being managed.

	Opening AUM at 1 Jan 2021	Gross inflows	Redemptions	Net flows	Market and other movements	Corporate actions	Closing AUM at 30 Jun 2021
6 months ended 30 June 2021	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Developed markets equities	14.7	1.7	(2.0)	(0.3)	1.5	-	15.9
Emerging markets equities	19.0	1.1	(2.0)	(0.9)	1.0	-	19.1
Asia Pacific equities	26.6	2.7	(3.0)	(0.3)	0.2	-	26.5
Global equities	8.9	0.8	(0.8)	-	0.6	-	9.5
Total equities	69.2	6.3	(7.8)	(1.5)	3.3	-	71.0
Developed markets credit	32.2	2.9	(4.4)	(1.5)	(1.5)	-	29.2
Developed markets rates	2.8	0.3	(0.2)	0.1	(1.8)	-	1.1
Emerging markets fixed income	12.2	2.3	(2.2)	0.1	1.3	-	13.6
Private credit	1.0	0.7	-	0.7	0.6	-	2.3
Total fixed income	48.2	6.2	(6.8)	(0.6)	(1.4)	-	46.2
Absolute return	11.5	0.4	(1.1)	(0.7)	(0.6)	-	10.2
Diversified growth/income	0.6	-	(0.1)	(0.1)	-	-	0.5
MyFolio	15.6	1.1	(1.4)	(0.3)	2.0	-	17.3
Other multi-asset	10.0	0.6	(0.7)	(0.1)	(3.0)	-	6.9
Total multi-asset	37.7	2.1	(3.3)	(1.2)	(1.6)	-	34.9
Total private equity	10.9	1.3	(0.5)	0.8	0.3	-	12.0
UK real estate	9.2	0.7	(0.5)	0.2	3.2	5.8	18.4
European real estate	12.1	0.6	(0.2)	0.4	0.7	(3.3)	9.9
Global real estate	1.8	0.2	(0.2)	-	-	-	1.8
Real estate multi-manager	1.6	0.1	(0.1)	-	(0.6)	-	1.0
Infrastructure equity	5.3	0.6	(0.3)	0.3	-	-	5.6
Total real assets	30.0	2.2	(1.3)	0.9	3.3	2.5	36.7
Total alternatives	19.5	1.4	(0.6)	0.8	-	-	20.3
Total quantitative	6.4	0.5	(0.5)	-	(0.4)	-	6.0
Total liquidity	29.8	2.0	(5.7)	(3.7)	(1.1)	-	25.0
Total	251.7	22.0	(26.5)	(4.5)	2.4	2.5	252.1

5.5    Analysis of Insurance

	Opening AUM at 1 Jan 2022	Gross inflows	Redemptions	Net  flows	Market and other movements	Corporate actions	Closing AUM at 30 Jun 2022
6 months ended 30 June 2022	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Phoenix	175.5	8.5	(9.5)	(1.0)	(21.7)	-	152.8
Lloyds1	33.6	0.3	(25.5)	(25.2)	(8.4)	-	-
Other	1.4	-	(0.1)	(0.1)	(0.1)	-	1.2
Total1	210.5	8.8	(35.1)	(26.3)	(30.2)	-	154.0

 

	Opening AUM at 1 Jan 2021	Gross inflows	Redemptions	Net  flows	Market and other movements	Corporate actions	Closing AUM at 30 Jun 2021
6 months ended 30 June 2021	£bn	£bn	£bn	£bn	£bn	£bn	£bn
Phoenix	171.5	6.0	(9.9)	(3.9)	1.1	-	168.7
Lloyds	31.8	3.1	(2.9)	0.2	2.2	-	34.2
Other	1.9	-	(0.1)	(0.1)	(0.2)	-	1.6
Total	205.2	9.1	(12.9)	(3.8)	3.1	-	204.5

1. Following completion of the LBG tranche withdrawals, the remaining LBG AUM of c£7.5bn which has been retained was reallocated to quantitatives in Institutional and is included in market and other movements in the table above.

