Annual reportand accounts
2023
abrdn plc

abrdn.com

Three years ago, we set out tofundamentally reshape our business.
Against a challenging backdrop, ourstrategy has formed a company that isbetter positioned for growth, driven by
the evolving needs of our clients andcustomers.

Our reporting suiteThis report forms part of our reporting suite.

Sustainability and TCFD report

This annual report and accounts 2023 for abrdn plc, and thestrategic report and financial highlights 2023 are published on
our website at www.abrdn.com/annualreport
Access to the website is available outside the UK, wherecomparable information may be different.
Certain measures such as adjusted operating profit,
adjusted profit before tax, adjusted capital generation andcost/income ratio, are not defined under International
Financial Reporting Standards (IFRS) and are therefore
termed alternative performance measures (APMs).

The focus of this report is to extend our
climate-related disclosure beyond ourAnnual report and update on othermaterial sustainability topics for abrdn.

APM

Stewardship report

APMs should be read together with the Group’s consolidated
income statement, consolidated statement of financial positionand consolidated statement of cash flows, which are presented
in the Group financial statements section of this report. Further
details on APMs are included in Supplementary information.

Sets out our application of the 12
principles of the UK Stewardship Code,as investors.

Modern slavery statement
Our disclosure in line with the UK Modern
Slavery Act, detailing our work to
mitigate related risks.

See Supplementary information for details on assets undermanagement and administration (AUMA), net flows and theinvestment performance calculation. Net flows in the Highlights
page excludes liquidity flows as they are volatile and lower
margin. It also excludes Lloyds Banking Group (LBG) tranche
withdrawals in 2022 relating to the settlement of arbitration
with LBG.

Strategic report

Highlights

At a glance2

Chairman’s statement

6

Chief Executive Officer’s review

9

Our business model and strategy

12

Performance overview

18

Our businesses

20

Sustainability

38

Key performance indicators

60

Chief Financial Officer’s overview

62

Risk management76

Governance

Board of Directors

82

Corporate governance statement

86

Audit Committee report

98

Risk and Capital Committee report

107

Nomination and Governance Committee report 111
Directors’ remuneration report

115

Directors’ report135

Statement of Directors’ responsibilities

141

Financial information

Independent auditor’s report

144

Group financial statements

160

Company financial statements

271

Supplementary information

286

Other information

STRATEGIC REPORTContents

Glossary

300

Shareholder information

303

Forward-looking statements

304

Contact us

IBC

This symbol indicates further information is available within
this document or on our corporate website.

Adjusted operating profit APM£249m
2022: £263m

IFRS loss before tax(£6m)
2022: (£612m)1

Full year dividend per share

14.6p
2022: 14.6p

Investment performance(% of AUM above benchmark over three years)

42%2022: 65%
Net flows(Excl. liquidity and LBG)

£13.9bn
outflow

2022: £10.3bn outflow
MSCI ESG ratingAA

2022: AAA

Download this report from: www.abrdn.com/annualreport

1. Comparatives have been restated for the HASL
implementation of IFRS 17. Refer Basis of preparationin the Group financial statements section.

Annual report 2023

abrdn.com

1

At a glance

abrdn is a modern investmentcompany that helps clients andcustomers plan, save and invest for
the future

Specialist asset management

UK savings and wealth platforms

Investments

Adviserinteractive investor (ii)1

Our clients:

Our clients:

Our clients:

Our capabilities in our Investments
business are built on the strength of
our insight – generated from wideranging research, worldwide
investment expertise and local
market knowledge.

–
–
–
–
–
–
–

Insurance companies
Sovereign wealth funds
Independent wealth managers
Pension funds
Platforms
Banks
Family offices

Adjusted operating profit£50m

Our Adviser business, the UK’s second
largest advised platform by AUA,
provides financial planning solutions
and technology for UK financial
advisers which enables them tocreate value for their businesses andtheir clients.
– Financial advisers– Discretionary fund managers

Adjusted operating profit£118m£366.7bn– Individuals

Adjusted operating profit

£114m
AUMA

AUMA

£73.5bn
Cost/income ratio

AUM

Powered by the UK’s second-largest
direct-to-consumer investment
platform, our interactive investor
business enables individuals in the UK
to plan, save and invest in the waythat works for them.

47%£66.0bn
Cost/income ratio

60%

Cost/income ratio

94%

Read more about our three businesses on pages 20 to 37. Overall performancesummary is included on page 70.

1. Personal has been renamed ii and includes Personal Wealth unless otherwise stated.

2

abrdn.com

Annual report 2023

STRATEGIC REPORTOur purpose

To enable our clients to be better investors

What sets us apart

A diversified business supporting clients at all financial stages

Trusted brands
with strong
market positions

Strongcommitment tosustainability andclimate action

Diversified, multiclient segment
business model
creating a resilientorganisation

Positive anddecisive action tostrengthen thebusiness model

Embedding
AI andtechnology inthe businessIndustryleading platforms
enablingenhanced client
service and value

Operating inmarkets withstructural growth
characteristics

Strong balance
sheet andshareholder
returns

Shaped by our cultural commitments
We put the client first

We are empowered

We are ambitious

We are transparent

Read more about our culture on pages 48 and 49.

Annual report 2023

abrdn.com

3Our strategy in action

Our strategy
in action

At the start of 2021, we set out our three-year strategy to build adiversified business that could be successful through market-cycles. We
have refocused on areas of strength, selling non-core elements withlower growth and profitability, and making strategic and bolt-on
acquisitions to add high value capabilities.
abrdn has fundamentally transformed. We now have a differentiatedvalue proposition, providing full lifecycle service through our investment
content and wealth platforms.

December
2020

February
2021

Acquisition ofmajority interest in
Tritax, bringing
exposure andexpertise in the
fast-growing
logistics ande-commerce
real estatemarket.
Completed
April 2021.

Reset ourrelationship with
Phoenix Group
with a simplified
and extended
strategic
partnership tomanage theirassets until atleast 2031, andsold them theStandard Life
brand.

4abrdn.com

March
2021

July
2021

Sale of Parmenion
Capital Partners
demonstrating
our commitment
to simplify ouroperations andreconfigure ourbusiness for
growth.
Completed
June 2021.

September
2021

Sale of Bonaccord
Capital Partnersand Hark Capital,
simplifying ourbusiness in the
US.

Standard Life
Aberdeen
officially becomesabrdn plc, building
on our heritage
with a highly
differentiatedbrand creating
unity across thebusiness.

Annual report 2023

October
2021

Acquisition of
Finimize, with
the intention
to enable it tobecome thenumber one
information
platform formoderninvestors.

December
2021

January2022

Acquisition ofinteractive
investor, theUK’s leading
subscription
based D2C
investment
platform,
significantly
expanding our
Personal business.
Completed May
2022.

December
2022

Purchase of
Macquarie
Delaware Funds,
addingsignificant scale
to three of ourexisting US
closed-end
funds.
Completed July
2023.

Monetised a 4%
holding in Phoenix,
raising £0.3bn with
the intention to
return this capitalto shareholders.

STRATEGIC REPORT

December2022

February
2023

Completed£300m sharebuyback.
Commenced inJuly 2022.

February
2023

Delivery of Phase
2 of Adviser
Experience
Programme, oneof the largest andmost complex
changes since
we launched theplatform, making
it faster and more
flexible. Further
phases willcomplete in 2024
and 2025.

Sale of discretionary
fund managementbusiness, concludingthat another owner
would be better
placed to invest to
deliver scalein the business.
Completed
September 2023.

May/
June
2023

February
2023

June
2023

Sale of remaining
shares in HDFC Lifeand HDFC AssetManagement.
Since December
2020, total net
proceeds of£2.1bn has been
generatedthrough thesestake sales.

Managed Portfolio
Service teammoves to Adviser
from Personal,
unlocking greater
opportunity for
growth.

July/
October
2023

October
2023

Sale of US private equity
business followed by sale ofEuropean headquarteredprivate equity business,underlining ourcommitment to exit
non-core businesses thatno longer align to ouroverall product strategy.
US sale completed
October 2023. European
sale expected tocomplete in the first halfof 2024.

Acquisition of thehealthcare fundmanagement
capabilities ofTekla, including
four NYSE listed
healthcare andbiotech thematic
closed-end funds.
Completed
October 2023.

Annual report 2023

December
2023

Completed£300m sharebuyback.
Commenced£150m sharebuyback in June
2023, andextended to£300m in August2023.

Proposed acquisitionof four closed-end
funds from First
Trust, cementing
our position as thethird-largest
manager ofclosed-end
funds globally.
Expected tocomplete H1 2024.

abrdn.com

5Chairman’s statement

Adapting tosucceed inan evolving
sectorContext is important when reviewing progress madeduring 2023.
Last year, many of the headwinds facing active asset
managers grew stronger, accelerating our drive toreshape abrdn to be more resilient within and acrosseconomic cycles. Notably, the year saw continuation,right across the market, of asset allocations trending
away from investment in equities, from emerging
markets and from commercial real estate, all reflecting
both changes in risk appetite as well as the reemergence of competing cash and liquidity productswith attractive yields, as interest rates rose markedly tocombat stubbornly high inflation.
This latter point was particularly relevant as, both in the
UK and in the US, investors could capture risk-free
returns in excess of 5% for the first time in 15 years at atime of heightened economic uncertainty. Continuing
outflows from UK equity funds marked 43 consecutive
months of outflow, in part due to the change in risk
preference described above. Equally important was thecontinuing run-off of closed defined benefit UK pension
schemes’ investment in UK listed equities, as they
completed their transition to liability driven strategies ortransferred their obligations to the insurance market.

6abrdn.com

Annual report 2023

Investment through defined contribution retirement
schemes compensated only partially, as contribution
rates are significantly lower than those of defined
benefit pension schemes and equity allocations there
are primarily to global equity products in which UK listedcompanies are a very small component. Recently
released ONS figures illustrate the impact of thesestructural shifts in asset allocation, evidencing that UK
pension schemes and insurers combined held only 4% of
UK listed equities, declining from around half in the early
1990s.
This structural shift in the relative importance of the UK
institutional market underlines the significance of ourrecent diversification to get closer to the end investor
through investment in our Adviser and ii businesses. As
will be noted in our results for 2023, in a weak year for
our Investments business, in part due to continued
restructuring, our two platform businesses grew theircontribution to adjusted operating profit to £232m,
thereby contributing 93% of the Group total.

Investment activity in 2023 also faced challenges fromthe macroeconomic and geopolitical environments. The
horrendous attack against Israel on October 7th
precipitated a powerful military response which is stillongoing, with fears of a wider Middle East conflict
impacting investor sentiment. This added to concerns
over the continuing war in Ukraine. Economically, cost ofliving burdens in the UK from continuing inflation
constrained the flow of funds into retail savings products
and indeed we saw some withdrawal from savings pots
as household budgets were stretched. With major
elections in 2024, notably in the US and the UK, but
extending into some 50 countries, the resulting politicallycharged policy narratives added to investment
uncertainty. Helpfully, market levels improved in the final
quarter of 2023 as feared recessions seemed less likely
and inflationary threats were downgraded leading tomarkets discounting earlier and larger interest rate
reductions than previously expected.

UK Capital Market restructuring initiatives anddemographic saving challenges

The decline in UK institutional participation in UK listed
equity markets referred to above, together with adecline in new listings in London and UK listed company
departures to other listing venues deemed more
attractive, precipitated considerable attention fromwithin the financial industry, the media and government.
This led to a number of initiatives supported bygovernment, industry and the regulatory community toremove barriers deemed to contribute to a lack ofcompetitiveness, as well as introducing reforms
designed to modernise UK capital markets. Of particularnote were the so-called Edinburgh Reforms, theMansion House Reforms as well as the work of theCapital Markets Industry Taskforce and the FCA’s
proposed listing regime reforms.
As a leading investment business in the UK, we
supported these initiatives and believe adoption of themeasures contained within them are hugely importantto the delivery of a stronger UK economy and a morecompetitive financial sector environment, throughwhich UK listed businesses can attract both the funding
and talent to be more successful. In 2023 we cosponsored a report by the think-tank New Financial thatprovided an analysis of many of the key issues
underlying this agenda and we look forward to playing
our part in supporting adoption.
The Mansion House Reforms were also particularly
important in highlighting the relatively lower returns inpooled retirement savings in the UK in defined
contribution schemes, as a consequence of both thelarge number of small schemes and a lower risk
appetite within such schemes than seen in other leading
economies. The savings gap opening up from this low
risk tolerance, together with the lower mandatory
contribution rates in the UK, risk contributing to ademographic timebomb as current generations ofscheme participants are likely to reach retirement withinadequate funds to meet their expectations of acomfortable retirement. Our industry along with ourregulators and policymakers need to work together toensure people are properly informed of the
responsibility increasingly placed on the individual tobuild adequate funds to support retirement. This is atheme where abrdn plans to have a leading voice andwe are positioning our Adviser and ii businesses to play a
prominent role; Stephen highlights the steps we aretaking in his review.

Progress on delivering on our strategic ambitions
and performance in the year

With revenue growth in 2023 expected to be very
challenging given the economic and geopolitical
backdrop described above, we set one of our priorities
for 2023 to eliminate some £75m of costs, excluding thatderived from business disposals. In part, this wasachieved through consolidating or closing sub-scale
funds and sharpening the focus of the investment
strategies offered to clients. All of this was achieved andis discussed more fully in the Chief Executive Officer’s
review.
However, the scale of revenue reduction in 2023 as aconsequence of market levels, risk reduction by clientsto less remunerated strategies and net outflows in theInvestments business far exceeded the cost savings
achieved, leading to the continuation of an
unsatisfactory ratio of cost to revenues in theInvestments business. Performance in our other twobusinesses was good and in line with our expectations
but that good performance was overshadowed by theunsatisfactory profitability within Investments. As aconsequence, the Board spent the majority of its
meetings in 2023 analysing in detail the shape of theInvestments business against market trends anddetermining what actions were necessary and within
our control to rebuild the profitability of the business on asustainable basis.
This culminated in the announcement made on
24 January that a more significant reorganisationand simplification of the business than previously
contemplated was needed to address the ongoingpressure on revenues from changing patterns of asset
allocation, in particular the greater institutional adoptionof passive and low cost thematic strategies. As
announced, the actions planned throughout 2024 and2025 are designed to take at least £150m from the costbase within the Investments business and fromfunctional costs. Stephen discusses the necessary
actions in more detail in his review.
To build a sustainable business and to grow we need toinvest at the same time and this requires reallocation ofcapital resources within abrdn.
During 2023 we completed the disposal of our non-corestakes in HDFC Life and HDFC Asset Management,
which augmented our capital position by £576m. The
sale of abrdn Capital which was announced alongsideour 2022 results completed in September 2023 at theagreed price of £140m adding a further £124m to ourcapital position. We also completed the sale of our US
private equity and venture capital business in October
and in the same month announced the sale of our
European-headquartered private equity business to
Nasdaq-listed Patria Investments. This reshaping of ourfootprint and capabilities allowed us to focus on
Annual report 2023

abrdn.com

7

STRATEGIC REPORT

Macroeconomic and geopolitical backdrop

Chairman’s statement continued

business areas where we have better growth prospects
and comparative advantage and by reducing
complexity, we are reducing costs.
As promised, we reinvested a portion of the capital
released through the above disposals to fill out gaps in
our Investments business and add technology
capabilities and marketing resources in our Adviser andii businesses. In October, we completed the acquisitionof the healthcare fund management capabilities ofTekla Capital Management bringing into the Group$2.8bn of funds under management and more
importantly, adding a distinctive capability in listed
healthcare and biotech thematic closed-end funds.
Together with other recent closed-end fund acquisitions
this positions abrdn as the third largest manager ofclosed-end funds globally. Investment in our Adviser andii business during 2023 to build organic growth
opportunities are covered in Stephen’s review.
When we reported our results for 2022 we indicatedthat our intention was to make a similar return of capitalin 2023 as had been delivered in 2022, dependent on
successful non-core stake realisation and retaining
necessary funds for investment; this we have delivered
through a further buyback of c£300m of shares andthe maintenance of the interim dividend at 7.3p per
share. The Board is recommending to shareholders afinal dividend of 7.3p per share subject to theirapproval at the upcoming AGM to bring the total
return to shareholders in respect of 2023 to £567m(2022: £595m).
We are updating one of our key performance indicators
moving forward, from adjusted capital generation to net
capital generation. This metric more closely aligns withthe dividend paying capability of the Company over thelong term.

Board

As previously announced, both Stephanie Bruce, our
CFO and Brian McBride, a non-executive director did
not seek re-election at the 2023 Annual General
Meeting at which their significant contributions to thedevelopment of abrdn were recognised. We wish themboth well in the next stages of their careers.
In October last year, we welcomed Jason Windsor as
our new CFO. Jason joined from Persimmon plc having
spent the vast majority of his career hitherto in financial
services. His financial industry experience and expertise
were gained notably through 12 years at Aviva, latterly
as Group Chief Financial Officer. Prior to that, he spent
15 years at Morgan Stanley in both London andSingapore, rising to be a Managing Director within its
Investment Banking Division. Jason has made an
excellent start at abrdn, and we all are looking forward
to working with him more closely in delivering ourstrategy.
Catherine Bradley has advised that she will not seek reelection at the Company’s Annual General Meeting on
24 April 2024 and will stand down from that date as a
Non-Executive Director and as Chair of the Audit
Committee. On behalf of the Board and all mycolleagues, I would like to thank Catherine for her
significant contribution to abrdn and our Board and8abrdn.com

Annual report 2023

Committee discussions. Earlier this year Catherine took
on the chair of ii, our direct-to-consumer investments
business, and she has concluded she should dedicate
her available time commitment to this responsibility. I’mdelighted she will remain connected with abrdn throughher ii appointment where we will continue to benefit
from her breadth of consumer, financial and regulatory
experience as we continue to grow ii and the critical roleit plays within the Group.

OutlookGiven all current uncertainties, it is hard to form a clear
outlook for 2024 and beyond. Our base case assumes
no major escalation in global inflationary pressuresacross the major global economies or an escalation ofgeopolitical tensions and assumes policy interest rates in
the US and the UK have peaked. We assume that,
notwithstanding some harsh rhetoric inevitable in anelection year, the US-China mutually beneficial traderelationship will remain intact. With the US appearing tobe successful in engineering a soft landing after anaggressive succession of interest rate hikes, upside to
the global economy rests upon the US maintaining its
solid growth trajectory and China resuming its
contribution as a key driver of global growth and as amajor part of the supply chain in the transition to a lower
carbon future. Given other geopolitical tensions, the USChina relationship remains a top issue in the investment
world. Their shared global economic leadership has led
to an understanding of mutual dependency andnotwithstanding tension over high-end semiconductors
and critical minerals, the resumption of trade dialogues
and senior visits are encouraging for the global
economy. Outlook for the UK and the rest of Europe ismore muted, with it recently being confirmed that the
UK had entered a modest recession; the investment
picture is likely to remain cautious given electoral
uncertainty and the lagging impact of wage increases
and tax changes on consumer confidence.
We enter 2024 with a clear plan of what we need to do
to build a sustainable business with good growthprospects and an efficient cost structure; our industry is
evolving rapidly as technology enables the offer of evermore sophisticated tailored investment themes andsolutions at low cost. Proximity to the end consumer andan understanding of their investment preferences andthe route through which they choose to invest will be
critical. abrdn is well positioned for this evolution in termsof the mix of our businesses and the talent and financial
resources needed to succeed.

Sir Douglas Flint
Chair

Chief Executive Officer’s review
STRATEGIC REPORT

Building amoderninvestmentcompany

We have continued with our determination to build amodern investment company that is capable of thriving
in a changing marketplace. In January of 2024, we took
the next step in that process, announcing a £150m costtransformation programme to accelerate the delivery
of a more sustainable cost base that can support
appropriate long-term profitability. The need tocontinue applying downward pressure on costs wasunderlined by another challenging year. Throughout
2023, the ‘higher for longer’ rate environment acrossdeveloped economies put sustained pressure on mostasset classes, and while the market now expects areversal over 2024, there is no doubt that we have felt
the effects in our Investments business. The upside is theimpact higher rates have had on income in Adviser andii, underscoring the benefits of our diversified businessmodel, which delivers through the economic cycle.
When we embarked on our transformation journeyback in 2021, not many would have foreseen the level ofglobal economic and geopolitical turmoil we have since
experienced. That has inevitably hindered our progress,and directly impacted performance. Nonetheless, as
pages 4 and 5 demonstrate, we have moved at pace toevolve the business and create a model that is better
suited to the modern investment landscape, betteraligned to the products and services clients will want in
the coming years and better positioned for future
growth.

A platform for growth

As we look ahead, we now have a platform to build on,connecting our investment content capabilities on the
one hand, with our market leading wealth platforms on
the other. We are able to identify where demand isgoing and react more quickly than ever, using data
sharing between businesses to design better products
and creating tailor-made solutions in Investments thatmeet the needs of clients and customers in Adviser, ii,
and the wider market.
Sensitivity to rates and markets has been mitigated byour more diverse business model. We are also well
positioned to take advantage across the group whenrates do start to come down, with a move to risk-on
giving oxygen to Investments, an easing of the cost-ofliving pressures that have impacted Adviser, and a
return of investor confidence supporting an increase insubscriptions and trading volumes for ii.

Annual report 2023

abrdn.com

9Chief Executive Officer’s review continued

Our new transformation programme will deliver anannualised cost reduction of at least £150m by the endof 2025. Approximately 80% of the cost reduction
benefits will be in our core Investments business. The
programme is targeting the removal of management
layers, increasing spans of control, and reducing
overheads. We will implement this programme withminimal impact to client service and at all times focusing
on investment performance.

Capital Management has added specialist knowledge inthe healthcare and biotech sector, an area we haveidentified as one of a small number of megatrends thatare expected to offer exciting investing opportunities in
the future. Alongside Tekla, the acquisition of otherclosed-end funds from Macquarie and the proposed
acquisition of funds from First Trust, would collectively
add £3.6bn in AUM and strengthen abrdn’s position as
one of the world’s leading players in closed-end funds.

2023 performance

Leading positions in the structurally attractive UK
savings and wealth market

At £249m (2022: £263m), adjusted operating profit isdown 5% on the previous year. While Adviser and ii bothincreased profitability, this was more than offset byfalling revenue in Investments where market conditions
had a substantial impact, as seen across the sector.
Overall, we are reporting an IFRS profit for the year of£12m (2022 restated: loss £546m), this improvement
reflects a reduction in impairment of intangible assets
and restructuring costs.
Our determination to manage our cost base is evident in
a 4% reduction in adjusted operating expenses, even
including a full 12 months of ii (compared to 7 months in2022). We exceeded our target to remove £75m in costfrom the Investments business, delivering savings of£102m in the year, and we have since set out plans for a
new transformation programme that will deliver amaterial improvement to our cost/income ratio.
As detailed below, we have maintained our disciplined
approach to capital allocation in 2023. Jason outlines
our performance in detail in the Chief Financial Officer’s
overview.

A leaner and more relevant Investments business

After another year of substantial change, we finished
2023 with a leaner, more relevant Investments business.
With the sale of our US Private Equity franchise andagreement to sell our European Private Equity franchise,and having continued to deliver on our fundrationalisation programme with the closure of a further
c60 funds in 2023, our more focused offering is based
upon areas of real strength and scale across publicmarkets and alternatives.
This simplification enabled us to go beyond our £75m
cost reduction target.

Investment performance over the three and five-yeartime periods has weakened, with 42% (2022: 65%) and
52% (2022: 58%) of AUM covered by this metric aheadof benchmark respectively. The drop in the three-year
performance reflects a challenging period for active
managers, particularly those with a quality equity
investment style with a bias towards Asia and Emerging
Markets. Our new Chief Investment Officer, Peter
Branner, who joined us in 2023, is leading a wide-ranging
programme of work to review and strengthen ourinvestment processes. You can read more about thiswork in the Investments section on page 22.
The creation of a more focused Investments businesshas been accompanied through the careful
deployment of capital in select areas where we seegood growth opportunities. Our acquisition of the fundmanagement capabilities of Boston-based Tekla
10abrdn.com

Annual report 2023

With an ageing population and the ongoing shift toward
individuals having to take a greater amount ofresponsibility for their own financial futures, the longterm structural growth factors underpinning the UKsavings and wealth market are well known. In that
context, owning two of the leading platform businesses
in the sector puts abrdn in a strong position, and thework we have done this year to strengthen thosebusinesses for the future only adds to that potential.
While the continuation of difficult market conditions
through 2023 undoubtedly had some impact acrossboth our Adviser and ii businesses, this was mitigated byincreased treasury income that supported improved
adjusted operating profit in both Adviser and ii. We notethat the FCA has been considering the retention ofinterest earned on cash balances and we have beenworking with them to ensure they understand ourapproach. We are confident that both Adviser and ii
offer clients and customers fair and transparent fee
structures.

In Adviser, 2023 saw the largest and most advanced
platform technology upgrade that we have undertaken.
As expected, this caused some disruption to service, but
by year-end service levels were returning to normal,
and we can now offer, and build upon, a far superioruser experience for our clients. As announced back in
May 2023, this will also see us roll out adviserOS this year
– a new way of delivering platform services to clientsthat will enhance our proposition, extend client capacity,and differentiate abrdn from the wider market.
The year saw our Managed Portfolio Services (MPS)
team shift to Adviser from our ii business. We anticipate
strong demand from advisers and believe there is asignificant opportunity for further growth here. The
same applies to the launch of our own on-platform SIPP
and Junior SIPP in 2024.
ii also benefited from a significant technology update in
2023 that allowed the platform to remain ahead in what
is a rapidly developing sector. While market conditions
dampened customer acquisition and trading activity,
we enjoyed the comparative resilience afforded by our
subscription model and proved our strength byincreasing our share of market trades over the year. ii
also delivered the highest net AUA inflows across UK
D2C platforms in 2023, according to Direct Matters.
Important work to optimise the business model within ii
was also delivered. The sale of our discretionary fundmanagement business to LGT in September underlined
our disciplined approach to capital allocation. The
simplification and integration of our Financial PlanningAnother customer-led development was the launch of
our Investor Essentials and Pension Essentials products,
offering lower prices to customers with smaller
investment pots and widening out the breadth of themarket for whom ii becomes the best choice on price.
We expect these innovations, and investment in ourbrand, will support higher customer acquisition overtime, especially as conditions begin to support improved
investor confidence.

Disciplined capital management

The indicative CET1 resources at 31 December 2023
were £1.5bn (2022: £1.3bn) with a coverage of 139%(2022: 123%). This was facilitated by another year of
disciplined capital management, during which we
carefully balanced non-core divestments with a
combination of targeted investment in the business andcontinued returns to shareholders.
Organic cash generation and efficient stake sales
generated £875m. Consistent with the previous year, wereturned c£600m to shareholders in the form of
dividends and share buybacks, and reinvested £152m
largely to continue growing our closed-end fundbusiness.
We plan to deploy surplus capital to fund the delivery ofthe £150m cost savings we have outlined and may use
the proceeds from divestments to support bolt-on
acquisitions within key thematic markets. The Board’s
current intention is to pay a total annual dividend of
14.6p until it is covered at least 1.5 times by adjusted
capital generation, at which point the Board will seek togrow the dividend in line with its assessment of theunderlying medium-term growth in profitability.

Playing our part in creating a more sustainableworld

The unfortunate sequence of global crises we haveexperienced in recent years may have drawn someattention away from the challenges we face on climatechange but the urgency around the need to respond is
only intensifying. Our Sustainable Investing team were
present for the COP28 meeting in the UAE in November
where we were encouraged by agreement for the firsttime on a transition away from fossil fuels, which we
believe can be a catalyst for meaningful action. We
continue to contribute from two angles; carefulmanagement of our own operations to limit our climate
impact, where we are exceeding our objective of a 50%
reduction in reported operational emissions by 2025with currently a 69% reduction versus our 2018 baseyear; and a deeply embedded approach to sustainable
investing that we have cultivated over many years withan ongoing reduction being reported for 2023 in the
carbon intensity of in-scope public market and realestate assets, meaning we are also on track to meet ourtargets in this area (see page 45 for more detail).
Another key aspect of our sustainability agenda is ourcommitment to offering an inclusive and supportive
working environment.

We have specific approaches in place to address
gender, ethnicity and social mobility imbalances andrecorded another successive year of reducing our
gender pay gap. You can read about our efforts in moredetail on page 53.
At a headline level, we saw overall employee
engagement remain at similar levels to last year, despite
a backdrop of challenging market conditions andongoing change within the business. The external
environment, coupled with the scale of change as wetransform our business, have undoubtedly beenchallenging for our colleagues. Across the company
they have shown deep commitment to our clients and ahuge will to rebuild the firm’s success. On behalf of theBoard and the management team, I’d like to thankeveryone across the business for their hard work, skill
and determination.

The next phase of our progress

Over the last three years we have moved at pace toreshape the company and create a business model thatis fit for the future. We now have more ways to win,particularly through our enhanced exposure to thehighly attractive UK savings and wealth market, but alsowith a more focused and more efficient Investments
business. This means we are already far better
equipped to address the well-known challenges facing
active asset management. However, we have also
recognised the need to go further still in transforming
our Investments business. The transformation
programme set out in January will deliver a leaner, more
profitable Investments business to go alongside our two
leading platform businesses. We are clear that there ismore work to do but we are confident in the trajectorythat we have created and the progress that we aremaking. Our goal is for all three businesses to make theirappropriate contribution to Group earnings and in doingso, create a sustainably profitable abrdn.

Stephen Bird
Chief Executive Officer

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11

STRATEGIC REPORT

and ii teams showed that we can cut cost while creating
a model we can better leverage for our customers.

Our business model

Building a modern
investment company
Positioned for success throughthe economic cycle

Driven by our purpose to enable our clients tobe better investors, we have strengthened ourbusiness model through effective capitalmanagement and investment to create strong
foundations for growth.
Positioned to benefit fromkey investment market
opportunities
1

Our strengths and resources
Specialist asset manager
providing investment solutions tomeet complex needs.
Sustainable investment
considerations integral to ourinvestment process.
Strong UK adviser platform
offering, powered by leading
technology.
UK’s second largest direct-toconsumer investment platform.
Strong balance sheet to drive
shareholder value.

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Continued growth opportunities in
Asia and emerging markets, driven
by:
–
–
–
–

Demographics
Urbanisation
Economic opportunity
Wealth effect
2

Energy transition seen acrossevery industry including:– Homes– Transportation– Construction
3
Democratisation of technology
and investment– People empowered to shape
their own investment
decisions

Annual report 2023

An efficient, diversified
model
Strengthened, simplified business– Strategic focus– Robust governance– Effective capital management
Driving investment in long-term
growth– People– Product– Technology
Structured around threecomplementary businesses
Investments
Adviserii

Delivered through strong
operational processes
Controlled processes
Our control environment helps us
manage risk effectively, provide
business security and maintain
operational resilience.
Efficient operations
We are building our operating
model for agility, speed andefficiency, supported bytechnology which aims to deliver
the best possible experience.

Clients
Long-term value created

Diversified business and a strong
balance sheet support longterm value creation
Investment in long-term growthPayment of dividends and thereturn of excess cash toshareholders

We focus on delivering outcomes that truly
matter to our clients. We draw on our expertiseand insight with the aim of delivering long-term
investment performance.

42%

Three-year investment performance

PeopleWe aim to attract and develop the best people
for leadership roles, and to offer clear pathways
for career advancement.

54%

Employee engagement scoreSociety
We have important responsibilities to society
and the environment. We combine the powerof responsible investment with the positive
impact we can have through our operations.

No.1

Ranked asset manager byWorld Benchmarking Alliance

Shareholders
How we make money
We earn money mainly from asset
management and platform fees basedon AUMA. We also earn revenue fromsubscription and trading fees, and earn
an interest margin on cash balances.

Read more in the Chief Financial Officer’s overview
on pages 62 to 75

We aim to create sustainable shareholder value
over the long term. We have a strong trackrecord of returning value to shareholders.

14.6p
Full year dividend

Read more on Stakeholder engagementon pages 54 to 56

Annual report 2023

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13

STRATEGIC REPORT

Value shared with stakeholders

Our strategy

A strategy forclient-led growth
A strong sustainable business means focusing on the areas where wehave the scale and expertise to win. We have four clear strategic
priorities where existing and emerging market opportunities, and the
evolving needs of our clients, align to our areas of strength.

Sustainable
investing

Asia
Asia is an economic powerhouse – and there’s more tocome. Long-term economic growth requires three
things: an increasingly skilled workforce, investment ininfrastructure, equipment and technology, andimproving productivity. Asia’s emerging markets
demonstrate all three of these essential building blocks.
We remain deeply committed to growing our businessin Asia. Our track record in specialist equities, means weare well placed to serve both clients in and outside of
Asia looking to invest in the region.

While scrutiny of Environment, Social and Governance(ESG) approaches has intensified, clients still want toinvest in a way that has the potential to make adifference as well as providing a financial return –whether that be through powering the energy
transition, protecting biodiversity or driving positivesocial change.
We have created a suite of sustainability-focused
solutions to meet client needs. We firmly believe that
active engaged investment management is integral toproviding the capital for positive change.

Progress

Progress– In 2021, we launched the abrdn Sustainability
Institute in Singapore and hired René Buehlmann as
CEO Asia Pacific, and then CEO of the Investments
business in May 2023.
– In 2022, we celebrated 30 years of investing in Asia.
– We refocused our model in Asia Pacific exiting
Taiwan and Australia and introducing distribution
partnership models.
– In 2023, we launched Strength in Asia, a major brandcampaign in markets across APAC and Europe.
– We led the region on driving Sustainable investing
through the facilitation of Asia Sustainability Week.

– In 2021, we launched our climate change fundrange. We also created a new Chief Sustainability
Officer position to ensure responsibility for thisintegral theme was represented at the most seniorlevels.
– In 2022, we launched our MyFolio Sustainable Index
range in support of clients’ ESG goals and ourEmerging Markets Sustainable Development
Corporate Bond passed through the $100m mark in
its first year.
– Over the course of the last two years, we have beenrunning an engagement programme with thehighest-financed emitters in our equity holdings,
identifying clear milestones on the path todecarbonisation.

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Annual report 2023

STRATEGIC REPORT

Alternatives

UK savings
and wealth

We believe we are in the foothills of the next techsuper-cycle which will see revolutions in biotech andhealthcare, clean tech, and digital assets. The best way
to access investment in these areas will be Alternatives.

The decline of defined benefit pensions, the significant
advice gap and an ageing society mean it is more
important than ever that UK investors have the tools
and appropriate guidance or advice.

Our Alternatives business includes our capabilities inreal assets, which comprises extensive global realestate expertise, infrastructure and commodities. It alsooffers clients access to major areas of European
Private Credit, as well as compelling and innovative
opportunities in the Hedge Fund sector.

With ii offering market-leading direct investing and ourplatform providing a best-in-class proposition to theadviser market, we have successfully repositioned ourbusiness towards an increasingly attractive andgrowing UK savings and wealth market.

Progress

Progress– We have built out our Alternatives franchise tosignificant scale with £76bn of assets, particularly inreal estate and logistics. Tritax, which we acquired in
2021 remains a leading player with two of thebiggest listed logistics funds in the market.
– In 2023, we were appointed by Border to CoastPensions Partnership, one of the UK’s largest asset
owner pools, to support the launch andmanagement of its UK Real Estate proposition.
– We have enhanced our talent and structure,appointing new Heads of Private Credit and Real
Estate.
– We refocused the business through announcing thesale of non-core US and European Private Equity
businesses.

– Acquisition of interactive investor brought 400,000
new customers to the abrdn group.
– Since the acquisition, ii has launched new products
and price points, including Investor Essentials andPensions Essentials, subscriptions at a lower pricepoint designed to appeal to investors with less toinvest. This makes ii the cheapest on the market foranyone with £15,000 or more to invest.
– In 2023, we migrated 5,800 customers from
Investments to ii to better service their needs.
– In Adviser we have retained our ‘A’ rating for
financial strength from leading independent
consultancy firm AKG – with financial strength a key
consideration for advisers when selecting theirprimary platform.
– In 2023, we delivered a major technology upgrade
to the platform to better service our adviser clients.

Annual report 2023

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15

Our strategy continued

Our investments in action
As a specialist global investor with over £360bn of AUM, wehelp capital meet opportunity to support the world’s everchanging needs. Informing our approach are a number ofmegatrends that are set to influence the shaping of the
global economy, including decarbonisation, urbanisation andinfrastructure development and a shift in economic power
to the East.

London based private biopharmaceutical company
Quell Therapeutics are working to delivertransformational and valued therapies addressing a
range of autoimmune and inflammatory diseases, aswell as preventing rejection in organ transplantation.
We are invested through two of the four closed-end
funds acquired from Boston based Tekla in 2023 tobuild out our capabilities in the biotech and healthcare
sphere where technology advances and demographic
changes are set to drive growing opportunities in the
future.

Ten Boomgaard in Bruges is the first investment in
Belgium on behalf of investors in the abrdn PanEuropean Residential Property Fund (APER) which now
has assets in 30 cities across 10 countries. As demand
continues to rise for good quality housing in key
European cities, the fund successfully raised over
€100m in the last quarter of 2023.

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Annual report 2023

STRATEGIC REPORTThe Mirasierra Gallery in Madrid has been recognised as
the Best Retail Park in Spain by leading industry body
Asociación Española de Centros y Parques Comerciales(AECC). Purchased for an institutional mandate, theGallery brings together both retail and healthcare
centres and was constructed with a core commitment
to sustainable building management.

Power Grid Corporation of India is the country’s largest
electric power transmission utility, transmitting about
50% of the electricity used domestically. Invested in thecompany through abrdn’s Asia Income fund, we see anopportunity to benefit from infrastructure spending andthe massive push towards renewables and associatedinfrastructure in India.

Wessex Internet Limited and its majority shareholder,abrdn’s third Infrastructure Fund, ASCI III, announced
successfully securing an additional £35m funding in 2023
for the business’s long term growth plans, bolstering thefirm’s mission to provide high-speed fibre to the home,
and improved connectivity in rural areas of South-WestEngland.

Annual report 2023

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17Performance overview

Results impacted by continued
challenging market conditions
Market conditions remainchallenging and this is reflectedin our 2023 results.

Financial performancesummary

We are taking actions to restore
our core Investments businessto a more acceptable level ofprofitability.

£1,398m
Net operating revenue
reduced by 4% to £1,398m (2022: £1,456m) with lower
revenue in Investments mainly reflecting the impact of net
outflows and adverse market conditions. This was partly
offset by growth in Adviser and ii.

£249m
Adjusted operating profit
reduced by 5% to £249m (2022: £263m) reflecting thelower profitability in the Investments business, partly
offset by the benefit of the full 12 months contribution
from ii1 of £127m. Excluding ii1, adjusted operating profit
was 38% lower than 2022 at £122m (2022: £196m).

82%
Cost/income ratio
was stable at 82% (2022: 82%) reflecting the benefit fromthe efficient Adviser and ii cost models, offset by lower
revenue in Investments.

(£6m)
IFRS loss before taxof £6m (2022: loss £612m2) was impacted by losses of£178m from the change in fair value of significant listed
investments, restructuring and corporate transaction
expenses of £152m and goodwill impairments of £62m.

(£13.9bn)
Net outflows (excl. liquidity and LBG
tranche withdrawals)of £13.9bn (2022: £10.3bn), representing (3%) of opening
AUMA, largely reflected by lower gross inflows which
included the impact of the uncertain market environment.
1. Relates to ii (excluding Personal Wealth).
2. Comparatives have been restated for the HASL implementation of IFRS 17. Refer to Basis of preparation in the Group financial statements section.

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Annual report 2023

STRATEGIC REPORTCapital performancesummary£1,466m

Our capital resources provide
strength to allow investment
to grow the business and be
more efficient.

CET1 capital resources
increased to £1,466m (2022: £1,301m), benefiting by£576m from the remaining HDFC stake sales, partly offset
by the impact of the £300m share buyback in 2023.

£1.8bnCash and liquid resources
remained robust at £1.8bn (2022: £1.7bn). These
resources are high quality and mainly invested in cash,
money market instruments and short-term debt
securities.

£557m
Value of listed stakesof £0.6bn (2022: £1.3bn) excluded from the CET1 capital
position. Reduction includes impact of final HDFC stakesales which generated net proceeds of £0.5bn.

14.6p
Full year dividend per share
was maintained at 14.6p (2022: 14.6p). It remains theBoard’s current intention to pay a total annual dividend of
14.6p until it is covered at least 1.5 times by adjusted
capital generation.

Read more about our financial and capital performance in the
Chief Financial Officer’s overview section of this report.

Annual report 2023

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19

Our businesses – Investments

A refocused Investments
business ready to capitalise
on areas of strength
The capabilities in our Investments businessare built on the strength of our insights, which
are generated from wide-ranging research,worldwide investment expertise and local
market knowledge. While continuing to offer acomprehensive range of solutions in publicmarkets and alternatives, we have simplified
our Investments business and refocused ourcapabilities on areas where we have the scaleand specialism to capitalise on the key
themes shaping markets.

Highlights£122.4bn

AUM from our fixed income capabilities£23.7bn

AUM in our closed-end funds£102m

Cost reduction in the Investments business,exceeding the £75m target set for 2023

Investment performance1
1 year44%(2022: 41%)
“Faced with industry headwinds and a challenging risk-off
environment for a second year in a row, 2023 was a difficultyear for the Investments business. However, we are taking
decisive action to stabilise flows, improve our cost/income
ratio and build the foundations for sustainable growth.
As a specialist asset manager, we continue to see compelling
opportunities across both public markets and alternatives, andI remain confident that we can deliver value for our global
client base, particularly as markets normalise.”René Buehlmann
CEO, Investments

3 years

42%(2022: 65%)

5 years52%(2022: 58%)

1. The investment performance calculation covers all funds that aim to outperform a benchmark, with certain assets excluded where this measure of
performance is not appropriate or expected. Further details about the calculation of investment performance are included in the Supplementary
information section.

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Annual report 2023

STRATEGIC REPORTWe are a specialist asset manager with £366.7bn in
AUM. We focus on areas where we have both thestrength and scale to capitalise on the key themes
shaping the market, through either public markets oralternative asset classes.

Speci
alist
equ
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a ti
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s o e in vel u tio ns st m e n tQuaan ti tti veAnnual report 2023

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21

Our businesses – Investments continued

Positioning our businessto capitalise on
megatrends
Another challenging year for investors

We have continued to operate in a challenging, risk-off
environment with outflows seen across the market. The
notable drop in market values across emerging markets(EM), fixed income and real assets has presented asignificant revenue challenge. Geopolitical and credit risk
persist, while rising interest rates have continued to drive
asset allocation into lower-risk, lower-margin debt
products and cash. With the growing adoption of passive
and index investing also disrupting traditional asset
management models, our business continues to takeactive steps to not only mitigate these challenges but also
to position itself for a pivot back to growth.
Investment performance over the three-year time period
has weakened, with 42% of AUM covered by this metricahead of benchmark (2022: 65%). The drop in the threeyear performance reflects a challenging period for active
managers particularly those with a quality equity
investment style with a bias towards Asia and Emerging
Markets. To address these challenges, we are committed
to refining our processes by:– Expanding our thematic equity offering and researchcapabilities.
– Implementing asset class-specific processenhancements, including refinement to valuation
approaches, portfolio construction techniques, and risk
analytics.
– Evolving our CIO governance structure andintroducing ‘Team Scans’ at asset class and desk levels
to facilitate peer review and to drive continuous
improvements.
– Focusing on strategic technology and data initiatives toenhance analysis and process efficiency.
Despite current headwinds, clear megatrends havedeveloped that will dictate market dynamics in years tocome. In 2023, we continued to align ourselves to thesetrends:Urbanisation and infrastructure development: With rapid
urbanisation, and growing populations worldwide, thedemand for homes and infrastructure continues to grow,driving capital expenditure and economic activity. We
have significant scale in real assets with £42.8bn of AUM as
at December 2023. In the logistics space, abrdn-owned
Tritax remains a leading player with two of the largest
listed logistics funds in the market. Throughout 2023, wedemonstrated momentum across infrastructure, living
and logistics, notably winning a significant mandate with
Border to Coast in June to support the launch andmanagement of its UK real estate proposition.