5.6    Analysis of total AUM

5.6.1 AUM by geography

	30 Jun 2022				31 Dec 2021
	Institutional and Wholesale	Insurance	Personal 2	Total	Institutional and Wholesale	Insurance	Personal2	Total
	£bn	£bn	£bn	£bn	£bn	£bn	£bn	£bn
UK	109.3	154.0	8.2	271.5	120.3	210.5	8.9	339.7
Europe, Middle East and Africa (EMEA)	56.4	-	-	56.4	62.5	-	-	62.5
Asia Pacific (APAC)	17.3	-	-	17.3	19.2	-	-	19.2
Americas	49.3	-	-	49.3	51.1	-	-	51.1
Total AUM	232.3	154.0	8.2	394.5	253.1	210.5	8.9	472.5

2. Excludes assets under advice of £5.1bn at 30 June 2022 (FY 2021: £5.5bn) and interactive investor assets under administration of £52.3bn (FY 2021: £nil).

5.7    Surplus regulatory capital

The £0.6bn indicative capital surplus below includes a deduction to allow for the proposed interim dividend which will be paid in September 2022.

	H1 2022	FY 2021
IFPR Group regulatory capital position	£bn	£bn
Common Equity Tier 1 capital resources	1.2	2.4
Additional Tier 1 capital resources	0.2	0.2
Total Tier 1 capital resources	1.4	2.6
Tier 2 capital resources	0.6	0.6
Total regulatory capital resources	2.0	3.2
Subordinated debt restrictions	(0.3)	(0.3)
Total regulatory capital resources available to meet total regulatory capital requirements	1.7	2.9
Total regulatory capital requirements	(1.1)	(1.1)
Surplus regulatory capital	0.6	1.8

6. Glossary

Adjusted net financing costs and investment return

Adjusted net financing costs and investment return is a component of adjusted profit and relates to the return from the net assets of the shareholder business, net of costs of financing. This includes the net assets in defined benefit staff pension plans and net assets relating to the financing of subordinated liabilities.

Adjusted operating expenses

Adjusted operating expenses is a component of adjusted operating profit and relates to the day-to-day expenses of managing our business.

Adjusted operating profit

A d justed operating profit before tax is the Group's key APM. Adjusted operating profit includes the results of the Group's three growth vectors: Investments, Adviser and Personal, along with Corporate/strategic.

It excludes the Group's adjusted net financing costs and investment return, and discontinued operations.

Adjusted operating profit also 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.

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

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

· Fair value movements in contingent consideration.

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

Adjusted profit before tax

In addition to the results included in adjusted operating profit above, adjusted profit before tax includes adjusted net financing costs and investment return.

Assets under management and administration (AUMA)

AUMA is a measure of the total assets we manage, administer or advise on behalf of our clients. It includes assets under management (AUM), assets under administration (AUA) and assets under advice (AUAdv). AUMA does not include assets for associates and joint ventures.

AUM is a measure of the total assets that we manage on behalf of individual and institutional clients. AUM also includes assets managed for corporate purposes.

AUA is a measure of the total assets we administer for clients through our Platforms.

AUAdv is a measure of the total assets we advise our clients on, for which there is an ongoing charge.

Board

The Board of Directors of the Company.

Carbon intensity

Weighted-Average Carbon Intensity (WACI) is calculated by summing the product of each company's weight in the portfolio or loan book with that company's carbon-to-revenue intensity. Carbon-to-revenue intensity is calculated by dividing the sum of all apportioned emissions, with the sum of all apportioned revenues across an investment portfolio or loan book. This metric gives an indication of how efficient companies in a portfolio or loan book are at generating revenues per tonne of carbon emitted.

Carbon neutral

Being carbon neutral means that carbon released through our operational emissions is balanced by an equivalent amount being removed through carbon offsetting. For the purposes of offsetting, we include Scope 1, 2 and 3 emissions within our operational emissions.