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Annual report 2023

Climate change and the energy transition: Global carbon
emissions rose by another 1.1% last year, which was thehottest year on record. However, the global energy
transition is well underway, supported by the COP28
agreement to triple renewable capacity and doubleenergy efficiency by 2030. We continue to evolve our
product range to capture climate commitments aiming to
respond to continued market interest in sustainable andclimate investing. In June 2023, our Climate Transition
Bond Fund secured Environmental Finance’s ‘ESG Fixed
Income Fund of the Year’ award, after being recognised
for its particular focus on climate adaptation.
Health and biotech: In October 2023, abrdn completed theacquisition of the healthcare fund management
capabilities of Tekla Capital Management, a specialist
healthcare investment adviser. With the global healthcare
sector grappling with an ageing population and increasing
rates of chronic illnesses, such as diabetes and cancer, thehealthcare technology industry has grown rapidly. In the
United States alone, healthcare expenditure has grown at
an annual rate of 6% since the 1980s, as the US population
has surpassed 330 million and the obesity epidemic has
worsened.
Growth in Asia and emerging markets: Despite thesignificant headwinds over the last two years we expect
Asia and emerging markets to remain important drivers ofglobal growth. Our estimates suggest that by 2035,
emerging markets will drive c75% of global growth, with
China and developing Asia alone accounting for 60% of
this. With a significant specialism in EM and Asia, where wehave operated for over 30 years, we are well positioned tobenefit from these structural growth opportunities. Despite
signs of recovery in Q4, Asia and EM performance was
subdued in 2023. However, we expect both Asia and EM todeliver improved performances this year and next with
opportunities emerging to further capitalise on our strong
insurance heritage across the regions.

STRATEGIC REPORTOur progress in 2023
Strengthening our team

Focusing on areas of strength

Strategic focus

Fixed income: Our fixed income offering has considerable
scale with over £122bn AUM across credit, government
bond and money market funds in developed andemerging markets. Fixed income opportunities have been
subdued in recent years by the low-yield environment, but
in 2023 we began to see this trend reverse and ourpipeline is now promising. This potential is underpinned by
performance with 81% of our fixed income capabilities
outperforming over three years, and in credit, where wehave particular strength, 99% of our assets outperforming
over the same period.

In May 2023, we announced changes to the management
team of our Investments business with René Buehlmann
becoming sole CEO, Peter Branner joining as Chief
Investment Officer and Xavier Meyer being promoted to
Head of UK and EMEA and Chief Client Officer.
In July and October we announced the sales of our US andEuropean Private Equity businesses, respectively with the
US sale completing in October and the European sale
expected to complete in H1 2024. These disposals willraise over £105m for the business and reflect our strategy
to focus on areas of strength and invest in sectors withattractive long-term dynamics.

Delivering significant cost savings

In 2022, we merged or closed c60 funds to simplify ouroffering and refocus on scale. In 2023, we continued thisprocess closing a further c60 funds deemed to be subscale, inefficient or no longer aligned with our corestrengths. While closing funds is never a simple exercise,we have significantly progressed our fund rationalisation
programme, which was central in the cost savings
delivered across 2023. This process has also increased
scale for our existing funds, with 74% of our funds now withover £100m in AUM (61% in 2022) and 55% with over
£200m in AUM (41% in 2022).
Our most significant headwinds this year have been in
emerging markets, Asia and Global Absolute Return
Strategies (GARS) where we have continued to see
outflows. Our EM range is well positioned to pivot to growth
once investor appetite for risk returns, and our GEM
Income fund continues its stellar track record, in which it
has performed in the top quartile of the market since
inception. We have taken action following a strategic
review to merge or close funds associated with our GARS
range, which completed in December 2023.
In addition to our fund rationalisation strategy, we
simplified our management structure, restructured ourAustralian operations, and refocused our equities andmulti-asset franchises. These actions, taken in
combination, resulted in the Investments business
comfortably exceeding its £75m cost saving target with
£102m in savings delivered in 2023.

Funds atthe start of 20221

c700

Funds atthe end of20231

Simplifying our product range, exiting undifferentiated or
sub-scale areas, and reducing costs has allowed us tointensify our focus on our areas of expertise in highermargin products and high-growth sectors with the highest
potential to deliver performance:

Alternatives: Real estate, infrastructure and logistics allcontinue to show attractive annual growth rates andcompelling opportunities for scale players. In 2023, we
made a series of investments across European real estateand infrastructure, with our third infrastructure fund, ASCI
III, investing in Spanish fibre networks, biomethane facilities
in Italy and regional heating and electricity in Finland. At
the end of 2023, our Alternatives business had £76.4bn in
AUM including £42.8bn in real assets, £8.8bn in private
credit and £17.1bn in funds of hedge funds andcommodity ETFs.
Closed-end funds: In 2023, we announced three significant
acquisitions in the closed-end fund (CEF) space, acquiring
five CEFs from Macquarie Asset Management, the four
listed CEFs of Tekla Capital and entering into anagreement to acquire four CEFs from First Trust, which we
expect to complete in Q1 this year. Assuming thecompletion of the First Trust funds, these acquisitions,when taken in combination, would add £3.6bn in AUM,
strengthening our already robust CEF offering. We remain
the third largest CEF manager globally.
Significant insurance expertise: We have nearly 200 years of
heritage in pensions and insurance, and currently run£45bn in pensions AUM globally and £179bn in insurance
assets. This expertise was recognised in the 2023 Asia
Asset Management Awards where we won ‘Best
Insurance Manager’. In 2023, our partnership with ourlargest client, Phoenix Group, delivered £6bn of grossinflows (£5.2bn net of reinsurance arrangements) fromtheir Bulk Purchase Annuities business and £4bn of inflows
from their Workplace Defined Contributions business.
Phoenix and abrdn continue to explore ways to mutually
benefit from and strengthen our partnership.

c580

1. A subset of the abrdn product range in-scope for rationalisation.

Annual report 2023

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23

Our businesses – Investments continued

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Our strategy in action in 2023

it
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Throughout 2023 we took decisive action to simplify and refocus ourInvestments business. By selectively disposing of non-core businesses, anddelivering significant cost savings, we have better positioned ourselves todeliver growth as global market conditions normalise.

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Annual report 2023

STRATEGIC REPORTJim O’Connor,
Head of the Americas“CEF acquisitions follow our strategy ofbuilding scale, focusing on asset classes
where we have strength, and bringing AUM
to the group in a perpetual capital
structure”

Q: In a year of fund rationalisation why has abrdn
been acquiring closed-end funds?

Spotlight on closed-end funds

While CEFs are often regarded as complex structures, we
believe our experience and knowledge sets us apart fromour competitors. Our scaled operating model enables us
to look after existing CEF product ranges with the ability togrow via the launch of new funds, secondary market
issuances, and corporate mergers and acquisitions offunds.

In Q4 2023 we announced the proposed acquisition offour CEFs from First Trust Advisors which, subject toapproval by the funds’ shareholders, represents c£600m in
additional AUM. The announcement of the deal followed
shortly after our acquisition of Tekla’s four listed CEFs
which, in combination with the five CEFs acquired fromMacquarie Asset Management earlier in the year, addedc£3bn in AUM. We spoke to Jim O’Connor, Head of theAmericas, who oversaw the Tekla deal about why abrdn
remains acquisitive in the CEF space.

Q: What was the attraction of Tekla Capital?

“As a specialist manager, we seek to deliver value in theareas of the market where there are inefficiencies andwhere active management can provide superior risk
adjusted returns.
This acquisition represents a strategic extension of ourthematics capabilities, enabling us to welcome a team oftalented investment professionals specialising in thehealthcare sector. We believe this to be an area of growthunderpinned by megatrends in the investable universe
with demographics and technological innovations driving
an ever-increasing demand for life science services.”“CEFs are an area of specialism and vehicles which
support long-term investment outcomes for retail andinstitutional investors that can’t be replicated by otherinvestment vehicles.

In December 2023, abrdn announced that we would
invest an amount equal to up to six months’ worth ofmanagement fees in the shares of our UK listed CEFs. The
total amount invested as part of this initiative will exceed£30m. This exercise aims to demonstrate our strong
advocacy for the integrity of the CEF business, and ourdesire to closely align ourselves with the shareholders of
the funds we manage.”

Q: abrdn has executed more listed CEF
acquisitions than any other investment manager inthe last 15 years, will this trend continue?
“Market headwinds have created a challenging
environment for CEFs, which have been trading at theirwidest discount levels since the financial crisis. This has
contributed to an environment with opportunities toacquire funds at attractive valuations. We continue toreview the marketplace for opportunities to drive
additional scale and efficiency in our key capabilities or to
add new capabilities of strategic significance.”

Our opportunities for growth– UK pensions and global insurance: We will continue to leverage our strong partnerships and heritage to drive growth in
the pensions and insurance markets. The UK is the fourth largest pension fund market globally with £2.2tn in AUM.
– Fixed income: We have strong performance across our capabilities in this c£20tn market, we will look to leverage thisstrength as market conditions become more conducive to fixed income and multi-asset products.
– Alternatives: We will bring our core capabilities across real estate, infrastructure and private credit to bear for clients
this year and beyond with our significant won not funded pipeline.
– Acquisitions: We will continue to scan the market for bolt-on acquisitions within key thematic markets, such as
biotech and healthcare.
– Group collaboration: interactive investor clients were provided early access to the IPO of the Short Dated Enhanced
Income Fund in July 2023. Building on this success, we aim to launch a range of thematic ETFs on ii in 2024.
Annual report 2023

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25

Our businesses – Adviser

Empowering advisers todeliver for their customers
Our Adviser business provides financial
planning solutions and technology for UK
financial advisers, enabling them to create
value for their businesses and their customers.
We offer a combination of tools and services
personalised to their needs, including accessto the full suite of investment solutions that
abrdn offers as well as a wide range of open
architecture investment options.

50%of UK advice businesses use our platforms

420,000
Customers

2,600
Adviser firms£73.5bn
AUMA1

Platinum rated by
AdviserAsset“We remain committed to our strategic ambition - to be theeasiest partner for advisers do business with. We will achieve
this by providing frictionless technology and solutions that help
advisers to do business their way. Following the delivery of ourlargest ever technology upgrade, our service experience isback on track and strong foundations have been laid for faster
upgrades and deeper integrations. We have made strong
strides forward, but we’re never done. With adviserOS on thehorizon we’re just getting started.”
Noel Butwell
CEO, Adviser

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12%

AUA market share

90%

Customer satisfaction score

1. Includes Platform AUA of £70.9bn. The MPS businesses
moved from Personal Wealth to Adviser in May 2023.
Comparatives have not been restated.

Annual report 2023

STRATEGIC REPORT

A growing and dynamic market£4.6tnUK Savings andWealth Market1

Performance overview

Despite challenging market conditions throughout theyear, our Adviser business delivered a robust
performance, culminating in another year of revenue
and operating profit growth.

AUMA4

2021

£76.2bn2022£68.5bn2023£73.5bn£590bnAdviser
Platforms2

£74bn

abrdn
Adviser3

Adjusted operating profit5

2021

£74m

2022

£86m

2023

£118m

Market overview

The UK adviser market is expected to grow at an annual
growth rate of 11% over the next five years2. Withc£590bn of advised customer assets currently on
platforms, this suggests c£995bn of assets will be on
adviser platforms in 2028. By leveraging our evolving
product and technology stack, our Adviser business is well
positioned to maintain its place as a market leader.
1. The Investment Association, Investment Management in the UK 2022-2023.
Figures as at 31 December 2022 and inclusive of retail and institutional markets.
2. Fundscape Q4 Press Release, February 2024, AUMA as at 31 December 2023.
3. abrdn Adviser AUMA as at 31 December 2023. Platform AUA is £70.9bn.
4. The MPS businesses moved from Personal Wealth to Adviser in May 2023. Comparatives for 2021 and 2022 have not been restated.
5. The threesixty and MPS businesses moved from Personal Wealth to Adviser from January 2023 and May 2023 respectively.
Comparatives for 2021 and 2022 have not been restated.

Annual report 2023

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27

Our businesses – Adviser continued

Creating capacity through technology
Robust market dynamics

The rapid transition from a low inflation, low interest rateenvironment to one of sustained high rates and stubbornly
high inflation has continued to impact the UK savings andwealth market. A cost-of-living crisis has persisted
throughout the year, leading to many individuals reducing
their saving commitments, or drawing on their existingsavings to mitigate higher living costs, with off-platform
cash solutions also increasing in attractiveness.
Against this challenging backdrop it is possible tounderappreciate the significant opportunity that
continues to exist within the domestic savings and wealthmarket. While savers’ propensity and ability to save has
been temporarily dampened, in times of market volatility,
high-quality advice from experienced advisers isinvaluable. Additionally, the core drivers of medium-term
flows into the market remain, including the need to invest
to counter the impact of inflation, a steady demand for
retirement planning, and the need to maximise tax
allowances in a challenging landscape. We will continue tochampion the role of independent advisers in delivering
advice and support, allowing more individuals and families
to plan, save and invest for their futures.

The democratisation of finance

There has been a continued shift in responsibility onto theindividual for their own financial affairs. Providing advisers
the flexibility to consolidate and control portfolios andwrappers, and to access a suite of tools to manage theircustomer’s finances on one platform meets this demand.
While savers now have more access to various asset
classes than ever, the complexity of their needs and a lackof understanding of investment strategies underpins therequirement for specialist advice.

The growing advice gap

In the UK savings and wealth market, demand for advice
continues to significantly outweigh supply, with this savings
and advice gap already running beyond 20 million people.
While just over 28,000 qualified financial advisers currently
practice in the UK, an ageing and growing populationmeans these advisers have faced significant capacity
constraints for many years. At abrdn, we understand thatthe most efficient means of addressing this capacity
limitation is through strategic technology enhancements.
We want to empower our clients to grow their businesses
in line with their ambition. By providing an enhanced
technology solution that allows advisers to onboard andregularly serve more customers, we not only increase theirpersonal capacity, but in turn address the wider advice
gap for their existing and potential customers. Researchfrom Investment Trends’ 2023 Adviser Technology andBusiness Report noted that the average UK adviser iscurrently targeting a c17% increase in their client base; oursolutions are designed to help facilitate this.

The evolution of platforms

Fragmented, archaic, and limited integration with theadvice process have made the lives of both customers
and advisers difficult. Our market-leading platform isdesigned to remove technological pain-points and allow
advisers to not only onboard more customers, but also
provide them with more flexible, efficient, andpersonalised services. We have built future-fit technology,
delivering a number of enhancements focused on areasof the platform where we’ve had adviser feedback. In May,
we announced adviserOS, which we plan to launch tomarket this year. adviserOS represents an extension ofservices beyond platform functionality, offering additional
services to improve integration and reduce friction in theadvice process.

A vote of confidence from primary partners

We have built our significant market position by sourcing,developing, and maintaining long-lasting relationships withfinancial advice businesses of all sizes. Core to our growthstrategy is becoming the primary partner for an
increasing number of our existing and new clients. In 2023,
46% of our AUMA was held by primary partnership firms,
which highlights the confidence of our clients to place
their money with us for the long term and the benefit of
the technology updates the business has made acrossthe year.

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Annual report 2023

STRATEGIC REPORTOur progress in 2023
A year of transformation

This year, our Adviser business delivered the largest andmost advanced technology release we’ve evercompleted on the Wrap platform. This provided adviserswith a range of upgrades in technology, including
improved customer reporting with 30 customisablefeatures, a flexi-ISA product, and an improved userinterface. As with all technology upgrades of this scale, we
experienced a period of disruption as clients learned touse the new platform. The platform is now operating as
expected, allowing advisers to fully benefit from theimproved functionality delivered.

Integration of MPS

Our Managed Portfolio Service (MPS) was previously partof abrdn’s discretionary fund management business,
which was sold in September 2023. Our MPS range
leverages the global investment research capabilities andexpertise from the wider abrdn business, ensuring the
optimal asset allocation with componentry from thewhole market. There are three investment styles applied
across four portfolio ranges, with five risk assessed models
in each range, providing advisers with a range of solutions
to meet customer’s different investment preferences andattitude to risk.
Over the course of the year, the MPS has now been fully
integrated into the Adviser business and with strong
demand from clients, we expect our solutions to provide asignificant growth opportunity starting this year. In
December 2023, we re-priced our abrdn MPS and
Sustainable MPS to drive this growth as we looked toleverage our existing relationships with half of UK advice
businesses.

Preparing to launch adviserOS

In May 2023, we announced our strategic intentions forWrap and Elevate, upgrading our solutions to become
adviserOS. adviserOS is a new approach to platforms thatwill enable advisers to achieve more for their customers. It
amplifies our position as the leader in terms of content andexperience, acting as our key differentiator in the market.
It is not a rebrand of Wrap or Elevate, but rather a newtechnology-enabled solution sitting above a single
platform technology that will provide advisory firms withaccess to a range of different services.
adviserOS will enable advisers to meet the challenges they
face by creating efficiency in the advice process throughbetter integration and workflow with the tools they
already use throughout their business. It will support
adviser businesses with tailored support and data-driven
insights, reduced keying of data and unlocking time infront of their customers.

Delivering the abrdn SIPP

In line with adviser feedback, our next phase of platform
upgrades is to launch our new abrdn SIPP and Junior SIPP
this year. The launch of these products forms a coreelement of our strategy to increase the number ofwrappers per customer amongst our existing base andattract new clients and customers to our platform.
The new abrdn SIPP will build on the foundations laid in thedelivery of our technology upgrade and will bring thesame experience and efficiency enhancements, whilst
also enabling the bulk transfer of the existing Wrap SIPP
from Phoenix. Our SIPP will provide a significant
improvement in technology through digitisation of key
processes and straight through processing, removing
inefficiencies in client and customer journeys and the needfor paper forms.
The abrdn SIPP launch will strengthen our product offeringwith a Junior SIPP, delivering an additional way for ourcustomers to help save for their children andgrandchildrens’ futures, whilst also laying the foundations
for relationships with the advised customers of tomorrow.
As with our Junior ISA, our Junior SIPP will be offered at nil
charge to encourage positive savings habits acrossgenerations.

Consumer duty

As a business, we completed a thorough value for money
assessment on both abrdn Wrap and Elevate. The
assessment, which can be found on our website, confirmsthat both platforms provide fair value to customers.

Financial performance

Difficult market conditions seen in 2022 persisted
throughout 2023 and, as such, flows have been impacted
market wide as inflation remained stubbornly high and asinterest rates steadily rose until August. Against these
conditions, our Adviser business saw outflows of £2.1bn(2022: £1.6bn inflows). However, the business delivered
another year of revenue and operating profit growth,
supported by the impact of the increasing base rateenvironment on cash margin throughout 2023.

Industry recognition

Our business continues to receive recognition from acrossthe industry. In 2023, we retained an ‘A’ rating for financial
strength from AKG, as well as a ‘Platinum’ rating from
AdviserAsset, and a ‘5 star’ rating from Defaqto for boththe Wrap and Elevate platform propositions. These
continued awards are not only a testament to the qualityof our team and solutions, but also form an importantreference point for the advisers who choose to partnerwith us.

We have developed a prototype and are actively testingand iterating the launch features of adviserOS with asample of client firms. The aim of this approach is toensure we’ve done enough research to genuinely
understand what works best and what matters most to
our clients before launching this year.

Annual report 2023

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29

Our businesses – Adviser continued

Our strategy in action in 2023
er technology upgrade
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After delivering comprehensive technology upgrades in 2023, we havereadied the Adviser business to capitalise on our position as a market
leader and to launch innovative products, including our SIPP, which will
support future growth.

30abrdn.com

Annual report 2023

STRATEGIC REPORT

Ashley Brooks,
Managing Director of DB Wood

“abrdn have a great balance of flexible
products, a well-priced distribution
platform and market leading reporting
functionality”
Why abrdn? We spoke to Ashley Brooks, the Managing
Director of DB Wood on what sets us apart from our peers.
A 44-year-old business located in Nottinghamshire, DB
Wood manages c£1bn on the behalf of around 1,500
households with over 65% of their AUA entrusted to abrdn.

Q: What are the critical factors in being a
successful financial adviser?

“Providing financial advice is essentially a people business.
In order to succeed you need to deliver high-quality,
proactive advice, set clear rules of engagement, andmaintain a commitment to doing the right thing for yourclients. Ultimately, you need to develop trust whileproviding a highly personable service.”

Q: Why did you first choose abrdn to support yourbusiness?

“We’ve been working with abrdn since 2006. We firstbegan working with abrdn due to your great balance of
flexible products, the well-priced distribution platform, andyour market leading reporting functionality, which allows
us to deliver on our client promises.”

Q: Why is abrdn now your primary platform
provider?

“abrdn understands our requirements and the challenges
that IFAs face in the UK. Because of this understanding, weare able to work with you strategically to grow ourbusiness and, more importantly, deliver the benefits ofscale that we can pass through to our client base via
reduced costs.”

Q: Is technology now the key growth driver within
the UK financial adviser market?

“Technology is an important component in delivering aneffective client service proposition. As ever, the mostimportant driver of growth in the market is the relationshipbetween client and adviser. Technology upgrades canimprove these relationships and also create capacity tobuild new relationships.”

Q: How do you expect adviserOS will improveclient experience?

“We expect the adviserOS upgrade to assist our businesswith its enhanced integration, personalisation,
administration efficiencies and enhanced client
proposition.”

Our opportunities for growth– Launch of adviserOS: adviserOS will introduce a new approach to platforms, providing clients with a broader
set of tools and capabilities, in addition to the core platform technology, to drive efficiency in the advice process.
– Launch of our SIPP: Our SIPP launch is central to our strategy of increasing our wrappers per customer, with ourjunior SIPP delivering an additional way for customers to help save for the futures of their families.
– Bulk transfer strategy: We will transfer existing Wrap SIPP customers from Phoenix to the abrdn platform pension,
enabling customers to benefit from the enhancements delivered.
– Grow our Managed Portfolio Service: We will leverage our reach in the UK Independent financial adviser market, inwhich we hold a relationship with 50% of IFA firms in the UK, to drive growth in our MPS business.
– Group collaboration: We will leverage Finimize capability and content for our adviser partners as part of theadviserOS upgrade.
Annual report 2023

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Our businesses – ii

The UK’s leading subscription-based
D2C investment platform
The UK’s second largest direct-to-consumer
investment platform and number one flat fee
provider, interactive investor (ii), enables
individuals in the UK to plan, save and invest in
the way that works for them. The acquisitionof ii transformed abrdn, positioning us for
growth as one of the UK’s leading personal
wealth businesses with positive long-term
structural dynamics.

407,000
Total customers1£152,000
AUA per customer1£61.7bn
AUMA1

19.3%

AUA market share2

1. Relates to ii (excluding Personal Wealth).
2. Compeer Benchmarking Report Q3 2023.

“We are pleased with how ii has progressed this year and how
we’ve positioned ourselves to deliver better outcomes for our
growing customer base. Despite challenging conditions in the
UK savings and wealth market, through technology andproduct upgrades, we have further empowered retailinvestors to save for their futures.”Richard Wilson
CEO, interactive investor

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Annual report 2023

STRATEGIC REPORT

Building a leading position in the UK savings andwealth market

Performance overview

ii is set to benefit from structural drivers in the UK retailinvestor market.

AUMA

In its first full year as part of abrdn, ii continued to exceed
our initial expectations and displayed significant potential
for market capture and growth in 2024 and beyond.

£13.1bn£4.3bn£4.6tnUK Savings andWealth Market1

2022 Total

2023 Total£67.1bn£66.0bn£54.0bn£326bn£61.7bn

Adjusted operating profit

D2C
Platforms2

2022 Total

£72m

£62bn

2023 Total£114m44,5Interactive
Investor3

£67m

£127m

Personal Wealthii (excluding Personal Wealth)

1. Investment Association, Investment Management in the UK 2022-2023.
Figures as at 31 December 2022 and inclusive of retail and institutional market.
2. Platforum D2C Market Update, September 2023, AUMA as at September 2023.
3. ii (excluding Personal Wealth) AUMA as at 31 December 2023.
4. Includes loss of £13m in Personal Wealth (2022: profit £5m).
5. Includes ii for 7 months.

Annual report 2023

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33

Our businesses – ii continued

The UK’s leading subscription-based provider
Empowering retail investors

The acquisition of ii in May 2022 fundamentally changed
abrdn as a business. ii is the UK’s second largest investment
platform for private investors and remains the leading
subscription-based provider. The business’s evolving
platform enables over 400,000 retail investors to access abroad range of investment and savings products via
desktop, mobile app and over the phone.
ii’s subscription-based model provides a higher degree offinancial resilience than peers with percentage fee
models, however the business has not been immune fromthe current subdued levels of investor confidence. ii
derives its revenue from subscription fees, trading
commissions, foreign exchange (FX) transactions andtreasury income, with trading commissions and FX mostimpacted by the headwinds in the market.

A growing customer baseHigh inflation and interest rates affected investor
confidence throughout the year and consequently ii’s rateof customer acquisition, however total customer numbers
grew from 402,000 to 407,000 in 2023.
Excluding the recently migrated customers from theInvestments business, Share Centre, EQi and customers
exiting due to the closure of our pension trading accounts,
customer numbers grew from 299,000 at the end of 2022
to 310,000 at the end of 2023, an increase of 4%.
As the market begins to show signs of recovery, ii intends
to attract net organic customer growth of over 5% in 2024,
driven by further platform developments, increasing SIPP
penetration, the development of our integrated Financial
Planning division and through continued investment inbrand and advertising.
Pleasingly, the business has continued to see inflows of
AUMA, with £2.9bn added in 2023, comprising £3.3bn of
inflows into ii and £0.4bn of net outflows from Personal
Wealth, which was largely due to restructuring activity
during the year. If outflows due to the exit of the pension
trading account product are excluded, ii’s net inflows
increased to £3.9bn, over 7% of opening AUA. According to
Direct Matters, ii delivered the highest net inflows acrossUK D2C platforms in 2023.

Resilience in a challenging market

The cost-of-living crisis in the UK has not only lowered
customers’ propensity to save and invest but has also
contributed to a more risk-averse environment.
Investors are now more likely to move into fixed-income
securities and savings accounts, made more attractive bya steady rise in interest rates, with the Bank of England’sbase rate peaking at 5.25% in August 2023, where it hasremained since.
Although the market as a whole saw decreased volumes,
ii’s market share of trades increased due to its active
customer base, pipeline of new services, and proposition
enhancements. While this market capture is encouraging,transactional revenues fell 17% in 2023, reflecting lower
trade pricing from September 2023, which reduced thecharge for standard UK and US trades to just £3.99.
34

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Annual report 2023

Growth potential

Despite relatively flat total customer numbers andreduced trading revenue, increased treasury income andour focus on simplification and digitalisation has supported
an increased operating margin and an improvement inour cost efficiency. This highlights the significant growthpotential of the business. As and when the market
normalises, new customers can be onboarded at a very
low and decreasing marginal cost, so if customer numbers
grow as anticipated in the medium-term, this lean
operating model amplifies that potential for sustained
growth in profitability.
ii’s potential is further supported by the medium-to-longterm growth drivers underpinning the UK direct-toconsumer market. The UK is the sixth largest economy in
the world and has a well-developed D2C investment
sector. The UK’s D2C industry is already worth over £300bn
and with a growing and ageing population, we are going
to see a significant intergenerational transfer of wealthwhich will drive further momentum in the market.

A compelling sector

Despite some new entrants, the UK D2C platform market
retains high barriers to entry and better-known platforms
with scale and high numbers of active users, such as ii,
benefit from both economies of scale and better
developed technology stacks. UK savings and wealththerefore remains a compelling industry to be in,particularly as financial education and retail participation
increases.

STRATEGIC REPORTOur progress in 2023
Introducing Financial Planningii’s offering has been repositioned during 2023, with thetransfer of Managed Portfolio Service to Adviser in May
2023, and the sale of the discretionary fund managementbusiness to LGT in September 2023.
As ii has continued to grow, we have received numerous
requests for financial planning advice. One of the key
synergies outlined when abrdn acquired ii was to integrate
abrdn’s financial planning capabilities into the business.
Over the course of 2023, we have further integrated thesecapabilities, and restructured our financial planning
offering, reducing headcount by 21% and closing four
offices.

Strengthening our platform

One of ii’s key growth drivers is the strength of ourplatform. In a competitive market with both incumbents
and new entrants investing heavily in their technology, it isessential that both our website and mobile app remainahead of the curve. In January 2023, we launched new
website infrastructure, modernising the design, improving
user experience, and making our news feed easier tonavigate.
An ever-increasing volume of trades are being made ‘inapp’, with new entrants to the market, in particular,
focusing on creating simple and engaging user interfaces.
While ii still sees the majority of investing activity taking
place via desktop rather than app, close to a fifth of all
mobile trades in the UK were done through our app,
highlighting not only the quality of our own user
experience, but the importance of continuing to invest in it.
In 2023, we continued to enhance our app capabilities,
including facilitating in-app currency conversion and
AGM/EGM voting capabilities.
– 50,000 new app downloads in 2023
– 26% increase year-on year of clients using our app– 36% increase year-on-year of in app trades
In Q2 2023, we piloted ii community, a social trading
platform allowing users to discuss shares, compare
portfolios and get inspiration from high-performing retailinvestors. The app, which will be fully rolled out in 2024 is asocial network encouraging investors to interact and tolearn from each other’s trading strategies.

Essential value

In February, ii launched Investor Essentials, an entry-level
ISA and/or trading account, designed for investors withportfolios of under £50,000. Through the Essentials plancustomers below the £50,000 threshold pay a monthly feeof £4.99 and benefit from free regular investing. At launch,trading fees were £5.99, which we later reduced in
September 2023 to £3.99, to deliver further value.

SIPP penetration

Increasing product penetration is a key pillar in our growthstrategy and central to this strategy is further market
capture of SIPPs. Currently, c15% of our customers hold a
SIPP account with us, an increase of 2.5% over the lastyear. In 2023, for the second year running, ii was a Which
Recommended Provider of SIPPs with our growth in themarket underpinned by attractive low fees, including ourPension Essentials plan, and our continuous developmentof the customer tools andcontent.

Introducing the ii’s

Despite being the UK’s second
largest investment platform for
private investors, we havehistorically tracked behind ourpeers in terms of brandrecognition. In 2023 weincreased investment inmarketing, culminating in Q4
with the launch of ii’s firsttelevision advert and asignificant multi-media
campaign.

Award-winning value

In 2023, ii continued to receive
positive recognition from its
customers, partners, andstakeholders. At year end, ii
had over 23,000 reviews on
Trustpilot, 81% of which were
five-star.
In yet another busy year forawards, ii also won Investors
Chronicle’s Best ISA, the AIC’s
Shareholder Engagement Award for the third year
running and we were crowned ‘Investor Rights Champion’for a second year running.

Consumer duty

In readiness for the FCA’s implementation deadline of
31 July 2023, ii ran a project to review all requirements inalignment with the Duty’s ‘Customer Outcomes’. Areas offocus included: customer journeys and testing ofcustomer communications; completion of ‘fair value’assessments across the product range; and a review ofthe ‘target market’. Changes to policy and process,initiated by the project are now embedded within the dayto-day operations of all functions, with ii well placed todemonstrate compliance with Consumer Duty.

Pension Essentials, which was launched in October 2023, isan entry-level subscription plan for portfolios under£50,000 and is now the best value pension in the UK forsaving pots over £15,000.
Annual report 2023

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35

Our businesses – ii continued

Our strategy in action in 2023
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In Q3 2023 over 25% of UK cash market trades in the D2C market weremade through our platform. By upgrading our technology, focusing ondelivering value and by increasing brand awareness with our first national
advertising campaign, in 2023 we laid the foundations for sustainedorganic growth.

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Annual report 2023

STRATEGIC REPORT

Alain Courbebaisse,
Chief Commercial Officer“Investment is not something that is
generally taught in schools, but it’s a life skill
that has the potential to provide financial
freedom much earlier in life.”
We asked Alain Courbebaisse, CCO of interactive
investor, about the driving factors behind launching
Investor Essentials and why he believes that investingshould be accessible to everyone. Alain joined ii in March2023 and is responsible for leading the commercial team,
as well as leading ii’s business development andintegration activity.

Q: Why does ii use a subscription-pricing model?

“Long-term, a flat fee is just a simpler, fairer way ofproviding an investment service. The beauty of flat-fee
pricing is that the more people save and grow theirinvestments, the more they keep. The wider market isdominated by percentage fee-models, which see
customers paying more and more as their portfolios grow.
Direct feedback from customers and our own market
research confirms that flat-fee is savers’ preferred way toinvest, and from a business perspective, it also provides
financial resilience with our subscription revenue not being
linked to market levels.”

Q: How have you found initial client feedback?

“Feedback from clients has been extremely positive andbecame even more so in September when we increased
the maximum portfolio value to benefit from Essentials up
to £50,000 (from £30,000 at launch). We also made thejourney even simpler by onboarding all our customers
onto Essentials plans and then upgrading them when thevalue of their portfolio exceeds £50,000.”

Q: What does the democratisation of investment
mean to you?

“Leaving savings sitting in a low-interest current accountor cash, particularly during periods of high inflation, meansthat individuals and families across the UK are at best
missing out on the long-term potential of the stock market
and at worse seeing the value of their savings steadily
decline in real terms.
Investment is not something that is generally taught inschools and can be quite daunting as a novice, but it’s a life
skill that has the potential to provide you financial freedom
much earlier in life. At ii we don’t just want to enable
investment; we want to actively encourage it andyou’ll certainly be seeing us continue to focus on education
this year.”

Q: Why did you launch Investor Essentials?

“Investment platforms can be a powerful force for positivechange when they put customer interests at the heart oftheir pricing. Our flat fee has always been incredible value
for larger pots and we wanted our model to work for abroader section of the investing public.”

Our opportunities for growth– Market penetration: ii continues to focus on organic growth through increased marketing and aims to continue
capturing market share, particularly from percentage-fee platforms.
– SIPP customers: Our strategy to increase SIPP market penetration continues and we are targeting 20% net growthin SIPP customers, year-on-year.
– Implementing new solutions: New solutions including the ii Managed ISA and Managed SIPP, a digitally led financial
planning proposition, ii Community and ii360, a new platform for experienced traders, are being developed to
attract new customers to our platform.
– Group collaboration: ii will continue to collaborate with the wider abrdn business to share talent, skills, products, andoperational capability to improve the quality and breadth of investment products and services on offer tocustomers right across the group.
Annual report 2023

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37

Sustainability – Overview

Sustainability overview
Supporting our clients, our people, and a credible transition
toward a better world.
Our focus:
Investments

Our communities

In-scope public market portfolio
carbon intensity reduction versus
2019 baseline

Contribution to charitable causes(2022: £2.4m)(2022: 27%)

Our conduct

41%
Environment

Climate andnature impact

25%

In-scope real estate portfolio
carbon intensity reduction versus
2019 baseline(2021: 7% increase)

Operations

Social69%

People andopportunities

Operational emissions reduction
versus 2018 baseline(2022: 70%)

Our people

54%
Governance

Trust andtransparency

Employee engagement level(2022: 50%)

43%

Female representation acrossglobal workforce (2022: 43%)

38

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Annual report 2023

£2.1m
99%

Mandatory training completed(2022: 99%)

External rating

AA

MSCI ESG Rating(2022: AAA)Climate - Introduction

We are committed to enabling our clients and customers to achieve theirclimate goals and to contribute to real world decarbonisation.
Learn more about our approach in our 2023 Sustainability and TCFD report.

2018

2019

Our operationalemissionsbaseline.

2021

Published ourinterim operationalemissions reduction
target.

Published climatechange approach
document for
Investments.

Climate performancefirst included in
Executive Director
Remuneration policy.

Launched
operational
climate working
group.

Initial pilot with theeco-app Pawprint
to help colleagues
understand andreduce their carbon
footprint.

Published ourlong-term climate
targets for operations
and investments.

10-year anniversaryof Environmental
Champions colleague
network.

Appointed our Headof Climate Change
Strategy and joined
the Net Zero AssetManagers initiative.

ii integrated into
operational footprint.

Launch of ourcarbon footprinting
tools for investment
desks.
Published our first
TCFD aligned
report.

2023

2024

41% reduction forin-scope publicmarket portfolio
carbon intensity
versus baseline.
25% reduction forin-scope real estate
portfolio carbon
intensity versus
baseline.
ii wins AIC
Shareholder
engagement award,
supporting retailinvestors to engage
with their investments.
Net Zero award fromthe Scottish Financial
Enterprise for our
research papers
identifying climatetransition leaders.
'ESG fixed income fundof the year' award from
Environmental Finance.

2022

Our portfolio
emissions
intensity
baseline.

Launched
investments
climate working
group.

69% reduction
in operationalemissionsversus baseline.

2020

First
standalone
TCFD
reporting for
Adviser entity.
We intend to
publish our
ClimateTransition Plan.

First report portfolio
emissions intensity
for equities andfixed income.

2025

First rollout of carbon
metrics reporting forclients, in-line with
SFDR.
Launched four climate
focused products
including our strategy
in partnership with the
Big Issue Group.
First published realestate net zero
investment framework.

Target date for
50% reduction
in operationalemissionsversus 2018.
Real estate net
zero studies
complete forall in-scope
funds.

Published our firstyear climate scenario
analysis research.

ii ACE 40 list supports
retail investors to findsustainable solutions.
Pilot biodiversity study
in partnership with
Natural History
Museum at Far Ralia
estate.
Publication of
credibility assessment
pilot research.
Launch ofengagement strategy
focused on highest
financed emitters.
Appointed Chief
Sustainability Officer
for Investments.

2030

Target date for
50% reduction forin-scope portfolio
carbon intensity
versus 2019baseline.

2040

Target date for
operational net zero.

Investments businessii business

Adviser business

Operational impacts

Annual report 2023

abrdn.com

39

STRATEGIC REPORT

Delivering our climate strategy

Climate – Governance

Climate oversight and management
Information flow and climate-related actions during the year
Our governance framework

abrdn plc operates using a governance frameworkaligned to the principles of the UK Corporate Governance
Code (2018) (page 86). Our Board of Directors oversee
the implementation of the company business model andactivities of our businesses: Investments, Adviser, and ii.

The role of our Board and Committees

The Board and Committees provide specific oversight inrelation to material business activities and challengemanagement on matters, which includes climate-relatedrisks and opportunities. Examples of this oversight are
outlined on this page, with a focus during 2023 on nonfinancial disclosure requirements and approach.

Our Executive Directors

January 2023
Audit Committee review of strategy and approach for nonfinancial disclosure, alongside regulatory requirements, andforward-looking objectives.

February 2023
Audit Committee review of paper advising of controls andprocesses for key sustainability disclosures related to the 2022
Annual report.
Remuneration Committee review of performance againstsustainability-related targets to inform Executive Director
remuneration.

Our Chief Executive Officer serves as the climate sponsor
for the business and bears delegated responsibility fromthe Board for oversight of climate-related risks andopportunities. Our Chief Financial Officer is incentivised
through our Executive Director Remuneration policy,
alongside our Chief Executive Officer, to achievesustained performance against our public targets.

Board noting of 2022 Sustainability and TCFD report.

Climate change working groups

Strategic update from Chief Corporate Affairs and Investor
Relations Officer to the Board, including corporate sustainability
priorities.

Our Chief Executive Officer delegates authority from theBoard to our Executive Leadership Team, and in turn toour climate working groups, to support the assessment ofclimate-related risks and opportunities and to provide
related recommendations.
Our Head of Sustainability Insights & Climate Strategy andHead of Corporate Environment Strategy chair two
climate-related working groups, which are key to ourclimate governance structure and consist of subject
matter experts from across the business. The groups meetto review and discuss material climate risks andopportunities and shape strategic approaches to climatechange. These groups are key forums for identifying
matters to be escalated through the Executive Leadership
Team and to the Board for consideration. In 2023, we alsoestablished a Climate Transition Plan Steering Group andsupporting taskforces to prepare for the publication of our
first Transition Plan. These forums supported engagement
across the business beyond our existing working group
activities.

Our wider sustainability governanceWe continue to take a forward-looking view and havetaken steps to advance our governance beyond climate
and to sustainability as a whole. Additional information isavailable in our Sustainability and TCFD report, available atwww.abrdn.com/annualreport40

abrdn.com

Annual report 2023

June 2023
Remuneration Committee review of performance againstsustainability-related targets.

October 2023
Remuneration Committee review of performance againstsustainability-related targets.

December 2023
Audit Committee review of paper advising of controls andprocesses for key sustainability disclosures, as relates to the2023 Annual report.
Strategic update from Chief Corporate Affairs and Investor
Relations Officer to the Board, including actions taken to prepare
our first Climate Transition Plan.

Climate – Strategy
STRATEGIC REPORTClimate-related risks
and opportunities
Our climate risk and opportunity radar
Our sustainable investing opportunity

Our focus on reporting

Many of our clients are interested in opportunities fromsustainable investing. This is a strategic focus for our
Investments business as we provide the solutions and insightto enable these objectives. In early 2022 we appointed a
Chief Sustainability Officer for the business, alongside a newly
created Sustainability Group. Our focus has since beenrecognised with external awards, such as Environmental
Finance’s ESG fixed income fund of the year, and the Scottish
Financial Services Award for Net Zero in 2023. We believe
there is a long-term opportunity to enable sustainable
investment for our clients and continue to invest in our people,
tools, and capabilities to support this. Conversely, we also
recognise the risk innate to shifting client preferences should
we not be positioned to meet evolving needs.

The regulatory landscape for sustainability reporting
continues to move at pace. Due to the global nature of ourbusiness, we are exposed to an array of emergent reporting
standards, and there is a risk of inadvertent non-compliance,alongside costs to resource and report the required
disclosure. Our first and second-line teams continue tomonitor the regulatory landscape and we are alert to theimplications of frameworks such as ISSB and CSRD. We havehistorically been an early adopter of sustainability reporting
frameworks, such as TCFD, so believe we have a strong
foundation to achieve implementation. Nevertheless, there isa risk that we inadvertently fail to meet the expectations of
our stakeholders, with potential costs and reputational
impacts as the consequence.

Identified climate opportunities

Potential financial impact to abrdn

Products
and services

Development of lower
carbon investment products
and services

Resource
efficiency

Use of more efficientbuildings, technology andtransport

Identified climate risks

Applicability

Time horizon

Likelihood

Revenue opportunity from demand for lowercarbon products and services

0-10 yrs

Possible

Reduced operational costs

0-10 yrs

ProbableTime horizon

Risk score

Potential financial impact to abrdn

Applicability

Policyand legal

Burdensome costs and/or
regulatory non-compliancedue to enhanced reporting
regulations

Costs to gather, analyse, and publish data

0-5 yrs

MediumCosts of inadvertent non-compliance, due tovolume of global regulation

0-5 yrsHigh

MarketNot understanding shifts toclient and customer
preferences

Reduced revenue from decreased demandfor products and services

0-10 yrs

MediumPotential for missed opportunities due to lackof suitable products and services

0-10 yrs

MediumUncertainty regarding public
policy on climate change

Lack of clarity regarding the pace, directionand evolution of public policy exacerbates
market uncertainties and associated returns

0-10 yrs

MediumClimate-related events
impact the financial markets

Volatility impacting clients and reducing
revenue and financial performance. Potential
for financial instability

0-10 yrs

Medium/High

Potential for financial market instability anduncertainty

0-10 yrs

Medium/High

Increased stakeholder
concern or negative
sentiment

Reduced revenue from decreased demandfor products and services

0-5 yrsHigh

Costs associated with potential litigation due
to investment decisions

0-5 yrs

High

Increased severity of
extreme weather events

Costs associated with damage toinfrastructure, technology, and disruption to
power networks

OngoingMediumCosts and operational impact of non- officebased disruption to colleagues/third party
suppliers

OngoingMediumReputational

PhysicalTime periods for climate risk and opportunity radar:
Short: 0-5 years

Medium: 5-10 years

Long: 10+ years

Investments

ii

Adviser

Annual report 2023

Operational impacts

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41

Climate – Strategy continued

Climate scenario analysis
Our approach to understanding transition pathways, within managed
investments.
Our beliefs driving our analysis

We believe climate scenario analysis is a critical tool toenable a thorough understanding of climate-related risks
and opportunities. It is vital that we understand how
physical climate change, and the energy transition, may
potentially affect the investment returns of the companies
and markets in which we invest on behalf of clients. We
believe that doing so will support increased resilience,
enable us to encourage positive change at the companies
in which we invest, and support client objectives. However,there is still uncertainty regarding exactly how policies,
technologies and physical impacts will unfold in the future.

Our bespoke approach

Climate scenario analysis provides the means to conduct
a forward-looking, quantitative assessment of potential
financial impacts arising from climate change. We use acombination of 18 bespoke and industry standard
scenarios across a range of temperature rises (between
1.3 and 3.2˚C by 2100) and transition pathways up to atime horizon of 2050. Our industry standard scenarios are
based upon those created by the Network for Greening
the Financial System (NGFS), with our bespoke approachallowing us to incorporate plausible policy assumptions
across regions and sectors. This results in a mean scenariothat captures our view of the most plausible energy
transition. Our third-party modelling partner supports ouranalysis and refinement of our insights on an annual basis.
Our approach goes further to consider the credibility ofcompany transition plans, using a six-factor scoring
framework developed in-house. This addresses one of the
primary challenges of scenario analysis in that companies
negatively exposed to the energy transition can also alter
their strategies and take advantage of transition
opportunities. Our credibility assessment covers
approximately 1,200 of the largest firms by sector, whichmeans that 79% of the 1,000 largest equities in our climate
scenario tool are covered by this assessment.

Limitations of modelling

Our framework has limitations inherent to forward-looking
analysis and assumptions. Our analysis is primarily focusedon equity and fixed income assets, and it is important toacknowledge a reliance on external data, which though
improving, remains lacking across some regions andsectors. Our climate scenario analysis cannot capture theimpacts from companies coming into and out of businessduring the energy transition. Our baseline scenario also
assumes that the market has accurately priced transition
risks and does not account for market inefficiencies orlevel of understanding of market participants. The
overriding limitation is that our exercise is a simplification of
the real world and must be reviewed alongside otheranalysis to support effective decision-making.

Our insight and conclusions

Our latest insight suggests the world is not on track toachieve Paris Agreement goals, with our analysis
suggesting that the most likely outcome is a 2.3°C world
by 2100. Our framework allows us to generate forecasts on
the effects of our climate scenarios on over 24,000 equity
assets and 52,000 corporate bonds. This can be
aggregated to sector, regional, and fund levels. However,
our core insight is that the impact from climate change ismostly a micro phenomenon. This is because at an
aggregate level the negative impacts on individual
securities are largely offset by positive effects on others;
therefore, suggesting actionable insight comes fromlooking at the dispersion across and within sectors. Figure
1 illustrates this and plots the dispersion of uplifts andimpairments across sectors using our mean scenario as
our most plausible view of the energy transition.

Resilience of abrdn as a firm

Our climate scenario analysis takes an external view toinform our investment processes. The resilience of theGroup is explored in the Viability statement on page 74.

Figure 1:

Health Care
Communication Services

Estimated asset impairments
and uplifts from our latest
research

Information Technology
Industrials
Financials

Probability weighted mean scenario,
February 2023.

Consumer Staples
Consumer Discretionary
Utilities
Real Estate
Materials
Energy
-80%

42

-60%

-40%

-20%

0%

20%

Valuation Impact

abrdn.com

Annual report 2023

40%

60%

80%

100%

Climate – Risk management
STRATEGIC REPORTSTRATEGICREPORT

Our climate change toolkit
Identifying and managing climate-related risks
Climate-related risk is integrated within our Enterprise Risk
Management Framework, which is subject to Board
oversight. We operate ‘three lines of defence’ with definedroles and responsibilities across the business. Climatechange is considered amongst our principal risks anduncertainties but is not defined as a principal risk due to its
close association with other risk categories.

Carbon metrics

In other words, we view climate risk to be material, but it isbetter perceived through financial or regulatory and legalrisk categories at the enterprise level. More information on
our principal risks from pages 76-79.

Provides a forward-looking view on transition and physical risks
and opportunities. Enables assessment of potential financial
impacts by geography, sector, and company. Supports
portfolio construction and solution development.

Identifying and assessing climate-related risks

Our identification of climate-related risks andopportunities is led by our first line sustainability teams, with
our Group risk assessment being based on our Enterprise
Risk Management risk impact matrix. Our Investments
business has a dedicated Sustainability Group, led by our
Chief Sustainability Officer, and we have a Corporate
Sustainability team which works closely with ourbusinesses to identify and manage sustainability risks andopportunities, including those related to climate change.
Our climate risk and opportunity radar (page 41) reflects
our assessment. Climate change considerations are partof our day-to-day risk management processes, but weperiodically revalidate our Group assessment. In January2024, our Chief Risk Officer chaired a workshop withrepresentatives from across abrdn to refresh our radar.
The focus of the radar is the likelihood and impacts of risks
and opportunities, and we have mitigation, or realisation
strategies aligned to each risk or opportunity. We consider
inherent risk and quality of controls to determine a residual
risk score.
Our business is predominantly exposed to transition risk
(and opportunity) as markets, policy, and regulations
come to terms with alignment to a lower carbon world.
This is of particular significance for our Investments
business as we invest on behalf of our clients andincorporate material climate-related risks andopportunities into our investment processes. We believe
our Adviser and ii businesses face less direct exposure toclimate-risks, as platform versus investment managementbusinesses.

Managing risk with our climate change toolkit

In addition to the expertise of our sustainability and ESG
professionals, we have developed a range of tools to
integrate and inform both our internal decision-making
processes and those of our platform clients. These tools
support decision-making with data, research, and insight,
and in the case of our Investments business, areintegrated with our risk management processes.1 It is
important to be clear that climate considerations are notmaterial to every investment decision, and integration
depends on the objective of the fund or strategy, nor are
tools without limitations. Supporting data is drawn from a
range of vendors with different levels of data coverage.
We aim to improve our capabilities each year.

Provides a baseline for measuring climate impact, providing an
understanding of portfolio carbon intensity and financed
emissions. This enables an understanding of climate-relatedrisks at portfolio, sector, and company levels.

Climate scenario analysis platform

Credibility assessment framework
Our framework assesses corporate net zero targets using a sixfactor scale, considering ambition, performance, readiness,
policy environment, market penetration, and governance. This
supports our identification of transition leaders.

Portfolio alignment
In 2023 we developed a portfolio alignment tool, which assesses
target design and emissions performance of 20,000+
companies. We translate the output to three alignment metrics,
with initial application to a subset of our funds.

Blueprint for Decarbonisation: Real Estate
Our direct real estate investment process is informed by 21
sustainability indicators, which include climate factors to
support the determination of risks and opportunities. This is an
input into our due diligence process.

ii ACE 40 investments
The ‘ACE 40’ list aims to support retail investors to find quality
choices among the available universe of sustainable funds
across asset classes, regions, and investment styles to allow
them to construct a global well–diversified portfolio.

Adviser platform enablement
Our platform provides access to a range of sustainable
investment options. We believe this is an increasing
consideration for advisers and provide information outlining
common types of sustainable investments on our website.
Investments
ii
Adviser

1. Further information on toolkit applicability in our 2023 Sustainability
and TCFD report, available at www.abrdn.com/annualreport

Annual report 2023

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43

Climate – Risk management continued

Active ownership and solutions
Enabling decarbonisation through ownership and solutions
Focus on real-world decarbonisation

Our climate engagement strategy is focused onunderstanding climate-related financial risks within ourholdings and driving real-world decarbonisation. One way
we can do this is through engaging with our largest
financed emitters to seek transparency on
decarbonisation milestones and to advocate forincreased disclosure. In 2022, for our public market
investments, we launched a two-year engagement
programme with our top 20 largest financed emitters. Our
expectation is that over two years we will observe
meaningful progress against climate-related milestones. If
we do not see sufficient progress against thesemilestones, we will take voting action and/or consider
reducing our financial exposure, if we believe a lack ofprogress represents a clear financial risk to our clients. Ourassessment of companies is informed by relevant
standards, such as the Climate Action 100+ net zerobenchmark, and our own credibility assessment
framework. We provide additional information on our
progress to date in our Stewardship report andSustainability and TCFD report. Available atwww.abrdn.com/annualreport

Exercising voting and ownership rights

In addition to encouraging improvement through targeted
engagement, we may take voting action at companies
that we identify as climate laggards and on climaterelated shareholder resolutions. Our public voting policy
outlines our expectations, and we disclose our voting
decisions on our website the day after a general meeting.
We use data from groups, such as CDP, to inform ourdecisions and understanding.
Climate change resolutions

2023

2022

Resolutions voted
Votes in favour
Votes against management

162
40%
55%

141
56%
26%

2023

Targets & Transition

2022

Say on Climate
Fossil Fuel Financing
Disclosure & Oversight
Lobbying
Just Transition‘Say on climate’ resolutions

We are supportive of ambitious corporate sustainability
strategies and targets but note an increasing trend
toward those strategies being tabled for shareholder
approval. While we welcome the intention of thetransparency, we believe they have the potential to diluteboard accountability and limit potential future investor
challenge. We have therefore taken the decision toabstain from those resolutions, as we believe othermechanisms offer more effective approaches.
44

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Collaboration and advocacy
We are members of the Net Zero Asset Managers initiative,
the Institutional Investors Group on Climate Change (IIGCC),
the Powering Past Coal Alliance (PPCA) and Climate Action
100+. We are also research funding partners for theTransition Pathway Initiative. Our belief is that industry
collaboration is an important mechanism to encourage
action and promote best practice. The Net Zero Investment
Framework (NZIF) from the IIGCC is the foundation for ourapproach to climate solutions. We contributed toward NZIF
as part of our involvement with IIGCC.

Investment solutions in supportof climate goals
We are proactively developing climate transition and low
carbon investment solutions to align climate ambition withinvestment opportunity, to help our clients achieve theirclimate goals. We work with current and prospective clientsto understand and enable their objectives. Our focus is tooffer a range of options for clients, whether they have madecommitments to net zero, or are interested more broadly intransition opportunities.
Climate considerations are incorporated to different extents
across our fund range, with our sustainability focused
solutions designed to meet four broad types of client needs.
We offer a small number of climate thematic funds, but also
apply climate-related screens, or decarbonisation targets toother sustainability focused products. We also work directlywith clients on segregated mandates to outline how we can
support any climate-related objectives they may have. This isin addition to using tools, such as climate scenario analysis,
and research capabilities to inform our wider investment
processes (pages 42 to 43) .
Many of our clients have set goals aligned to net zero but thisdoes not automatically translate to mandates. Markets andpolicy environments need to align to support decarbonisation
at pace. Equally, terms like sustainability and ESG are
increasingly subject to public challenge. Against thisbackdrop our Head of Sustainability Insights and Climate
Strategy spent time during 2023 speaking with clients in the
US, Australia, Singapore, Hong Kong, and at COP28; hearing
first-hand from investors as to their priorities, and highlightingsome of the risks and opportunities we have identified related
to climate change. We will continue to actively engage withour clients in support of their objectives.

Climate – Metrics and targets
Strat
STRATEGICREPORT

Portfolio decarbonisation
We are targeting a 50% reduction in the carbon intensity of in-scope
assets versus a 2019 baseline by 2030, within our Investments business.
In 2023 we report a 41% reduction in the carbon intensity of in-scope public market assets (2022: 27%), and a 25%
reduction to the carbon intensity of in-scope direct real estate assets (2021: 7% increase), versus our 2019 baselines.

Public markets: Progress to dateThis is our second year of reporting against our target, witha 41% reduction in the carbon intensity of in-scope publicmarket assets versus our 2019 baseline (2022: 27%). Inscope assets include equities, fixed income, and active
quantitative strategies, with decarbonisation across each
asset class. Our progress to date is in-line with our initialexpectations, based on emission intensity trajectories fromclimate scenario analysis, and we note a gradual increase
to client mandated decarbonisation in segregatedaccounts, which is an important enabler to achieving ourtarget. We also note client inflows to low-carbon
quantitative strategies over the last three years, with theseproducts being a significant contributor to reducing publicmarket carbon intensity, due to targeting low-carbon
exposures as part of the product strategy mandate.

Real estate: Reporting a less volatile metric

In our 2022 disclosure we noted our intention to introduce
the calculation of real estate emissions intensity by floorarea (m2). This is a static denominator; whereas ourprevious metric used valuation (£GAV), which can bevolatile and may less meaningfully represent the carbon
intensity of real estate assets. We are restating our datausing the floor area metric, as we believe this to be a morecredible basis to monitor our long-term target.

Drivers of change in carbon intensity

There remain significant challenges to overcome toachieve real-world decarbonisation, including favourable
policy environments, data availability, and client demand.
Reductions in portfolio carbon intensity may not be
attributable to real-world impact. Our strategy to drive thischange is supported by climate scenario analysis, work tounderstand corporate credibility (page 42), active
ownership, and solutions development (page 44). Ourcarbon target is an aggregate indicator and does notreflect specific objectives of all clients and funds.

Between 2019 and 2022, we note a reduction in carbon
intensity by floor area of 25%. This can be attributed tochanges to property type composition of in-scope
portfolios, decarbonisation of UK and EU energy grids, andmore efficient management of assets. We note a
reduction by floor area of 35% to office assets, which
typically have a higher carbon intensity than other asset
types. This is often due to the proportion of landlord
procured energy (Scope 1 and 2) being higher for offices
than for retail and industrial parks, where tenants often
procure a higher proportion of energy. Changes to ourportfolio, such as this, mean that our reported reduction
cannot be directly attributed to real-world changes.
However, on a like-for-like basis (e.g. assets that were held
through 2019 and 2022), we note an 18% reduction incarbon intensity, illustrating a carbon intensity reduction
irrespective of portfolio change.

Additional portfolio emissions metrics

Taking the long-term view

Public market decarbonisation 26% AUMA)

Real estate decarbonisation (2% AUMA)

41% reduction (2022: 27% reduction)

25% reduction (2021 : 7% increase)

Real-world decarbonisation

Our teams can monitor a range of carbon metrics, withtools enabling disaggregation to specific holdings. These
metrics are not part of our target but can inform ourprocesses, and support climate-related risk management.

WACI: tCO2e/$m Revenue (Scope 1 and 2)

‘19

234.4

‘22
‘23

171.5
139.0

Weighted average carbon intensity (WACI) is our method of
tracking public market decarbonisation, in line with the original
recommendations of TCFD. In-scope assets include equities, fixedincome, and active quantitative strategies.

Our portfolio of assets is diverse, and we have aframework to understand the actions required to support
our target. This is expected to outline transition pathways
for all our direct real estate funds by 2025, with supporting
actions to achieve real-world decarbonisation.

Carbon intensity: kgCO2e/m2 (Scope 1 and 2)

‘19

11.05
11.78

‘21
8.26

‘22

Carbon intensity for in-scope direct real estate is normalised byfloor area and reported for the 2022 financial year. There is asignificant lag to the collection of real estate metrics fromindividual assets, preventing reporting to 31 December 2023.

Further information available in our 2023 Sustainability and TCFD report, available at www.abrdn.com/annualreport

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45

Climate – Metrics and targets continued

Operational targets and emissions
We are targeting operational net zero by 2040, with clear progressversus our interim objective.
In 2023 we remained on track to meet our objective of a
50% reduction in reported operational emissions by 2025.
We report a 69% reduction versus our 2018 base year.
This is driven largely by a significant reduction to businesstravel since 2018, which we attribute to the adoption of
hybrid working within abrdn, and amongst those we workwith. We also note significant declines in emissions
associated with energy use in our office since 2018, which
we have consolidated as part of wider organisationalchange programmes. Year-on-year, we note an increase
in reported operational emissions by 4%.
Operational climate targets1

Despite a fall in travel related emissions since our baseline
year, we note an uptick in business travel since 2022, which
is offset by reductions in energy use in our offices, and areduced estimate for employees working from home (seepage 47). This increased business travel demonstrates apartial return to pre-COVID-19 working patterns, with ourchallenge now to support behaviour change to addressthese residual emissions. Our ways of working havefundamentally changed, with this now fully reflected in our
corporate emissions profile. Further information, including
limitations, and reporting method provided on page 47.
2018base year

2022

2023

% change
versus base year

32,2189,5502

9,919

-69%

2,667
7,069
9,736
4,376

817
2,031
2,848
687

739 
1,821 
2,560
558

-72%
-74%
-74%
-87%

Fuel- and energy-related activities
Waste from operations
Business travel6
Employees working from home7
Total Scope 3
Total energy consumption

451
22,031
22,482

150
5
4,175
2,372
6,702

135
7
6,012
1,205
7,359 -67%

UK energy consumption
Global energy consumption (excluding UK)
Total energy consumption
Emissions intensity metric

26,658
8,451
35,10910,6392,388
13,027

10,746
1,812
12,558 

-60%
-79%
-64%

1.57

0.56

0.54

-66%

2,629
38
4,181
2,888

776
41
1,305
726

702
37
1,275
546

-73%
-3%
-70%
-81%

in metric tonnes of CO2e (tCO2e)

Operational net zero by 2040
50% reduction in operational emissions by 2025
Scope 1 and 2 reported emissions
in metric tonnes of CO2 e (tCO2 e)

Scope 13
Scope 2 (Location based)
Total Scope 1 and 2 (Location based)
Scope 2 (Market based)
Scope 3 reported emissions5
4

in metric tonnes of CO2 e (tCO2 e)

in kilowatt-hours (kWh ‘000s)

in metric tonnes of CO2 e (tCO2e)

Scope 1 & 2 emissions intensity per full-time employee
equivalent (FTE)8
Reported emissions by location
in metric tonnes of CO2 e (tCO2 e)

Scope 1
Scope 2 (Location based)

UK
Global (excluding UK)
UK
Global (excluding UK)

1. Operational net zero and interim reduction targets are based on reported Scope 1, 2, and 3 absolute emissions (tCO2e) reductions.
2. 2022 total restated to 9,550 tCO2e (previously 14,246 tCO2e) following the application of a revised method to estimate employees working from home.
3. Scope 1 emissions include natural gas, fluorinated gas, company-owned vehicles, and stationary fuel.
4. Scope 2 emissions include purchased electricity and district heating.
5. Scope 3 reported emissions do not include some emissions categories deemed to be material but where data is currently unavailable. Refer to page 47.
6. Rail and flight journeys for business travel are calculated using the GHG Protocol's distance-based method. Exclusions apply to countries in APAC, where
only Singapore and Australia are included.
7. 2022 estimate associated with employees working from home restated to 2,372 tCO2e (previously 7,068 tCO2e) due to methodology changes. Refer topage 47.
8. Emissions intensity reporting based on FTE as of 31 December 2023 of 4,719 (2022: 5,130 and 2018: 6,192). We deem this the most applicable intensity
metric for our operational emissions footprint due to our impacts largely relating to how and where we work, e.g., offices, travel, and homeworking.

9. 2023 data subject to Independent Limited Assurance in accordance with ISAE(UK)3000 and ISAE3410 by KPMG. Assurance statement and detailed
reporting criteria included in the Sustainability and TCFD report at www.abrdn.com/annualreport46

abrdn.com

Annual report 2023

STRATEGIC REPORTEmissions reporting
Method and supporting commentary
Operational reporting methodology

Our emissions inventory on page 46 is reported in line with
Greenhouse Gas (GHG) Protocol. We use an operational
control boundary and exclude any joint ventures andassociates. Emissions associated with our direct
operations are therefore representative of abrdn plc andits wholly-owned and operated subsidiaries.

Scope 1 and 2 emissions categories

Scope 1 and Scope 2 emissions are captured andconverted from recorded metrics, such as kilowatt-hours(kWh) to tonnes of carbon dioxide equivalent (tCO2e)
using regional guidance on conversion factors. If data isunavailable for in-scope sites on 31 December, emissions
are estimated using comparative time periods or otherapplicable methods.

Reported Scope 3 emissions categories

We report fuel and energy related activities (Category 3),
waste from operations (Category 5), business travel(category 6), and an estimate for employees working
from home. For each category we follow GHG Protocol
guidance and prioritise the conversion of real data, suchas passenger kilometres travelled, to tCO2e using
applicable conversion factors. We are reliant on third
parties for the collection of some of this data, including
waste contractors and travel booking platforms. There
are also immaterial limitations linked to completeness inthat data may not always be available for our entire estateor is subject to estimates or apportioning due to sharedoffices. We prioritise reporting based on proportion FTE
and aim for continuous improvement year on year.

Other Scope 3 emissions categories

We do not currently report against all 15 categories of
Scope 3 defined by the GHG Protocol. Our assessment isthat some categories are not material due to the nature of
our operations. However, we acknowledge gaps related
to purchased goods and services (Category 1), capital
goods (Category 2), employee commuting (Category 7)
and investments (Category 15). During 2023 ourprocurement function has worked to develop a Category
1 and 2 baseline, which we expect to report in future. We
also carried out an employee survey which will enable us
to establish a Category 7 baseline. Our focus for Category
15 has been to enable our clients to understand emissions
related to their portfolios and we disclose portfolio carbon
intensity metrics on page 45, with scope limited by data
coverage and availability. This does not currently include
financed emissions associated with the assets on theabrdn balance sheet (pages 162-163). Our intention is todisclose all material emissions categories over time.
However, our priority is to ensure the data capability toenable client objectives. We will continue to allocate
resources with that view but expect to add to ourdisclosure over time. This may result in adjustments to ourreported baseline and targets in future periods.

Restating emissions linked to homeworking
In 2022 we noted our intention to reflect on our approach toestimating carbon emissions associated with colleagues
working from home. We continue to believe this is the rightthing to do but acknowledge the lack of an accepted
standard method to calculate those emissions. In 2023 wehave revised our approach in collaboration with our partners,
Pawprint, using an employee survey to inform the basis of thecalculation. Our 2023 figure (1,205 tCO2e) is significantly lower
than previous years’ estimations. This is due to a reduction in
homeworking, more nuanced analysis of home energy use
and the model now accounting for numbers of people
working from home and dividing the energy requirements per
individual. We have also restated our 2022 figures using our
new methodology with Pawprint to enable the reporting ofcomparative figures.

Portfolio emissions metrics
As investors we do not have access to real-time emissions
data from companies and assets. There also remain
significant reporting gaps across some regions and sectors,
with Scope 3 reporting still to fully develop. We use Scope 1
and 2 data to track progress against our target and reportcore portfolio level metrics (page 45). The source for this data
set in public markets is a specialist third-party provider,whereas data for real estate is collected directly from thoseassets. Both routes include a lag associated with data being
reported, collated, and made available to investors. Assetclasses other than listed equity, corporate credit, and realestate remain difficult to accurately monitor due to data
availability and nascent methodologies. Our portfolio metrics
are based upon the original recommendations of TCFD, andmethods established by the Partnership for Carbon
Accounting Financials (PCAF), which we believe to be bestpractice. It is also important to recognise that portfoliocarbon metrics are subject to volatility not related to changes
in emissions, with revenues, asset values, and markets as key
drivers. We believe that tracking and reporting these metrics
is critical, but that tools such as climate scenario analysis(page 42) are also essential to support decision-making.

Annual report 2023

abrdn.com

47

People – Our commitments

Our commitments
We are:Client first

From every seat in our business,
we understand our unique role inenabling our clients to be better
investors, regardless of where we
fit in the organisation.

Meet

Kate

“I’m a problem solver – if I can’t findthe solution to a clients’ needs, I’ll
find someone who can (and see itthrough to the end!)”Kate Doyle

Platform Consultant, Adviser, UK

Empowered

We speak up, challenge and act.
We take ownership for our work,
we accept accountability for our
successes and, when they happen,
our failures too.

Meet

Will

Chief Information Security
and Resilience Officer, UK

Ambitious

We strive for exceptional
performance. We also know when
to balance pace with perfection to
get things done. We are
passionate about the positive
impact we can have on ourbusiness.

Meet

Jacqueline

48

abrdn.com

Will Lynch“Ambition means constantly seeking
new and improved ways of doing
things”
Jacqueline Tan

Head of Business Management
Investments, APAC

Transparent

We have the honest and importantconversations that fuel our
performance and build trusted
relationships.

“Empowerment leads to trust and asense of ownership, and this can inturn lead to increased speed ofdelivery”

Meet

Jose

Head of Workplace & Property
Investments, Americas

Annual report 2023

“Transparency is about being openwith people – it helps to build trustand confidence in one another”
Jose Paulino

People – Engagement
STRATEGIC REPORT

Embedding our commitments
Actions we are taking in support of colleague engagement
In early 2022 we set out to redefine our culture at abrdn,
which supports the delivery of our purpose and strategy.
This involved looking across the business to understandwhat our colleagues feel proud of and reflecting on what
our clients need from us to deliver our strategy. Ourcommitments are the output of this reimagining. Our
objective was to create an environment where colleagues
feel empowered to speak up, where we are ambitious inwhat we do, but also transparent in how we go about it,
ensuring we enable our clients to be better investors.
During 2023 we have focused on integrating ourcommitments into every stage of colleague experience,
supported by powerful storytelling and robust feedback
mechanisms. We have also been focused on taking
actions to improve transparency, communication, andrecognition across the organisation, with a series ofengagement programmes.

Our 2023 engagement results

Each year our annual engagement survey provides
colleagues with the opportunity to have their voices heard.
Our November 2023 survey saw 79% of our people takepart, with over 5,200 comments providing a rich picture of
how we are doing across areas of focus. Amidst achallenging market, ongoing transformation, andorganisational change, overall colleague engagement
increased slightly to 54% (2022: 50%). We see positivescores attributed to the roles people play, their sense ofinclusion, the nature of their work, and motivation levels.
Where we have focused, we see improvements across2023, with increased scores around leadership, systems,
and processes. As we transform abrdn, we continue tofocus on our culture and the actions we need to take toshape our overall colleague experience. Whilst we know
there is work to do, we are ambitious and committed tomaking demonstrable progress for our people.

Talking talent seriesAwards and recognition

We are focused on creating an environment wherecolleagues feel abrdn is the place to grow their careers.
Building on our 2022 series we invited leaders and colleagues
to come together to share personal development stories
through ‘Talking talent’. This helps amplify our existinglearning and development programmes and illustrate
opportunities available at different career stages.

In 2022 only 44% of colleagues felt recognised for their workin the business. We want colleagues to feel celebrated for the
extraordinary work they do, so we launched our first ‘abrdn
awards,’ with over 600 colleagues receiving a nomination
which was a great response as we came together incelebration. In 2023 we saw an improvement to 64% ofcolleagues feeling recognised for their work.

Leadership communication programmeColleagues told us they needed to hear more from oursenior leaders. In response we launched six newcommunication channels to facilitate authentic
conversations between colleagues and leaders. This
includes monthly CEO broadcasts, frequent townhalls,
and informal coffee sessions with targeted groups. We
collect feedback from these sessions and have seen
upticks to how colleagues feel about transparency and intheir understanding of our strategy.

Leadership communication channels active during 2023

Leadership visibility“This is exactly what we need as staff –honesty, transparency and theopportunity to ask questions.”
Anonymous survey feedback
Between January 2023 and November 2023, we observed a
12% increase in colleague confidence in our leaders.
Clarity of strategy

Understanding andconnection to our
purposeBuilding confidence
in our future

Equipping leaders
for success

As it is (CEO messaging)
Monthly broadcast to all colleagues
Let’s Hear It (colleagues)
Bi-monthly live Q&A with our leaders
Let’s Hear It (leaders)Bi-monthly live Q&A with our leaders
Leader Essentials
Monthly email for all people leaders
Results
Live Q&A focused on performance
Executive Leadership Team (ELT) coffee sessions
Small informal group conversations
Annual report 2023

abrdn.com

49

People – Diversity, equity & inclusion

Diversity, equity & inclusion (DEI)
We believe in the benefits of a diverse and inclusive workforce,with different perspectives helping to improve decision making
Our strategy intends to make a positive impact across ourbusiness and is led by our Executive Leadership Team, withoversight from our Board. We are focused on delivering our
gender, ethnicity, and social mobility action plan, with four
guiding priorities. We also believe setting targets is an effective
way to make progress. Our targets to 2025 are outlined on
page 51, and we have introduced a senior leadership ethnicity
target, which we will begin reporting on from 2024, with theaim to be delivered in 2027. This follows the recommendationof the UK Government supported Parker Review. Our
approach is recognised externally, and we were delighted tobe named in the 2023 Financial Times Diversity Leader List
and be given recognition from Citywire, 100 Women in
Finance, and the Equality Group. Find out more atwww.abrdn.com/annualreport

Our four guiding priorities:

1

2

3
4

DEI is part of our purpose.
We embed our commitment to DEI through ourbrand, culture, suppliers and partners we choose, andthe way we engage with companies we invest in.
Our ways of working are inclusive.
Our priority is to make sure people feel connected
and that all opportunities are equitable. Managers
lead inclusive working for hybrid teams.
We feel valued and included everyday.
We focus on building the capability and awarenessto drive inclusive conversations and active allyship.
We bring diverse talent through our organisation.
We focus on minimising any potential bias or barriersin our processes, policies, and approach.

Our gender, ethnicity, and social mobility action plans
GenderAchieve gender balance across alllevels of our organisation.

Ethnicity
Improving outcomes for ethnic
minority colleagues.

Social mobility
Positive outcomes for people facing
barriers in society.

What we have done:

What we have done:

What we have done:

Recruitment
Tools such as augmented writing
software for job adverts, returnshipprogrammes for women, andpartnerships with organisations such as
GAIN (Girls are Investors) help attract
more women into roles in our business.

Recruitment
Tools such as diverse interviewer pools,
and partnerships with organisations suchas 10000 Interns Foundation to help us
reach minority ethnic candidates.

Fair work
We are accredited UK Living Wage andLiving Hours employers.

Development
Introduction of development offerings for
women at early and mid-career stages.
Data
We promote accountability by providing
leaders with increasingly detailed data.
Capability
Actions taken to address barriers tocareer progression, such as steps to build
our Career Framework, and creating
safe spaces to share and learn.
Colleague support
Our Balance colleague network provides
support and runs sessions on topics suchas mental health and career progression.
PolicyOur benefits policies and gender policies
are inclusive, including equal parent leavein the UK.

Developing understanding
We produced a ‘Talk about race’ guide tosupport colleagues talking openly about
race and to build inclusion.
Data
We believe industry transparency helps
drive progress and have publishedethnicity data on regional representation.
Capability
We run cultural awareness workshops
and promote ‘Human Library’ learning
opportunities.
Colleague support
Our Unity colleague network runs regular
events and provides learning
opportunities across the business.
Public commitments.
We were one of the inaugural signatories
to the Race At Work Charter in 2018 andalso joined the Corporate Call to Action
and Coalition for Equity and Opportunity.

Recruitment
We have partnerships with organisations
such as SEO London to help us reachcandidates from different economic
backgrounds.
Developing understanding
We produced a ‘Talk about class’ guide tosupport colleagues talking openly aboutsocial mobility issues.
Data
We have embedded social mobility
questions into our recruitment processes
to deepen our understanding.
Colleague support
Our NextGen colleague network runs
regular events across the business.
Working across our industry
We work collaboratively with groups
including the Living Wage Foundation.
These collaborations help us share bestpractice and encourage cross industry
working.

Example actions from our business to support inclusivity:
Active ownership and gender diversity
In 2023 we wrote to 16 US companies tooutline our minimum expectation of 30%
female representation on boards ofcompanies with a market capitalisationof $10bn or more. In total we took voting
action at 90 US companies due to board
gender diversity concerns.
50

abrdn.com

Adviser
In 2023 our Client Engagement Hubpiloted the use of biometric technology,
which can monitor stress levels at work.
We hope to identify insights from the data
to support colleague wellbeing, and tohelp us be client first, through increased
learning, or training, on common themes.

Annual report 2023

ii and Pension Essentials
In 2023 we launched Pension Essentials,
expanding our Which? Recommended
SIPP pension product to provide lower
fees for pots under £50,000. Our GreatBritish Retirement survey supports thisneed, finding that 76% of self-employedpeople are paying nothing into a pension.

2023
2022

We have set 2025 targets toimprove diversity across abrdn

abrdn plc Board
Target: 40% women, 40%men, 20% any gender by 2025

Women

Our diversity targets have been in place since 2020 and
those relating to our Board members are consistent with
the FCA reporting requirements introduced in 2022. We
go further and report additionally on gender
representation across our global business, and seniorleadership teams. We note that, as part of organisational
redesign, reductions in total headcount correlate with areduction in gender representation for our seniorleadership population. We know there is much more to do
and remain committed to our targets and actions.

2022
2023
2023
2022

Target: 40% women, 40%men, 20% any gender by
2025 (CEO-1 and 2)

2023
2023

As of 31 December 2023, 40% of the abrdn plc Board
identified as women, with 1 Director identifying as from aminority ethnic background. This information is self-reported
by Board members. No senior positions on the abrdn plc
Board, as defined by FCA LR 9.8.6 R(9), were held by womenon the reference date. This represents a change from 2022
due to a change of Chief Financial Officer during the period.
Other senior roles retain continuity between periods. abrdn
is committed to diversity, equity, and inclusion and Board
appointments are always with due regard to the benefits ofdiversity. The Board continues to support its Diversity
Statement. Further detail on pages 92-93.

2022

2023
2023

White British or other White (including minority-white groups)
Asian/Asian British
Not specified/prefer not to say6
Subsidiary Director
gender representation7

Men
Women

61%
(of 132)66%(of 96)34% (of 96)

Number of
Board
members

Men

43%
57%
(of 5,147) (of 5,147)
43% 
57%
(of 4,742) (of 4,742)

abrdn plc Board
Ambition: 2 Directors
identifying as minority ethnic
by 2025

2023

Board and executive management
ethnic representation539%(of 132)

Target: 50% gender balance(+/-3% tolerance) by 2025

2022

Men
Women

Men

Global workforce92022

2023 data subject to Independent Limited Assurance in accordance with
ISAE(UK)3000 and ISAE3410 by KPMG. Assurance statement anddetailed reporting criteria included in the Sustainability and TCFD reportat www.abrdn.com/annualreport

Board and executive management
gender representation1,2

Women

Women

2022


45%
55%
5 (of 11) 6 (of 11)
40% 
60%
4 (of 10)6 (of 10)

Senior leadership8

2022

Statement of the extent of consistency with the FCA
Listing Rules requirements for reporting Board
diversity

Men

Minority

Majority9%
1 (of 11)10% 
1 (of 10)91%
1 (of 11)90%
1 (of 10)Percentageof the Board

Number of senior
positions on
the Board3

Numberin executive
management4

Percentageof executive
management

6
4

60%
40%

4
-

12
2

86%
14%

9
1
-

90%
10%
-

4
-

10
1
3

71%
7%
21%

Numberof Subsidiary
Directors in 2023

Percentage
of Subsidiary
Directors in 2023

Numberof Subsidiary
Directors in 2022

Percentage
of Subsidiary
Directors in 2022

16 (of 30)
14 (of 30)

53%
47%

13 (of 25)
12 (of 25)

52%
48%

1. Gender for Board members is self-reported.
2. Gender for executive management is obtained from self-reported employee records.
3. Senior positions on the abrdn plc Board are Chief Executive Officer, Chief Financial Officer, Senior Independent Director, and Chair.
4. Executive management team includes Executive Leadership Team and excludes administration roles.
5. Ethnicity data for Board and executive management is self-reported (using local census data categories and collected where legally possible).
6. Includes one individual based in a country where we do not collect diversity data.
7. Relates to Directors of the Company's direct subsidiaries as listed in Note 44(a) of the Group financial statements and not otherwise classified above.
8. Senior leadership includes Company Secretary but excludes administration roles, and individuals on garden leave.
9. 63 colleagues without gender data on our people system are excluded from the headcount data (2022: 60).

Annual report 2023

abrdn.com

51

STRATEGIC REPORTDiversity targets

People – Talent

Identifying, attracting
and retaining talent
We segment the approach we take to talent, which helps us focus
on specific DEI and development priorities for each career stage
Identifying, attracting and retaining the best talent for ourbusiness is fundamental to our strategy. Through a periodof transformation, we have continued to prioritise theimportance of inclusive recruitment with our Hiring for
Success interviewer training programme. This equips ourhiring communities to identify and mitigate potential
biases. Colleagues can also volunteer to be part of ourDiverse Interviewer Pool, which we expanded during 2023.
Our role profiles are monitored for non-inclusive language
using technology, and we use personalised automatedonboarding to keep successful candidates engaged inadvance of their start dates.

Early careers

Our focus is to build and maintain diverse early careers
talent globally. We work with partners to reach talent who
may not be attracted to opportunities in our industry. In
2023 we became a corporate sponsor of GAIN andprovided internships to members. We also committed tooffering internships via the Able Intern Programme, whichseeks to address the underrepresentation of disabled
talent in the UK. In 2023 our graduate intake was 44%
identifying as female (2022: 61%) and 19% identifying asfrom a minority ethnic background (2022: 26%). Also, 78%
of our UK trainees attended a state school (2022: 72%).

Mid-career

We aim to identify a strong talent pipeline anddemonstrate the value of growing our internal talent, witharound 31% of our roles being filled internally. We havedevelopment programmes targeted toward mid-careercolleagues, also with courses run specifically for women.
We also continued to run our Returners Programme, forthe third-consecutive year.

Senior career

All our search partners for senior talent are obliged topresent diverse candidates as part of the recruitment
process. We also look to ensure our Executive Leadership
Team succession pipeline has the breadth and diversity ofexperience needed to deliver our strategy. This has
shaped our ‘Future Leaders’ programme, which is entering
into its second cohort and is designed to include learning
tailored to strategic objectives.

52

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Annual report 2023

Developing talent with our learning strategy

There is no one-size-fits-all approach to learning. We aim
to give all our colleagues the tools and resources theyneed to take control of their development, and to support
the delivery of our strategy. Our aim is to:– Develop skills and capabilities to support our strategy.
– Support colleagues to build successful careers.
– Create engagement in our organisation.
Technology is at the heart of our learning strategy,
allowing us to create an inclusive approach todevelopment while also managing costs and theenvironmental impact of travel. Virtual classroom sessions
and digital resources are established mechanisms fordelivering courses and content.

Our Leadership Academy
Launched in 2023, our Leadership Academy takes asegmented approach to ensure we develop leadership skills
at every career stage. We have developed programmes on
the following themes:
Leading self
Devoting time and energy to self-development. Topics
include: collaboration, creativity, and problem solving.
Leading others
Building the ability to get the best from others. Topics include:
coaching, developing others, and strategic thinking.
Leading the businessInspiring others to build for the future. Topics include:
storytelling, personal impact, strategy, and empowering
inclusivity.
The development of our academy was informed directly bycolleague feedback, as we aim to amplify opportunities
available at all career stages. We collate continuous feedback
and track KPIs for our all programmes. We provide additional
detail in our Sustainability and TCFD report, available atwww.abrdn.com/annualreport

In addition to our Academies, we continue to provide
graduate, school leaver and internship programmes, eachof which have dedicated development support, including
apprenticeships and professional qualifications. We also
have a process for employees to apply for funding forexternal courses and qualifications. We work across thebusiness to identify organisational needs on an ongoingbasis and colleague feedback is central to our approach.
Achieving the right blend of human and digital learning
opportunities continues to be a key focus as we support
colleagues to get the most from AI and technologies thatare being introduced through business transformation.

People – Equity and inclusivity

Our role in enabling a fairer, more inclusive, society through examples of
our actions supporting our people, clients, and communities
Our UK gender pay and bonus gaps

We have reduced our UK gender pay gaps in 2023 for thesixth consecutive year and believe we have theappropriate actions in place to address this long term. Our
mean bonus gap increased by 9.1 percentage points
during 2023. Average bonuses for both men and women
decreased but some types of bonus payments, such as
those associated with sales roles, were less impacted.
These roles currently have a higher proportion of men,
therefore driving an increase in the mean bonus gap.
UK gender pay and bonus gaps

Mean pay gap
Median pay gap
Mean bonus gap
Median bonus gap

2023

2022

24.8%
18.8%
55.3%
34.6%

28.7%
24.2%
46.2%
47.4%

We are committed to continued reductions in our gender pay
gap, with a key contributing factor being that more men
occupy senior roles than women. We have four actions inplace to address this imbalance:
We set targets for representation of
women at all levels across theorganisation.

1

Representation
targets2

We have a gender action plan in place
to focus actions on attraction, retention
Gender action planand progression of women at early,
mid and senior career stages.

3

4

Industrycollaboration

We set a collective industry target to
reduce the industry gender pay gap by
50% by 2030, in partnership with theDiversity Project.

Executive
accountability

We were one of the first signatories tothe HM Treasury Women in Finance
Charter, linking delivery of our targets
to pay through our Executive Director
scorecard.

We benchmark our progress every year through the
Bloomberg Global Gender Equality Index and have beenrecognised on the index for the last five years.
Feeling valued and included everyday

Ethnicity, gender, and social mobility are our primary areasof focus, but in 2023 we set out LGBTQ+ priorities for theorganisation and put more support in place for disability andneurodiversity. We are working to create a culture where
everyone feels they belong and were proud to secure‘Excellent’ rating for LGBTQ+ equality by the Human Rights
Campaign in 2022 (100%) and 2023 (95%). We also
became a Disability Confident employer in 2023, under the
UK Government Scheme.

Support for customers in vulnerable
circumstances
We support advisers to achieve the best outcomes for theirclients, which includes additional support for customers invulnerable circumstances. Anyone could find themselves invulnerable circumstances in their lives. The FCA identifies four
key drivers of vulnerability including: health, life events,
resilience, and capability.
Through our Client Engagement Hub, we can provide thesupport and tools for clients with vulnerabilities and aim to
make processes as effortless as they would be for anyone. We
have a team of specialists who are trained to provide
additional help when a vulnerability is identified, and we tailor
our services in instances where the client may contact us
again. We do this using the data and advanced technology
behind our platform.
Our accessibility services also support additional needs. We
can translate certain documents into braille, or large print, andcan accept calls from registered Sign Language interpreters,or through RelayUK, which enables users to type to talk. During2023 we have also been working to identify third parties wecan engage with to help further support advisers and theirclients with vulnerabilities. With our proactive focus on training,technology and collaboration, our goal is to lead the way, as
vulnerability could affect anyone at any time.