Carbon offsetting

Carbon offsetting is an internationally recognised way to take responsibility for carbon emissions. The aim of carbon offsetting is that for every one tonne of offsets purchased there will be one less tonne of carbon dioxide in the atmosphere than there would otherwise have been. To offset emissions we purchase the equivalent volume of carbon credits (independently verified emissions reductions) to compensate for our operational carbon emissions. We work with Climate Impact Partners to offset our operational greenhouse gas emissions and voluntarily offset via two verified projects. We have historically supported a Gold Standard wind turbine project in India and a Verified Carbon Standard (VCS) Climate, Carbon, and Community rainforest protection project in Gola. For our 2021 emissions, we supported the development of wind energy in Nicaragua, with a Gold Standard Project, and a VCS project in Malawi focused on forest conservation and provision of clean cook stoves. We chose offsets that we knew were verifiable and correctly accounted for and have a low risk of non-additionality, reversal, and creating negative unintended consequences for people and the environment . Our intention is to review our approach in H2 2022 as the voluntary carbon market continues to evolve.

Chief Operating Decision Maker

The executive leadership team.

Company

abrdn plc. Standard Life Aberdeen plc was renamed abrdn plc on 2 July 2021.

Cost/income ratio

This is an efficiency measure that is calculated as adjusted operating expenses divided by fee based revenue.

CRD IV

CRD IV is the European regulatory capital regime (comprising the Capital Requirements Directive and Capital Requirements Regulation) that applied to investment firms up to and including 31 December 2021. The new IFPR regime came into force on 1 January 2022.

Director

A director of the Company.

Earnings per share (EPS)

EPS is a commonly used financial metric which can be used to measure the profitability and strength of a company over time. EPS is calculated by dividing profit by the number of ordinary shares. Basic EPS uses the weighted average number of ordinary shares outstanding during the year. Diluted EPS adjusts the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares, such as share options awarded to employees.

Effective tax rate

Tax expense/(credit) attributable to equity holders' profit divided by profit before tax attributable to equity holders' profits expressed as a percentage.

Executive leadership team (ELT)

Our ELT leads the business across our growth vectors and supporting functions globally and is responsible for executing and monitoring progress on the delivery of our business plans. The ELT also ensures we meet our obligations to our clients, people, shareholders, regulators and partners.

Fair value through profit or loss (FVTPL)

FVTPL is an IFRS measurement basis permitted for assets and liabilities which meet certain criteria. Gains or losses on assets or liabilities measured at FVTPL are recognised directly in the income statement.

FCA

Financial Conduct Authority of the United Kingdom.

Fee based revenue

Fee based revenue is a component of adjusted operating profit and includes revenue we generate from asset management charges (AMCs), platform charges, treasury income and other transactional charges. AMCs are earned on products such as mutual funds, and are calculated as a percentage fee based on the assets held. Investment risk on these products rests principally with the client, with our major indirect exposure to rising or falling markets coming from higher or lower AMCs. Treasury income is the interest earned on cash balances less the interest paid to customers. Fee based revenue is shown net of fees, costs of sale, commissions and similar charges. Costs of sale include revenue from fund platforms which is passed to the product provider.

Fee revenue yield (bps)

The average revenue yield on fee based business is a measure that illustrates the average margin being earned on the assets that we manage, administer or advise our clients on excluding interactive investor. It is calculated as annualised fee based revenue (excluding performance fees, interactive investor and revenue for which there are no attributable assets) divided by monthly average fee based assets. interactive investor is excluded from the calculation of Personal and total fee revenue yield as fees charged for this business are primarily from subscriptions and trading transactions.