Supporting financial education with MyBnk

In 2022 we launched a three-year partnership with MyBnk,
whose mission is to empower young people to takecharge of their future by bringing money to life. We
expanded this partnership in 2023, with our totalcommitment now over £1,300,000 via the abrdn
Charitable Foundation. Our support will enable MyBnk todeliver financial education programmes and money
management workshops. Learn more about community
impact in our Sustainability and TCFD report atwww.abrdn.com/annualreport“We are excited to be supporting
MyBnk, by working together we
can make a difference to thefinancial confidence of young
people across the UK.”
Kirsty Brownlie
Sustainability Manager, Social impact

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abrdn.com

53

STRATEGIC REPORT

Equity and inclusivity

Stakeholder engagement and section 172 statement

Delivering our purpose incollaboration with our stakeholders
We are driven to enable our clients to be better investors, and work withall our stakeholders to achieve our purpose

Sovereign
wealthfunds

Insurancecompanies

Colleagues
Deliver our purposeand benefit fromour success

Pensionfunds

Familyoffices

Platforms

Investments
Banks

Financialadvisers

Independent
wealthmanagers

Discretionary
fundmanagers

Adviser

Suppliers
Support deliveryof our purpose
Shareholders
Owners of ourbusiness

Individualsii

Communities

We enable ourclients to be better
investors

Regulators
Promoting strong
financial markets

Direct relationships and indirect impacts
through investments

Section 172 (1) statement

The Board recognises the requirements of reporting against matters set out in section 172 (1) (a) to (f) of theCompanies Act. The illustration on this page and information on pages 55 to 56 identifies key stakeholders andsummarises actions and engagement activities undertaken during 2023, in support of the success of thecompany and for the benefit of members as a whole. Further information is also provided on pages 86 to 89 of
the Corporate governance statement.

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People – Equity and inclusivity

We recognise our responsibility to engage with our stakeholders and thisplays an important role in the long-term decisions we makeExamples of stakeholder engagement during 2023
Clients

How do we engage?
– Our purpose is to enable our clients to be better investors. We have client firstteams across the business, and we monitor specific success metrics toholistically capture the experience of different client groups.
What did we learn?
– Our Investments business has a diverse client base. We monitor a range ofmeasures to track client experience, with independent client survey feedback
highlighting strong client service and account management.
– Listening to feedback is critical, with indicators, such as consistently ‘Excellent’ratings from ii customers on Trustpilot, illustrating this in practice.
– Similarly for Adviser, we are targeting world-class customer satisfaction scores,
with a satisfaction score of 90% in our Adviser business.

Shareholders How do we engage?

– Our Annual General Meetings (AGM) offer shareholders the opportunity tointeract directly with our Chair and Board.
– In November 2022 we delivered a ‘Spotlight on Adviser’ presentation toinvestors, which received positive feedback. Following this, in July 2023 we held
an analyst day to spotlight the ii business and strategy.
– During 2023, we also carried out a comprehensive programme of meetings
with domestic and international investors.
What did we learn?
– Feedback from our analyst day in July 2023 was positive, withacknowledgement of the market opportunities for ii and benefits of thesubscription model for abrdn.
– Feedback from our programme of meetings reflects a broad range of investor
interests. Learn more on page 86.

Suppliers

Regulators

How do we engage?
– All suppliers providing services within the scope of our third-party risk
management framework are engaged through due diligence assessmentand ongoing monitoring.
– Strategic supplier relationships have dedicated relationship managers to
support greater oversight and engagement.
– Environmental, social, and governance topics are included within our oversightreviews.
What did we learn?
– Through due diligence and ongoing monitoring, we are able to assess suppliers
against our third party expectations as outlined in our Global Third Party Codeof Conduct.
– Many of our suppliers align with our expectations and, in many cases,
demonstrate an established understanding of ESG related risks. However,where suppliers do not align, we have discovered that we must establish
stronger controls to support them and monitor their performance.
How do we engage?
– abrdn retains membership of various industry groups and forums, which
supports the development of a collective sector view.
– We proactively respond to consultations on major sustainability reporting
standards, which impact us both as investors and disclosers.
What did we learn?
– We are supportive of the regulatory focus on non-financial reporting as wework towards common sustainability disclosure standards.
– We are also strong believers in client first outcomes and support theimplementation of requirements such as Consumer Duty.

Annual report 2023

Related outcomes:– Examples of ourinvestments in action on
pages 16 to 17.
– Learn more about our
Adviser client experienceon page 31.
– We are strengthening the ii
platform for our customers.
Learn more on page 35.

Related outcomes:– On 24 January 2024 we
confirmed our intention toprovide the market with a
trading update, including
AUMA and net flows, for the
first and third quarters of
the year. This reflects ourunderstanding of investor
appetite for an increase in
the frequency of ourcommunication.
– The business aims toencourage all-employee
share ownership. Learn
more on page 127.
Related outcomes:– In 2023 the businessonboarded a new supplierrisk assessment andmonitoring platform tobetter understand our
supply bases exposure andapproach to sustainability
related risks (environment,labour and human rights,
business ethics, and supply
chain).

Related outcomes:– During 2023 we responded
to the Transition Plan
Taskforce consultation on
its Disclosure Framework.
– Our Adviser business havepublished a series of
insights to support
implementation ofConsumer Duty
requirements.

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55

STRATEGIC REPORTEngaging with our stakeholders

Stakeholder engagement and section 172 statement continued

Examples of stakeholder engagement during 2023 continued
Communities How do we engage?

– We conduct research and publish insights relating to topics such as financial
inclusion, savings and retirement, and the low carbon transition.
– The abrdn Charitable Foundation directs our community impact strategy, witha focus on tomorrow’s generation.
– Our colleagues volunteer and fundraise for a variety of charitable causes. We
provide 3 paid volunteering days to abrdn colleagues to enable this.
What did we learn?
– Insights from our research such as, ii’s Great British Retirement survey showsthat 56% of those aged 41 to 55 believe they may never retire.
– Our colleagues have primarily chosen to volunteer for environmental and social
welfare causes, accounting for 50% of the total time disclosed.

Colleagues

How do we engage?
– Our annual colleague engagement survey (page 49).
– Pulse surveys throughout the year checking in with colleagues.
– Our Let’s Hear It sessions and townhalls provide candid Q&A opportunities with
our Executive Leadership Team.
What did we learn?
– Where we have focused, we have driven improvements through 2023, withincreased scores around leadership, systems, and processes.
– With support from culture champions around the business our commitments
are now integrated into each stage of colleague experience.
– Colleagues’ sense of transparency and understanding of strategy have been
positively impacted by six new communication channels (page 49).
– Our Board Employee Engagement programme includes a number ofopportunities throughout the year for employees to engage with ourdesignated NED for employee engagement.

Related outcomes:– £2.1m contributed tocharitable causes in 2023
(2022: £2.4m).
– 3,248 hours spent
volunteering by colleagues
during 2023 (2022: 2,842).
– Insights from research can
inform product offering,with ii launching its pension
essentials product in 2023.
Related outcomes:– Focus on increased visibility
and communication fromsenior leaders, with Let's
Hear It and As It Is sessions.
– Talking Talent internal
communications
campaign to highlightlearning and development
opportunities.
– Our first global abrdn
Awards to recognise teams
and individuals across thebusiness.

Board Employee Engagement (BEE) programme
Hannah Grove continued as our designated NonExecutive Director for employee engagement.

BEE purpose– Ensure that employee perspectives and sentiments
are heard and understood by the Board to help inform
decision-making.
– Develop an environment where colleagues
understand the role of the plc Board and have directaccess to our Non-Executive Directors (NEDs).

2. Meet the NEDs events“Without doubt the biggest highlight for me
is interacting with abrdn’s people.
The company has an extraordinary depthof talent and it’s been a privilege to get toknow our colleagues better.”

3. Employee network engagement

Hannah Grove

Programme pillars
1. Listening sessions

4. Reporting and measurement
BEE programme - 2023 in summary
Total employee
attendance

Listening sessions

Meet theNEDs events

Employee network
engagements

NEDs involved in the
programme

Site visits

Average event rating

797

11

6

9

100%

14

8.6/10Find out more about our BEE engagement on page 87.
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including in UK,
US and APACSTRATEGIC REPORT

Non-financial andsustainability information
Summary of climate disclosure

We continue to support disclosure against therecommendations of the TCFD framework. This is criticalfor us as we assess climate-related risks and opportunities
as investors. The information on this page summarises
where we have made required disclosures under FCA LR
9.8.6R (8) and Companies Act 414CA and 414CB in thisreport. We also provide additional information in our
separate Sustainability and TCFD report (pages 11-48),
which we believe adds value for our stakeholders andreflects common market practice.

Climate and environment

Our continued focus is on managing our climate-related risks
and opportunities, which is presently the most material
environmental matter for our business. This is reflected throughour related governance, management, and targets. In 2023, we
also took steps to understand potential nature-related impacts
and dependencies in our public market portfolios, with naturebased risks and opportunities increasingly an area of focus. We
also recognise other environmental matters, such as operational
resource consumption and responsible waste management.
Our team are looking at improving available data on metrics
such as water and waste, but this is not presently assessed asmaterial, relative to other non-financial matters.

Relevant policies– Our Sustainability and TCFD report provides additional
information on our areas of focus

Policy outcomes– Climate targets applicable to operations and investments– Active engagement approach, and solutions development

Related risks– Refer to page 41.

Risk management– Sustainability and ESG professionals across the business– Tools developed to support and inform processes

Selected non-financial KPIs
– GHG emissions metrics– Climate-related voting and engagement activity

Statement of the extent of consistency with FCA
LR 9.8.6R (8) for TCFD aligned disclosure
We believe our disclosure within this report, and the
additional information in our Sustainability and TCFD report,
to be consistent with the 11 recommendations of the TCFD
framework, except for complete disclosure of Scope 3
financed emissions. Data availability continues to be achallenge and has bearing on the completeness of
information we can report. We acknowledge that ourreporting may evolve in future periods. Our view is thatsufficient climate-related data is available to better enable
our investment processes and to manage our objectives asa responsible business. This also allows us to track ourprogress against targets, outlined on pages 45 and 46.

Recommended TCFD-aligned disclosure1

Governance
Describe the Board’s oversight of climaterelated risks and opportunities.

Page 40.

Describe management’s role in assessing andmanaging climate related risks andopportunities.

Page 40.

Strategy
Describe the climate-related risks andPage 41.
opportunities the organisation has identified
over the short, medium, and long term.
Describe the impact of climate-related risks and Pages 41-44.
opportunities on the organisation’s businesses,
strategy, and financial planning.
Describe the resilience of the organisation’sPages 41-42.
strategy, taking into consideration different
climate related scenarios, including a 2°C or
lower scenario.

Risk management
Describe the organisation’s processes for
identifying and assessing climate-related risks.
Describe the organisation’s processes for
managing climate-related risks.

Pages 43-44.

Describe how processes for identifying,assessing, and managing climate-related risks
are integrated into the organisation’s overall risk
management.

Page 43.

Pages 43-44.

Metrics and targets
Disclose the metrics used by the organisation to Pages 45-47.
assess climate-related risks and opportunities inline with its strategy and risk management
process.
Disclose Scope 1, Scope 2, and, if appropriate,
Pages 45-47.
Scope 3 greenhouse gas (GHG) emissions, andthe related risks.
Describe the targets used by the organisation to Pages 45-47.
manage climate-related risks and opportunities
and performance against targets.

1. This table exists to support users to navigate to climate-related disclosures in this report, which we believe addresses both requirements of FCA LR 9.8.6R(8) and Companies Act 414CA and 414CB. abrdn is required to report against the original 11 TCFD recommendations under the former, with thelanguage in the latter mirroring those recommendations but rationalising the original 11 to 8 disclosure requirements. We refer to the language of theinternationally recognised original 11 recommendations here to avoid duplicative signposting and believe our disclosure between pages 39 and 47 to beconsistent against both reporting standards.

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57

Non-financial and sustainability information statement

Summary of other matters

The information on this page addresses the requirements of Companies Act 414CA and 414CB with summary
information on other important non-financial matters. Our sustainability aspiration is to create long-term sustainablevalue and we focus on those areas where we have significant impact or influence. This includes the areas outlined
below, with additional information also available in our Sustainability and TCFD report available atwww.abrdn.com/annualreport
Employees

Our people are essential to our success and our objective is tocreate a transparent, inclusive, culture, where the best talentfrom all backgrounds can succeed. In 2023 we have been
focused on embedding Our Commitments, increasingtransparency across the organisation, and enabling colleagues
to develop. We have targets to improve representation acrossthe business and continue to see reductions in our UK gender pay
gap. Our aspiration is that abrdn is a place where people love towork but changes to our business have meant reductions inheadcount and resource pressures. We disclose detail relating tocolleague engagement on page 49.

Relevant policies– Diversity, equity and inclusion policy– Global code of conduct

Policy outcomes– Colleague engagement survey– Inclusive recruitment and development programmes

Related risks– Noted amongst principal risks and uncertainties

Risk management– Listening and responding to colleague feedback

Selected non-financial KPIs

– Employee engagement scores– Increased representation across abrdn by 2025

Further information
Pages 48-53.

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Social matters

We are committed to helping our customers build long-term
financial resilience and take control of their financial futures. Our
focus begins with our products and services and extends to ourcommunities through our focus on tomorrow’s generation. In
2023, ii published the fifth Great British Retirement survey, whichhighlights common financial challenges and reinforces the role
our sector can play through education, financial planning, andadvice. ii also works with a peer-to-peer learning initiative tosupport women to expand or start their investment journey. We
also expanded our partnership with MyBnk to support financial
education in the UK.
– Client and customer policy– Charitable giving strategy– More inclusive products and services– Charitable partnerships via the abrdn Charitable Foundation– Lack of financial inclusion for our key stakeholders– More inclusive products and services– Published research and insights– Third sector partnerships– Client and customer satisfaction– Impact reporting from our charitable partnerships
Pages 50 and 53.

Annual report 2023

STRATEGIC REPORT

Human rights

It is critical to embed respect for human rights throughout ourbusiness. We take an active approach and work across ouroperations and through our investments. Our annual Modern
Slavery Statement provides the opportunity to chart our progress
as we focus on the assessment of risk in our supply chain, with our
Stewardship report outlining actions we taken to influence thecompanies and assets in our value chain. Our position is zerotolerance for modern slavery and child labour in supply chains.
We have invested time and resources to better understandrelated risks, amidst a complex global network of third party
suppliers and relationships.

Anti-corruption and anti-bribery

abrdn and its people conduct business fairly, honestly,transparently, and with integrity, and do not take part in acts ofcorruption or pay or receive bribes, whether directly or indirectly
to gain business advantage. Employees are prohibited fromengaging in acts of corruption and from paying or accepting
bribes or kickbacks. We have a programme and procedures inplace to implement and support our Anti Bribery and Corruption
Policy. In particular, employees must refuse any bribe or
inducement in a manner which is not open to misunderstandingor which may give rise to false expectations, report any offers ofbribes or inducements and report any suspicious behaviour.

Relevant policies– Global code of conduct– Third-party code of conduct– Modern slavery statement– Privacy and data protection– Anti-Financial Crime policy– Anti Bribery and Corruption standards– Global code of conduct

Policy outcomes– Human rights is a focus of our active equities engagement
strategy for our Investments business– Evolving capability relating to our supply chain management– Gifts and entertainments processes working effectively– Anti Bribery and Corruption controls embedded within
operating procedures

Related risks– Safe and secure work
– Data protection and security– Noted amongst principal risks and uncertainties

Risk management– Influencing our value chain and developing further
understanding of the related risks in our supply chain– Data protection procedures– Colleague Anti-Financial crime and Anti Bribery andCorruption training– Controls to prevent and detect instances of bribery andcorruption

Selected non-financial KPIs
– Voting and engagement– Third party risk assessments– Data incidents and breaches– Completion rates of staff training– Gifts and entertainment incidents and breaches

Further information
Page 55.

Page 79.
Illustration on pages 12-13.

Our business model enables our clients to be better investors

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59

Key performance indicators

Our key performance indicators
Net operating revenue

KPI£1,398m

APM

Cost/income ratio

KPI

82%

‘21

£1,515m‘21‘22£1,456m

‘22

82%

‘23

£1,398m‘2382%This measure is a component of adjusted operating
profit and includes revenue we generate from asset
management charges, platform charges and othertransactional/advice charges and treasury income.

Adjusted operating profit

KPI

£249m
‘21

APM

‘23

Adjusted operating profit is our key alternative
performance measure and is how our results aremeasured and reported internally.
KPI

(£6m)
‘23

£1,115m(£612m)(£6m)

IFRS profit/loss before tax is the measure of profitability
set out in our financial statements. As well as adjusted
profit, it includes items such as restructuring costs, profit
on disposal of interests in associates and goodwill
impairment.

Adjusted capital generation

KPI

£299m
‘21

KPI

APM

13.7p
10.5p
13.9p

This measure shows on a per share basis our profitability
and capital efficiency, calculated using adjusted profit
after tax.

IFRS (loss)/profit before tax1

‘22

13.9p
‘22

£249m

‘21

Adjusted diluted earnings per share

‘21

£263m

‘23

79%

This ratio measures our efficiency. We are focused on
improving our cost/income ratio by increasing revenue
and continued cost discipline.

£323m

‘22

APM

Full year dividend per share

KPI

14.6p
‘21

14.6p

‘22

14.6p

‘23

14.6p

The total annual dividend (interim and final) is an
important part of the returns that we deliver toshareholders and is assessed each year in line with ourstated policy to hold at 14.6p until it is covered at least
1.5 times by adjusted capital generation.

APM

£366m
£259m

‘22

£299m

‘23

This measure aims to show how adjusted profit
contributes to regulatory capital.
1. 2022 results have been restated for the HASL implementation of IFRS 17. 2021 results have not been restated. Refer Basis of preparation in the Groupfinancial statements section.

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STRATEGICREPORT
STRAT

Investment performance

KPI(Percentage of AUM above benchmark overthree years)

42%

78%
65%
42%

‘23

‘21

51%

‘22

50%

Other indicators
AUMA

This measure is important in gauging the engagement
and motivation of our people in their roles. It also enables
our managers at all levels to take local action in
response to what their teams are telling them.

Gross inflows£494.9bn£64.1bn‘21£542.1bn‘21‘22£500.0bn‘22‘23£494.9bn‘23

Net flows — Total‘21£69.0bn£64.1bn(£13.9bn)(£6.2bn)(£37.9bn)(£3.2bn)‘21(£10.3bn)‘22(£17.6bn)

‘23

‘23

IFRS diluted earnings per share1

0.1p

APM

‘21

‘23

£72.3bn

Net flows – Excl liquidity and LBG
tranche withdrawals(£17.6bn)

‘22

54%

‘23

This measures our performance in generating
investment return against benchmark. Calculations forinvestment performance are made gross of fees except
where the stated comparator is net of fees.

‘22

KPI

54%

‘21
‘22

Employee engagement survey

46.0p(26.6p)0.1p(£13.9bn)

Alternative performance measures
We assess our performance using a variety of
performance measures including APMs such as
cost/income ratio, adjusted operating profit, adjusted
profit before tax and adjusted capital generation.
APMs should be read together with the Group’s IFRS
financial statements. Further details of all our APMs areincluded in Supplementary information.

1. 2022 results have been restated for the HASL implementation of IFRS 17. 2021 results have not been restated. Refer Basis of preparation in the Groupfinancial statements section.

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Chief Financial Officer’s overview

Taking action
to rebuild
profitability
and growth

Our diversified business andstrong balance sheet are clear
strengths but we need todeliver a step change in our
cost base in order to lay thefoundation for future growth.
I am proud to join a company
with a strong conviction to
enable clients at all financialstages to be better investors.
Jason Windsor
Chief Financial Officer

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Overview

2023 was a challenging macro environment for theinvestment industry. This is evident in lower adjusted
operating profit, largely reflecting lower revenues in
Investments, which is closely related to the market
context.
Despite this, the advantage of our three business modelis clear in these results. We have built resilience into theGroup and the benefits of diversification are alreadyevident with Adviser and ii on a stronger trajectory ofgrowth, with more efficient operating margins and clear
opportunities for the future. We exceeded expectations
on our net £75m cost reduction target, with savings of£102m achieved.
ln addition to this £102m reduction, we are now
targeting further annualised cost savings of at least£150m across the Group by the end of 2025, with the
majority of actions to be taken this year.

This transformation programme will drive improved
profitability and allow for reinvestment into growthareas, which is fundamental to improving performance.
Initial work to deliver these efficiencies is already wellunderway and we will provide further updates over thecourse of the programme.
In 2023, we delivered on our commitment to return asignificant proportion of capital generated from ourIndian stake sales to shareholders: £300m by way ofshare buybacks and the remainder via dividends. We
also generated capital following the sales of ourdiscretionary fund management and US private equity
businesses which supported the strategic moves toacquire closed-end funds from Macquarie, Tekla, andFirst Trust to further strengthen our capabilities in thisarea.
Our balance sheet remains strong, and this enables us
to fund the implementation costs of our transformation
programme from our balance sheet. We will continue tobe disciplined in our allocation of capital to invest in thebusiness in order to drive growth and to support
continued returns to shareholders.
I believe the actions that we have taken to build
resilience into our business and move towards improved
profitability, despite industry headwinds, combined withthe significant additional cost savings we are now
targeting, will put us in a stronger position to deliver on
our commitment to enable our clients to be better
investors.

ProfitAdjusted operating profit for 2023 was down 5% to£249m (2022: £263m). This includes a reduction of £80m
in Investments principally due to a significant decline inrevenue in this business. This was partly offset by anincrease in adjusted operating profit in both our Adviser
and ii businesses, to £118m (2022: £86m) and £114m(2022: £72m) respectively. ii includes the benefit of a full
12 months contribution compared to 7 months in 2022.
The IFRS loss before tax was £6m (2022: loss £612m1)
including adjusting items of £336m (2022: £865m1), witha decrease in the impairment of intangible assets andrestructuring costs compared to 2022. The goodwill
impairments in 2023 of £62m (2022: £340m) include theimpact of lower projected revenues as a result ofadverse markets and macroeconomic conditions, andfor Finimize the impact of lower short-term projected
growth following a strategic shift that prioritises
profitability over revenue growth.

STRATEGIC REPORT

We have undertaken a comprehensive review of ouroperating model. The programme is targeting theremoval of management layers, increasing spans ofcontrol, and reducing overheads particularly fromGroup functions and support services. Approximately
80% of the cost reduction benefits will be seen in theInvestments business. The total implementation costs
are estimated to be around £150m.

The cost/income ratio was stable at 82% (2022: 82%)reflecting the benefit from the efficient Adviser and ii
cost models, offset by lower revenue in Investments.

Net operating revenue

Net operating revenue of £1,398m (2022: £1,456m) was
down 4%, including the impact of the challenging
market conditions in Investments. This was partially
offset by increases in revenue in both Adviser and ii,
reflecting higher treasury income for both businesses,
and the benefit of a full 12 months of ii.
In Investments, net operating revenue was 17% lower
than in 2022 largely due to net outflows and lower
market performance impacting average AUM, andchanges to the asset mix. While redemptions werelower, gross flows were also lower reflecting the client
response to the uncertain market environment,
particularly in equities and multi-asset. Net outflows andmarket performance in multi-asset and equities
resulted in a reduction in average AUM of 16% and 14%
respectively. Our Phoenix partnership continues to
produce results with £6.0bn (2022: £2.9bn) of grossinflows from their bulk purchase annuity business,reflecting our insurance asset management capabilities
and proprietary techniques.
In our Adviser business, net operating revenue was 21%
higher than 2022 at £224m (2022: £185m) comprising£167m Platform charges (2022: £174m), £31m treasury
income (2022: £11m) and £26m other (2022: £nil). The
higher revenue included the c£15m benefit of a revised
distribution agreement with Phoenix and c£11m fromthreesixty/MPS following the transfer from the Personal
Wealth business.
In our ii business (excluding Personal Wealth), net
operating revenue increased to £230m (2022: £114m),
largely reflecting the benefit of a full 12 months ofrevenue. Revenue continues to benefit from diverse
streams. Treasury income on client cash balances
contributed £134m, benefiting from the continued rise ininterest rates. Trading revenue of £48m was impacted
by muted levels of customer activity given the uncertain
market conditions. Revenue from subscriptions was£54m.
In Personal Wealth, net operating revenue of £57m
(2022: £87m) reduced by £30m due to a c£19m impact
from the transfer of the MPS business to Adviser and thesale of abrdn capital to LGT, c£6m from the transfer ofthreesixty to Adviser, and the impact of adverse market
movements.

1. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.

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Chief Financial Officer’s overview continued

Adjusted operating expenses

Adjusted operating expenses decreased by 4% to£1,149m (2022: £1,193m), reflecting management
actions to reduce costs, mostly offset by the inclusion of£103m (2022: £47m) of ii1 expenses for the full 12 month
period. Excluding ii1, expenses were 9% lower at£1,046m (2022: £1,146m).
In the Investments business, we exceeded the targeted£75m reduction that we outlined previously. The £102m
cost reduction in Investments was driven by lower staff
costs reflecting 8% lower front/middle office FTEs andreduced market data and outsourcing costs, partly
offset by the impact of staff cost inflation.
In Adviser, the cost/income ratio improved to 47%,
benefiting from higher treasury income and the revised
distribution agreement with Phoenix.
For ii overall, expenses increased reflecting the full 12months of ii (excluding Personal Wealth). The
cost/income ratio improved from 64% to 60%, despite
the impact on profitability in Personal Wealth due to therevenue impacts on this business outlined above.
As I have touched on already, further significant costsavings across the business are targeted to improve
efficiency and profitability.

CapitalOur capital position provides us with resilience during
periods of economic uncertainty and volatility.
In 2023, we have been disciplined in our allocation ofcapital with a combination of investment in the businessto drive growth and continued returns to shareholders.
We generated a total of £713m capital from the sales of
our listed Indian stakes (£576m), and the disposals of ourdiscretionary fund management and US private equity
businesses (£137m). We have now completed the saleof our remaining stakes in HDFC Life and HDFC AssetManagement, which further simplifies our groupstructure.
We have continued to invest in the business throughstrategic bolt-on acquisitions, building out our global top
three position in closed-end funds. In 2023, wecompleted the acquisition of four closed-end funds
from Macquarie and acquired the healthcare fundmanagement capabilities of Tekla for a total of £152m.
We also used the proceeds from our non-core disposals
to support restructuring costs of £121m, including thereshaping of the Investments business.
We returned £300m by way of share buybacks in linewith our commitment to return a significant proportionof the proceeds of our stake sales. As we outlined in our
FY 2022 results, we returned £0.6bn of capital in total toshareholders in 2023 by way of dividends and sharebuybacks.
Going forward, we will continue to have a disciplined
approach to generation and allocation of our capital:– We are committed to taking significant cost actions to
restore our core Investments business to a more
acceptable level of profitability. To achieve thedesired simplification and cost savings, total
implementation costs are estimated to be around
1. Relates to ii (excluding Personal Wealth).

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–

–

–

£150m. We will deploy CET1 surplus capital to fund
this restructuring over 2024 and 2025.
We will continue to scan the market for bolt-on
acquisitions within key thematic markets, such as themost recent acquisition of the healthcare fundmanagement capabilities of Tekla.
As part of our approach to allocating capital, we holda buffer over regulatory capital to provide a level ofmanagement flexibility and capital strength andresilience during periods of volatility.
It remains the Board’s current intention to pay a total
annual dividend of 14.6p (with the interim and final
both at 7.3p per share), until it is covered at least 1.5
times by adjusted capital generation. Over the shortterm, the dividend will largely be supported byadjusted capital generation and our surplus capital.

OutlookAs demonstrated in our 2023 results, we have reshaped
the business. The resulting diversification in sources ofrevenue and inherent cost efficiency within Adviser andii partly offset the revenue impact from net outflows andadverse market movements within Investments. Looking
forward, we expect inflation to moderate slowly, and wehave assumed a stable interest rate environment. This
will continue to benefit ii and Adviser where we expect
the average cash margin for 2024 to be broadly in linewith 2023. The outlook for global markets remains
uncertain. Where market conditions, structural andcyclical, remain challenging for active asset managers
we continue to expect headwinds arising from changing
client demand and preferences. Within Insurance inparticular, we expect the asset rotation from active
equity and fixed income strategies to passive
quantitative strategies experienced in 2023 to continue
into 2024. This together with related pricing changes,
may result in a further contraction of revenue margin.
Notwithstanding this backdrop we are taking action to
restore profitability and to transform the way weoperate, through simplification and leveraging
technology across the Group, particularly in
Investments. As we have said, the work to achieve atleast £150m of cost savings is now underway. While 80%of the cost savings is expected to benefit Investments,
we anticipate cost growth in ii and Adviser to beapproximately 3-5% per annum over 2024-2026
reflecting continued growth and reinvestment in thesebusinesses. Implementation of the transformation
programme is expected to take place primarily in 2024,with c£60m benefit from lower adjusted operating
expenses expected in 2024, and will be completed by
the end of 2025. We expect total restructuring costs ofless than £150m in 2024, to support the group costtransformation programme, and further investment in
the Adviser platform.
The strength of our balance sheet allows us to fundthese restructuring expenses, and to maintain thedividend. Our balance sheet is further strengthened by
our Phoenix stake and the staff pension scheme which
has a significant surplus. Our focus remains to bedisciplined in our allocation of capital to drive growth,and to maintain the dividend payment until capital
generation improves.

Analysis of profit

Net operating revenue
Adjusted operating expenses
Adjusted operating profit
Adjusted net financing costs and investment return
Adjusted profit before tax
Adjusting items including results of associates and joint ventures
IFRS loss before tax
Tax credit
IFRS profit/(loss) for the year

2023
£m

20221
£m

1,398
(1,149)
249
81
330
(336)
(6)
18
12

1,456
(1,193)
263
(10)
253
(865)
(612)
66
(546)

The IFRS loss before tax was £6m (2022: loss £612m) including an adjusted operating profit of £249m (2022:£263m). Adjusting items were £336m (2022: £865m) including:– Losses of £178m (2022: losses £187m) from the change in fair value of significant listed investments (HDFC AssetManagement, HDFC Life and Phoenix) as a result of the fall in the share price of these companies in 2023.
– Restructuring and corporate transaction expenses were £152m (2022: £214m), mainly consisting of property
related impairments, severance, platform transformation and specific costs to effect savings in Investments.
Adjusted operating profit was £14m lower than 2022 largely due to the revenue impact of continued net outflows
and adverse market movements, which particularly impacted high yielding equities. The 2023 results included acontribution from ii2 for the full 12 months (2022: seven months) which benefited net operating revenue by £230m(2022: £114m) and adjusted operating profit by £127m (2022: £67m). Removing ii2, adjusted operating profit was
38% lower than 2022 at £122m (2022: £196m).

Net operating revenue

Adjusted operating expenses£1,456m£116m(£65m)(£59m)

2022

Net flows(£30m) £1,398m£31m

Investments Other
margin margin(£51m)

Marketsii

Perf feesand other2023

Net operating revenue decreased by 4% reflecting:– Impact from net outflows3 of c4%, and adverse
Investments margin movements.
– Although the market declines seen in 2022 began toreverse in 2023, the lower average AUMA comparedwith 2022 impacted revenue by c4%.
– Benefit of £116m from the full 12 months of ii2 in 2023.
– Performance fees reduced by £16m mainly withinreal assets, where 2022 saw a number of funds
coming to the end of their natural lifecycle, triggering
performance fees at maturity.
The diversification that now drives our sources of revenue
has helped to mitigate the impact of market volatility,
including the benefit from ii’s subscription model and thehigher total treasury income of £165m (2022: £69m).
Net operating revenue reduced by 13% excluding ii2.

Staff costs excluding variable
compensation
Variable compensation
Staff and other related costs4
Non-staff costs
Adjusted operating expenses

2023
£m

2022
£m

511
75
586
563
1,149

527
85
612
581
1,193

Adjusted operating expenses decreased by 4%reflecting management actions to reduce costs, mostly
offset by the inclusion of £103m (2022: £47m) of ii2
expenses for the full 12 month period. Excluding ii2,
expenses were 9% lower at £1,046m (2022: £1,146m)
reflecting:– 7% lower staff costs (excluding variable
compensation), with the benefit of lower FTEs (13%),
partly offset by wage inflation.
– Lower variable compensation reflecting businessperformance.
– 9% lower non-staff costs, with cost savings partly
offset by the impact of inflation.
The Group cost/income ratio was stable at 82%(2022: 82%) reflecting the benefit from the efficient
Adviser and ii cost models, offset by lower revenue inInvestments.

1. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.
2. Relates to ii (excluding Personal Wealth).
3. Reflects the estimated impact on net operating revenue as a result of net outflows in both the current and prior period, as a percentage of priorperiod revenue.
4. See Supplementary information for a reconciliation to IFRS staff and other employee related costs.

Annual report 2023

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65

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Results summary

Chief Financial Officer’s overview continued

Investments
Adjusted
operating profit

Net operating
revenue

£50m

£878m

Institutional and Retail Wealth1

Insurance Partners1

2022

2023

2022

2023

2022

£878m
(£828m)£50m
94%
23.5bps£366.7bn£50.3bn(£69.3bn)(£19.0bn)(£15.3bn)(£15.3bn)£1,060m(£930m)£130m
88%
25.4bps£376.1bn£59.3bn(£100.3bn)(£41.0bn)(£37.8bn)(£13.4bn)

32.6bps£211.2bn£28.1bn(£46.0bn)(£17.9bn)(£14.2bn)(£14.2bn)

36.1bps£231.2bn£36.5bn(£48.1bn)(£11.6bn)(£8.4bn)(£8.4bn)

10.0bps£155.5bn£22.2bn(£23.3bn)(£1.1bn)(£1.1bn)(£1.1bn)

10.5bps£144.9bn£22.8bn(£52.2bn)(£29.4bn)(£29.4bn)(£5.0bn)

Adjusted operating profit

Adjusted operating expenses

Profit reduced by £80m (62%) to £50m, reflecting 17%
lower revenue, partly offset by 11% lower costs.
– Results in our Investments business reflect thechallenging economic environment and market
turbulence that has impacted across the industry.

––

Net operating revenue

17% lower than 2022 largely due to net outflows andlower market performance impacting average AUM,
and changes to the asset mix.
Performance fees of £14m (2022: £30m) were
earned mainly from Asian equities and Insurance
Partners.

–(£15.3bn)

2023

–

–

(Excl. liquidity)

23.5bpsTotal

Net operating revenue2,3Adjusted operating expenses2
Adjusted operating profit2
Cost/income ratio2
Net operating revenue yield
AUM
Gross flows
Redemptions
Net flows
Net flows excluding liquidity4
Net flows excluding liquidity and LBG4,5

Net flows

Net operating
revenue yield–

Whilst there is a reduction in profitability in the year,
we exceeded the £75m net cost reduction target.
Adjusted operating expenses reduced by £102m (11%)
to £828m (2022: £930m2) driven by lower staff costs
reflecting 8% lower front/middle office FTEs andreduced market data and outsourcing costs, which
was partly offset by the impact of staff cost inflation.
Adjusted operating expenses also benefited fromreduced brand marketing activity and lower projectchange costs compared to 2022.

Institutional and Retail WealthNet operating revenue

Revenue yield

17% lower at £724m (2022: £868m2) due to a 7%
reduction in average AUM to £220.0bn (2022: £236.2bn).
Multi-asset and equities average AUM down 16% and
14% respectively.
Reduction in average AUM primarily relates to net
outflows and market performance.

–

–

–

–

Gross flows–

Excluding liquidity, £6.8bn (26%) lower at £19.5bn(2022: £26.3bn) mainly in equities, multi-asset andalternative investment solutions. This reflected theclient response to the uncertain market environment
which impacted the wider industry, as many clientsdelayed investment decisions.

3.5bps lower at 32.6bps largely due to the decrease in
the higher margin equities average AUM impacting
the asset mix. Equities are 22% (2022: 24%) of average
AUM at a yield of 60.7bps (2022: 62.5bps).
The reduction in the multi-asset yield reflects thegrowing proportion of lower yielding MyFolio in thisasset class.
Net flows–––

Net outflows were £5.8bn higher than 2022 at £14.2bn(excluding liquidity) due to lower gross flows.
Excluding liquidity, net outflows represent 7% of
opening AUM compared with 4% in 2022.
Redemptions (excluding liquidity) were £1bn lower
than 2022 at £33.7bn due to lower real asset outflows.

1. Wholesale has been renamed Retail Wealth, Insurance has been renamed Insurance Partners.
2. Finimize and our digital innovation group have moved from Investments to Other. Comparatives have been restated.
3. Includes performance fees of £14m (2022: £30m).
4. Institutional/Retail Wealth liquidity net flows excluded.
5. Flows excluding LBG do not include the final tranche withdrawals in 2022 of £24.4bn relating to the settlement of arbitration with LBG.

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Net operating revenue–

Revenue yield

20% lower in 2023 at £154m (2022: £192m), reflecting
the impact of 13% reduction in average AUM to£147.7bn primarily due to net outflows, market
declines in 2022 and the impact of the final LBG
tranche withdrawal of £24.4bn in 2022.

–

Gross flows––£0.6bn lower than 2022 at £22.2bn (2022: £22.8bn).
Our Phoenix partnership continues to produce resultswith £6.0bn (2022: £2.9bn) of gross inflows from theirbulk purchase annuity business, reflecting our
insurance asset management capabilities andproprietary techniques.

Net operating revenue yield decreased to 10.0bps(2022: 10.5bps). We expect the asset rotation from
active equity and fixed income strategies to passive
quantitative strategies experienced in 2023 tocontinue into 2024, this together with related pricing
changes, is expected to result in a further contractionof yields.
Net flows–

Net outflows improved by £3.9bn in 2023 at £1.1bn(2022: £5.0bn outflow excluding LBG tranche
withdrawals), representing (0.8%) of opening AUM
compared with (2.4%) in 2022.

AUM–

Insurance AUM increased by £10.6bn to £155.5bn with
net outflows offset by positive market movements.

Investment performance% of AUM ahead of benchmark1

Equities
Fixed income
Multi-asset
Real assets
Alternatives
Quantitative
Liquidity
Total

1 year

3 years

5 years

2023

2022

2023

2022

2023

2022

27
81
12
30
100
100
100
44

30
65
13
57
88
17
84
41

17
75
15
56
100
100
95
42

63
72
50
63
100
27
97
65

48
84
22
45
100
37
97
52

65
79
22
52
100
29
97
58

Investment performance over the three-year time
period has weakened, with 42% of AUM covered by thismetric ahead of benchmark (2022: 65%). The drop in
the three-year performance reflects a challenging
period for active managers, particularly those with aquality equity investment style with a bias towards Asia
and Emerging Markets.
Performance for fixed income, quantitative, alternative
investment strategies, and liquidity remains consistently
strong and illustrates the resilience of our performancedelivery in these asset classes. Key outperforming
strategies include Emerging Market Debt, Euro
Investment Grade, Euro High Yield, Money Markets, Ultra
Short Munis and our full range of Quantitative Enhanced
Index strategies.
Equities has been impacted by our AUM bias towards
Asia and Emerging Markets and the quality growth stylewhich have both struggled when compared to the
exceptionally narrow performance of the Magnificent 7
stocks in the US. The faltering recovery in China has
been a headwind for our larger Asia, Emerging Markets

and China strategies due to our domestic overweight.
However, there are strong areas of outperformance in
Emerging Market Income, Emerging Market Small Cap,UK Value and European Small Cap strategies.
2023 was also a challenging backdrop for our multiasset strategies. However, our Multi-Manager range,
while behind long term cash based composite
benchmarks used in the calculation above, isperforming well versus peers with 67% ahead of peergroup2.
Real estate valuations experienced some of the
sharpest corrections in history in late 2022/early 2023
which impacted returns over all periods. However, after
the sharp de-rating in our favoured sectors of logistics
and industrials we have seen some performancerecovery coming through YTD to Q3 2023, with funds
benefiting from being underweight to UK offices andcontinued robust performance from German
Residential. Our Listed Real Estate funds areoutperforming over 1, 3 and 5 years.

1. Calculations for investment performance use a closing AUM weighting basis and are made gross of fees except where the stated comparator is net
of fees. Benchmarks differ by fund and are defined in the investment management agreement or prospectus, as appropriate. These benchmarks
are primarily based on indices or peer groups. The investment performance calculation covers all funds that aim to outperform a benchmark, withcertain assets excluded where this measure of performance is not appropriate or expected. Further details about the calculation of investment
performance are included in the Supplementary information section.
2. Morningstar category peer group average over 3 years to 31 December 2023.

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Insurance Partners

Chief Financial Officer’s overview continued

Adviser
Adjusted
operating profit£118m

Net operating
revenue

Net operating
revenue yield£224m

30.6bps

Net operating revenue
Adjusted operating expenses
Adjusted operating profit
Cost/income ratio
Net operating revenue yield
AUMA2
Gross flows
Redemptions
Net flows

Adjusted operating profit–––

Net operating revenue

21% higher than 2022 at £224m, comprising £167m
Platform charges (2022: £174m), £31m treasury
income (2022: £11m) and £26m other (2022: £nil).
Rise in interest rates resulted in an increase in treasury
income on client balances to £31m and increase in
cash interest paid to clients.
H2 2023 includes c£15m benefit of a revised
distribution agreement with Phoenix, relating to the
SIPP product that we will be taking legal ownership ofin 2024.
2023 revenue also included c£11m fromthreesixty/MPS following the transfer from the
Personal Wealth business.
The average margin earned on client cash balances
during 2023 was c228bps and the indicative Adviser
average cash margin for 2024 is expected to bebroadly in line with 2023.

–
–
–

–
–

Revenue yield–(£2.1bn)

20231

2022

£224m
(£106m)£118m
47%
30.6bps£73.5bn£5.8bn(£7.9bn)(£2.1bn)£185m(£99m)£86m
54%
26.1bps£68.5bn£6.6bn(£5.0bn)£1.6bnAUMA

Strong earnings performance with profit up 37% to£118m, against a backdrop of challenging market
conditions.
Cost/income ratio improved to 47%, benefiting fromhigher revenue as detailed below, and outsource
costs savings.

–

Net flows

7% increase in 2023 due to inclusion of AUM of c£2.6bn
relating to our Managed Portfolio Service (MPS)
business and favourable market movements.
Our MPS business, which was part of the discretionary
fund management business, has been retained andmoved to the Adviser business from the Personal
Wealth business in May 2023 in order to maximise
opportunities available through the Adviser distribution
model. Our platforms have a footprint with 50% of UKadviser firms, resulting in a significant opportunity for
the MPS business.
Gross flows–

Inflow activity (including MPS) reduced by 12% in
2023, reflecting muted client activity across theindustry due to ongoing market uncertainty and thecost of living impact on customers’ ability to save. This
has a heightened impact on our Adviser businesswhere gross flows are primarily driven by existingcustomers.
Net flows–

Net outflows of £2.1bn reflect the market conditions,customer behaviours in response to the increased
cost of living and the short-term impact in 2023
resulting from the technology upgrade.

Increased to 30.6bps due to the higher revenue
explained above, with average AUMA in line with
2022 at £70.8bn.

1. The threesixty and MPS businesses moved from Personal Wealth to Adviser from January 2023 and May 2023 respectively. Comparatives have notbeen restated.
2. Includes Platform AUA of £70.9bn (2022: £68.5bn).

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STRATEGIC REPORT

ii
Adjusted
operating profit£114m

Net operating
revenue

Net operating
revenue yield£287m

ii (excluding Personal Wealth)

2023

2022

12 months to
31 Dec 2023

£287m(£173m)
£114m
60%

£201m
(£129m)
£72m
64%

£230m
(£103m)
£127m
45%

£114m
(£47m)£67m
41%£66.0bn£10.2bn(£7.3bn)£2.9bn£67.1bn£5.6bn(£3.7bn)£1.9bn£61.7bn£9.5bn(£6.2bn)£3.3bn£54.0bn£4.1bn(£2.5bn)£1.6bnAdjusted operating profit–––

Higher profit reflects the inclusion of £127m for the full
12 month result for ii4, compared to only seven months
in 2022.
ii4 has continued to perform well against an uncertain
market environment.
Personal Wealth restructured during 2023, withtransfers of business to Adviser and the sale of abrdn
Capital to LGT. The loss of £13m in 2023 was mainly
due to the lower revenue detailed below and theimpact of inflation on expenses.
Net operating revenue–––

Revenue4 of £230m continues to benefit fromdiverse revenue streams. Treasury income
contributed £134m (2022: £58m), benefiting from thecontinued rise in interest rates. Trading revenue of£48m (2022: £27m) was impacted by muted levels ofcustomer activity in uncertain market conditions.
Revenue from subscriptions was £54m (2022: £32m).
Average cash margin was 236bps in 2023 andthe indicative ii average cash margin for 2024 is
expected to be broadly in line with 2023.
Personal Wealth revenue reduced by £30m due to ac£19m impact from the transfer of the MPS business
to Adviser and the sale of abrdn capital to LGT, c£6m
from the transfer of threesixty to Adviser, and theimpact of adverse market movements.
Revenue yield–£2.9bn58.8bps

Total1

Net operating revenue
Adjusted operating expenses
Adjusted operating profit/(loss)
Cost/income ratio
Net operating revenue yield3
AUMA
Gross flows
Redemptions
Net flows

Net flows

Personal Wealth revenue yield was broadly flat at
58.8bps with average AUMA of £9.7bn, 28% lower
than 2022.

7 months to
31 Dec 20222

Personal Wealth1
2023

2022

£57m
(£70m)(£13m)
123%58.8bps£4.3bn£0.7bn(£1.1bn)(£0.4bn)£87m(£82m)£5m
94%
59.2bps£13.1bn£1.5bn(£1.2bn)£0.3bnAUMA––

ii4 AUA increased to £61.7bn (2022: £54.0bn) including£0.5bn from internal customer transfers in December
2023, with the industry leading AUA per customer up
13% to £152k.
Personal Wealth AUMA decreased to £4.3bn(2022: £13.1bn) mainly due to the sale of abrdn
Capital, (AUM of c£6bn) to LGT, which completed on
1 September 2023 and MPS AUM of c£2.5bn moving to
the Adviser business in H1 2023.
Gross and net flows––

ii4 net inflows remained strongly positive in 2023 at£3.3bn despite a subdued retail market across theyear.
Personal Wealth net outflows of £0.4bn include theimpact of client uncertainty following theannouncement of the sale of our discretionary
fund management business.

ii4 operational metrics

Total customers at year end
Total customers excluding EQi andShare Centre migrated customers
and pension trading accounts
Customers holding a SIPP accountCustomer cash balances
AUA per customer
New customers
Daily average retail trading
volumes

2023
12 Months

2022
12 Months

407k

402k

310k
62.4k
£5.5bn
£152k
30.2k

299k
51.5k
£6.0bn
£134k
29.2k

15.7k

17.3k

1. The threesixty and MPS businesses moved from Personal Wealth to Adviser from January 2023 and May 2023 respectively. Comparatives have notbeen restated.
2. Results for interactive investor (excluding Personal Wealth) included following the completion of the acquisition on 27 May 2022.
3. Net operating revenue yield is shown for Personal Wealth only. Revenue for ii4 is not aligned with AUA and therefore revenue yield is not presented.
4. Relates to ii (excluding Personal Wealth).

Annual report 2023

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69

Chief Financial Officer’s overview continued

Overall performance
Adjusted
operating profit£249m

IFRS loss
before tax

Adjusted capital
generation(£6m)

Investments1,2
Adviserii3
Other1Eliminations
Total
Liquidity net flows
LBG tranche withdrawals
Total net flows (including liquidity and LBG)(£17.6bn)£299m

Adjusted operating profit
Segmental summary

Net flows

AUMA

Net flows

2023
£m

2022
£m

2023
£bn

2022
£bn

2023
£bn

2022
£bn

50
118
114
(33)
249

130
86
72
(25)
263

366.7
73.5
66.0
(11.3)
494.9

376.1
68.5
67.1
(11.7)
500.0(15.3)
(2.1)
2.9
0.6
(13.9)(3.7)(17.6)(13.4)
1.6
1.9
(0.4)
(10.3)(3.2)(24.4)(37.9)

Assets under management and administration

Assets under management reduced by 1% to £494.9bn (2022: £500.0bn):– Net outflows excluding liquidity of (£13.9bn), with outflows in Investments and Adviser partly offset by positiveflows of £2.9bn in ii.
– Market and other movements of £19.4bn mainly reflecting positive movements in Investments, driven by Insurance
partners.
– Net impact of corporate actions of (£6.9bn) primarily due to the sales of the discretionary fund management and
US private markets businesses, partly offset by the acquisition of the specialist healthcare fund managementbusiness of Tekla.

Analysis of profit
Net operating revenue
Adjusted operating expenses
Adjusted operating profit
Adjusted net financing costs and investment return
Adjusted profit before tax
Adjusting items including results of associates and joint ventures
IFRS loss before tax
Tax credit
IFRS profit/(loss) for the year

2023
£m

20224
£m

1,398
(1,149)
249
81
330
(336)
(6)
18
12

1,456
(1,193)
263
(10)
253
(865)
(612)
66
(546)

Adjusted net financing costs and investment return
Adjusted net financing costs and investment return resulted in a gain of £81m (2022: loss £10m):–––

Investment losses, including from seed capital and co-investment fund holdings reduced to £3m (2022: loss £34m).
Net finance income of £50m (2022: costs £5m) reflecting a higher rate of interest on cash and liquid assets
and the benefit from the redemption of the 5.5% Sterling fixed rate subordinated notes in December 2022.
Higher net interest credit relating to the staff pension schemes of £34m (2022: £29m) reflecting an increase in
the opening discount rate due to a rise in corporate bond yields.

1. Adjusted operating loss consists of net operating revenue £9m (2022: £10m) and adjusted operating expenses £42m (2022: £35m). Finimize and our
digital innovation group have moved from Investments to Other. Comparatives have been restated. Refer Note 2 in the Group financial statements
section.
2. Investments net flows exclude Institutional/Retail Wealth liquidity and LBG tranche withdrawals.
3. Personal has been renamed ii and includes Personal Wealth unless otherwise stated.
4. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.

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Restructuring and corporate transaction expenses
Amortisation and impairment of intangible assets acquired in business combinations
and through the purchase of customer contracts
Profit on disposal of subsidiaries and other operations
Profit on disposal of interests in associates
Change in fair value of significant listed investments
Dividends from significant listed investments
Share of profit or loss from associates and joint ventures
Reversal of impairment/(impairment) of interests in associates and joint ventures
Other
Total adjusting items including results of associates and joint ventures

Restructuring and corporate transaction expenses were£152m, comprising restructuring costs of £121m(2022: £169m) in property related impairments,
severance, platform transformation, and specific costs
to effect savings in Investments, offset in part by a £32m
release of provision for separation costs, with further
details provided in Note 33 of the Group financial
statements. Corporate transaction costs of £31m
(2022: £45m) primarily related to prior year transactions
and the sale of our European-headquartered private
equity business.
Amortisation and impairment of intangible assets acquiredin business combinations and through the purchase ofcustomer contracts reduced to £189m, mainly due to thelower impairments of £63m (2022: £369m).
Impairments of goodwill in 2023 of £62m (2022: £340m),
comprising £36m (2022: £nil) for our financial planningbusiness and £26m (2022: £41m) for Finimize. In 2022,
there was also a goodwill impairment of £299m in
Investments. The impairments in 2023 include theimpact of lower projected revenues as a result ofadverse markets and macroeconomic conditions, andfor Finimize the impact of lower short-term projected
growth following a strategic shift that prioritises
profitability over revenue growth. Further details areprovided in Note 13 of the Group financial statements.
Profit on disposal of interests in subsidiaries and otheroperations relates to the sales of our discretionary fundmanagement business and our US private equity andventure capital business. See Note 1 for further details.
Profit on disposal of interests in associates was £nil.
The 2022 profit of £6m related to the sale of our stake inOrigo Services Limited.
Change in fair value of significant listed investments of(£178m) from market movements is analysed in thetable below:
Phoenix
HDFC Asset Management
HDFC Life
Change in fair value of significant
listed investments

2023
£m

2022
£m

(77)
(96)
(5)

(44)
(105)
(38)

(178)

(187)

2023
£m

20221
£m

(152)

(214)

(189)
79
(178)
64
1
2
37
(336)

(494)
–
6
(187)
68
5
(9)
(40)
(865)

Dividends from significant listed investments relates toour shareholdings in Phoenix (£54m) and HDFC AssetManagement (£10m).
Share of profit or loss from associates and joint ventures
reduced to a profit of £1m (2022: £5m). The results for
HASL have been impacted by the adoption of IFRS 17 on
1 January 2023. As required by IFRS 17, the standard has
been applied retrospectively with a resulting
restatement of the carrying value of the joint ventureand opening retained earnings as at 1 January 2022.
This change resulted in our 2022 share of HASL profit
increasing from the £7m previously reported to £10m.
HASL
Virgin Money UTM/Other
Share of profit or loss from associates
and joint ventures

2023
£m

20221
£m

3
(2)

10
(5)

1

5

Reversal of impairment/(impairment) of interests inassociates and joint ventures was £2m in 2023 relating toa reversal of impairment on Virgin Money UTM. See Note
14 for further details. The £9m in 2022 related to an
impairment of Tenet Group Ltd.
Other adjusting items in 2023 includes the £36m
liability insurance recovery of the £41m single process
execution event provision reflected at 2022, net of a
£5m excess. Other adjusting items in 2023 also includesa £21m provision expense for a potential tax liability. See
Note 11 for further details of other adjusting items andNote 33 for further details on provisions.
See pages 179 and 194 for further details on adjusted
operating profit and reconciliation of adjusted operating
profit to IFRS profit. Further details on adjusting items areincluded in the Supplementary information section.

The final HDFC Life and HDFC Asset Management
stakes were sold on 31 May 2023 and 20 June 2023
respectively.
1. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section(page 167).

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71

STRATEGIC REPORT

Adjusting items

Chief Financial Officer’s overview continued

Tax policy

We have important responsibilities in paying andcollecting taxes in the countries in which we operate.
Our tax strategy is therefore, guided by a commitment
to high ethical, legal and professional standards andbeing open and transparent about what we are doing
to meet those standards.

Earnings per share––Tax expense

The tax credit attributable to the IFRS loss for the year,
excluding amounts relating to prior periods, is £1mwhich gives rise to an effective tax rate of 17%. The
overall IFRS tax credit, including tax credits relating toprior periods of £17m, is £18m (2022: credit £66m)
which results in an effective tax rate of 300% (2022:
11%) due to the relative scale of the loss in the year. The
difference to the UK Corporation Tax rate of 23.5% ismainly driven by:– Dividend income and fair value movements from ourinvestments in Phoenix not being subject to tax.
– Movements in the fair value of our investment in HDFC
Asset Management being tax effected at the Indianlong-term capital gains tax rate, which is lower thanthe UK Corporation Tax rate.
– Profit on the sale of abrdn Capital not being subject
to tax.
– Goodwill impairments not deductible for tax
purposes.
– Prior year adjustments to deferred tax liabilities on
intangibles.
The tax expense attributable to adjusted profit is £50m
(2022: £22m), an effective tax rate of 15% (2022: 9%).
This is lower than the 23.5% UK rate primarily due tochanges in the applicable deferred tax rates on
temporary differences and pension scheme surplus
movements included on a net of tax basis.

Total tax contribution

Total tax contribution is a measure of all the taxes abrdn
pays to and collects on behalf of governments in the
territories in which we operate. Our total tax
contribution was £449m (2022: £443m). Of the total,£201m (2022: £186m) was borne by abrdn whilst£248m (2022: £257m) represents tax collected byabrdn on behalf of the tax authorities. Taxes borne
mainly consist of corporation tax, employer’s national
insurance contributions and irrecoverable VAT. The
taxes collected figure is mainly comprised of pay-asyou-earn deductions from employee payroll payments,
employees’ national insurance contributions, VAT
collected and income tax collected on behalf of HMRC
on platform pensions business.

‘21

£447m

‘22

£443m

‘23

£449m
You can read our tax report on our website
www.abrdn.com/annualreport

Adjusted diluted earnings per share increased to
13.9p (2022: 10.5p) due to the higher adjusted profit
after tax and the benefit from share buybacks in 2022
and 2023.
Diluted earnings per share was a profit of 0.1p
(2022: loss 26.6p1) reflecting the factors above,
impairments and fair value losses of significant listed
investments.

Dividends

The Board has recommended a final dividend for 2023
of 7.3p (2022: 7.3p) per share. This is subject toshareholder approval and will be paid on 30 April 2024
to shareholders on the register at close of business on
15 March 2024. The dividend payment is expected to be£130m.
External dividends are funded from the cumulative
dividend income that abrdn plc receives from its
subsidiaries and associates (see below for details of
cash and distributable reserves). The need to holdappropriate regulatory capital is the primary restriction
on the Group’s ability to pay dividends. Further
information on the principal risks and uncertainties that
may affect the business and therefore dividends isprovided in the Risk management section.
The adjusted capital generation trend and related
dividend coverage is shown below:

‘21
‘22

£366m
£259m

‘23

1.18x
0.88x

£299m

1.12x

Return of capital

On 5 June 2023 we commenced a £150m sharebuyback which was extended to £300m on 8 August2023. This completed on 19 December 2023 with a totalof 161m shares repurchased at an average price of£1.86 per share.

Capital and liquidity
Adjusted capital generation
Adjusted capital generation which shows how adjusted
profit contributes to regulatory capital increased by
15% to £299m.
Adjusted profit after tax
Less net interest credit relating to
the staff pension schemes
Less AT1 debt interest
Add dividends received fromassociates, joint ventures andsignificant listed investments
Adjusted capital generation
Restructuring and corporatetransaction expenses (net of tax)
Net capital generation

2023
£m

2022
£m

280

231

(34)
(11)

(29)
(11)

64
299

68
259

(121)
178

(178)
81

1. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.

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IFRS net cash flows

The indicative surplus CET1 capital at 31 December
2023 was £876m (2022: £711m). Disposal of ourremaining HDFC Life and HDFC Asset Management
stakes, in May and June 2023 respectively, benefited
regulatory capital by £576m.

Net cash inflows from operating activities were£221m (2022: £110m) which includes outflows fromrestructuring and corporate transaction expenses,
net of tax, of £78m (2022: £149m).
– Net cash inflows from investing activities were £542m(2022: outflows £86m) and primarily reflected £535m
net proceeds from the final HDFC Asset Managementand HDFC Life stake sales.
– Net cash outflows from financing activities were£711m (2022: £761m) with the decrease mainly due
to the repayment of subordinated liabilities in 2022.
The cash inflows and outflows described above resulted
in closing cash and cash equivalents of £1,210m as at 31
December 2023 (2022: £1,166m).
–

Key movements in surplus CET1 capital are shown in
the table below.
Analysis of movements in surplus CET1 capital (IFPR
basis)

2023
£m

2022
£m

Opening surplus regulatory capital
Sources of capital
Adjusted capital generation
HDFC Life, HDFC AssetManagement1 and Phoenix sales
Disposals2
Uses of capital
Restructuring and corporatetransaction expenses (net of tax)
Dividends
Share buyback
Acquisitions3
Other
Closing surplus CET1 capital

711

1,799

299

259

576
137

789
-

(121)
(267)
(302)
(152)
(5)
876

(178)
(295)
(302)
(1,364)3711

1. Capital benefit of HDFC Asset Management sales reflects the pre-tax
proceeds.
2. Discretionary fund management and US private equity businesses.
Capital benefit of discretionary fund management disposal includes
derecognition of related intangibles (£58m).
3. ii (excluding Personal Wealth) in 2022 and Tekla and Macquarie funds
in 2023.

The full value of the Group’s significant listed
investments is excluded from the capital position under
IFPR.
A summary of our CET1 coverage is shown in the tablebelow.
2023
£m

2022
£m

CET1 capital resources

1,466

1,301

Total regulatory capital requirements

1,054

1,054

CET1 coverage

139%

123%

CET1 coverage

Note 42 of the Group financial statements includes areconciliation between IFRS equity and surplus regulatory
capital and details of our capital management policies.

Cash and liquid resources and distributablereserves
Cash and liquid resources remained robust at £1.8bn at
31 December 2023 (2022: £1.7bn). These resources arehigh quality and mainly invested in cash, money market
instruments and short-term debt securities. Cash andliquid resources held in abrdn plc were £0.4bn at
31 December 2023 (2022: £0.3bn).

IFRS net assets
IFRS net assets attributable to equity holders decreased
to £4.9bn (2022: £5.6bn4) mainly due to the sharebuyback and dividends paid in the year:– Intangible assets remained at £1.6bn (2022: £1.6bn)
due to additions being offset by amortisation andimpairments. Further details are provided in Note 13.
– The principal defined benefit staff pension scheme,
which is closed to future accrual, continues to have asignificant surplus of £0.7bn (2022: £0.8bn). Further
details are provided in Note 31. As part of ongoingactions 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 March2023 seeking a direction on the destination of any
residual surplus assets that remain after all planrelated 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 becompleted 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 towork 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 timingof release of any surplus remains a matter for thetrustee. The IAS 19 defined benefit plan asset is notincluded in abrdn’s regulatory capital.
– Financial investments decreased to £2.0bn(2022: £2.9bn) primarily due to the final stake sales in
HDFC Asset Management and HDFC Life, which
completed in H1 2023. At 31 December 2023 financial
investments included £0.6bn (2022: £1.3bn) in relation
to significant listed investments (Phoenix).

Further information on cash and liquid resources, and areconciliation to IFRS cash and cash equivalents, areprovided in Supplementary information.
At 31 December 2023 abrdn plc had £3.1bn(2022: £3.2bn) of distributable reserves.
4. Comparatives have been restated for the HASL implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.

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73

STRATEGIC REPORTIFPR surplus CET1 capitalChief Financial Officer’s overview continued

Viability statement
Longer-term prospects

The Directors have determined that three years is anappropriate period over which to assess the Group’s
prospects. In addition to aligning with our businessplanning horizon, this reflects the timescale over whichchanges to major regulations and the externallandscape affecting our business typically take place.
The Group’s prospects are primarily assessed throughthe strategic and business planning process. These
prospects have been enhanced as a result of actions
taken during the year, including through actions tosimplify the business.
The assessment reflects (i) the Group’s focus on its
strategic priorities as set out on pages 14 to 15 and how
this is expected to drive client-led growth in abrdn’s
three businesses and (ii) the expected impact of
the transformation programme announced in
January 2024.
In forming their assessment of the Group’s longer-term
prospects, the Directors have also taken into account:– The Group’s capital position as set out on page 73.
– The Group’s substantial holdings of cash and liquid
resources as well as holdings in listed equity
investments, as set out on page 73.
– The Group’s principal and emerging risks as set out on
pages 76 to 79.

Assessment of prospects
The Directors consider the Group’s focus on its
strategic priorities will deliver growth whileallowing the Group to maintain its regulatory
capital position and the dividend policy describedon page 64.

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Viability

The Directors consider that three years is anappropriate period for assessing viability as this is in linewith the horizon used for our business planning andstress testing and scenario analysis processes.
In considering the viability statement, the Board has
reviewed and assessed the Group’s principal risks inorder to understand potential vulnerabilities for thebusiness. In addition to this, the Directors assessed theGroup’s viability taking into account:– Output from the Group’s business planning process.
– Results from the Group’s stress testing and scenario
analysis programme.
– Results from the Group’s reverse stress testing
exercise.
– Work performed in connection with the UK’s FCA andPRA rules on operational resilience.
The business planning process includes the projection of
profitability, regulatory capital and liquidity over a threeyear period, based on a number of assumptions. This
includes assumptions regarding the economic outlook
which reflects various factors, including the changing
market conditions following the significant geopoliticaland economic developments in recent years.
The Group has no debt maturing over the next three
years and based on business planning projections, there
is no expectation that the Group will need to draw downon its £400m revolving credit facility described on page
241.
The Group’s stress testing and scenario analysis
programme develops financial projections over a threeyear horizon in response to a range of severe but
plausible stresses to the business plan to understand theGroup’s financial resilience. This includes exploring (i)the impacts of market-wide stresses, (ii) stresses thatare specific to abrdn, and (iii) stresses that combine
both these elements. Whilst all of the Group’s principal
risks could potentially impact on the Group’s financial
resilience, our combined stress testing scenarios
focused on those risks expected to have the mostsignificant impact:– Financial risk was considered through stresses tomarket levels, flows, and margins. The scenarios thatwere explored included stressing flows over all three
years and assuming a market shock in 2024 with an
impact that might be expected around 1-in-20 years.
This included equity markets falling approximately
24% in Q1 2024 with recovery occurring from Q32024 through 2026 and the UK Base rate falling to
0.1% by Q1 2025 where it remains.
– Operational risks were considered in the context of
the Group incurring £90m of operational losses whichwere assumed to represent the cumulative impact of
a number of severe losses across a range of principal
risk categories, such as: process execution and tradeerrors, technology risk, security and resilience risk, or
fraud and financial crime risks.

The Group operates extensive controls to protect thebusiness against cyber-attacks and engages actively
with third parties to understand and, where necessary,request improvement in the controls they operate.

Given the strength and quality of the Group’s financial
position, the Group had sufficient capital and liquid
resources to remain above its regulatory requirements
without needing to take any management actions
other than those assumed within the business plan.

The likelihood of two cyber-attacks arising in themanner described is considered to be very remote. This,and the controls in place to mitigate the impact of suchcyber-attacks, supports the assessment of viability andno qualification is considered necessary.

In the event that the Group was to experience more
severe stresses than those explored under the Group’s
stress testing and scenario analysis programme, theGroup has a range of management actions it would be
able to take, including a number of sizeable
management actions wholly within the Group’s control.
This includes drawing down on the revolving credit
facility, reducing discretionary expenditure, anddividend management actions.

Over recent years the Group has also explored reverse
stress tests including the failure of a critical third-party
administrator in the Investments business, the loss ofcritical staff and extreme financial market shocks. The
work performed concluded that these events had a low
likelihood of occurrence and were not considered likely
to threaten the Group’s viability. These conclusions are
considered to remain valid.

The Group is considered to be resilient to adverse
climate change over the three-year horizon; thestresses to market levels and flows explored under the
stress testing and scenario analysis programme are
deemed to capture the possible consequences ofclimate change over this period.
Reverse stress testing involves exploring the quantitative
and/or qualitative impacts of extreme scenarios which
could threaten the viability of our business model. For
this year’s exercise, we investigated the potential forcyber-attacks to impact on the Group’s viability.
Initial analysis highlighted that, given the diversificationof revenues arising from the Group’s three businesses,
the Group’s viability was most likely to be threatened
where significant disruption was experienced by morethan one business.
The Group’s IT architecture and related controls were
found to reduce the risk of a single cyber-attack having
a material impact on more than one business. As aresult, it was concluded that significant disruption was
only likely to be experienced by more than one businesswhere the Group suffered more than one cyber-attack.
Based on the above, the reverse stress test scenariothat was explored focused on a ransomware cyberattack impacting on the abrdn Group, followed a few
months later by a cyber-attack impacting FNZ’s ability
to serve abrdn. In exploring this extreme scenario,
consideration was given to understanding the possible
disruption that could arise in the Investments andAdviser business such that the abrdn Group could
become non-viable.

Operational resilience reflects the ability of firms and thefinancial sector as a whole to prevent, adapt andrespond to, and recover and learn from operational
disruptions. In addition to causing potential harm tocustomers and threatening market integrity, suchoperational disruptions and the unavailability ofimportant business services have the potential tothreaten viability.
To support the Group’s operational resilience, and in linewith UK regulatory expectations, the Group reviews andapproves important business services, impact tolerance
thresholds, and operational resilience self-assessments
on an annual basis. The Group also undertakes
measures where relevant to comply with operational
resilience regulations in overseas jurisdictions, forexample Singapore and Ireland.
The Group continues to enhance its operational
resilience and defences against risks throughenhancement programmes. This is to ensure the Group
complies with UK regulatory expectations around
operational resilience that must be met by March 2025
and helps to further reduce risks of non-viability.

Assessment of viability
The Directors confirm that they have areasonable expectation that abrdn plc will beable to continue in operation and meet its
liabilities as they fall due over the next three years.

The investigations concluded that the Group’s nonviability was most likely to arise due to (i) a significant
outflow of AUMA from the Investments businessfollowing the cyber-attack on the abrdn Group and (ii)the Adviser business reaching a point of non-viability
following disruption caused by the cyber-attack on FNZ.

Annual report 2023

abrdn.com

75

STRATEGIC REPORTAll the scenarios explored resulted in the Groupexperiencing reduced profitability and, in some cases,
losses over the planning horizon. Projections of capitaland liquid resources fell as a result of these losses.

Risk management

Managing risk for better outcomesOur approach to risk management

A strong risk and compliance culture underpins ourcommitment to put client and customers first andsafeguard the interests of our shareholders. Our Board
has ultimate responsibility for risk management andoversees the effectiveness of our Enterprise Risk
Management (ERM) framework.

ERM framework

The ERM framework supports risk management
throughout our business. We operate ‘three lines ofdefence’ with defined roles and responsibilities. We
continually evolve our framework to meet the changing
needs of the company and to make sure it keeps pacewith industry best practice. In 2023, improvements to theframework included:– Delivering a new approach to Risk and Control Self
Assessments, focused on key business outcomes andexecutive accountability.
– Improving abrdn’s risk acceptance process.
– Improved management information to bettermeasure how the framework is applied in practice.
– Reviewing our risk taxonomy.
– Strengthening capabilities within Enterprise Risk.
– Further embedding of capabilities to support
Operational Resilience and Consumer Duty outcomes.
– Updating our Global Code of Conduct.

Business risk environment

The commercial environment remained challenging
during 2023 given the market and economic
environment and geopolitical events and risks. Inflation
remained high, accompanied by the continued
tightening of monetary policy. These conditions
adversely impacted market levels and client flows over
the year.
We have continued to simplify our business model,delivering on recent transformation projects andcontinued diversification of the Group’s revenue,
following the acquisition of ii in 2022.
We have simplified and focused our investment
capabilities on areas where we have both the skill andthe scale to capitalise on the key theme shaping themarket, through either public markets or alternative
asset classes. We have completed the sales of our US
private equity and discretionary fund managementbusinesses and announced the sale of our European
private equity business. We have also acquired thehealthcare fund management capabilities of Tekla, aspart of our journey to refocus our business to become a‘specialist’ manager.
We continue to manage a lot of change across thebusiness, to simplify and achieve sustainable growth.
The volume of change may create bandwidth issues
and operational stretch on top of our core activities,
whilst we balance the demands of the businesssimplification and growth agendas. We continue tomonitor how we attract, retain and develop ourcolleagues and engage regularly on colleague
engagement.
Client and customer interests are at the heart of ourbusiness. We continue to focus on good outcomes
which we deliver across our business. During 2023, we
implemented the FCA’s new Consumer Duty
requirements, which came into force on 31 July. This isembedded in our Global Code of Conduct andsupported by our Consumer Duty mandatory training
and our Client and Customer Policy.
The Consumer Duty requirements place specificobligations on the abrdn Group’s businesses todemonstrate Value for Money for its clients. This isachieved by avoiding biased incentive schemes and by
our Value for Money framework, underpinned by ourculture and strategy.

Evolving and emerging risks

We are vigilant to risks that could crystallise overdifferent horizons and impact our strategy, operations
and our clients. These risks vary in nature as they covergeopolitical, economic, societal, technological, legal,
regulatory and environmental themes. We distil internaland external research to consider how risks could
emerge and evolve.
We provide our clients and customers fair andtransparent fee structures and are engaged with the
FCA (in the UK) on retention of interest earned on cash
balances. Some notable risks (and opportunities) for ourbusiness include adoption of modern technologies,
uncertainty driven by geopolitics, unprecedented
market shifts, evolving cyber threats and climatechange.

Sustainability risks1

We have a responsibility to shareholders, clients,
customers and all stakeholders to assess, report on,
manage and mitigate our sustainability risks. As aninvestment firm, we need to consider the impact of ourcorporate activities while making investments in line withclient mandates. We are mindful of the increasing
challenges around providing consistent ESG disclosuresacross multiple geographies.
During 2023, we continued to deliver against a numberof key milestones. These included regulatory disclosure
requirements under the EU SFDR and UK TCFD andenhancing our climate and carbon analytical tools. We
completed the integration of ESG data into ourinvestment data platform to support 2024 regulatory
reporting and transitioned to a new ESG screening andexclusion tool. We have commenced a review of the
UK SDR reporting and disclosure requirement fordelivery in 2024.

1. See Note 34 for disclosure relating to the financial impact of climate-related risk on the Group financial statements.

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We categorise our risks across 12 principal risk categories which have both internal and external drivers. Within our
ERM framework, we have developed more detailed taxonomy of risks under these principal risk categories. This
allows us to systematically monitor the risk profile of our business. Principal and emerging risks are subject to active
oversight and robust assessment by the Board. These risks are described in the following table.

Risk to our business1

How we manage this risk

Strategic risk

– The current external geopolitical andmacroeconomic environment presents a wide
range of risks that could impact our business planand the implementation of our strategy.
– The volume of internal change also poses a risk to
the delivery of our plans.
– Risks could include failing to meet client
expectations, poor strategic decision-making or
failure to adapt.

We continued to simplify our business model, increase
efficiency and improve the blend of capabilities,
technology and processes.
We successfully completed key acquisitions anddisposals to simplify our business and strengthen ourcapabilities for future growth. Each business has a clear
growth strategy. We rigorously assess inorganic
opportunities for their contribution to our core strategy
and client needs. Market and competitor intelligence has
aided decision-making.
We have maintained focus on geopolitical andmacroeconomic developments to understand andmanage implications.

2

Financial risk

– This is the risk of having insufficient financial
resources, suffering losses from adverse markets or
the failure or default of counterparties. It is
impacted by our flows experience, global market
conditions and the fees we charge on investment
mandates, platforms and wealth management
services.
– Our strong capital and liquidity position enabled thecontinuation of returning capital to shareholders
through share buybacks, while still maintaining astrong capital position.

3

Business planning and stress testing is used to project our
financial resources under a range of scenarios andconfirm the financial resilience of our business. During2023, we continued to operate to the UK Investment
Firms Prudential Regime which determines regulatory
capital and liquidity requirements for the group and its
key entities. Our UK regulator completed a planned
Supervisory Review and Evaluation Process during 2023,
as standard for the industry.
Our Treasury Policy includes minimum standards for
managing liquidity, market and counterparty risks,
including the credit quality of our counterparties.

Conduct risk

– Our business relies on our ability to deliver good
service and fair client and customer outcomes.
– There is a risk that we fail to achieve this through ouroperational activities and the implementation of ourchange programmes.
– This could lead to customer and client harm,
reputational damage and loss of income.

Being client and customer-led is a commitment and an
essential aspect of our culture. This means thecontinuous focus on client and customer outcomes in allthat we do.
Our ERM framework supports the management ofconduct risk with clear expectations around conduct
goals and responsibilities. In 2023, we updated our Global
Code of Conduct and implemented the FCA’s Consumer
Duty. Work is continuing to embed the new framework,
improve management information and ensurecompliance of closed book products, required by
31 July 2024.

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77

STRATEGIC REPORT

Principal risks and uncertainties

Risk management continued

Risk to our business4

How we manage this risk

Regulatory and legal risk

– High volumes of regulatory change can create
interpretation and implementation risks.
– Compliance failures can lead to poor customer andclient outcomes, sanctions, reputation damage andincome loss.
– During 2023 the company continued to respond toand implement regulatory change, including in
relation to ESG and the new Consumer Duty
requirements in the UK.
– Potential risks of changing capital and liquidity
requirements.
– Tax risk is inherent in the nature of our global
business. This could lead to reputational risk and/or
financial loss for our business.

We actively monitor developments and engage with ourregulators on the regulatory landscape, given the broadand complex rules that the firms’ operations must apply
globally, including the implementation of new regulatory
policy initiatives. We also invest in compliance andmonitoring activity across the business. The evolution ofregulatory divergence between the UK and EU rulebooks is
a particular focus for the group in view of our businessfootprint.
We work with our regulators and tax authorities, toaddress requirements and expectations.
Our relationships with key regulators are based on trust
and transparency while our compliance and legal teams
support senior managers across our business.

Operational risks (5-12)
5Process execution and trade errors– This is the risk that processes, systems or external
events could produce operational errors.
– During 2023 there was continued management
focus on process execution and trade errors.

6

People– Our people are our greatest asset. Business change
has the potential to impact engagement andmorale.
– Engaging with our people, and supporting theirwellbeing, is critical to our strategy and the successof our business.

7

We invest considerable time listening to andcommunicating with our staff and have well-establishedapproaches to engaging at all levels.
We continue to monitor and have responded to market
pressures and increased competition for talent in our
industry. We use targeted approaches to support
retention and recruitment for our key business functions.

Technology– There is a risk that our technology may fail to keep
pace with business needs. There is also thesignificant risk of unauthorised access of oursystems and cyber-attack.
– These risks are relevant to a wide range of potential
threats to the business including internal failure,
external intrusion, supplier failure and weather
events.
– Our current IT estate is complex and there are
dependencies on third party suppliers that need tobe managed in a dedicated way.

78

We have established processes for reporting andmanaging incidents, risk events and issues. We monitor
underlying causes of error to identify areas for action,
promoting a culture of accountability and continuously
improving how we address issues.

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Annual report 2023

We have an ongoing programme to invest in andenhance our IT infrastructure controls. We benchmark
our IT systems environment to identify areas for
improvement and further investment.
We delivered our Adviser platform technology upgradein February, to allow abrdn to deliver better adviser andcustomer outcomes, greater operational efficiency, andexit transitional services with Phoenix.
We maintain heightened vigilance for cyber intrusion,
with dedicated teams monitoring and managing cybersecurity risks. We carry out regular testing on penetrationand crisis management.

8

How we manage this risk

Security and resilience– Incidents that can impact business resilience andcontinuity include environmental issues, terrorism,
economic instabilities, cyber-attacks andoperational incidents.
– The risk of disruption from inside the organisation isbroadly stable. However, tools for exploiting IT
vulnerabilities are becoming more widely available
globally and are frequently used by criminal groups
to enable ransomware attacks.

9

We continue to work with the financial authorities and ourindustry peers to assist those targeted by scams.

The ongoing simplification of our business model enables
us to be more agile and respond at pace to changes inthe economic environment.
In our commitment to transformation, we are positioning
our business for a longer-term sustainable future andhave committed to actions to align our resources andcapabilities. We have established governance processes
with project resources and clearly defined roles acrossthe three lines of defence.

Third party management– We outsource various activities to third party
suppliers and are exposed to a variety of delivery,
regulatory and reputational risks as a result.

12

We have improved the control environment for antimoney laundering. Processes are in place to identify
client activity linked with financial crime, globally. These
include controls for anti-money laundering, anti-bribery,fraud and other areas of financial crime.

Change management– As a diverse, global investment firm, we arecontinually implementing change to improve ourbusiness or meet regulatory expectations. As well
as being costly, failure to deliver change effectively
can lead to poor client and customer outcomes
and/or regulatory non-compliance.

11

We continue to strengthen our operational resilience.
Crisis management and contingency planning processes
are regularly reviewed and tested, to strengthen ourresilience and response. We are preparing to implementchanges in relation to the new EU Digital Operational
Resilience Act, to be implemented by January 2025.

Fraud and financial crime– As a business that handles clients’ money, we areexposed to the risk of fraudulent and dishonest
activity.
– As we engage with a wide number of external
parties, we have to be vigilant to the risk that theseparties are connected with criminal behaviour, or
subject to sanctions by national or global
authorities.

10

STRATEGIC REPORT

Risk to our business

Our Third-Party Risk Management framework continues
to evolve in line with external developments, industry
practice and regulatory developments.

Financial management process– We have extensive financial reporting obligations toclients, customers, shareholders, regulators andother stakeholders. Failures in these processes
could impact decision-making and lead toregulatory and litigation risk.

Our financial reporting activities align to externalreporting standards and industry best practice. These
activities are subject to extensive internal control andexternal assurance.

The cover to page 79 constitute the Strategic report which was approved by the Board and signed on its behalf by:
Stephen Bird
Chief Executive Officer
abrdn plc
(SC286832)
26 February 2024

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79Governance80

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Annual report 2023

Contents

82
86
98
107
111
115
135
141

GOVERNANCE

Board of Directors
Corporate governance statement
1. Audit Committee report
2. Risk and Capital Committee report
3. Nomination and Governance Committee report
4. Directors’ remuneration report
Directors’ reportStatement of Directors’ responsibilities

Annual report 2023

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81Board of Directors

Our business is overseen by our Board of Directors. Biographical details (and shareholdings)of the Directors as at 26 February 2024 are listed below.

Sir Douglas Flint CBE –ChairmanAppointed to the Board
November 2018
Nationality
BritishBoard committees:

Stephen Bird –Chief Executive Officer
Age68
Shares200,000

In other current roles, Sir Douglas is Chairmanof IP Group plc and Chairman of the Royal
Marsden Hospital and Charity. He is amember of a number of advisory boards andtrade associations through which he keeps
abreast of industry, regulatory andinternational affairs of relevance to his publiccompany responsibilities.
Previously, Sir Douglas served as Group
Chairman of HSBC Holdings plc from 2010 to2017. For 15 years prior to this he was HSBC’sgroup finance director, joining from KPMG
where he was a partner, and from 2005 to2011 he served as a non-executive directorof BP plc. He has extensive experience ofbusiness in Asia, having been a member ofboth the Mayor of Shanghai and Mayor of
Beijing’s Advisory Boards and currently serveson the International Advisory Panel of theMonetary Authority of Singapore.
Sir Douglas was awarded the CBE in 2006
and his knighthood in 2018, both inrecognition of his service to the financeindustry. In June 2022, he was awarded anhonorary degree by the University ofGlasgow, his alma mater, in recognition of his
services to the business community.

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Age
57
Shares782,355

Appointed to the Board
October 2023
Nationality
BritishAge
51
SharesNilNC

Sir Douglas’ extensive experience of board
leadership in global financial services has
shaped a collaborative approach whichhelps to facilitate open and constructive
boardroom discussion. He maintains a keeninterest and involvement in international,
financial and governance matters, retaining
an expertise which is an important asset toabrdn. This expertise, together with his priorboard experience, help to focus board
attention on their stewardship responsibilities
as well as guiding discussion and challenge
on the design and delivery of our strategy.

82

Appointed to the Board
July 2020
Nationality
BritishJason Windsor –Chief Financial Officer

Stephen brings a track record of delivering
exceptional value to clients, creating highquality revenue and earnings growth incomplex financial markets, and deep
experience of business transformation during
periods of technological disruption andcompetitive change.
Stephen joined the Board in July 2020 as
Chief Executive-Designate, becoming Chief
Executive Officer in September 2020. He is anabrdn representative director to the US
closed-end fund boards and the SICAV fundboards where abrdn is the appointed
investment manager.
Previously, Stephen served as Chief Executive
Officer of global consumer banking at
Citigroup from 2015, retiring from the role inNovember 2019. His responsibilities
encompassed all consumer and commercial
banking businesses in 19 countries, including
retail banking and wealth management, andoperations and technology supporting thesebusinesses. Prior to this, he was Chief
Executive for Citigroup’s Asia-Pacific businessacross 17 markets, including India and China.
Stephen joined Citigroup in 1998. Over 21
years he held leadership roles in banking,operations and technology across its Asianand Latin American businesses. Before this,he held management positions at GE Capital,
where he was director of UK operations from1996 to 1998, and at British Steel.
Stephen is a member of the Investment
Association’s board of directors, and the
Financial Services Growth and Development
Board in Scotland. He holds an MBA in
Economics and Finance from University
College Cardiff and is an Honorary Fellow.

Annual report 2023

Jason joined abrdn as Chief Financial Officer
in October 2023, bringing over twenty-fiveyears of experience in the financial services
industry. Having held senior finance roles ininvestments, insurance and banking, Jason
has established a strong track record ofleadership in finance, asset management,
M&A, and strategy.
His most recent role before joining abrdn was
Chief Financial Officer of Persimmon plc. Prior
to this, Jason was Group Chief Financial
Officer of Aviva plc between 2019 and 2022.
He had previously been Chief Financial
Officer of Aviva’s UK General Insurance and
UK Life businesses, Chief Capital &Investments Officer, and a director on theboard of Aviva Investors.
Before joining Aviva in 2010, Jason spent 15
years at Morgan Stanley in London andSingapore, latterly as a Managing Director
within its Investment Banking Division, where
he advised UK and international banks,
insurers and asset managers on M&A, capitalraising and strategy.
Jason is a governor of Felsted School in Essex.
Jason holds a BA (Hons) from the University of
Oxford, with a Part II thesis in Atmosphericchemistry.

Key to Board committees

R

Remuneration Committee

RC Risk and Capital Committee
A

Audit Committee

NC Nomination and Governance Committee

Committee Chair

GOVERNANCE

Jonathan Asquith –Non-executive Director and Senior
Independent Director

Catherine Bradley CBE –Non-executive Director

Appointed to the Board
September 2019
Nationality
BritishBoard committees:

Appointed to the Board
January 2022
Nationality
British and French
Board committees:

Age
67
Shares
205,864R NC

Jonathan has considerable experience as a
non-executive director within the investment
management and wealth industry. This
brings important insight to his roles as Senior
Independent Director and Chair of ourRemuneration Committee.
Jonathan is a non-executive director of
CiCap Limited and its regulated subsidiary
Coller Capital Limited. He is also a nonexecutive director of B-FLEXION Group
Holdings SA and subsidiaries including
Vantage Infrastructure Holdings and Capital
Four Holding A/S. At the end of 2020 hestepped down as Deputy Chair of 3i Groupplc after nearly 10 years as a board member.
Previously, he has been Chair of Citigroup
Global Markets Limited, Citibank International
Limited, Dexion Capital plc and AXA
Investment Managers. He has also been a
director of Tilney, Ashmore Group plc and
AXA UK plc.
In his executive career Jonathan worked at
Morgan Grenfell for 18 years, rising tobecome group finance director of Morgan
Grenfell Group, before going on to take theroles of Chief Financial Officer and Chief
Operating Officer at Deutsche Morgan
Grenfell. From 2002 to 2008 he was a directorof Schroders plc, during which time he was
Chief Financial Officer and later Executive
Vice Chairman.
He holds an MA from the University ofCambridge.