Greenhouse gases

Greenhouse gases are those gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and emit radiation at specific wavelengths within the spectrum of thermal infrared radiation emitted by the earth's surface, the atmosphere itself, and by clouds. This property causes the greenhouse effect. Water vapour (H2O), carbon dioxide (CO2), nitrous oxide (N2O), methane (CH4) and ozone (O3) are the primary greenhouse gases in the earth's atmosphere. Moreover, there are a number of entirely human-made greenhouse gases in the atmosphere, such as halocarbons and other chlorine- and bromine-containing substances, dealt with under the Montreal Protocol. Beside CO2, N2O and CH4, the Kyoto Protocol deals with the greenhouse gases sulphur hexafluoride (SF6), hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs).

Group or abrdn

Relates to the Company and its subsidiaries.

Growth vectors

We provide services across three growth vectors:

-  I nvestments : Asset management investment solutions for institutional, wholesale and insurance clients.

-  Adviser : Our Wrap and Elevate adviser platforms.

-  Personal : Comprises of Personal Wealth which includes our financial planning business and our direct-to-consumer services, and interactive investor following the completion of the acquisition in May 2022.

Internal Capital Adequacy and Risk Assessment (ICARA)

The ICARA is the means by which the Group assesses the levels of capital and liquidity that adequately support all of the relevant current and future risks in its business.

International Financial Reporting Standards (IFRS)

International Financial Reporting Standards are accounting standards issued by the International Accounting Standards Board (IASB).

Investment Firms Prudential Regime (IFPR)

The Investment Firms Prudential Regime is the FCA's new prudential regime for MiFID investment firms. The regime came into force on 1 January 2022.

Investment performance

Investment performance has been aggregated using a money weighted average of our assets under management which are outperforming their respective benchmark. Calculations for investment performance are made gross of fees with the exception of those for which the stated comparator is net of fees. Benchmarks differ by fund and are defined in the relevant investment management agreement or prospectus, as appropriate. The investment performance calculation covers all funds that aim to outperform a benchmark, with certain assets excluded where this measure of performance is not appropriate or expected, such as private markets and execution only mandates, as well as replication tracker funds which aim to perform in line with a given index.

LBG tranche withdrawals

On 24 July 2019, the Group announced that it had agreed a final settlement in relation to the arbitration proceedings between the parties concerning LBG's attempt to terminate investment management arrangements under which assets were managed by members of the Group for LBG entities. In its decision of March 2019, the arbitral tribunal found that LBG was not entitled to terminate these investment management contracts. The Group had continued to manage approximately £104bn (as at
30 June 2019) of assets under management (AUM) for LBG entities during the period of the dispute. Approximately two thirds of the total AUM (the transferring AUM) will be transferred to third party managers appointed by LBG through a series of planned tranches from 24 July 2019. During this period, the Group will continue to be remunerated for its services in relation to the transferring AUM. The final tranche withdrawal was completed in H1 2022.

Net flows

Net flows represent gross inflows less gross outflows or redemptions. Gross inflows are new funds from clients. Redemptions is the money withdrawn by clients during the period.

Net zero

Net zero is the target of completely negating the amount of greenhouse gases produced by human activity, to be achieved by reducing emissions to the lowest possible amount and offsetting (see carbon offsetting) only the remainder as a last resort.

Net Zero Direct Investing

Net Zero Directed Investing means moving towards the goal of net zero in the real world - not just in specific investment portfolios. At abrdn we seek to achieve this goal through a holistic set of actions, including rigorous research into net-zero trajectories, developing net-zero-directed investment solutions and active ownership to influence corporates and policy makers.

Operational emissions

Operational emissions are the greenhouse gas emissions related to the operations of our business. They are categorised into three groups or 'scopes'. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company. Scope 3 includes all other indirect emissions that occur in a company's value chain. At abrdn we report Scope 1, Scope 2, and Scope 3 emissions, which includes our working from home emissions.

Paris alignment

'Paris alignment' refers to the alignment of public and private financial flows with the objectives of the Paris Agreement on climate change. Article 2.1c of the Paris Agreement defines this alignment as making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. Alignment in this way will help to scale up the financial flows needed to strengthen the global response to the threat of climate change.

Phoenix or Phoenix Group

Phoenix Group Holdings plc or Phoenix Group Holdings plc and its subsidiaries.