John Devine –Non-executive Director
Age
64
Shares12,181A NC RC

Catherine has more than 30 years’executive
experience advising global financial
institutions and industrial companies oncomplex transactions and strategic
opportunities. She brings knowledge fromworking across Europe and Asia, serving on
the boards of leading consumer-facing
companies, and working with regulators
which provides valuable input to her roles as
Chair of our Audit Committee and nonexecutive Chair of interactive investor, awholly owned subsidiary of the group.
Catherine is a non-executive director ofJohnson Electric Holdings Limited, andeasyJet plc, where she chairs the financecommittee. She is also senior independent
director of Kingfisher plc.
Previously, Catherine served on the boards ofleading industrial and consumer-facing
companies in the UK, France, and Hong Kong.
She was appointed by HM Treasury to theboard of the Financial Conduct Authority in2014 and played an important role inestablishing the FICC Markets Standards
Board in 2015. Catherine stepped down fromthese boards in 2020. Between 2021 and2022 she was also a board member of theValue Reporting Foundation, where she cochaired the audit committee.
In her executive career, Catherine has held anumber of senior finance roles in investmentbanking and risk management: in the US with
Merrill Lynch, in the UK and Asia with Credit
Suisse, and in Asia with Société Générale. She
returned to Europe in 2014 to start her nonexecutive career.

Appointed to the Board
July 2016
Nationality
BritishBoard committees:

Age
65
Shares52,913
RC A NC

John’s previous roles in asset management,
his experience in the US and Asia, and his
background in finance, operations andtechnology are all areas of importance to ourstrategy. John’s experience is important tothe board’s discussions of financial reporting
and risk management. He is Chair of our Risk
& Capital Committee.
John was appointed a director of ourbusiness in July 2016, at that time Standard
Life plc. From April 2015 until August 2016, he
was non-executive Chair of Standard Life
Investments (Holdings) Limited.
He is non-executive Chair of Credit SuisseInternational and of Credit Suisse Securities(Europe) Limited, and a non-executive
director of Citco Custody Limited and Citco
Custody (UK) Limited.
From 2008 to 2010, John was Chief
Operating Officer of Threadneedle AssetManagement Limited. Prior to this, he held anumber of senior executive positions at Merrill
Lynch in London, New York, Tokyo and HongKong.
He holds a BA (Hons) from Preston
Polytechnic, and MBA in Banking from
Bangor University and is a Fellow of theChartered Institute of Public Finance andAccounting.

Catherine graduated from the HEC Paris
School of Management with a major in
Finance and International Economics. She
was awarded a CBE in 2019.

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83Board of Directors continued

Hannah Grove –Non-executive Director
Appointed to the Board
September 2021
Nationality
British and American
Board committees:

Pam Kaur –Non-executive Director
Age
60
Shares
33,000NC R

Hannah brings more than 20 years ofleadership experience in the global financial
services industry. Her expertise includes
leading brand, client and digital marketingand communications strategies, including
those for major acquisitions, which she
combines with deep knowledge of regulatoryand governance matters. She is also ourdesignated non-executive director for board
employee engagement and sits as a nonexecutive director on the boards of Standard
Life Savings Limited and Elevate Portfolio
Services Limited, wholly owned subsidiaries ofabrdn group.
Before joining our Board, Hannah enjoyed a22-year career at State Street. This included
12 years as Chief Marketing Officer, retiringfrom the role in November 2020. She was amember of the company’s management
committee, its business conduct & risk, andconduct standards committees, and a board
member for its China legal entity.
Before joining State Street, Hannah wasmarketing director for the Money Matters
Institute, supported by the United Nations, theWorld Bank and private sector companies tofoster sustainable development in emerging
economies.
In other current roles, Hannah is a member of
the advisory board of Irrational Capital. She
has also received significant industry
recognition as a champion of diversity andinclusion and is a member of the board ofadvisors for reboot, an organisation that aims
to enhance dialogue around race both atwork and across society.

84

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Appointed to the Board
June 2022
Nationality
BritishBoard committees:

Age
60
SharesNil
A RC

Pam has more than 20 years’ experience ofleadership roles in business, risk, compliance,
and internal audit within several of the world’s
largest and most complex financial
institutions during periods of significant
change and public scrutiny. She brings
considerable expertise in leading thedevelopment and implementation ofcompliance, audit and risk frameworks andadapting these to changing regulatory
expectations.
Pam currently holds the role of Group Chief
Risk and Compliance Officer at HSBC and isalso a director of the Hong Kong Shanghai
Banking Corporation. Between 2019 and2022, she served as a non-executive director
on the board of Centrica, where she was alsoa member of the audit and risk committee,
the nomination committee and the safety,
environment and sustainability committee.
Since qualifying as a chartered accountant
with Ernst & Young, Pam has progressed
through a range of technical, compliance,
anti-fraud and risk roles with Citigroup, Lloyds
TSB, Royal Bank of Scotland, Deutsche Bankand HSBC. These positions have given her
extensive insight into the benefits of effective
internal control systems that recognise
external regulatory requirements.
She holds an MBA and B.Comm in
Accountancy from Punjab University, and is afellow of the Institute of Chartered
Accountants of England and Wales.

Annual report 2023

Key to Board committees

R

Remuneration Committee

RC Risk and Capital Committee
A

Audit Committee

NC Nomination and Governance Committee

Committee Chair

GOVERNANCE

Michael O’Brien –Non-executive Director
Appointed to the Board
June 2022
Nationality
Irish
Board committees:

Cathleen Raffaeli –Non-executive Director
Age
60
Shares173,780
A RC

Mike has held executive leadership roles
within a number of leading global asset
managers in London and New York. He brings
extensive asset management experience,with a key focus throughout his career oninnovation and technology-driven change insupport of better client outcomes. A qualified
actuary, during his executive career with JP
Morgan Asset Management, BlackRock
Investment Management and Barclays
Global Investors, he was responsible fordeveloping and leading global investment
solutions, distribution and relationshipmanagement strategies.
Mike is a non-executive director of Carne
Global Financial Services Limited, and he is asenior adviser to Osmosis Investment
Management. He is also an investment
adviser to the British Coal Pension Funds.
Previously, Mike served on the board of the UK
NAPF and was a member of the UK NAPF
Defined Benefit Council. He retired in 2020
from his role as Co-Head, Global Investment
Solutions at JP Morgan Asset Management.
Prior to his move to BlackRock in 2000, Mike
qualified as an actuary with Towers Watson,
where he served as an investment and risk
consultant.
Mike graduated from Limerick University witha BSc in Applied Mathematics. He is also a
Chartered Financial Analyst and a Fellow of
the Institute of Actuaries.

Appointed to the Board
August 2018
Nationality
AmericanBoard committees:

Age
67
Shares9,315
R RC

Cathi has strong experience in the financial
technology, wealth management andbanking sectors with a background in theplatforms sector, as well as internationalboard experience. She brings these insights
as non-executive Chair of the boards ofStandard Life Savings Limited and Elevate
Portfolio Services Limited, wholly owned
subsidiaries of abrdn group. Her roleprovides a direct link between the board andthe platform businesses that help us
connect with clients and their advisers.
Cathi is managing partner of Hamilton
White Group, LLC which offers advisory
services, including business development, tocompanies in financial services growthmarkets. In addition, she is managing
partner of Soho Venture Partners Inc, which
offers third-party business advisory services.
Previously, Cathi was lead director of
E*Trade Financial Corporation, nonexecutive director of Kapitall Holdings, LLC
and President and Chief Executive Officer of
ProAct Technologies Corporation. She wasalso a non-executive director of Federal
Home Loan Bank of New York, where she
was a member of the executive committee,
and Vice Chair of both the technology
committee and the compensation andhuman resources committee.
She holds an MBA from New York University
and a BS from the University of Baltimore.

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85Corporate governance statement

The Corporate governance statement and the Directors’
remuneration report, together with the cross references tothe relevant other sections of the Annual report andaccounts, explain the main aspects of the Company’s
corporate governance framework and seek to give agreater understanding as to how the Company has
applied the principles and reported against the provisionsof the UK Corporate Governance Code 2018 (the Code).

Statement of application of and compliancewith the CodeFor the year ended 31 December 2023, the Board has
carefully considered the principles and provisions of theCode (available at www.frc.org.uk) and has concluded
that its activities during the year and the disclosures madewithin the Annual report and accounts comply with therequirements of the Code. The statement also explains therelevant compliance with the FCA’s Disclosure Guidance
and Transparency Rules Sourcebook. The table on page
140 sets out where to find each of the disclosures requiredin the Directors’ report in respect of all of the information
required by Listing Rule 9.8.4 R, and our statement on Board
diversity is on page 92.

(i) Board leadership and company purpose
Purpose and Business model

The Board ratifies the Company’s purpose set out on page
3 of the Strategic report, and oversees implementation of
the Group’s business model, which it has approved, andwhich is set out on pages 12 and 13. Pages 2 to 79 show
how the development of the business model in 2023
supports the protection and generation of shareholder
value over the long term, as well as underpinning ourstrategy for growth. A significant development in 2023
supporting these objectives was the continued
diversification of the business model through relentless
focus on costs within the Investments business, continued
investment in the Adviser business and the integration of ii
and the Personal Wealth business. The Board’s
consideration of current and future risks to the success of
the Group is set out on pages 76 to 79, complemented by
the report of the Risk and Capital Committee on pages 107
to 110.

Oversight of culture

The Board and the Nomination and GovernanceCommittee play a key role in overseeing how the
management of the Group assesses and monitors theGroup’s culture. Through engagement surveys and theBoard Employee Engagement programme, the Board
acquires a clear view on the culture evident within theGroup’s businesses and how successfully expectedbehaviour is being embedded across the group in waysthat will contribute to our success.
The Board holds management to account for a range ofengagement and diversity, equity and inclusion outcomes,
which are seen as important indicators of culture, andwhich form a key part of the executive scorecard.
The Board and the executive leadership team (ELT) havedefined a set of Commitments – Client First, Empowered,
Ambitious and Transparent - which embody our culturalaspirations at abrdn and are designed to create the best
working environment for our colleagues, so contributing to86

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Annual report 2023

better customer experience and outcomes. Our culture isdefined by these Commitments and the behaviours which
underpin them, which are set out on page 48.

Stakeholder engagement

The Annual report and accounts explains how the Directors
have complied with their duty to have regard to thematters set out in section 172 (1) (a)-(f) of the Companies
Act 2006. These matters include responsibilities with regard
to the interests of customers, employees, suppliers, thecommunity and the environment, all within the context ofpromoting the success of the Company. The table on
pages 88 and 89 sets out the Board’s focus on its key
relationships and shows how the relevant stakeholder
engagement is reported up to the Board or Board
Committees.

Engaging with investors

The Group’s Investor Relations and Secretariat teams
support the direct investor engagement activities of the
Chairman, Senior Independent Director (SID), CEO, CFO
and, as relevant, Board Committee chairs. During 2023, we
carried out a comprehensive programme of meetings withdomestic and international investors, via a range of 1:1,
group, conference and reporting related engagements.
Investors had broad interests including progress on cost
reduction targets, synergies between the three business
units, progress on strategy to drive revenue growth,
investment performance, financial performance and shareprice, capital allocation and strategy for returns toshareholders, the relationship with Phoenix and the role ofthe share stake, customer cash balances and theregulatory focus on this area given high interest rates, andcorporate governance, including approach to ESG andsustainability. The Chairman, SID, CEO and CFO bringrelevant feedback from this engagement to the attentionof the Board.
The Board ensures its outreach activities encompass theinterests of the Company’s circa one million individual
shareholders. Given the nature of this large retailshareholder base, it is impractical to communicate with allshareholders using the same direct engagement model
followed for institutional investors. Shareholders areencouraged to receive their communications electronicallyand around 400,000 shareholders receive allcommunications this way. The Company actively
promotes self service via the share portal, and more than
203,000 shareholders have signed up to this service.
Shareholders have the option to hold their shares in theabrdn Share Account where shares are held electronicallyand around 91% of individual shareholders hold their sharesin this way.
To give all shareholders easy access to the Company’s
announcements, all information reported via the London
Stock Exchange’s regulatory news service is published on
the Company’s website. The CEO and CFO continue tohost formal presentations to support both the full year andhalf year financial results with the related transcript andwebcast available from the Investors’ section of theCompany’s website. For 2024, the Company published a
Q4 2023 update in mid-January and intends to publish Q1
and Q3 2024 updates after the close of these periods.

The resolution to re-elect Catherine Bradley CBE as a
Director received 75.89% of votes in favour. One major
shareholder applies more stringent requirements thanprevailing proxy advisor guidelines in relation to the numberof external mandates held, and the number of externalmandates held by each Director are within therequirements of the proxy advisor guidelines and in line withmarket practice. As noted, Catherine has decided not tostand for re-election at the 2024 AGM.
The other resolutions which received less than 80% of votes
cast in favour of them related to authority to allot shares,
disapply pre-emption rights, buy back issued ordinary
shares, and to allot shares in relation to the issuance ofConvertible Bonds. The key area of concern cited byshareholders voting against the resolutions related toshareholder dilution and, in relation to share buybacks,
shareholdings breaching certain thresholds. While themajority of our shareholders are supportive of theauthorities sought the Board have recognised the concerns
raised and will reflect these in the resolutions to be
proposed at the 2024 AGM. Our 2024 AGM will be held on
24 April in Edinburgh. The AGM Guide 2024 will be published
online at www.abrdn.com in advance of this year’s meeting.
The voting results, including the number of votes withheld,
will be published on the website at www.abrdn.com after
the meeting.

Engaging with employees

Hannah Grove continued as our designated non-executive
Director for employee engagement for a second year.
abrdn's Board Employee Engagement (BEE) programme isdesigned to ensure that employees’ perspectives andsentiments are heard and understood by the Board to help
inform decision-making, and to support colleagues’
understanding about the role of the plc Board and ability tohave direct access to our Non-Executive Directors (NEDs).
During 2023, the programme comprised four pillars: (i)Listening Sessions, an opportunity for colleagues to share
their perspectives and feedback in smaller group settings
throughout the year, (ii) Meet the NEDs sessions, for larger
groups of colleagues to interact with Board members andask questions directly, (iii) Employee Network engagement,
focused on both gathering perspectives from abrdn’s
Diversity and Inclusion cohorts, and recognising them fortheir contributions, and lastly (iv) Reporting andmeasurement, including regular thematic updates to theBoard and abrdn's ELT, feedback gathered about the
programming specifically via post event surveys, andmeasurement compared to wider abrdn colleague
sentiment through the engagement survey.
Based on this strategy, the following are some example
activities from 2023:– Eleven Listening Sessions were held with groups acrossvarious levels, businesses and geographies, including
Culture Champions, the Future Leaders cohort,
Investment teams, Finimize and interactive investor
colleagues.
– Five Meet the NEDs sessions took place including eventswith all colleagues in London and Boston, as well as a
specific session held by our subsidiary Adviser board
directors for Adviser colleagues in Edinburgh.
– Nine Employee Network engagements: including arecognition event for network chairs with plc Board
members in Edinburgh, a session with the newly
launched NextGen network in Tokyo, and a roundtablediscussion with our US network chairs in Philadelphia.
In 2023, BEE activity spanned eight abrdn locations acrossthe UK, US and APAC, with sessions and events delivered in
a combination of in-person, virtual or hybrid formats.
Overall, colleague sentiment garnered was broad in reachin terms of geography, as well as business areas. The BEE
programme received positive and constructive feedback
from colleagues that participated in the programme.
Hannah provided regular updates from the BEE
programme to the Board covering themes raised bycolleagues including compensation, strategy, the pace ofchange, technology and empowerment.
In 2024, the BEE programme will maintain its core
objectives, gathering feedback and demonstrating
actionable outcomes, and focusing on key themes
including culture, strategy and connecting the dots acrossabrdn. Communication and measurement will continue tounderpin activity with plans to increase the frequency of
updates on the programme to all colleagues throughout
the year. We will also continue to benchmark the
programme externally to understand best practices andnew approaches.
On 24 January 2024 the Company announced atransformation programme. In the first half of 2024, a
number of BEE initiatives will be focused on employee
listening and engagement with opportunity to discuss thecommitments made. In addition, we will look to capture
insights from the BEE programme to support the Board in its
assessment of how the Company’s desired culture has
been embedded in accordance with the updated
requirements of the recently published UK Corporate
Governance Code.

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87

GOVERNANCE

The 2023 Annual General Meeting (AGM) was held in
Edinburgh on 10 May 2023. The meeting was arranged as a‘hybrid’ meeting. This allowed shareholders to participate in
the meeting remotely, as well as in person. For thoseparticipating remotely, questions could be submitted
during the meeting via a ‘chat box’, many of which werethen posed to the Chair by a moderator. The Chair and
CEO presentations addressed the main themes of thequestions which had been submitted at the meeting. 45%of the shares in issue were voted. Although all resolutions
were passed, a number of resolutions received less than
80% of votes cast in favour of the resolution. The results ofthe vote were primarily driven by a small number ofshareholders, and the significant majority of shareholders
who voted did so in favour of the resolutions. Following theAGM, the Company Chair and Jonathan Asquith, abrdn’s
Senior Independent Director, met with shareholders
representing more than 80% of the shares voted against
the five resolutions, to understand their views.

Corporate governance statement continued
Summary of Stakeholder engagement activities

In line with their obligations under s.172 of the Companies Act 2006, the Directors consider their responsibilities tostakeholders in their discussions and decision-making. The table below illustrates direct and indirect Board engagementwith various stakeholders. More details of stakeholder engagement activities can be found on pages 55 and 56.

Our people

Clients

Key stakeholders

88

Direct Board engagement

Indirect Board engagement– The CEO meets with key clientsas required and reports to theBoard on such meetings.
– The CEO takes part in key client
pitches to hear directly fromclients on their requirements.
– The Chair meets with peers andkey clients at conferences andindustry membership andadvisory boards where he
represents the Group.
– Board members feed into Board
discussions any feedback
received directly from clients.

– The CEOs of the businesses
report at Board meetings on key
client engagement, support
programmes and client
strategies.
– Market share data andcompetitor activity are reported
to the Board.
– Results of client perceptions
survey/customer sentimentindex are reported.

– ‘Meet the NEDs’ BEE sessions fora diverse mix of staff at all levels
allows direct feedback in
informal settings.
– Employee engagement NED inplace and active with theemployee diversity networks aswell as with employees throughtheir representatives. The BEE
NED reports regularly to the
CEO and the Board.
– Each year, the Chair and NEDs
all mentor one or two CEO-1 or 2 level emerging talent.
– The CEO and CFO run ‘Town
Hall’ sessions.

– The Chief People Officer (CPO)
reports to the Nomination and
Governance Committee
meeting on key hires andemployee issues including
development needs to support
succession planning.
– The CPO produces reporting for
the Board drawing out key
factors influencing staff
turnover, morale andengagement.
– Viewpoints and employee
surveys collect aggregate,regional and functional trend
data which is reported to theBoard.

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Annual report 2023

Outcomes– Engagement supported thedevelopment of the key client
management process, and ourclient solutions and ESG
approaches.
– The businesses position thebusiness around client needs
with performanceaccountability measured onthat basis.
– Investment processes are driven
by understanding client needs
and designing appropriate
solutions taking into accountclient risk appetite andsophistication.
– Engagement feedback
recognised in Board discussions.
– Engagement feedback is a key
input to talent and development
programmes and the design ofreward philosophy.

– CEO oversees the Phoenix, FNZ
and Citigroup relationships andmeets with his opposite
numbers as required.
– ED direct meetings with coresuppliers.
– The Risk and CapitalCommittee reviews thedependency on criticalsuppliers and how they are
managed.
– The Audit Committee leads anassessment of external audit
performance and service
provision.
– The Board received detailed
papers supporting theoutsourcing of technology andbusiness services.

Communities– Board members present atrelevant events andconferences.
– Chair/CEO/CFO represent theGroup on public policy andindustry organisations.
– Board is kept up to date with theactivities of the abrdn Financial
Fairness Trust and the abrdn
Charitable Foundation– Regular engagement by CEO,CFO, Chair and Committee
Chairs.
– FCA has access to the Board.
– ‘Dear Board/CEO’ letters issued
from regulators.
– Relevant engagement withregulators in overseas
territories.
– Results, AGM presentations andQ&A.
– Chair, CEO and CFO meetings
with investors.
– Chair, Committee Chairs,
Senior Independent Director
and BEE NED round table withgovernance commentators.
– Remuneration Committee
Chair meetings with institutional
investors.
– Chair/CEO direct shareholder
correspondence.

Regulators/
policymakers/
governments

Shareholders

Shareholders

Direct Board engagement

Business
partners/ supply
chain

Indirect Board engagement

Outcomes– The Board hears reports on firstline key supplier relationships
and their role in transition andtransformation activities.
– Supplier due diligence surveys
are undertaken.
– Tendering process includes
smaller level firms.
– Access and audit rights in placewith key suppliers.
– Modern slavery compliance
process in place.
– Procurement/payment
principles and policies in place.
– Certain key suppliers regularly
discussed at Audit Committee,
Risk and Capital Committee
and Board.
– Oversight of key outsourcing
arrangements reported to theBoard.
– Stewardship/sustainability
teams report regularly to theBoard and Committees.
– Feedback on annual
Stewardship and Sustainability
and TCFD reports.
– Review of charitable giving
strategy.
– ESG presentations to the Board.

– The development of ourbusiness through ourrelationships with partners is a
critical element of the Board’s
strategy.
– Transformation discussions
have included a focus on thequality, service provision,
availability and costs of relevant
suppliers.
– The overriding guidelines forbusiness partnerships havebeen established as working forboth parties and creating
efficient operations.
– The Board sought executive
assurance on the operation andworking practice of key
suppliers.

– CFO and Chief Risk Officer(CRO) update the Board
regularly.
– Board hears reports on the
results of active participation
through industry groups.

– Relevant Board decisions
recognise regulatory impact
and environment.

– Regular updates from the EDs/
Investor Relations Director/
Chair/Chair of Remuneration
Committee summarising theoutput from their programmesof engagement.
– Analyst/Investor reports
distributed to the Board.
– As relevant, feedback from
corporate brokers.
– Dedicated mailbox andshareholder call centre team.

– Considered as input to theGroup’s charitable giving
programmes.
– Engagement drives theexpression of our purpose.

There has been continued
dialogue with shareholders on
remuneration matters includingin the period to the 2023 AGM in
respect of the Directors'
Remuneration Policy.

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Community

Key stakeholders

Corporate governance statement continued
Speaking up

The workforce has the means to raise concerns in
confidence and anonymously, and these means are wellcommunicated. The Audit Committee’s oversight of thewhistleblowing policy and the Audit Committee Chair’s role
to report to the Board on whistleblowing matters is coveredin the Audit Committee report on page 99.

Outside appointments and conflicts of interest

The Board’s policy encourages executive Directors to takeup one external non-executive director role, as the
Directors consider this can bring an additional perspective
to the Director’s contribution. Stephen Bird has
representative director roles, on fund boards where abrdn
is the appointed investment manager and on theInvestment Association. Jason Windsor is a Governor of
Felsted School and a Director of Felsted School Trustees
Limited.
Any proposed additional appointments of the nonexecutive Directors are firstly discussed with the Chair andthen reported to the Nomination and GovernanceCommittee prior to being considered for approval. The
Senior Independent Director takes that role in relation to the
Chair’s outside appointments. The register of the Board’s
collective outside appointments is reviewed annually by the
Board. Directors’ principal outside appointments areincluded in their biographies on pages 82 to 85. These
appointments form part of the Chair’s annual performance
review of individual non-executive Directors’ contribution
and time commitment, and similarly that of the Senior
Independent Director of the Chair.
The Directors continued to review and authorise Board
members’ actual and potential conflicts of interest on aregular and ad hoc basis in line with the authority granted
to them in the Company’s Articles. As part of the process toapprove the appointment of a new Director, the Board
considers and, where appropriate, authorises theirpotential or actual conflicts. The Board also considers
whether any new outside appointment of any current
Director creates a potential or actual conflict before, whereappropriate, authorising it. All appointments are approvedin accordance with the relevant group policies. At the startof every Board and Committee meeting, Directors arerequested to declare any actual or potential conflicts ofinterests and in the event a declaration is made, conflicted
Directors can be excluded from receiving information,
taking part in discussions, and making decisions that relate
to the potential or actual conflict.

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(ii) Division of responsibilities

The Group operates the following governance framework.

Governance framework– The updated strategy and the 2024 to 2026 business plan toimplement the strategy.
– Capital adequacy and allocation decisions including the decision tosell stakes in HDFC Asset Management.
– Oversight of culture, our standards and ethical behaviours.
– Dividend policy including the decision framework governing when to
return the dividend to growth.
– Financial reporting.
– Risk management, including the Enterprise Risk Management (ERM)
framework, risk strategy, risk appetite limits and internal controls andin particular how this was adapted for blended working including
working from home.

– Significant corporate transactions.
– Succession planning, in particular in the appointment of Jason Windsor.
– The quarterly performance of the Investments business.
– The ESG approach, both as a corporate and as an asset manager.
– Significant external communications.
– The work of the Board Committees.
– Appointments to the Board and to Board Committees.
– Matters escalated from subsidiary boards to the Board for approval.

The Board regularly reviews reports from the Chief Executive Officer and from the Chief Financial Officer on progress against approved strategies
and the business plan, as well as updates on financial market and global economic conditions. There are also regular presentations from theBusiness CEOs and business functional leaders.
Chair– Leads the Board and ensures that its
principles and processes are maintained.
– Promotes high standards of corporate
governance.
– Together with the Company Secretary, sets
agendas for meetings of the Board.
– Ensures Board members receive accurate,
timely and quality information on the Groupand its activities.
– Encourages open debate and constructive
discussion and decision-making.
– Leads the performance assessments andidentification of training needs for the Boardand individual Directors.
– Speaks on behalf of the Board andrepresents the Board to shareholders andother stakeholders.
Nomination and GovernanceCommittee (N&G)– Board and Committee
composition and appointments.
– Succession planning.
– Governance framework.
– Culture, Diversity, Equity &Inclusion (DEI).

Chief Executive Officer (CEO)Senior Independent Director (SID)

The CEO operates within authorities delegated by
the Board to:– Develop strategic plans and structures forpresentation to the Board.
– Make and implement operational decisions.
– Lead the other executive Director and the ELT in
the day-to-day running of the Group.
– Report to the Board with relevant and timely
information.
– Develop appropriate capital, corporate,
management and succession structures tosupport the Group’s objectives.
– Together with the Chair, represent the Group to
external stakeholders, including shareholders,customers, suppliers, regulatory andgovernmental authorities, and the local andwider communities.

The SID is available to talk with ourshareholders about any concernsthat they may not have been able toresolve through the channels of the
Chair, the CEO or Chief Financial
Officer, or where a shareholder was
to consider these channels as
inappropriate.

Audit Committee (AC)– Financial reporting.
– Internal audit.
– External audit.
– Whistleblowing.
– Regulatory financial reporting.
– Non-financial reporting (ESG).

The SID leads the annual review ofthe performance of the Chair.
Non-executive Directors (NEDs)
The role of our NEDs is to participate
fully in the Board’s decision-making
work including advising, supportingand challenging management as
appropriate.

Remuneration Committee (RC)– Development andimplementation of
remuneration philosophy andpolicy.
– Incentive design and setting ofexecutive Director targets.
– Employee benefit structures.

Risk and Capital Committee (RCC)– Risk management framework.
– Compliance reporting.
– Risk appetites and tolerances.
– Transactional risk assessments.
– Capital adequacy.
– Anti-financial crime.

Executive leadership team (ELT)The ELT supports the CEO by providing clear leadership, line of sight and accountability throughout the business. The ELT is responsible to the CEO
for the development and delivery of strategy and for leading the organisation through challenges and opportunities.
Businesses

TalentEfficient Operations

Control

Business CEOs support the CEO todeliver growth across the business:– Investments.
– Adviser.
– ii.

The Chief People Officer (CPO)
supports the CEO in developing
talent management andsuccession planning andculture initiatives.

Strategy, Technology, Legal and
Finance ELT members, including
the CFO, support the CEO by
overseeing global functions andthe delivery of functional
priorities.

The Chief Risk Officer (CRO)supports the ELT and the CEO intheir first line management of risk.
The Chief Internal Audit Officer
attends ELT controls meetings.

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Board
The Board’s role is to organise and direct the affairs of the Company and the Group in accordance with the Company’s constitution, all relevantlaws, regulations, corporate governance, and stewardship standards. The Board’s role and responsibilities, collectively and for individual Directors,
are set out in the Board Charter. The Board Charter also identifies matters that are specifically reserved for decision by the Board. During 2023, theBoard’s key activities included approving, overseeing and challenging:

Corporate governance statement continued
The framework is formally documented in the Board
Charter which also sets out the Board’s relationship with theboards of the key subsidiaries in the Group. In particular, it
specifies the matters which these subsidiaries refer to theBoard or to a Committee of the Board for approval or
consultation.
You can find the Board Charter on our website
www.abrdn.com

Board balance and director independence

The Directors believe that at least half of the Board should
be made up of independent non-executive Directors. As at
26 February 2024, the Board comprises the Chair, sevenindependent non-executive Directors and two executive
Directors. The Board is made up of six men (60%) and four
women (40%) (2022: men 55%, women 45%). Brian
McBride stepped down from the Board on 10 May 2023
and Stephanie Bruce stepped down on 11 May 2023. Jason
Windsor was appointed to the Board on 23 October 2023.
The Chair was independent on his appointment in
December 2018. The Board carries out a formal review of
the independence of non-executive Directors annually. The
review considers relevant issues including the number andnature of their other appointments, any other positions theyhold within the Group, any potential conflicts of interest they
have identified and their length of service. Their individual
circumstances are also assessed against independence
criteria, including those in the Code. The Nomination and
Governance Committee, on behalf of the Board, conductsa particularly rigorous review for any non-executive
director whose term exceeds six years. In addition to theabove, this review includes any feedback from the Board
effectiveness review, ongoing overall contribution, and theoutput from individual annual performance discussions
with each NED conducted by the Chair. John Devine is the
only non-executive Director to have served beyond six
years, with Cathi Raffaeli and Sir Douglas Flint passing thistimeline later in 2024. No issues or considerations wereraised through this assessment.

(iii) Board composition, succession, diversity andevaluation

The Board’s policy is to appoint and retain non-executive
Directors who bring relevant expertise as well as a wide
perspective to the Group and its decision-making
framework. The Board continues to support its Board
Diversity statement which states that the Board:– Believes in equity and supports the principle that thebest person should always be appointed to the role with
due regard given to the benefits of diversity, including
gender, ethnicity, age, and educational andprofessional background when undertaking a searchfor candidates, both executive and non-executive.
– Recognises that diversity can bring insights andbehaviours that make a valuable contribution to its
effectiveness.
– Believes that it should have a blend of skills, experience,
independence, knowledge, ethnicity and genderamongst its individual members that is appropriate to its
needs.
– Believes that it should be able to demonstrate withconviction that any new appointee can make ameaningful contribution to its deliberations.
– Is committed to maintaining its diverse composition.
– Supports the CEO’s commitment to achieve andmaintain a diverse workforce and an inclusive
workplace, both throughout the Group, and within
the ELT.
– Has a zero-tolerance approach to unfair treatment or
discrimination of any kind, both throughout the Groupand in relation to clients and individuals associated with
the Group.

Board Diversity
GenderMale: 6
Female: 4

Following the review, the Board has concluded that all the
non-executive Directors are independent andconsequently, the Board continues to comprise a majority
of independent non-executive Directors.
Jonathan Asquith served as Senior Independent Director
throughout 2023. In this role, he is available to provide asounding board to the Chair and serve as an intermediaryfor the other Directors and the shareholders. He also led theprocess to review the Chair’s performance.
The roles of the Chair and the CEO are separate and aresummarised on page 91. Each has clearly defined
responsibilities, which are described in the Board Charter.
The Directors have access to the governance advice of theCompany Secretary whose appointment and removal is amatter reserved to the Board.
You can find out more about our Directors in their biographies
on pages 82 to 85.

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Nationality

British: 6
American: 1
British and American: 1
British and French: 1
Irish: 1

Diversity activities and progress to meet our targets arecovered in the People – Diversity, equity & inclusion sectionof the Strategic report on page 50. The ELT’s diversity policy
is covered in the Diversity, equity and inclusion section of the
Directors’ report on page 138.

Board changes during the period are covered above and in
the Directors’ report on page 137.
Ethnicity

In accordance with Listing Rule 9.8.6(9), as at 31 December
2023:– at least 40% of the individuals on the boardof directors are women;– at least one individual on the board of directors is froma minority ethnic background;
During 2023, we applied our policy on diversity whensearching for a successor to Stephanie Bruce, with Jason
Windsor ultimately appointed, as CFO. Consequently, we
do not currently meet the requirement under Listing Rule9.8.6(9)(a)(ii) to have a woman represented in theidentified Board leadership positions (Chair, Senior
Independent Director, CEO or CFO).
The Board supports the principle that the person best
qualified, in the particular circumstances of the role, should
always be appointed to the role with due regard given to
the benefits of diversity, including the full range of protectedcharacteristics, as well as cognitive diversity. This principle
applies to the search for and appointment of all candidates,
both executive and non-executive. In reviewing thecomposition of the Board, the Committee regards theCommittee Chair roles as equal in importance to thedesignated roles, which is reflected in their current
composition.
Board appointment process, terms of service and role
Board appointments are overseen by the Nomination and
Governance Committee and more information can befound on page 113.
Each non-executive Director is appointed for a three-year
fixed term and shareholders vote on whether to elect/reelect them at every AGM. Once a three-year term has
ended, a non-executive Director can continue for a
maximum of two further terms, if the Board is satisfied with
the non-executive Director’s performance, independence
and ongoing time commitment. Taking account of their
appointment dates the current average length of service ofthe non-executive Directors is three years. For any nonexecutive Directors who have already served two threeyear terms, the Nomination and Governance Committee
considers any factors which have the potential to impact
their independence or time commitment prior to making
any recommendation to the Board. No Directors came tothe end of a three-year term during 2023.

Time commitment
The letter of appointment confirms that the amount of timeeach non-executive Director is expected to commit toeach year, once they have met all of the approval andinduction requirements, is a minimum of 35 days.
When appointing a non-executive Director, the Nomination
and Governance Committee carefully considers timecommitments, investor guidelines and voting policies andtheir application on current directorships. The Committee
also reviews in detail the planned changes to a nonexecutive Director’s portfolio and overall capacity, including
the balance of listed and non-listed non-executive Directorroles. This is also reviewed by the Chairman as part of aformal sequence of bilateral conversations with each
Board member during the Company’s annual Board
Effectiveness process. This covers: time commitment andthe impact of any anticipated changes to external
appointments over the next 12 months; conflicts of interest
and; any training requirements that would support theBoard member in their role during the year. The Company
supports plc Directors taking active roles on the main groupsubsidiary boards. Cathi Raffaeli chairs the Standard Life
Savings Limited and Elevate Portfolio Services Limitedboards, and Hannah Grove also sits on these boards.
Catherine Bradley was appointed as the chair of theinteractive investor Limited board on 1 January 2024. Timecommitment for their roles on these group boards are also
considered as part of the annual evaluation process.
Having carefully reviewed various inputs, including thoseoutlined above and each non-executive Director’s
contribution and capacity in 2023, the Nomination and
Governance Committee concluded that all non-executive
Directors continue to have sufficient time to dedicate
to their role as independent non-executive Directors of
abrdn plc.
The service agreements/letters of appointment for
Directors are available to shareholders to view on requestfrom the Company Secretary at the Company’s registeredaddress (which can be found in the Shareholder
information section) and will be accessible for the 2024
AGM. Non-executive Directors are required to confirm thatthey can allocate sufficient time to carry out their duties
and responsibilities effectively. Their letters of appointment
confirm that their primary roles include challenging andholding to account the executive Directors as well as
appointing and removing executive Directors.
Director election and re-election
At the 2024 AGM, all of the Directors, except Catherine
Bradley, will retire and stand for election or re-election. As
well as in the Board of Directors section, the AGM Guide2024 includes background information about the Directors,
including the reasons why the Chair, following the Directors’
annual reviews, believes that their individual skills andcontribution support their election or re-election.

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GOVERNANCE

White: 9
Asian: 1

External search consultants may be used to support Board
appointments. The Group has used the services of MWM
Consulting to support senior management searches. MWM
Consulting has no other connection to the Group or the
Directors.

Corporate governance statement continued
Details of Directors’ outside appointments can be foundin their biographies on pages 82 to 85.

AdviceDirectors may sometimes need external professional
advice to carry out their responsibilities. The Board’s policy is
to allow them to seek this where appropriate and at theGroup’s expense. Directors also have access to the advice
and services of the Company Secretary. With the
exception of professional advice obtained by the
Remuneration Committee, as detailed in page 133, no
independent professional advice was sought in 2023.

Board effectiveness
Review process
Following the externally facilitated review in 2022, the 2023
effectiveness review was conducted internally, on behalf of
the Board, by the Chairman and supported by theCompany Secretary. A questionnaire was issued to each
Board member, which allowed individual feedback on aconfidential basis. This was supplemented by any matters a
Director wished to raise as part of their year-end 1:1
discussion with the Chairman.
The tone of the review was positive and concluded that theBoard and its Committees continued to operate effectively
during 2023, with no material issues or concerns raised andpriorities for the coming year clarified. Good progress wasnoted on those matters identified in the 2022 review,
including greater focus on the Company’s talent pipeline,
the refresh of the NED mentoring programme and work
undertaken to improve the flow of information across theGroup. As part of this initiative, the Chairman hosted aninaugural conference in September 2023 to bring together
non-executive directors from the Group’s subsidiarycompanies and EMEA-based fund boards. The main areas
arising from the 2023 review on which the Board looked tosee continued improvement in 2024, both in respect of its
own effectiveness and that of its Committees, were in
relation to improving the insights within and brevity ofmaterials presented, the continued development ofmanagement information to support its oversight of theCompany’s transformation programme and avoiding
duplication across the agendas of the Board and its
subsidiary companies where this could be achieved. This
included the planned use of more joint sessions on mattersof shared interest, such as on operational resilience, cybersecurity and the Company’s capital management policies.
The report also acknowledged that given the criticality ofhuman talent and technology to future sustainablesuccess, succession planning would remain a core focus
for the Board as would technology development given its
impact on the future of asset and wealth management.
As in prior years, the report noted the strong levels of Board
engagement and participation, both in formal meetingsand other Board initiatives, such as the BEE programme.
The report also recognised positively Board dynamics, theeffectiveness of Board Committees and the breadth ofknowledge and experience of Board members.
Maintaining these attributes was seen as essential to theCompany’s successful navigation of current macroeconomic challenges and the delivery of its desired
strategic outcomes.

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Chair
The review of Sir Douglas’s performance as Chair was led
by the SID, Jonathan Asquith, supported by the Company
Secretary. It was based on feedback given in returned
questionnaires specifically regarding the Chairman’s
performance and discussions between the SID and theother non-executive Directors. The feedback wassummarised into a report which was considered by the
Directors in a meeting led by Jonathan Asquith and without
Sir Douglas being present. It was agreed that the Chair’s
industry experience, style and development of the Board
continued to be of significant benefit to the Group. As withthe main Board evaluation, the continued focus on delivery
for shareholders and other stakeholders was a key priority
and the important role that the Chairman plays insupporting the execution of the Group’s strategy wasrecognised. Jonathan Asquith met with Sir Douglas to pass
on feedback from the review directly and his final report
was made available to all non-executive Directors.
Directors
An important part of the annual effectiveness review
process is the individual evaluation of each member of theBoard. This process is undertaken personally by the Chair
and this year was conducted through year-end bilateral
discussions with each Board member to a specific agenda.
These discussions ran alongside the broader effectivenessprocess and fed into Nomination and GovernanceCommittee’s consideration of director re-election andongoing succession planning. In addition to discussing
individual performance, consideration was also given to
Non-Executive Directors’ time commitment and capacity,
conflicts of interest, any individual training anddevelopment needs and broader Company engagement
opportunities.
Director induction and development
The Chair, supported by the Company Secretary, is
responsible for arranging a comprehensive preparationand induction programme for all new Directors. The
programme takes their background, knowledge andexperience into account. If relevant, Directors are required
to complete the FCA’s approval process before they areappointed and Directors self-certify annually that theyremain competent to carry out this aspect of their role.
These processes continue to adapt to meet evolving bestpractice in respect of the Senior Managers andCertification Regime.
The formal preparation and Induction programme
includes:– Meetings with the executive Directors and themembers of the ELT.
– Focused technical meetings with internal experts on
specific areas including the three businesses, regulatory
reporting, ESG, conduct risk, risk and capitalmanagement, and financial reporting.
– Visits to business areas to meet our people and gain abetter insight into the operation of the business and its
culture.
– Meetings with the external auditors and contact with
the FCA supervisory teams.
– Meetings with the Company Secretary on the Group’s
corporate governance framework and the role of theBoard and its Committees.

–Meetings with the Chief Risk Officer on the risk
management framework as well as meetings on theirindividual responsibilities as holders of a Senior
Management Function role.

The induction programme provides the backgroundknowledge new Directors need to perform to a high level assoon as possible after joining the Board and its Committees
and to support them as they build their knowledge andstrengthen their performance further.
When Directors are appointed to the Board, they make acommitment to broaden their understanding of theGroup’s business. The Secretariat, Finance, Risk andReward teams monitor relevant external governance andrisk management, financial and regulatory developments
and keep the ongoing Board training and information
programme up to date. Specific Board and Committee
awareness and deep-dive sessions took place on:– Geopolitics.
– Cyber resilience.
– abrdn’s Internal Capital and Risk Assessment (being arisk management process introduced by theInvestment Firms Prudential Regime).
– Operational resilience self-assessment.
– Sustainability.
– Technology.
– FCA Consumer Duty.
– Anti-Financial Crime.
– Vulnerable Customers.
– Asset class deep dives:o Fixed income.
o Equities.
o Multi-asset Investment Solutions.
o Real Estate.
o Real Assets and Alternatives.

(iv) Audit, risk and internal control

The Directors retain the responsibility to state that they
consider the Annual report and accounts, taken as a whole,is fair, balanced and understandable, presents anassessment of the Company’s position and prospects andpresents the necessary information for shareholders toassess the business and strategy. They also recognise their
responsibility to establish procedures to manage risk andoversee the internal control framework. The Directors’
responsibilities statement is on page 141. The reports fromthe Audit Committee and the Risk and Capital Committee
Chairs show how the Committees have supported theBoard in meeting these responsibilities.
The Board’s view of its principal and emerging risks
and how they are being managed is contained in the
Risk management section of the Strategic report on
pages 76 to 79.

The Directors have overall responsibility for the governancestructures and systems of the group, which includes the
ERM framework and system of internal control, and for theongoing review of their effectiveness. The framework is
designed to manage, rather than eliminate, risk and can
only provide reasonable, not absolute, assurance againstmaterial misstatement or loss. The framework covers all of
the risks as set out in the Risk management section of theStrategic report.
In line with the requirements of the Code, the Board has
reviewed the effectiveness of the system of internal control.
The Audit Committee undertook the review on behalf of
the Board and reported the results of its review to theBoard. The system was in place throughout the year and
up to the date of approval of the Annual report andaccounts 2023.
The review of abrdn’s risk management and internal
control systems was carried out drawing on inputs acrossthe three lines of defence taking into account the operationof each component of the Enterprise Risk Management
Framework.
The business continues to make control improvements tomeet increasing regulatory expectations, particularly, in theareas of operational resilience and third-party oversight.
2023 has seen the business continue to strengthen controls
within its operating model through better definition of
accountability and processes. Technology advances andthe implementation of actions around the Consumer Duty
and Operational Resilience regulations continue to drive
further improvements in the control environment. The
Finance function operates a set of defined processes which
operate over all aspects of financial reporting, which
includes the senior review and approval of financial results,
controlled processes for the preparation of the IFRS
consolidation, and the monitoring of external policy
developments to ensure these are adequately addressed.
These processes include the operation of a Technical
Review Committee and the Financial Reporting Executive
Review Group to provide senior review, challenge andapproval of relevant disclosures, accounting policies, andchanges required to comply with external developments.
The Board’s going concern statement is on page 140 and
the Board’s viability statement is on page 74.

(v) Remuneration

The Directors’ remuneration report (DRR) on pages 115 to
134 sets out the work of the Remuneration Committee andits activities during the year, the levels of Directors’
remuneration and the shareholder approved
remuneration policy. The Company’s approach to investingin and rewarding its workforce is set out on page 129 of the
DRR. The Board believes that its remuneration policies andpractices are designed to support the Company’s strategy
and long-term sustainable success. More information
about the policies and practices can be found in the DRR.

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GOVERNANCE

Background information is also provided including:– Key Board materials and information, stakeholder andshareholder communications and financial reports.
– The Group’s organisational structure, strategy, businessactivities and operational plans.
– The Group’s key performance indicators, financial andoperational measures and industry terminology.

Annual review of internal control

Corporate governance statement continued
Other information

You can find details of the following, as required by FCA Disclosure and Transparency Rule 7.2.6, in the Directors’ report andin the Directors’ remuneration report:
Share capital– Significant direct or indirect holdings of the Company’s securities.
– Confirmation that there are no securities carrying special rights with regard to control of the Company.
– Confirmation that there are no restrictions on voting rights in normal circumstances.
– How the Articles can be amended.
– The powers of the Directors, including when they can issue or buy back shares.
Directors– How the Company appoints and replaces Directors.
– Directors’ interests in shares.

Board meetings and meeting attendance

The Board and its Committees meet regularly, operating to an agreed timetable. Meetings are usually held in Edinburgh or
London. During the year, the Board held specific sessions to consider the Group’s strategy and business planning. The Chair
and the non-executive Directors also met during the year, formally at each Board meeting, and informally, without theexecutive Directors present and where matters including executive performance and succession and Board effectivenesswere discussed. The Board scheduled eight formal meetings and a focused strategy meeting in 2023.
Directors are required to attend all meetings of the Board and the Committees they serve on, and to devote enough timeto the Company to perform their duties. Board and Committee papers are distributed before meetings other than, by
exception, urgent papers which may need to be tabled at the meeting. If Directors are not able to attend a meeting
because of conflicts in their schedules, they receive all the relevant papers and have the opportunity to submit theircomments in advance to the Chair or to the Company Secretary. If necessary, they can follow up with the Chair of themeeting. Recognising that some Directors may have existing commitments they cannot change at very short notice, theBoard has established the Standing Committee as a formal procedure for holding unscheduled meetings. The Standing
Committee meets when, exceptionally, decisions on matters specifically reserved for the Board need to be taken urgently.
All Directors are invited to attend Standing Committee meetings. The Standing Committee did not meet during 2023.
The Company Chair is not a member of the Audit, Risk and Capital, or Remuneration Committees. He is invited to attend
meetings of all Committees, by invitation, in order to keep abreast of their discussions and routinely does so. The tablebelow reflects the composition of the Board and Board Committees during 2023 and records the number of meetings andmembers’ attendance.

Board

Audit Committee

Nomination and
GovernanceCommittee

Remuneration
Committee

Risk and CapitalCommittee

4/4

–

–

Chair
Sir Douglas Flint

9/9

Executive Directors
Stephen Bird
Jason Windsor1

9/9
2/2

–
-

–
-

–
-

–
-

Non-executive Directors
Jonathan AsquithJohn Devine
Hannah Grove
Pam Kaur
Cathleen Raffaeli
Catherine Bradley
Mike O’Brien

9/9
9/9
9/9
9/9
9/9
9/9
9/9

–
6/6
6/6
–
6/6
6/6

4/4
4/4
4/4
–
–
4/4
–

7/7
7/7
–
7/7
–

–
6/6
6/6
6/6
6/6
6/6

Former members
Stephanie Bruce (stood down 11 May 2023)
Brian McBride (stood down 10 May 2023)

3/3
3/3

–

–
–

–
3/3

–
–

1. Jason Windsor was appointed on 23 October 2023.

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Tenure as at February 2024

Executive and Non-executive mix

0-3 years: 4
Non-executive: 8
GOVERNANCE

3-5 years: 3

Executive: 25+ years: 3

Board Committees
abrdn plc Board

Audit

Remuneration

Nomination

Risk andCommittee

Committee

andCapitalGovernanceCommittee

Committee

The Board has established Committees that oversee,
consider and make recommendations to the Board on
important issues of policy and governance. At each Board
meeting, the Committee chairs provide reports of the key
issues considered at recent Committee meetings, andminutes of Committee meetings are circulated to theappropriate Board members. This includes reporting fromthe Chair of the Audit Committee on any whistleblowing
incidents which have been escalated to them. The
Committees operate within specific terms of reference
approved by the Board and kept under review by eachCommittee.

All Board Committees are authorised to engage theservices of external advisers at the Company’s expense,
whenever they consider this necessary. With the
exception of fees paid to external advisers of theRemuneration Committee, as detailed on page 133, nosuch expense was incurred during 2023.

Committee reports

This statement includes reports from the chairs of the
Audit Committee, the Risk and Capital Committee and theNomination and Governance Committee. The report on
the responsibilities and activities of the Remuneration
Committee can be found in the Directors’ remuneration
report section.
The Committee Chairs are happy to engage with you on theirreports. Please contact them via questions@abrdnshares.com

These terms of reference are published within the
Board Charter on our website at www.abrdn.com

Annual report 2023

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97

Corporate governance statement continued
The report is structured in four parts:(i) Governance(ii) Report on the year(iii) Internal audit(iv) External audit

Catherine Bradley
Chair, Audit Committee(i) GovernanceMembershipAll members of the Audit Committee are independent nonexecutive Directors. For their names, the number of
meetings and committee member attendance during2023, please see the table on page 96.

1. Audit Committee report

The Audit Committee assists the Board in discharging its
responsibilities for external financial reporting, internal
controls over financial reporting and the relationship withthe external auditors.
I am pleased to present my report as Audit Committee(the Committee) Chair.
While the Committee focuses its attention primarily on the
Company’s financial and non-financial control framework,
during 2023 it has also put specific governance emphasison:– the integration of Internal Audit as a key, seamless
partner to the Committee.
– better differentiation, sequencing, andcomplementarity between the Risk and CapitalCommittee and the Audit Committee.
– the governance around internal controls, in particular as
the Enterprise Risk Management framework evolves.
– the introduction of deep-dives on key subject areas toexpand the Committee’s knowledge.
– oversight of the Group’s evolution as it continues its
transition to align its resources and capabilities to meetclient needs.
– significant changes in senior personnel in the Financefunction.
The Committee also continued to focus on the quality offinancial reporting.
While ensuring we fulfil our delegated responsibilities onbehalf of the Board, the Audit Committee is a dynamic
forum which benefits from a high degree of transparency
from management, enabling effective discussion anddecision making. This will remain fundamental to theCommittee’s effectiveness and its oversight of theCompany’s financial and non-financial reporting andcontrol environment during 2024.

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The Board believes Committee members have thenecessary range of financial, risk, control and commercial
expertise required to provide effective challenge tomanagement and have competence in accounting andauditing as well as recent and relevant financial experience.
Catherine Bradley is a non-executive director of Johnson
Electric Holdings Limited and of easyJet plc, where shechairs the finance committee. She is also seniorindependent director of Kingfisher plc. Catherine has
previously chaired the audit committees of Groupe
Peugeot Citroen and of the Financial Conduct Authority.
John Devine is a member of the Chartered Institute of
Public Finance and Accounting. Pam Kaur is a qualified
chartered accountant. Mike O’Brien is a fellow of theInstitute and Faculty of Actuaries. The Committee
members are also members of audit committees related
to their other non-executive Director roles.
Invitations to attend Committee meetings are extended to
the Chair, the Chief Executive Officer, the Chief Financial
Officer, the Group Financial Controller, the Chief Internal
Audit Officer and the Group Chief Risk Officer, as well as theExternal auditors.
The Audit Committee meets privately for part of its
meetings and also has regular private meetings separately
with the external auditors and the Chief Internal Audit
Officer. These meetings address the level of co-operationand information exchange and provide an opportunity forparticipants to raise any concerns directly with theCommittee.

Key responsibilities

In carrying out its duties, the Committee is authorised by the
Board to obtain any information it needs from any Director
or employee of the Group. It is also authorised to seek, atthe expense of the Group, appropriate external
professional advice whenever it considers this necessary.
The Committee did not need to take any independent
advice during the year.
In accordance with the Senior Managers and Certification
Regime the Audit Committee Chair is responsible for theoversight of the independence, autonomy andeffectiveness of our policies and procedures onwhistleblowing including the procedures for the protectionof employees who raise concerns related to detrimental
treatment. Throughout the year the Audit Committee
Chair met regularly with the Chief Internal Auditor, the Chief
Sustainability Officer - Investments and the Global Head ofCorporate Sustainability to discuss their work, findings andcurrent developments.

(ii) Report on the year
Audit agenda

As well as regular reporting, agenda items were aligned tothe annual financial cycle as set out below:

Jan-Mar

–
–
–
–
–

–
–
–
–

Apr-Jun

–
–
–
–
–
–

Jul-Sep

Oct-Dec

Annual report and accounts 2022.
Strategic report and financial highlights 2022.
Financial reporting judgements.
Process execution event in the Investments
business.
Liaison with the Remuneration Committee on
any financial reporting matters related to theachievement of targets and measures.
External auditor’s review of Full year results.
Whistleblowing.
Sustainability reporting.
Effectiveness of the Internal Audit function.
Internal audit findings.
Prudential and Regulatory reporting.
Initial financial reporting matters for Half year
2023.
Whistleblowing.
External auditor’s management letter, andaudit strategy.
Risk and Control Self-Assessment (RCSA)
reform.

–––––Half year results 2023.
External auditors’ review of Half year results.
External auditors’ independence.
Internal audit findings.
Whistleblowing.

–

Initial financial reporting matters for Full year
2023, including pension scheme assumptions.
Non-audit services policy.
The internal audit plan and charter.
Internal audit findings.
Effectiveness of the external auditors andrelated non-audit services.
Whistleblowing.
Sustainability and ESG reporting.
Risk management and internal control systemannual review and future plans.
CASS reporting update.
Corporate and Audit Reform update.

–
–
–
–
–
–
–
–
–

Committee effectiveness

The Committee reviews its remit and effectiveness eachyear. Following the externally facilitated review in 2022, the2023 review was conducted internally, on behalf of theBoard, by the Company Secretary. The review concluded
that the Committee continued to operate effectively during2023 with no material issues or concerns raised. Moreinformation about the process involved, and its outcomes,
can be found on page 94.

Annual report 2023

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99

GOVERNANCE

The Audit Committee’s responsibilities are to oversee, andreport to the Board on:– The appropriateness of the Group’s accounting andaccounting policies, including the going concern
presumption and viability statement.
– The findings of its reviews of the financial information in
the Group’s annual and half year financial reports.
– The clarity of the disclosures relating to accounting
judgements and estimates.
– Its view of the ‘fair, balanced and understandable’
reporting obligation.
– The findings of its review of certain Group prudential
external disclosures.
– Internal controls over financial reporting.
– ESG disclosures relating to financial and quantitative
information.
– Liaison with the Remuneration Committee on any
financial reporting matters related to the achievementof targets and measures.
– Outcomes of investigations resulting from
whistleblowing.
– The appointment or dismissal of the Chief Internal Audit
Officer, the approved internal audit work programme,
key audit findings and the quality of internal audit work.
– The skills of the external audit team and theircompliance with auditor independence requirements,
the approved audit plan, the quality of the firm’s
execution of the audit, and the agreed audit and nonaudit fees.

Corporate governance statement continued
The indicative proportion of time spent on the business of
the Committee is illustrated below:

Financial reporting (incl. ESG reporting)Internal audit
External audit
Other matters (incl. whistleblowing, review
of external developments and internal controls)

Detail of work

The focus of work in respect of 2023 is described below.
Financial and non-financial reporting
Our accounts are prepared in accordance with
International Financial Reporting Standards (IFRS). The
Committee believes that some Alternative Performance
Measures (APMs), which are also called non-GAAP
measures, can add insight to the IFRS reporting and help togive shareholders a fuller understanding of theperformance of the business. The Committee considered
the presentation of APMs and related guidance as
discussed further in the ‘Fair, balanced andunderstandable’ section below.
The Committee reviewed the Group accounting policies
and confirmed they were appropriate to be used for the2023 Group financial statements. IFRS 17 Insurance
Contracts was adopted in 2023. This primarily impacted
our HASL joint venture business. Read more in the Basis ofpreparation in the Group financial statements section.
The Committee reviewed the basis of accounting and inparticular the appropriateness of adopting the going
concern basis of preparation of the financial statements. In
doing so, it considered the Group’s cash flows resulting
from its business activities and factors likely to affect its
future development, performance and position together
with related risks, as set out in more detail in the Strategic
report. The Committee recommended the going concern
statement to the Board.
In addition, the Committee considered the form of theviability statement and in particular whether the three-year
period remained appropriate, and concluded that it did.
This reflects both our internal planning cycle and thetimescale over which changes to major regulations and theexternal landscape affecting our business typically takeplace. In formulating the statement, the Committee
considered the result of stress testing and reverse stresstesting presented to the Risk and Capital Committee. The
Committee recommended the viability statement to theBoard.
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During 2023, the Committee reviewed the Annual reportand accounts 2022 and the Half year results 2023. For both
periods it received written and/or oral reports from the
Chief Financial Officer, the interim Chief Financial Officer,
the Company Secretary, the Chief Internal Audit Officer
and the external auditors. The Committee used thesereports to aid its understanding of the composition of thefinancial statements, to confirm that the specific reporting
standards and compliance requirements had been met
and to support the accounting judgements and estimates.
Following its reviews, the Committee was able torecommend the approval of each of the reports to theBoard, being satisfied that the full and half year financial
statements complied with laws and regulations and had
been appropriately compiled.
The Committee recognises the importance of sustainability
and ESG reporting. During 2023 the Committee discussed
and reviewed the sustainability reporting landscape andthe related governance framework at a number of
meetings. In particular, as part of the review of the Annual
report and accounts, the Committee reviewed Task Forceon Climate-Related Financial Disclosures (TCFD). The
Committee’s review focused on ensuring metrics andoutcomes were appropriately explained and validated.
KPMG in their role as auditor have reviewed our TCFD
disclosures as part of their audit engagement. Moreinformation can be found on page 105.

Accounting estimates and judgements
The Audit Committee considered all estimates and judgements that Directors understood could be material to the 2023
financial statements. The Committee also focused on disclosure of these key accounting estimates and judgements.
Significant accounting estimates, judgements and assumptions
for the year ended 31 December 2023

The recoverable amount for abrdn financial planning was determinedbased on FVLCD, with the primary approach being a multiples valuation
approach based on price to revenue and price to assets under advice.
The recoverable amount for Finimize was also determined based on
FVLCD, with the primary approach being a revenue multiple valuation
approach.
Goodwill relating to the interactive investor CGU was also tested for
impairment and the recoverable amount, based on FVLCD, indicatedthat no impairment was required.
UK defined benefit pension plan
In compiling a set of financial statements, it is necessary to make somejudgements and estimates about outcomes that are dependent on future
events. This is particularly relevant to the defined benefit pension plansurplus which is inherently dependent on how long people live and future
economic outcomes.
For the principal UK defined benefit pension plan, the Committee
reviewed the assumptions for mortality, discount rate and inflation.

The Committee spent time reviewing andchallenging recoverable amount assumptions atthree meetings. For abrdn financial planning theCommittee considered several different valuation
approaches and discussed the valuation assessmentwith management and agreed that recoverable
amount was within the reasonable range.
For Finimize the Committee noted that the business isinherently difficult to value as there are few directlycomparable companies and therefore there are arange of reasonable valuations. The Committee
discussed the valuation assessment withmanagement and agreed that recoverable amount
was within the reasonable range.
The Committee agreed with management’s viewthat the goodwill for the interactive investor CGU was
not impaired. The Committee noted the inherent
sensitivity of the recoverable amounts and supported
the disclosure of appropriate sensitivities.
Further details on goodwill impairment reviews aredisclosed in Note 13 of the Group financial
statements.

The Committee considered the proposed
assumptions taking into account market data andinformation from pension scheme advisors. The
Committee concurred with management and theiractuarial advisors that appropriate adjustments are
required to avoid the mortality assumptions being
skewed by excess COVID-19 deaths and to allow
for the ongoing uncertainty around the pandemic’s
impact on future mortality improvement.
Note 31 of the Group financial statements provides
further details on the actuarial assumptions used,and sets out the impact of mortality, discount rateand inflation sensitivities. Note 31 also provides
details on the accounting policy applied andaccounting policy judgements relating to theGroup’s assessment that it has an unconditionalright to a refund of a surplus, and the treatment oftax relating to this surplus.

Tritax contingent consideration fair value
In 2021, the abrdn group purchased 60% of the membership interests in
Tritax Management LLP. Subject to certain conditions, an additional
contingent deferred earn-out is expected to be payable to acquire theremaining 40% of membership interests in Tritax should the selling
partners choose to exercise put options in respect of each of the years
ended 31 March 2024, 31 March 2025 and 31 March 2026. The amountpayable is linked to the EBITDA of the Tritax business in the relevant period.
abrdn has the right to purchase any outstanding interests at the end of2026 through exercising a call option.
The contingent consideration liability is required to be recognised at fairvalue, which is primarily dependant on future earnings projections.

The Committee analysed and discussed
management’s assumptions underlying the fairvalue of the contingent consideration at
31 December 2023 and agreed that the fair value
was within the reasonable range. The Committee
reviewed and supported that disclosure ofsensitivities to key assumptions should be provided
given the inherent uncertainties in the valuation. See
Note 36 of the Group financial statements forfurther details.

Annual report 2023

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101

GOVERNANCE

Goodwill impairment reviews
Goodwill is required to be tested annually for impairment and thedetermination of recoverable amounts for this impairment assessment
is a key area of estimation. The impairment assessment is performed bycomparing the carrying amount of each cash-generating unit (CGU)
with its recoverable amount, being the higher of its value in use (VIU) andfair value less costs of disposal (FVLCD). In 2023 impairments of goodwill
were recognised in relation to the abrdn financial planning CGU(impairment of £36m) in the ii segment and in relation to the Finimize
CGU (impairment of £26m) within Other business operations andcorporate costs (previously in Investments) and therefore thedetermination of the recoverable amount for these CGUs was a key
judgement which directly impacted the amount of the impairment. The
impairments include the impact of lower projected revenues as a resultof adverse markets and macroeconomic conditions, and for Finimize
the impact of lower short-term projected growth following a strategic
shift that prioritises profitability over revenue growth.

How the Audit Committee addressed these significant
accounting estimates and assumptions

Corporate governance statement continued
Significant accounting estimates, judgements and assumptions
for the year ended 31 December 2023

How the Audit Committee addressed these significant
accounting estimates and assumptions

Investments in subsidiaries
In relation to the abrdn plc Company only accounts, an assessment is madeat each reporting date as to whether there are any indicators of
impairment in relation to investments in subsidiaries. At year end 2023
management noted that the Company’s net assets attributable toshareholders of £4.6bn (post impairments) continues to be higher than the
Company’s market capitalisation of £3.3bn. Taking this into account alongwith the continued headwinds facing active asset managers, it wasassessed that there were indicators of impairments in relation to theCompany’s asset management holding companies, abrdn Investment
Holdings Limited (aIHL) and abrdn Holdings Limited (aHL). aIHL had also
paid up significant dividends in 2023 following the sale of abrdn Capital
Limited and the sale of its subsidiary’s holding in HDFC Asset Management.
Following the performance of valuation exercises, impairments of aIHL andaHL of £169m and £40m respectively have been recognised.

The Committee discussed the investment in
subsidiaries impairment assessment withmanagement and noted that the judgements inrelation to these assessments were materially thesame as the judgements relating to the goodwill
impairment reviews. The Committee supported that
relevant disclosures were made in the Company
only accounts including disclosure that appropriate
consideration had been given to the Company net
assets being higher than the abrdn market
capitalisation. The Committee noted that theCompany’s distributable profits were £3.1bn
following the 2023 impairments which continued toprovide support for the dividend policy.

Indicators of impairment were also identified in relation to abrdn Financial
Planning Limited (aFPL). The goodwill relating to aFPL had been impaired at
the consolidated level in 2023. Following the performance of the valuation
which also supported the assessment of goodwill above, an impairment of
the Company carrying value of £52m has been recognised.

Further details on the assessment of investments in
subsidiaries are set out in Note A of the Company
financial statements section.

The Company’s investment in its subsidiary abrdn (Mauritius Holdings) 2006
Limited (aMH06) was impaired during 2023 by £43m. The impairment
resulted from the payment of dividends from aMH06 to the Company in2023. Following the payment of the dividends, the recoverable amount of
aMH06 was less than £1m.
No other indicators of impairment were identified on any material
investment in subsidiaries including ii which, as noted above, is also fully
supported by a valuation exercise performed for goodwill purposes.
Indicators of reversal of impairment must also be considered and in relation
to Aberdeen Corporate Services Limited, following the recent Court ofSession ruling on the surplus for the UK principal plan, it is consideredappropriate to recognise a reversal of impairment of £13m.

Principal risks are disclosed in the Strategic report and recommended to the Board by the Risk and Capital Committee. The
Committee was satisfied that the estimates and quantified risk disclosures in the financial statements were consistent with
the Strategic report. The Committee concluded that appropriate judgements had been applied in determining theestimates and that sufficient disclosure had been made to allow readers to understand the uncertainties surrounding
outcomes.

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Annual report 2023

Fair, balanced and understandable

The Committee supported management’s continued aim
to compile the Annual report and accounts to be ‘fair,balanced and understandable’.

Fair‘We are being open
and honest in theway we present our
discussions andanalysis, and areproviding what we
believe to be an
accurate
assessment ofbusiness andeconomic realities.’

Balanced‘We are fully
disclosing our
successes, thechallenges we have
faced in the period,
and the challenges
and opportunities
we anticipate in the
future; all with equal
importance and at alevel of detail that is
appropriate for our
stakeholders.’

Understandable‘The language we
use and the way westructure our reportis helping us present
our business and its
performanceclearly; in a way thatsomeone with areasonably
informed
knowledge offinancial statements
and our industry
would understand.’

–

–

–

–

–

–

–

–

The narrative contained in the
Annual report and accounts ishonest, accurate andcomprehensive.
The key messages in the
narrative in the Strategic
report and Governancesections of the Annual reportand accounts reflect thefinancial reporting containedin the financial statements.
The Key Performance
Indicators (KPIs) for the period
are consistent with the key
messages outlined in theStrategic report.
The Annual report andaccounts presents both
successes and challenges
experienced during the year
and, as appropriate, reflects
those expected in the future.
The level of prominence wegive to successes in the year
versus challenges faced isappropriate.
The narrative and analysis
contained in the Annual reportand accounts effectively
balances the informationneeds and interests of each of
our key stakeholder groups.
The layout is clear andconsistent and the language
used is simple and easy tounderstand (industry specificterms are defined whereappropriate).
There is a consistent tone
across and good linkage
between all sections in amanner that reflects acomplete story and clear
signposting to where
additional information can befound.

An Internal Review Group (IRG) is in place which reviews
the Annual report and accounts specifically from a fair,balanced and understandable perspective and provides
feedback to our financial reporting team on whether it
conforms to our standards. The members of the IRG are
independent of the financial reporting team and include
colleagues from Investor Relations, ESG reporting,Risk, Internal Audit, Communications and Strategy.
The key points discussed by the IRG covered:– The impact of markets on business performance,
particularly in relation to the Investments business.
– The balance of reporting relating to the business risk
environment.
– How previously reported matters had been updated.
Fair, balanced and understandable guidance wasprovided to relevant stakeholders involved in the Annual
report and accounts production process.
The Audit Committee, reviewed the messaging in the
Annual report and accounts, taking into account material
received and Board discussions during the year.
Three drafts of the Annual report and accounts 2023 werereviewed by the Audit Committee at three meetings. The
Committee complemented its knowledge with that of
executive management and internal audit. An interactive
process allowed each draft to embrace contributions.
The Annual report and accounts goes through an
extensive internal verification process of all content toverify accuracy.
The Committee also reviewed the use and presentation of
APMs which complement the statutory IFRS results. This
review considered guidelines issued by the European
Securities and Markets Authority in 2016 and the thematic
reviews by the Financial Reporting Council (FRC). A
Supplementary information section is included in the
Annual report and accounts to explain the rationale forusing these metrics and to provide reconciliations of these
metrics to IFRS measures where relevant. This section also
provides increased transparency over the calculation ofreported financial ratios.
Adjusted operating profit and adjusted profit before tax
are key profit APMs. The Committee considered whether
the allocation of items to adjusted operating profit was inline with the defined accounting policies, consistent withprevious practice and appropriately disclosed. Where
there were judgemental areas, such as in relation tocertain interactive investor related costs, the Committee
specifically reviewed the proposed treatments andensured that the Annual report and accounts provided
appropriate disclosures.
The Audit Committee agreed to recommend to the Board
that the Annual report and accounts 2023, taken as awhole, is fair, balanced and can be understood bysomeone with a reasonably informed knowledge offinancial statements and our industry.

Annual report 2023

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103

GOVERNANCE

abrdn’s principles
To create clarity on fair, balanced and understandable forabrdn a set of principles is applied, as set out below:

Activities

Corporate governance statement continued
Prudential reporting

The Committee also considered disclosures relating to
IFPR (Investment Firms Prudential Regime) results includedin the Strategic report and notes sections of the Annual
report and accounts and half year reporting, together withrelated assurance over these disclosures.

Internal controls

As noted earlier, the Directors have overall responsibility for
abrdn’s internal controls and for ensuring their ongoing
effectiveness. This does not extend to associates and joint
ventures. Together with the Risk and Capital Committee,
the Committee provides comfort to the Board of their
ongoing effectiveness.
Internal audit regularly reviews the effectiveness of internal
controls and reports to the Committee and the Risk andCapital Committee.
The Finance function sets formal requirements forfinancial reporting which apply to the Group as a whole,defines the processes and detailed controls for the
consolidation process and reviews and challenges
reporting submissions. Further, the Finance function runs aTechnical Review Committee and is responsible formonitoring external technical developments. The
Committee focuses on ensuring appropriate sign-offs on
financial results are provided, and a mechanism for theescalation of issues from major regulated subsidiary
Boards is in place.
The control environment around financial and nonfinancial reporting will continue to be monitored closely.
In early 2023, the Committee discussed the implications ofa significant process execution event and this wasreflected in 2022 financial reporting.

Whistleblowing

Our people are trained via mandatory training modules todetect the signs of possible fraudulent or improper activity
and how to report concerns either directly or via our
independent whistleblowing hotline. The Committee Chairis the designated whistleblower’s champion and theCommittee receives regular updates on the operation of
the whistleblowing procedures (Speak Up) from theConduct and Conflicts Oversight Manager. The
anonymised reports include a summary of the incidents
raised as whistleblowing, and information on
developments of the arrangements in place, to ensure
concerns can be raised in confidence about possible
malpractice, wrongdoing and other matters.
The Committee oversees the findings of investigations andrequired follow-up action. If there is any allegation against
the Risk or internal audit functions, the Committee directs
the investigation. The Committee is satisfied that theGroup’s procedures are currently operating effectively.
The Committee Chair reports to the Board on the updates
the Committee receives.

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Annual report 2023(iii) Internal audit

The role and mandate of the internal audit function is set
out in its Charter, which is reviewed and approved by theCommittee annually. Whilst internal audit maintains a
relationship with the external auditors, in accordance with
relevant independence standards, the external auditors
do not place reliance on the work of internal audit. Theinternal audit plan is reviewed and approved by theCommittee at least annually and is flexed during the year
to respond to internal and external developments. The
function’s coverage aligns to the Group’s activities andfootprint, taking account of local internal audit
requirements. Regular reporting is provided to theCommittee to illustrate plan progress, any emerging risks
or themes and the status of implementation ofrecommendations.
The Committee assesses the independence and quality
assurance practices of the Internal Audit function andagrees the effectiveness of the function, aligned to theGroup’s objectives on an annual basis. Independent
external reviews are also undertaken at regular intervals.
The most recent one was completed in H2 2021 by
Deloitte who assessed the abrdn internal audit function as
having the highest overall rating with conformance against
all aspects of the Institute of Internal Auditors’ International
Professional Practices Framework (IPPF) and the Internal
Audit Financial Services Code of Practice (the Standards).
The Committee’s own review of the function in 2023 waspositive and supports the continuous evolution andenhancement of Internal Audit.
The Committee Chair meets the Chief Internal Audit
Officer periodically, without management being present.

(iv) External auditors
The appointment

The Committee complies with the UK Corporate
Governance Code, the FRC Guidance on Audit
Committees with regard to the external audit tendering
timetable, the provisions of the EU Regulation on Audit
Reform, and the Competition and Markets Authority
Statutory Audit Services Order with regard to mandatory
auditor rotation and tendering. The Committee willcontinue to follow the annual appointment process but
does not currently anticipate re-tendering the audit before
2026. This is currently considered to be in the best interestsof the Company taking into account the results of theformal review of the effectiveness of the KPMG audit
discussed in this section.
The audit was last subject to a tender during the first half of2016, and on 17 May 2016 the Company announced its
intention to appoint KPMG as its auditor for the year ending
31 December 2017, replacing PwC who were theCompany’s previous auditors.
In March 2017, the proposed acquisition of Aberdeen AssetManagement PLC was announced. Consequently, theStandard Life plc Audit Committee (now abrdn plc) sought
assurance that KPMG’s independence would not becompromised as a result of their previous position as
external auditor of Aberdeen Asset Management PLC,
from its incorporation in 1983 until 30 September 2015.
While recognising that the KPMG tenure had ceased
nearly two years prior to the proposed acquisition, a paper
outlining the matters which had been considered wasbrought to the Committee and, following review, theCommittee was satisfied that there were no impacting
issues.
KPMG’s independence has subsequently been regularly
reviewed by the Committee and we remain satisfied of
their independence. Further detail on this assessment is set
out below. We consider KPMG’s tenure for abrdn plc andits group of companies to run from the completion of the2016 tender exercise and their appointment for year end
in 2017. The audit for the year ended 31 December 2023 is,therefore, KPMG’s 7th year as auditor. The Senior Statutory
Auditor is Richard Faulkner.

The Board has an established policy (the Policy) setting out
which non-audit services can be purchased from the firm
appointed as external auditors. The Committee monitors
the implementation of the Policy on behalf of the Board.
The aim of the Policy, which is reviewed annually, is tosupport and safeguard the objectivity and independenceof the external auditors and to comply with the revised FRC
Ethical standards for auditors (Ethical Standards). It does
this by prohibiting the auditors from carrying out certain
types of non-audit services, and by setting out which nonaudit services are permitted. It also ensures that where
fees for approved non-audit services are significant, they
are subject to the Committee Chair’s prior approval. KPMG
has implemented its own policy preventing the provision
by KPMG of most non-audit services to FTSE 350
companies which are audit clients. A 70% fee cap on nonaudit services to audit clients is in place.
The services prohibited by the Policy are as set out in the
FRC Revised Ethical Standard 2019.
The Policy permits non-audit services to be purchased,following approval, when they are closely aligned to theexternal audit service and when the external audit firm’s
skills and experience make it the most suitable supplier.
These include:– Audit related services, such as regulatory reporting.
– Investment circular reporting accountant
engagements.
– Attesting to services not required by statute or
regulation (e.g. controls reports).
– Other reports required by a regulator or assurance
services relating to regulatory returns.
– Sustainability and TCFD report audits/reviews.
– Fund merger assurance engagements, where theengagement is with the manager and the external
auditor is also the auditor of the fund.
KPMG has reviewed its own independence in line withthese criteria and its own ethical guideline standards.
KPMG has confirmed to the Committee that following its
review it is satisfied that it has acted in accordance with
relevant regulatory and professional requirements andthat its objectivity is not impaired.
Having considered compliance with our Policy and thefees paid to KPMG, the Committee is satisfied that KPMG
has remained independent.

Audit and non-audit fees

The Group audit fee payable to KPMG in respect of 2023
was £7.2m (2022: KPMG £6.2m). In addition, £2.8m(2022: £2.3m) was incurred on audit related assurance
services. Fees for audit related assurance services areprimarily in respect of client money reporting and the halfyear review. The Committee is satisfied that the audit fee iscommensurate with permitting KPMG to provide a quality
audit and monitors regularly the level of audit and nonaudit fees. Non-audit work can only be undertaken if thefees have been approved in advance in accordance with
the Policy for non-audit fees. Unless fees are small (which
we have defined as less than £75,000), the approval of theCommittee Chair is required.

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The Committee has responsibility for making
recommendations to the Board on the reappointment of
the external auditors, determining their independence
from the Group and its management and agreeing thescope and fee for the audit. Following its review of KPMG’s
performance, the Committee concluded that there should
be a resolution to shareholders to recommend thereappointment of KPMG at the 2024 AGM.

Auditor independenceCorporate governance statement continued
Non-audit fees amounted to £1.0m (2022: £1.3m), of
which £1.0m (2022: £1.0m) related to other assurance
services and £nil (2022: £0.3m) related to other non-audit
fee services. Other assurance services in 2023 primarily
related to control assurance reports, which are closely
associated with audit work. The external auditors wereconsidered the most suitable supplier for these services
taking into account the alignment of these services to thework undertaken by external audit and the firm’s skill sets.
The Committee also monitors audit and non-audit
services provided to non-consolidated funds and weresatisfied fees for those services did not impact auditor
independence.
Further details of the fees paid to the external auditors foraudit and non-audit work carried out during the year are
set out in Note 7 of the Group financial statements.
The ratio of non-audit fees to audit and audit related
assurance fees is 10% (2022: 15%). The total of audit
related assurance fees (£2.8m) and non-audit fees(£1.0m) is £3.8m, and the ratio of these audit related
assurance fees and non-audit fees to audit fees is 53%(2022: 58%). As noted above the audit related assurance
fees are primarily fees in relation to required regulatory
reporting, where it is normal practice for the work to be
performed by the external auditor.
The Committee is satisfied that the non-audit fees do not
impair KPMG’s independence.

Audit quality and materiality

The Committee places great importance on the quality ofthe external audit and carries out a formal annual review
of its effectiveness.
The Committee looks to the audit team’s objectivity,
professional scepticism, continuing professional educationand its relationship with management, all in the context ofregulatory requirements and professional standards.
Specifically:– The Committee discussed the scope of the audit prior
to its commencement.
– The Committee reviewed the annual findings of the
Audit Quality Review team of the FRC in respect of
KPMG’s audits. The Committee was satisfied insofar as
the issues might be applicable to abrdn’s audit, that
KPMG had proper and adequate procedures in placefor our audit.
– The Committee approved a formal engagement withthe auditor and agreed its audit fee.
– The Committee Chair had regular meetings with thelead audit partner to discuss Group developments.
– The Committee receives updates on KPMG’s work andits findings and compliance with auditor independence
requirements.
– The Committee reviewed and discussed the audit
findings including audit differences prior to theapproval of the financial statements. See the discussion
on materiality in the following paragraphs for moredetail.
– The Committee also continued to monitor and discuss
relevant external matters in relation to KPMG as a firm.

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The Committee discussed the accuracy of financial
reporting with KPMG both as regards accounting errorsthat would be brought to the Committee’s attention and as
regards amounts that would need to be adjusted so thatthe financial statements give a true and fair view.
Differences can arise for many reasons ranging fromdeliberate errors (fraud etc.) to good estimates that weremade at a point in time that, with the benefit of more time,
could have been more accurately measured. KPMG haveset overall audit materiality at £13.7m (2022: £14m) basedon revenue (as set out in the KPMG independent auditors’
report). This is within the range in which audit opinions areconventionally thought to be reliable. To manage the riskthat aggregate uncorrected differences becomematerial, the Committee supported that audit testing
would be performed to a lower materiality threshold forindividual reporting units. Furthermore, KPMG agreed to
draw the Committee’s attention to all identified
uncorrected misstatements greater than £0.7m(2022: £0.7m). The aggregated net difference between
the reported pre-tax profit and the auditor’s judgement of
pre-tax profit was less than £5m which was less than audit
materiality. The gross differences were attributable tovarious individual components of the consolidated income
statement and balance sheet. No audit difference wasmaterial to any line item in either the income statement or
the balance sheet. Accordingly, the Committee did not
require any adjustment to be made to the financial
statements as a result of the audit differences reported by
the external auditors.
KPMG has confirmed to the Committee that the audit
complies with their independent review procedures.

Further details on these and other activities carried out by
the Committee during the year can be found in the reportthat follows.

GOVERNANCE

John Devine
Chair, Risk and Capital Committee

MembershipAll members of the Risk and Capital Committee are
independent non-executive Directors. For their names, thenumber of meetings and Committee member
attendance during 2023, please see the table on page 96.

2. Risk and Capital Committee report

I am pleased to present my report as Chair of the Risk andCapital Committee (or the “Committee” for the purpose ofthis report).
The Risk and Capital Committee supports the Board inproviding effective oversight and challenge of risk
management and the use of capital across the Group so
as to ensure that we meet the expectations of ourshareholders, regulators, and clients.
During 2023 the Committee ensured there was a client first
focus in the management of risk and capital matters.
Particular focus was placed on client and conduct risk, andoperational and financial resilience. Throughout 2023, theCommittee considered the financial and strategic
considerations of the challenging market and economic
environment and deepened focus on sustainability andgeopolitical risks. The Committee continued to review andchallenge key activities undertaken by the business andadvise the Board on these, including:– Evolution of the Enterprise Risk Management (ERM)
framework.
– Delivery of the Group’s ICARA and capital and liquidity.
– Conduct risks across our three businesses andimplementation of the new Consumer Duty andcontinued support of vulnerable customers.
– Key project delivery updates from the transformation
activity across the Group.
– The progress to strengthen anti-financial crime andanti-money laundering activity across the Group.
– Work to mature our approach to managing cyber
resilience in line with the US National Institute ofStandards and Technology (NIST) framework.
– The simplification and diversification of the businessmodel.
– The Group’s exposure to emerging risks, including client,sustainability and geopolitical risks and events.
Furthermore, the Committee has closely monitored
developments from our regulators across the world as
they have progressed the regulatory agenda, including theareas of ESG, operational resilience and innovation intechnologies (AI).

The Committee meetings are attended by the Chief Risk
Officer. Others invited to attend on a regular basis include
the Chief Executive Officer, the Chief Financial Officer,
Group General Counsel and the Chief Internal Auditor, as
well as the External auditors.
Regular private meetings of the Committee’s members
have been held during the year, providing an opportunity
to raise any issues or concerns with the Chair of theCommittee. The Committee’s members have also held
regular private meetings with the Chief Risk Officer andaccess to management and subject matter experts
outside of the Committee meetings, to support them ingaining an in-depth understanding of specific topics.

Key responsibilities

The Company’s purpose results in opportunities andexposure to a range of risks and uncertainties.
Understanding and actively managing the sources andscale of these opportunities and risks are key to fulfilling thispurpose.
The role of the Committee is to provide oversight andadvice to the Board, and where appropriate, the Board ofeach relevant Group company on the following:– The Group’s current risk strategy, material risk
exposures and their impact on the levels and allocationsof capital.
– The structure and implementation of the Group’s ERM
framework and its ability to react to forward-looking
issues and the changing nature of risks.
– Changes to the risk appetite framework andquantitative risk limits.
– Risk aspects of major investments, major productdevelopments and corporate transactions.
– Regulatory compliance across the Group.
– Specific deep dives including asset classes and thetreatment of vulnerable customers.
Further detail on the work performed in each of theseareas is set out in the report below.
In addition, the Committee acts as the Board Risk
Committee for the Group’s two main UK investmentcompanies, abrdn Investment Management Limited(aIML) and abrdn Investments Limited (aIL). Accordingly,
the CEO of these entities is also invited to attend theCommittee meetings.
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Corporate governance statement continued
In carrying out its duties, the Committee is authorised by
the Board to obtain any information it requires from any
Director or employee of the Group. It is also authorised toseek, at the expense of the Group, appropriate external
professional advice whenever it considers this necessary.
The Committee did not need to take any independent
advice during the year.

In addition to reviewing these recurring items, theCommittee provided oversight of a broad range of topics
in 2023. This included consideration of:–
Jan-Mar––

The Committee’s work in 2023
Overview

The Committee operates a dynamic agenda and uses
each meeting to consider a range of recurring items aswell as other items that are more ad hoc and/or more
forward-looking in nature. An indicative breakdown as to
how the Committee spent its time is shown below:–––

Apr-Jun

Jul-Sep

ERM framework incl. risk policies and appetites
Operational risks (incl. cyber risk)
Conduct and Compliance risks
Capital adequacy
Other

The key recurring items which were considered by theCommittee are:
– The ‘Views on Risk’ report - this provides an independent
holistic assessment from the Chief Risk Officer of the
key risks and uncertainties faced by the Group’sbusinesses and the monitoring against risk appetites.
– Conduct risks in each of abrdn’s three main businesses
and, in particular, implementation of the Consumer
Duty rules.
– Ongoing activity to enhance and develop abrdn’s ERM
framework, including the process for risk identificationand conformance with the ERM and Policy framework.
– Performance of the Group’s ICARA processes inaccordance with IFPR, including the firm’s stress andscenario testing programme. The ICARA supports theCommittee in understanding changes to the risk profileof the Group and the capital position over time.
Through these recurring activities the Committee wasable to challenge management’s assessment of risks andoversee the key actions being taken to manage theserisks.

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Oct-Dec

Advice provided to the Remuneration
Committee regarding the delivery of
performance relative to risk appetites.
Conduct risks for the Investments business.
Findings from the abrdn Investment
Management business internal controls report.
Stress testing results from the ICARA process.
Operational resilience annual self-assessment.
Review of abrdn’s principal risks and risk
disclosures for the Annual report and accounts.

–
–
–
–
–

Conduct risks for the ii business.
Consumer Duty implementation update.
Real Assets and Alternative investments.
Anti-financial crime related activity.
Trade and Transaction Reporting.

–
–
–
–

Conduct risks for the Adviser business.
ICARA 2023 approach.
Digital Assets Products.
Management of IT obsolescence.

–
–
–
–
–
–
–

ICARA process and FCA supervisory review.
The remit of the Risk & Compliance function.
Consumer Duty implementation progress.
Vulnerable Customers.
Cyber Risk and Cyber Security.
Conflicts of Interest.
2024 Monitoring & Oversight assurance plan.

After each meeting, the Committee Chair reports to theBoard, summarising the key points from the Committee’s
discussions and any specific recommendations.