Significant listed investments

Relates to our investments in HDFC Asset Management, HDFC Life and Phoenix. Fair value movements and dividend income relating to these investments are treated as adjusting items for the purpose of determining the Group's adjusted profit.

Subordinated liabilities

Subordinated liabilities are debts of a company which, in the event of liquidation, rank below its other debts but above share capital. The 5.25% Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes issued by the Company in December 2021 are classified as other equity as no contractual obligation to deliver cash exists.

7. Shareholder information

Registered office

1 George Street
Edinburgh
EH2 2LL

Scotland

Company registration number: SC286832

For shareholder services call: 0371 384 2464*

* Calls are monitored/recorded to meet regulatory obligations and for training and quality purposes. Call charges will vary.

Secretary: Kenneth A Gilmour

Registrar: Equiniti

Auditors: KPMG LLP

Solicitors: Slaughter and May

Brokers: JP Morgan Cazenove, Goldman Sachs

Shareholder services

We offer a wide range of shareholder services. For more information, please:

· Contact our registrar, Equiniti, who manage this service for us. Their details can be found on the inside back cover.

· Visit our share portal at www.abrdnshares.com

Sign up for Ecommunications

Signing up means:

· You'll receive an email when documents like the Annual report and accounts, Half year results and AGM guide are available on our website.

· Voting instructions for the Annual General Meeting will be sent to you electronically.

Set up a share portal account

Having a share portal account means you can:

· Manage your account at a time that suits you.

· Download your documents when you need them.

To find out how to sign up, visit www.abrdnshares.com

Preventing unsolicited mail

By law, the Company has to make certain details from its share register publicly available. As a result it is possible that some registered shareholders could receive unsolicited mail, emails or phone calls. You could also be targeted by fraudulent 'investment specialists', clone firms or scammers posing as government bodies e.g. HMRC, FCA. Frauds are becoming much more sophisticated and may use real company branding, the names of real employees or email addresses that appear to come from the company. If you get a social or email message and you're unsure if it is from us, you can send it to [e-mail] and we'll let you know .

You can also check the FCA warning list and warning from overseas regulators, however, please note that this is not an exhaustive list and do not assume that a firm is legitimate just because it does not appear on the list as fraudsters frequently change their name and it may not have been reported yet.

www.fca.org.uk/consumers/unauthorised-firms-individuals

www.iosco.org/investor_protection/?subsection=investor_alerts_portal

You can find more information about share scams at the Financial Conduct Authority website www.fca.org.uk/consumers/scams

If you are a certificated shareholder, your name and address may appear on a public register. Using a nominee company to hold your shares can help protect your privacy. You can transfer your shares into the Company-sponsored nominee - the abrdn Share Account - by contacting Equiniti, or you could get in touch with your broker to find out about their nominee services.

If you want to limit the amount of unsolicited mail you receive generally, please visit www.mpsonline.org.uk

Financial calendar

Half year results 2022	9 August
Ex-dividend date for 2022 interim dividend	18 August
Record date for 2022 interim dividend	19 August
Last date for DRIP elections for 2022 interim dividend	7 September
Dividend payment date for 2022 interim dividend	27 September

Analysis of registered shareholdings at 30 June 2022

Range of shares	Number of holders	% of total holders	Number of shares	% of total shares
1-1,000	59,344	65.69	23,754,048	1.09
1,001-5,000	26,379	29.20	54,294,871	2.49
5,001-10,000	2,642	2.92	17,651,293	0.81
10,001-100,000	1,481	1.64	36,159,333	1.66
# 100,001+	499	0.55	2,048,866,415	93.95
Total	90,345	100.00	2,180,725,960	100.00

# These figures include the Company-sponsored nominee - the abrdn Share Account - which had 927,858 participants holding 643,129,574 shares.

8. Forward-looking statements

This document may contain certain 'forward-looking statements' with respect to the financial condition, performance, results, strategies, targets, objectives, plans, goals and expectations of the Company and its affiliates. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts.

Forward-looking statements are prospective in nature and are not based on historical or current facts, but rather on current expectations, assumptions and projections of management of the abrdn Group about future events, and are therefore subject to known and unknown risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements.

For example but without limitation, statements containing words such as 'may', 'will', 'should', 'could', 'continues', 'aims', 'estimates', 'projects', 'believes', 'intends', 'expects', 'hopes', 'plans', 'pursues', 'ensure', 'seeks', 'targets' and 'anticipates', and words of similar meaning (including the negative of these terms), may be forward-looking. These statements are based on assumptions and assessments made by the Company in light of its experience and its perception of historical trends, current conditions, future developments and other factors it believes appropriate.

By their nature, all forward-looking statements involve risk and uncertainty because they are based on information available at the time they are made, including current expectations and assumptions, and relate to future events and/or depend on circumstances which may be or are beyond the Group's control, including among other things: UK domestic and global political, economic and business conditions, (such as the UK's exit from the EU and the ongoing conflict between Russia and Ukraine); market related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the impact of inflation and deflation; the impact of competition; the timing, impact and other uncertainties associated with future acquisitions, disposals or combinations undertaken by the Company or its affiliates and/or within relevant industries; experience in particular with regard to mortality and morbidity trends, lapse rates and policy renewal rates; the value of and earnings from the Group's strategic investments and ongoing commercial relationships; default by counterparties; information technology or data security breaches (including the Group being subject to cyberattacks); operational information technology risks, including the Group's operations being highly dependent on its information technology systems (both internal and outsourced); natural or man-made catastrophic events; the impact of  pandemics, such as the COVID-19 (coronavirus) outbreak; climate change and a transition to a low-carbon economy (including the risk that the Group may not achieve its targets); exposure to third party risks including as a result of outsourcing; the failure to attract or retain necessary key personnel; the policies and actions of regulatory authorities and the impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations (including changes to the regulatory capital requirements that the Group is subject to in the jurisdictions in which the Company and its affiliates operate. As a result, the Group's actual future financial condition, performance and results may differ materially from the plans, goals, objectives and expectations set forth in the forward-looking statements.

The Company, nor any of its associates, directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. Persons receiving this document should not place reliance on forward-looking statements. All forward-looking statements contained in this document are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Each forward-looking statement speaks only as at the date of the particular statement. Neither the Company nor its affiliates assume any obligation to update or correct any of the forward-looking statements contained in this document or any other forward-looking statements it or they may make (whether as a result of new information, future events or otherwise), except as required by law. Past performance is not an indicator of future results and the results of the Company and its affiliates in this document may not be indicative of, and are not an estimate, forecast or projection of, the Company's or its affiliates' future results.

Contact us

Got a shareholder question? Contact our shareholder services team.

UK and overseas (excluding Germany and Austria)

phone  [phone]*

email  [e-mail]

visit  www.abrdnshares.com

mail  abrdn Shareholder Services Aspect House

Spencer Road Lancing, West Sussex

BN99 6DA, United Kingdom

Germany and Austria

phone  [phone]*

email  [e-mail]

visit  www.abrdnshares.com

mail  abrdn Shareholder Services Aspect House

Spencer Road Lancing, West Sussex

BN99 6DA, United Kingdom

* Calls are monitored/recorded to meet regulatory obligations and for training and quality purposes. Call charges will vary.

Please remember that the value of shares can go down as well as up and you may not get back the full amount invested or any income from it. All figures and share price information have been calculated as at 30 June 2022 (unless otherwise indicated).

This document has been published by abrdn plc for information only. It is based on our understanding as at August 2022 and does not provide financial or legal advice.

abrdn plc is registered in Scotland (SC286832) at 1 George Street, Edinburgh EH2 2LL.

www.abrdn.com © 2022 abrdn, images reproduced under licence. All rights reserved.

UKIR22 0822

 

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