Risk exposures and risk strategy

The Committee has received regular reporting throughthe ‘Views on Risk’ report on each of the Group’s 12
principal risks, including risk dashboards, commentary andmanagement information.
The Committee continued to monitor the risk appetite
measures and limits against the approved Board risk
appetites, revised in Q4, 2022. The Committee consideredchanges to the risk profile in view of the external
environment and ongoing transformation of the business.
Through reviewing the Views on Risk reporting, theCommittee supports the Board by monitoring risk
exposures and the resilience of the capital position undercurrent and stressed conditions. Key items that theCommittee discussed during the year in this context
included:– The risks associated with the delivery of the businessplan.
– Components of the Group’s risk appetite framework.
– The process of completion of the abrdn ICARA and its
results.
– Improvements to anti-financial crime processes.
– Deepening the focus on conduct risks and embedding
Consumer Duty.
– The management of cyber risk and operational
resilience across the Group.
Results from regular stress testing and scenario analysis
has supported the Committee in understanding,monitoring, and in managing the capital and liquidity risk
profile of the business under stressed conditions. These
results provided the Committee with a forward-looking
assessment of the Group’s financial resilience in response
to potentially significant adverse events affecting key risk
exposures. The material presented to the Committee
included combined stress scenarios which looked atsimultaneous stresses impacting on economic conditions,flows and idiosyncratic factors specific to the Group.

From reviewing the reverse stress testing results, theCommittee concluded that the risk of the Group having towind down due to this scenario was remote. The
Committee also noted that the Group has strengthened
controls and resilience and actively manages its
relationships with third parties. The Committee receives
regular reporting on cyber risks and third party
management.

Enterprise Risk Management (ERM) framework

During the year, the business continued to evolve the ERM
framework used to identify, assess, control, and monitor
the Group’s risks.
The Committee has obtained assurance regarding theoperation of the ERM framework through its review ofregular content within the Views on Risk report. In particular
we have used our review of the various risk and capital
dashboards, including the consolidated dashboard on key
conduct risk indicators and Board risk appetite metrics tounderstand the Group’s risk profile and the conformanceand effectiveness of the framework in supporting themanagement of these risks.
The Committee receives reporting from the Risk andCompliance function on the results of the quarterly risk
management survey of regional and functional executives
which is used to support identification of key risks facing
the business. The completion of this survey, along withsubsequent discussion of the results by the Executive
Leadership Team, helps to drive greater risk awarenessand accountability. Furthermore, through reviewing theresults of the survey, the Committee has been able toensure there is appropriate focus on the key risks facing
the business.
Exceptions-based reporting is provided to the Committee
through the Views on Risk report. This sets out any mattersof significance in respect of the results of Policy
compliance reporting and actions being taken in response
to risk events. These two items also support the Committee
in performing its oversight of the ERM framework.

From reviewing the stress testing and scenario analysis
results, the Committee concluded that the Group was
financially resilient and there was no requirement for thebusiness to reduce its risk exposures.
The Committee has also considered the results of reverse
stress testing to explore extreme but plausible events thathave the potential to cause the business to become
unviable. This allowed the Committee to assess the risk ofbusiness failure and the ability of the Group to prevent andmitigate this risk. The reverse stress testing considered theimpact of a combination of cyber-attacks resulting in the
non-viability of the Group.

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abrdn’s risk appetite framework enables thecommunication, understanding and control of the types
and levels of risk that the Board is willing to accept in its
pursuit of the strategy of the Group. This includes thebusiness plan objectives and the capital and liquidity it
requires.

Corporate governance statement continued
Regulatory developments and compliance

The Committee reviews and assesses regulatorycompliance plans detailing the planned schedule ofmonitoring activities to be performed by the Risk andCompliance function to ensure there is appropriate
coverage. Regular updates on key findings from
regulatory compliance activity and progress against theplans were reported to the Committee through the Views
on Risk report.
As a Committee we have closely monitored global
regulatory developments to understand and anticipate
potential implications for the Group and the wider financial
services sector. In particular the Committee paid close
attention to geopolitical risks and resulting operational
implications. The Committee has also closely followed
regulatory developments and implementation activity inrelation to the new Consumer Duty, operational resilience,and new sustainability regulations globally.

Governance arrangements

The Committee has continued to refer to the work of thosenon-executive risk committees operating in subsidiarycompanies to provide oversight and challenge of risks
within those subsidiaries. This has included the risk
committees in place for abrdn Life and Pensions Limited,Standard Life Savings Limited, and Elevate Portfolio
Services Limited.
The Committee receives updates from, and reviews theminutes of, these committees in order to maintainawareness and oversight of risks across the Group. In
addition to the Committee reviewing reporting from thesubsidiary risk committees, arrangements also exist for theCommittee’s Chair to attend these subsidiary risk
committees on request.
In its capacity since January 2022 as the board risk
committee to the Group’s two main UK investment firms,
the Committee routinely considered the implications ofGroup risk management activities for these two firms andidentified any significant risk concerns to be brought to theattention of the respective Boards, The Chair of the two
investment firm Boards has a standing invitation to attend
the Risk and Capital Committee.
During the year, the Committee provided advice to theRemuneration Committee regarding the delivery of
performance in the context of incentive packages. In
particular, the Committee considered whether
performance had been delivered in a manner that wasconsistent with the Group’s strategy, risk appetite andtolerances, and capital position. The provision of this advice
helps to ensure that the Group’s overall remuneration
practices are aligned to the business strategy, objectives,culture and long-term interests of the Group and that
individual remuneration is consistent with, and promotes,
effective risk management.

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Committee effectiveness

The Committee reviews its remit and effectiveness eachyear. Following the externally facilitated review in 2022, the2023 review was conducted internally, on behalf of theBoard, by the Company Secretary. The review concluded
that the Committee continued to operate effectively
during 2023 with no material issues or concerns raised.
More information about the process involved, and its
outcomes, can be found on page 94.

Culture, Diversity, Equity and Inclusion

3. Nomination and Governance Committee
reportI am pleased to present the Nomination and GovernanceCommittee (the Committee) report for the year ended
31 December 2023.
The Committee’s key priorities this year were to maintaineffective board governance processes while the group
continued to transition to a more sustainable businessmodel and to support succession planning for the Boardand the executive, particularly in relation to therecruitment of our new Chief Financial Officer and Chief
Investment Officer, together with the reconfiguration of
the leadership team within the Investments business.
Additionally, we continued to oversee initiatives supporting
the development of talent, leadership, diversity, equity andinclusion. Monitoring the embedding of the Company’svalues within our expectations of employee and employer
behaviours to reinforce our cultural commitments,
became an important regular agenda item. This followed
the expansion of the remit of the Committee in 2022 toinclude oversight of culture, recognising the contribution
this would make as an important enabler within the
Company's transformation programmes. Further detail on
this can be found on pages 48 to 53.

Governance Framework

We continued to review our governance framework
against the Code principles and provisions and welcomed
the revisions made to the Code in early 2024. There wereno material changes proposed to our governanceframework during 2023.

Board evaluation

Following the externally-facilitated review in 2022, our2023 Board review was conducted internally andconcluded the Board was operating effectively andhighlighted areas where further progress could be madein 2024. More information about what the process involved,
and its outcomes, can be found on page 94.

While the Committee fully supported the recruitment andpromotion of the person best qualified for individual roles, it
challenged the modest deterioration in DEI progressagainst established targets and was reassured that there
was no systematic bias. On the positive side, we madeprogress in reducing UK gender pay and median bonus
gaps and achieved better DEI representation within early
careers and talent pipelines when compared with ourglobal workforce statistics. Within this, I was pleased our2023 graduate intake was 44% female, which provides abuilding block for a more balanced future talent pipeline
while we continue to focus on inclusive recruitment actions
to maintain this progress.
The Committee recognised there is still more to do andremains focused and committed to holding the executive
to account for delivery of tangible actions.
There is more detail about this below and on pages 50 and
51.
In my statement last year, I reported the sad passing of
Lynne Connolly in early 2023 after living with incurable
cancer for many years. Lynne headed our DEI
programmes for six years and was an inspiration to all of
our colleagues. Lynne not only worked hard to make DEI
progress in abrdn, she was passionate about working
across the business community to make collective efforts.
She supported the GenAnalytics/Herald awards (and theirDiversity Conference) over the years. I reported last yearthat we planned to establish an award scheme in her
memory and was therefore delighted that we agreed withher family and the organisers of the Scottish Diversity
Awards that a special award would be established in her
name (The Lynne Connolly Achievement in Diversity
Award). The inaugural award was presented at the annual
GenAnalytics/Herald awards ceremony on 12 October
2023.

Talent and Leadership

The Committee received regular reports from teams
involved with Talent and Organisation Effectiveness,oversighting their plans to deliver effective leadership,talent and performance management across the Group.
During the year we have spent particular time on the talentpipeline. It is pleasing that since the last report theCompany’s approach to talent has continued to develop
and become more targeted and systematic. This wasparticularly reflected in the establishment of various
leadership and readiness cohorts and the frequency anddetail of the talent discussions occurring at both executive
level and with the Committee. Following the launch of a
new 18-month long future leaders programme this has
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The Committee received regular updates on the work
being done to implement the Group’s culture, diversity,
equity and inclusion programmes. Having worked throughfour distinct phases of activity regarding embedding
culture change from activation to hardwiring, we
completed the formal programmatic element of the workin 2023. Diversity, Equity and Inclusion remained a key
focus and commitment of the Board, especially given thechallenge of historic under-representation of women andminority ethnic colleagues within the fund management
industry.

Corporate governance statement continued
already led to the role expansion/promotion of 34% of theintroductory cohort.

Board composition

The Committee, on behalf of the Board, assesses thebalance of executive and non-executive Directors, and thecomposition of the Board in terms of the skills, experience,
diversity and capacity needed for the Company to be
successful. These factors are important to the Board whenreviewing overall composition and during the year werereviewed by the Committee, covered in my 1:1 discussions
with Directors, all of which fed in to the Board effectiveness
review.
As I have covered already in my Chairman’s statement,
both Stephanie Bruce, our previous CFO and Brian
McBride did not seek re-election at the 2023 Annual
General Meeting at which their significant contributions to
the development of abrdn were recognised. In October
2023 we welcomed Jason Windsor as our new CFO. Jason
joined from Persimmon plc having spent the vast majorityof his career prior to that in financial services, notably
through 12 years at Aviva, latterly as Group Chief Financial
Officer.
Our policy on diversity was applied when searching for
Stephanie’s successor at the long list and short list stage.
Whilst we recognise the appointment of Jason means we
do not currently meet the requirement to have a woman
represented in the identified Board leadership positionsprescribed by the UK Listing Rules (Chair, Senior
Independent Director, CEO or CFO) the Board, with thesupport of the Committee, continues to support the
principle that the person best qualified, in the particular
circumstances of the role, should always be appointed
with due regard given to the benefits of diversity, including
the full range of protected characteristics as well as
cognitive diversity. This principle applies to the search forand appointment of all candidates, both executive andnon-executive, and will continue to form an important partof future Board succession considerations. In reviewing thecomposition of the Board, the Committee regards theCommittee Chair roles as equal in importance to thedesignated roles, which is reflected in their current
composition.
Catherine Bradley has advised that she will not seek reelection at the Company’s Annual General Meeting on 24
April 2024 and will stand down from that date. She willremain Chair of interactive investor (ii), a wholly owned
subsidiary of the Group. An announcement regarding her
successor following the AGM will be made in due course.
There were no other Board or Committee compositionchanges during the year.

Sir Douglas Flint
Chairman and Chair of the Nomination and GovernanceCommittee

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Membership

The members of the Committee are the Chairman, theChairs of Board Committees and the NED responsible for
Employee Engagement. For their names, the number of
meetings and committee member attendance during2023, please see the table on page 96.
Stephen Bird, in his CEO role, is invited to Committee
meetings to discuss relevant topics, such as the roles within
and membership of the ELT, talent development andmanagement succession.

Key responsibilities

The Committee’s primary role is to support thecomposition and effectiveness of the Board, and tooversee the Group’s activities to strengthen its talentpipeline. It also oversees ongoing development andimplementation of the Group’s governance frameworkand its work to embed appropriate diversity and inclusion
policies.
The Committee’s key responsibilities are:– Identifying and recommending Directors to beappointed to the Board and the Board Committees
and ensuring relevant training is provided on
appointment and throughout their tenure.
– Reviewing and assisting in the development andimplementation of initiatives to embed the Board’s
desired outcomes for diversity, equity and inclusion
within the Group and to define, monitor andperformance manage the behaviours expected of all
employees that will be seen to represent the Group’s
culture.
– Reviewing Board diversity, skills and experience.
– Supporting the process and output of the Board’s
effectiveness review.
– Overseeing succession planning, and leadership andtalent management development throughout theGroup.
– Considering how the Group should comply withcurrent and upcoming corporate governancerequirements, guidance and best practice andrelevant directors’ duties.
The Committee reports regularly to the Board so that all
Directors can be involved in discussing these topics asappropriate.

The Committee’s work in 2023

An indicative breakdown as to how the Committee spent
its time is shown below:–
Jan-Mar

–
–
–
–
–

–
Apr-Jun

–

–
–
–

–
Jul-Oct––––
Nov-Dec––

Reviewed the Group’s Culture and Talent
Strategy plan.
Reviewed the management structure and talentpipeline in the Investments business following thedissolution of the Co-CEO model.
Received an update on Diversity, Equity andInclusion progress and action plans.
Reviewed ELT succession planning.
Reviewed the Group’s annual Stewardship
Code Report.
Received an update on Diversity, Equity andInclusion progress and action plans.
Reviewed response to the UK Corporate
Governance Code Consultation.
Received an update on ELT and critical rolesuccession plans.
Received a diagnostic on Group governance andopportunities.
Received an update on Diversity, Equity andInclusion progress and 2023-24 priorities.
Reviewed progress on Talent and Leadershipdevelopment activities.
Received the regular update on the activities of
the abrdn Financial Fairness Trust.

An indicative breakdown as to how the Committee spent
its time is shown below:

Succession planning and talent development
Board, committee appointments and composition
Culture, diveristy and inclusion
Corporate governance

The Committee keeps under constant review the skills,
experience and capabilities needed for particular Board
roles. This recognises the need to secure a pipeline ofpotential successors to be able to chair the Board
Committees, and also the need to plan ahead to takeaccount of the length of time served on the Board by thecurrent independent non-executive Directors. In addition, it
also recognises the skills which the Board will need as it
moves forward to oversee the implementation of theGroup’s approved strategy and takes account of theGroup’s commitments to achieve and maintain its
published Board diversity targets.
Where Board augmentation is needed, an external search
consultant is then requested to prepare a list of suitable
candidates. From that, the Committee agrees a shortlist.
Following interviews with potential candidates, theCommittee makes recommendations to the Board on any
proposed appointment, subject always to the satisfactorycompletion of all background checks and regulatory
notifications or approvals. Part of this includes considering
existing or planned external commitments of candidates
to assess their ability to meet the necessary timecommitment and whether there are any conflicts ofinterest to address.
The Committee also oversees the process thatrecommends continuation of appointments; members of
the Committee do not, however, take part in discussions
when their own performance – or continued appointment– is being considered.
During the year the Committee considered theappointment of Catherine Bradley as Chair of interactive
investor (ii), a wholly owned subsidiary of the Group. As
part of the appointment to the ii Board, the Committee
reviewed Catherine’s time commitment and capacity, andagreed that this was complementary to her roles on theplc Board. Catherine has advised that she will not seek reelection at the Company’s Annual General Meeting on 24
April 2024 and will stand down from that date as a NonExecutive Director of abrdn plc. She will remain Chair ofinteractive investor.

Succession planning and talent management
activities

The Committee regularly reviews succession planning
activities, including identifying key person and retention
risk, and talent development programmes across theGroup.
During 2023, in particular, the Committee discussed thefuture leadership and talent needs of the Group and how
the current programmes could be revised to take accountof the skills and expertise required by both the Board andthe ELT. These programmes are designed to recognise thechanging shape of the Group, and also to identify both thetalent available within the Group and the need/benefits ofexternal recruitment. Diversity was considered as a core
part of these discussions, and progress was reviewed
against our diversity goal to achieve minimum 40%
women on ELT succession plans.

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Reviewed compliance with the UK Corporate
Governance Code for the 2022 ARA.
Reviewed the results of the Committee
Effectiveness Review.
Reviewed progress on Talent and Leadershipdevelopment activities.
Recommended the appointment of Jason
Windsor as CFO and Peter Branner as CIO.
Reviewed the recommendations to shareholders
to re/elect Directors at the AGM.
Received an update on the 2022 year-end annual
performance process.
Received the results of the staff engagement
survey.

Board and committee appointments andcomposition

Corporate governance statement continued
The Talent and Change agenda is led by the CPO, in
conjunction with the CEO.
The Committee spent time during 2023 building on thefoundations built in 2022 and looking at the strategic
priorities of the talent team to:– Bring the best possible people into the organisation andcontinue to develop our colleagues.
– Enable people to be the best they can andencouraging movement of talent across ourorganisation.
– Create the best possible environment for our people tothrive.
The Committee discussed the team’s progress to deliverinitiatives to support early careers, talent acquisition, future
talent, core capabilities and behaviours and effective
performance management. The Committee discussed
the inclusive design of the initiatives such as early careers,talent acquisition and future talent and considered thediversity of talent this achieved.
The Committee reviewed the effectiveness of its NED
mentoring programme which allows each NED to get toknow members of the next generation of talent throughindividual meetings which take place over the course of
the year and evolve based on the needs of each individual
being mentored. Having received positive feedback fromboth mentors and mentees, the mentoring relationships
were refreshed in 2023 to continue the Board’s exposure
to our top talent and the programme will continue in 2024.
In addition, we created a new talent group focused on our
Executive Succession Talent. The group is our most seniortalent group with the purpose of ensuring engagement,
retention, and readiness of our identified Executive
Leadership Team successors.
During the year, the Committee reviewed the succession
and contingency planning for our top performing fundmanagers. In addition, 47 enterprise-wide roles wereidentified which are considered as critical to deliveringbusiness results and revenue growth. The identification of
successors for these roles will create opportunities fortalent development as well as ensuring better business
continuity.
The Committee regards all of these initiatives as helpful insupporting its oversight of the development of theCompany’s key talent. Continuing to focus on thosecommercial roles and those that manage key client andrevenue generating relationships will remain an importantfocus of the Committee.

Board evaluation

The Committee has a key role in supporting the Board
evaluation process. Details of the 2023 review are on
page 94.

Culture, Diversity, Equity and inclusion

The Committee and the Board spent time with both the
CEO and the Chief People Officer understanding theirprogress against plans to strengthen meaningfulmeasurement and reporting of culture across the Group,
including the introduction of the abrdn index, focusing
attention on those things that shape culture and tracking
progress through our transformation.
114

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Annual report 2023

The Board and the ELT previously defined a set ofcommitments which define the Group’s culture – ClientFirst, Empowered, Ambitious and Transparent. Informationon our cultural commitments can be found on page 48.
During 2023 the Committee have overseen the launch andembedding of these commitments against a detailed planof activities to hardwire these commitments into all key
aspects of colleague experience. We measure overall
progress against our cultural ambitions through ourlistening strategy and our employee engagement online
platform. Insight and progress is shared and discussed with
the Committee.
The Board’s diversity statement is on page 92. The
Committee has a key role in supporting publication of thisstatement through its oversight of DEI activities. DEI
activities are presented at the Committee at least twice ayear to report on progress to deliver against Committeeapproved framework, action plans and initiatives. The
Committee reviewed progress against the Group’s DEI
framework priorities, being:– Making diversity, equity and inclusion part of our
purpose.
– Maintaining inclusive and equitable ways of working.
– Attracting and developing diverse talent.
– Ensuring colleagues feel included and valued everyday.
The committee further reviewed relevant DEI trends, data
points, and regulation including:– Internal colleague sentiment in relation to DEI themes
such as data collection and inclusive experience.
– External landscape and regulation including the FCA
and PRA consultation papers related to DEI within
financial services.
– Target setting discussion in line with the UK
Government-backed Parker Review.

ESG reporting

During the year, ESG reporting in 2023 - including the UK
Stewardship report, and the Sustainability and TCFD report- was predominantly considered by the Board and the
Audit Committee. With the publication of the Company’s
Climate Transition Plan expected in the first half of 2024,
the Committee’s role and remit of how it can best support
the Board’s oversight of the delivery of the Company’scommitments and the reporting thereof, will be reviewed.

Committee effectivenessThe effectiveness review was conducted internally in 2023
following the external review undertaken in 2022.
Details of the 2023 review are on page 94 and reflect thethemes raised across the Board and its Committees.

Dear shareholder

On behalf of the Board I am pleased to present the Directors’
remuneration report for the year ended 31 December 2023.

Introduction

4. Directors’ remuneration report

Remuneration Committee Chair’s statement

This report sets out what the Directors of abrdn were paid in
2023 together with an explanation of how the Remuneration
Committee reached its recommendations.
Where tables and charts in this report have been audited by
KPMG LLP, we have marked them as ‘audited’ for clarity.
The report is structured in the following sections andcorresponding page numbers:
At a glance – 2023 remuneration outcomes
At a glance – 2024 Policy implementation
Directors’ remuneration in 2023
Shareholdings and outstanding share awards
Executive Directors’ remuneration in context
Remuneration for non-executive Directors and the
Chairman
The Remuneration Committee

Page

119
120
121
124
128
131

2023 was another year of significant change for abrdn. Whilethe headwinds facing active asset managers only grewstronger, we reshaped our footprint and took steps to reducecomplexity. As set out in the Chairman’s statement and theChief Executive Officer’s review, a number of strategic
actions were taken to streamline our businesses and set up aplatform for growth. These included reducing costs throughthe consolidation and closure of sub-scale funds, investing intechnology capabilities and marketing resources, selling our
US Private Equity franchise, securing the agreement to sell our
European Private Equity franchise and acquiring thehealthcare fund management capabilities of Tekla CapitalManagement, increasing our holding of closed-end funds.
In a year of continued challenge for the active investment
industry, flows and investment performance weredisappointing in our Investments business, while rising profits in
Adviser and ii were insufficient to counter the decline inrevenues in Investments, despite strong cost-cutting in thearea. As a result, financial performance metrics came out
towards the bottom end of the range. There were better
outcomes against non-financial targets, which measured
progress on strategic actions taken by management to set
the stage for growth while maintaining our focus on ourpeople, culture and customers as we transform our businessand continue our efforts to advance sustainable investing andlimit our own climate impact.

133

Approval

The Directors’ remuneration report was approved by the
Board and signed on its behalf by:

Jonathan Asquith
Chair of the Remuneration Committee
26 February 2024

Annual report 2023

abrdn.com

115

GOVERNANCE

At the 2023 AGM our directors’ remuneration report for 2022
received a 93% vote in favour and our new Directors’
remuneration policy (Policy) was approved with a 94% vote infavour. I would like to thank all shareholders for yourcontinued strong level of support and constructive dialogue
on remuneration matters, particularly in the period leading up
to the 2023 AGM in respect of the Policy.

Corporate governance statement continued

New Chief Financial Officer’s remuneration

We were delighted to welcome Jason Windsor to the Boardand the executive team on his appointment as Chief Financial
Officer on 23 October 2023. Jason is a highly experienced
Chief Financial Officer bringing demonstrable expertise andsignificant knowledge of our industry from over a decade
within Aviva plc, latterly as Group Chief Financial Officer. His
deep knowledge and experience in our sector together withhis broader financial markets experience provide an ideal
complement to the capabilities of the existing executive
team.
The remuneration arrangements for Jason Windsor’s
appointment and Stephanie Bruce’s exit were agreed by the
Remuneration Committee in conformity with the Policy
agreed at the 2023 AGM. As detailed in the announcement
on 27 July 2023, Jason’s remuneration package comprises:–
A base salary of £675,000 per annum.
–
A pension allowance of 18% of salary aligned to the
maximum contribution available to abrdn's UK-based
employees and other benefits in line with our Policy.
–
An Annual Bonus up to a maximum of 150% of salary
subject to performance (with 50% of any bonus earned
being deferred for three years into abrdn shares, which
will vest in three equal annual tranches). The award for
performance year 2023 was prorated to reflect his
joining the Company part way through the performanceyear.
–
An annual Long Term Incentive award of 225% of salary(final vesting percentage is based on stretching financial
and shareholder return targets over the three-year
performance period and the award is subject to afurther two-year holding period after vesting).
The structure and quantum of the Chief Financial Officer’s
remuneration package is consistent with our Policy and falls
below the maximum levels permitted under the Policy.
Jason’s package was calibrated in the context of anassessment of what it would take to attract the required skills
and expertise from the market (utilising benchmarking data
for similar roles across FTSE Financial Services peer groupcompanies), the expectations of other candidates put
forward for the role and Jason’s previous remuneration
packages.
The Remuneration Committee is confident that the
remuneration package, which was shared with the market atthe time, has been set at a level that takes into account theskills and experience that Jason brings.
In line with our Policy and standard practice, Jason also
received buy-out awards to compensate for remuneration
he forfeited on leaving his previous employer. All such awards
reflect the value and structure of awards foregone, including
the vesting and/or holding periods. Where relevant, theseawards include abrdn performance conditions enabling
immediate alignment to abrdn performance. Further details
are set out on pages 126 and 127.

How our Policy was applied in 2023

Strategic advances in 2023 to enable a leaner Investments
business, generate capacity for Adviser clients and generateorganic customer growth in ii were balanced by shortfalls in
the Investments business’s financial performance as themacro environment continued to be challenging for abrdn.
With 35% of the annual bonus and 100% of the LTIP driven
directly by profit and total shareholder return measures, low
rewards for executive Directors reflected the low returns forshareholders balanced by a recognition of the progress
made in developing ii and Adviser and in addressing costissues in Investments.
In this context, the Remuneration Committee is comfortablethat the Policy operated as intended.

Annual bonus (detail on pages 121 to 123)
Financial performance (65%)

Financial targets were set with reference to the Boardapproved plan including measures on net flows, investment
performance and adjusted operating profit before tax.
Against the backdrop of a ‘higher for longer’ rate environmentand continued significant macroeconomic and geopolitical
headwinds, financial performance was subdued.
Investment performance: performance for fixed income,quantitative, alternative investment strategies and liquidity
remained strong. However, Equities were impacted by our
AUM bias towards Asia and Emerging Markets and the quality
growth style. 2023 was also challenging for multi-asset
strategies and real estate valuations experienced early onsome of the sharpest corrections for many years andimpacted returns over all periods. Overall, performance did
not meet the threshold required for a payout under theannual bonus plan.
Net flows: continued challenging asset allocation trends had
an adverse impact on flows, with Institutional and Retail
Wealth experiencing lower gross flows while net flows
improved in Insurance Partners. Although Adviser andPersonal Wealth proved more resilient, market conditions andcost of living pressures contributed to net outflows there too,
while ii net inflows remained strong despite a subdued retailmarket. In aggregate, performance on net flows fell below
the threshold required to qualify for payouts under the annual
bonus plan.
Adjusted operating profit before tax: this came in 5% lower
than the prior year, at £249m. ii and the Adviser businessincreased profitability, with ii including the benefit of a full 12months’ contribution compared to 7 months in 2022.
However, this was offset by reduced revenue in theInvestments business reflecting net outflows and adverse
market conditions. The overall outcome was between
threshold and target.
The outcomes for the financial element of the 2023 annual
bonus are summarised below.
Weighting(% of total scorecard)

2023 outcome(% of total scorecard)

Investment performance

15%

0%

Net flows
Adjusted operating profit
before tax

15%

0%

35%

9.42%

Financial performance measure116

abrdn.com

Annual report 2023

This resulted in an overall assessment of 9.42% out of a
maximum of 65% on financial measures.

the Remuneration Committee determined the final outcomeof 7.5% out of 10%.

Non-financial performance (35%)

Considering all components together, this resulted in an
overall assessment of 26.5% out of a maximum of 35% on
non-financial measures.

Strategic: the Investments business closed or merged over
100 funds, sold the US Private Equity franchise and deliveredsavings of £102m, generating a leaner business althoughrevenues still fell faster than costs. Adviser delivered its largest
and most complex technology upgrade, despite early
implementation headwinds, enhancing our platform
proposition in advance of the impending launch of adviserOS
in 2024. ii enriched its offering in the year with its pilot of ii
community, the launch of Investor Essentials and Pension
Essentials, alongside further expansion in its SIPP programme
and a new approach to brand development, increasing
customers by 4% organic growth and gaining market sharedespite subdued market conditions. ii also launched new
website infrastructure in January 2023, modernising thedesign and improving user experience. The Remuneration
Committee took into account these significant strategic
actions to better position the businesses for future growth anddetermined the final outcome of 8% out of 10%.
Environment: targeted engagement continued with ourlargest financed emitters (162 resolutions voted on in 2023).
Tracking at a 41% carbon intensity reduction in in-scope
public market portfolios compared to our 2019 baseline (25%reduction in in-scope real estate portfolio), we are on track forour target of a 50% reduction by 2030. For our own
operational net zero, we remain well-placed to meet ourlong-term net zero carbon emission target. The
Remuneration Committee took into account more than 5
separate qualitative and quantitative performance indicatorsin agreeing the outcome at 5% out of 5%.
Social/people: engagement levels held steady despite
continued large-scale transformation and organisationalchange. Sense of inclusion, the nature of each individual’s
work and personal motivation levels all continue to score well,although we recognise that there is more work to do. 2023
saw noteworthy steps taken to transform the culture of
abrdn, with the culture programme work completing and thefinal phase of our ‘Commitments’ work delivered. DEI levers ofchange held steady. Taking into account more than 15
qualitative and quantitative performance indicators andnoting minimal traction on employee engagement levels, theRemuneration Committee determined the final outcome of
6% out of 10%.
Customer: in the Investments business, strong relationships
with clients persisted with independent client survey
feedback highlighting good client service and accountmanagement. In Adviser, delivering the recent technology
release for the Wrap platform disrupted service for clients inthe short term, although our ‘Return to Green’ activity in H2
2023 saw service levels and client satisfaction improve. For ii,
the Remuneration Committee recognised the organic
growth in customer numbers, the increase in market shareand the continued positive feedback from customers
regarding their experience with ii. Taking into account morethan 20 qualitative and quantitative performance indicators,

Remuneration Committee assessment

To assess whether the outcomes generated by thescorecard were fair in the broader performance and risk
context, the Remuneration Committee reviewed theindividual components which contributed to the delivery ofthis performance and the alignment of scorecard outcomeswith the experience of a range of stakeholders. Further
components the Remuneration Committee considered are
set out on page 123.
In particular, the Remuneration Committee carefully
considered the experience of employees and how executive
Director incentive outcomes compared to employee
incentive outcomes. External market conditions have beenchallenging for abrdn in recent years and this has heavily
impacted both executive Director and employee pay
outcomes. By design, there are differences in the priorities
which drive how these two populations are remunerated; as aresult, their relative experiences can be different.
Executive Directors’ annual bonus levels reduced from 80.5%(2021) to 30.25% (2022) of maximum opportunity. The
increase to 35.92% for 2023 represents an important but
limited reversal of that move, recognising the progress thatthe executive Directors are making in reshaping abrdn tocope with the challenges facing the company and the wider
asset management industry.
For key staff below Board level, we have implemented various
other reward changes, including granting restricted stock
awards and increasing salaries, which have not been
awarded to our executive Directors. In this context, theRemuneration Committee concluded that executive Director
outcomes reflected the overall employee experience.
The Remuneration Committee concluded that the outcomesdelivered by the scorecard were a fair and balanced
assessment of performance and no adjustment to them wasneeded or made.
Summarising these results, the Remuneration Committee
approved the following outcomes based on performanceagainst targets:
Executive Director

Final outcome(% of max)

2023 total bonus(£000s)Stephen Bird

35.92%

786

Jason Windsor

35.92%

701

Stephanie Bruce

35.92%

1032

1. The 2023 total bonus for Jason Windsor is prorated to reflect his appointment
to the Board effective 23 October 2023.
2. The 2023 total bonus for Stephanie Bruce is prorated to reflect her stepping
down from the Board effective 11 May 2023.

Annual report 2023

abrdn.com

117

GOVERNANCE

In 2023, we assessed non-financial performance against
three baskets of measures: Strategic (three measuresaligned to each of our businesses), ESG (comprising
Environment and Social categories) and Customer.

Corporate governance statement continued

Long-term incentives (detail on pages 123 to 127)

Vesting of the 2021 Long-Term Incentive Plan (LTIP) award
granted to Stephen Bird and Stephanie Bruce is based on
performance over the three-year period ending on 31
December 2023. A proportion of Jason Windsor’s 2021 LongTerm Incentive Buyout is also subject to the performance
conditions of the 2021 LTIP (see pages 126 and 127 for moredetail). After review, the Remuneration Committee
concluded that the performance for the Adjusted Diluted
Capital Generation per share metric was between threshold
and target and the overall award should vest at 18.75%.

Policy implementation in 2024

Following a review, no change has been made to salaries forthe executive Directors or fees for the non-executives for2024.
In line with previous practice, we will continue to set stretch
targets for the annual bonus and the LTIP to ensure that the
maximum opportunity will only be earned for exceptional
performance.
The scorecard for the 2024 annual bonus is detailed on page
120 and the targets, which are commercially sensitive, will be
disclosed at the end of this performance year in the 2024
Annual report and accounts. The scorecard continues tofocus the majority of the opportunity on the achievement offinancial targets as set out in our Policy (65%), with thebalance measured against non-financial performance
including Strategic, ESG and Customer objectives. The
Remuneration Committee has agreed a Strategic measure
and a basket of key indicators in the other areas which willallow a rounded assessment of performance to be made.
Details on these metrics, including how the Remuneration
Committee assessed performance against them, will be
disclosed retrospectively.
As outlined in the Chairman’s statement, the Group is
updating one of its key performance indicators moving
forward, from adjusted capital generation (ACG) to net
capital generation (NCG).
The Remuneration Committee reviewed the impact of thischange and agreed that the 2024 LTIP will consist of two
equally weighted targets, Net Capital Generation per share
Compound Annual Growth Rate (NCG CAGR) and Relative
TSR. The new metric of NCG CAGR more closely aligns to thedividend paying capability of the Company over the longterm, compared to ACG CAGR, and incentivises the phasingout of restructuring costs in the long term as targeted in the
Board-approved business plan. NCG is defined as ACG lessrestructuring and corporate costs (net of tax). The three-year
NCG per share target range has been set at 15%-25% CAGR,
which is aligned with the business plan agreed with the Board.
The annual development of this measure is not linear andtarget ranges for any future grants will be calibrated to allow
for this. The Remuneration Committee also reviewed the TSR
peer group for the Relative TSR metric. Details of the 2024 LTIP
grant can be found on page 120.

118

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Annual report 2023

During the year, the Remuneration Committee remained
mindful of the debate and discussions led by the CapitalMarkets Industry Taskforce on resetting the approach to
executive pay for UK listed firms. We continue to welcome thedebate on the use of restricted share awards and thepromised review of the Investment Association Principles ofRemuneration. The Remuneration Committee will review any
future guidelines and consider whether there is a beneficial
role for restricted share awards in the abrdn remuneration
structure.
To help you navigate the report effectively, I would like todraw your attention to the sections on pages 119 and 120
which summarise both the outcomes for 2023 and how the
Policy will be implemented in 2024. Further detailed
information is then set out in the rear section of the report foryour reference as required.
On behalf of the Board, I invite you to read our remuneration
report. As always, the Remuneration Committee and I are
open to hearing your views on this year’s report and our Policy
in general.

At a glance – 2023 remuneration outcomes
Outcome of performance measures ending in the financial year

The following charts show performance against the target range for the annual bonus and commentary on the 2021-2023 LTIP.
Further detail on the assessment of the performance conditions can be foundon pages 121 to 123.
1

Investment performance (15%)1

0%

2

0%

Net flows (15%)

GOVERNANCE

Performance vs Maximum (%) – Financial measures
41%

Adjusted operating profit
before tax (35%)

27%
20

10

0

40

30

60

50

70

90

80

100

Performance vs Maximum (%) – Non-financial measures
80%

Strategic (10%)
Environment (5%)

100%

Social/people (10%)

60%

Customer (10%)

75%
75%

0

10

20

30

40

50

60

70

92%
80

90

100

% AUM above benchmark average of three-year for all asset classes.
Excl. cash/liquidity and Insurance.

2023 annual bonus scorecard outcome

The following table sets out the final outcome for the 2023 annual bonus. A detailed breakdown of the assessment of
performance conditions can be found on pages 121 to 123.
Bonus Scorecard Outcome
Financial metrics(minimum 65%)

Non-financial
metrics (maximum
35%)

Total Bonus Outcome
Salary received
in year(£000s)Maximum
opportunity(% of salary)

Total award(% of salary)

Total award(£000s)Stephen Bird

875

250%

89.80%

786

Jason Windsor1
Stephanie Bruce2

130
192

150%
150%

53.88%
53.88%

70
103

9.42%

26.5%

Board approved
outcome(% of maximum)

35.92%

1. Jason Windsor was appointed to the Board effective 23 October 2023. The salary received in year and total 2023 annual bonus awarded value is prorated
to reflect the proportion of the 2023 performance year for which he served at abrdn. For further information, see pages 121 to 127.
2. Stephanie Bruce stepped down from the Board effective 11 May 2023. The salary received in year and total 2023 annual bonus awarded value is prorated
to reflect the proportion of the 2023 performance year for which she served at abrdn. For further information, see pages 121 to 126.

2021-2023 LTIP outcome

The performance period for the 2021-2023 LTIP concluded on 31 December 2023. Performance was assessed against two
measures: Adjusted Diluted Capital Generation per share (CAGR) and Relative TSR performance. The performance for the
Adjusted Diluted Capital Generation per share (CAGR) metric fell between threshold and target and, therefore, the overall
award will vest at 18.75%. Detail of the performance assessment for the 2021-2023 LTIP can be found on page 123.

Total remuneration outcomes in 2023

The chart below shows the remuneration outcomes for the CEO in 2023 based on performance compared to the maximum
opportunity.
All figures in £000s

Max

1,034

1,094

Actual2023

1,034

393 393

1,094
323

Stephen
Bird

3,063

£6,285£2,143

Salary, pension and benefits
Annual bonus - cash
Annual bonus - deferred
LTIP

Annual report 2023

abrdn.com

119Corporate governance statement continued

At a glance – 2024 Policy implementation

This section sets out how we propose to implement our Policy in 2024. The full Policy, which remains unchanged for 2024
from the Policy approved by shareholders at the 2023 AGM, including detail on how it addresses the principles as set out inthe 2018 Corporate Governance Code, can be found in the 2022 Annual report and accounts on pages 120 – 130.
Element of remuneration

Key features of operation

2024 implementation

SalaryCore reward forundertaking the role

Normally reviewed annually, taking into account a range ofinternal and external factors.

Stephen Bird: £875,000
Jason Windsor: £675,000

PensionCompetitive
retirement benefit

Aligned to the current maximum employer contribution
available to the UK wider workforce (18% of salary).

Stephen Bird: 18% of salary
Jason Windsor 18% of salary

Includes (i) private healthcare; (ii) death in service protection(iii) income protection (iv) reimbursement of membership feesof professional bodies; and (v) eligibility for the all-employee
share plan.

No change to benefits provision

Annual performance assessed against a range of key financial
and non-financial measures. At least 65% will be based on
financial measures. At least 50% will be deferred into shares
vesting in equal tranches over a three-year period.
Awards are subject to malus and clawback terms.

No change to quantum
Stephen Bird: 250% of salary
Jason Windsor: 150% of salary
See below for 2024
performance conditions

Awards are subject to a three-year performance period, witha subsequent two-year holding period. Dividend equivalents
accrue over the performance and holding period.
Awards are subject to two equally weighted performance
metrics linked to long-term strategic priorities and the creationof long-term shareholder value.
Awards are subject to malus and clawback terms.

No change to quantum
Stephen Bird: 350% of salary
Jason Windsor: 225% of salary2024 performance metrics are
set out below

Executive Directors are required to build up a substantial
interest in Company shares. The share ownership policy forexecutive Directors requires shares up to the value of theshareholding requirement to be held for a period of two years
following departure from the Board.

Stephen Bird: 350% of salary
Jason Windsor: 225% of salary

Benefits
Competitive benefits

Annual bonus
To reward the deliveryof the Company’sbusiness planLong-term incentiveplan
To align with ourshareholders andreward the delivery of
long-term growth

Shareholding
requirements

Performance conditions for 2024 annual bonus
Financial (65% weighting)Non-financial (35% weighting)

Investment performance (15%), Adjusted operating profit (35%) and Net flows(15%)
Performance against Customer (10%) and ESG objectives (incorporating people
engagement and diversity metrics, and environmental measures) (15%) andprogress on a key strategic initiative (10%)

Due to commercial sensitivity, actual targets and ranges will be disclosed at the end of the performance period. The
Remuneration Committee retains an appropriate level of flexibility to apply discretion to ensure that remuneration
outcomes reflect a holistic view of overall performance, including conduct and culture.

Performance conditions for 2024 Long-term incentive plan

Target range1

Net Capital Generation per share (50% weighting)2
Relative TSR (50% weighting)3

15% - 25% CAGR
Equal to median – equal to upper quartile

1. Straight line vesting occurs between threshold and maximum. 25% vesting for threshold performance.
2. See the Remuneration Committee Chair’s letter on page 118 for an explanation of the Net Capital Generation per share (CAGR) metric.
3. The peer group is made up of the following global asset management peers: AJ Bell, Alliance Bernstein, Amundi, Ashmore Group, DWS Group,
Hargreaves Lansdown, IntegraFin Holdings, Janus Henderson Group, Jupiter Fund Management, Liontrust Asset Management, M&G, Ninety One, Quilter,
Rathbones Group, Schroders and St James’s Place.

120

abrdn.com

Annual report 2023

Directors’ remuneration in 2023

This section reports remuneration awarded and paid at the end of 2023 in further detail, including payments to past
Directors.

Single total figure of remuneration – executive Directors (audited)Basicsalary for
year
£000s

Taxablebenefits
in year£000s1

Pensionallowance
paid in year
£000s

Bonus
paid in
cash
£000s

Bonus
deferred£000s2

LTIP with period
endingin the year£000s32019 EIP£000s

BuyoutAwards£000s

Total
for theyear£000s

Total fixed
£000s

Total
variable
£000s

2023
2022
2023

875
875
130

1
1
-

158
158
23

393
331
35

393
331
35

323
4

-

712

2,143
1,696
939

1,034
1,034
153

1,109
662
786

2023
2022

192
538

1

34
97

51.5
122

51.5
122

-6
791

(139)

-

329
1,532

226
636

103
896

Executive
Directors

Stephen Bird
Jason
Windsor4
Stephanie
Bruce5

1. This includes the taxable value of all benefits paid in respect of the relevant year. Included for 2023 are medical premiums at a cost to the group of£606 per annum for executive Directors.
2. This represents 50% of the total bonus award and is delivered in shares which will vest in equal tranches over a three-year period.
3. The values reported for 2023 are the market values of the LTIP awards that will vest, at 18.75% of maximum, based on the three-year
performance measurement period ending on 31 December 2023. The share price at the date of vesting is not known at the date of publication ofthis report. Therefore, the number of abrdn plc shares that will vest (excluding dividend equivalent shares accrued) has been multiplied by theaverage share price over the quarter ending 31 December 2023 (166.52 pence). This amount will be restated in the 2024 Annual report andaccounts once the share price at date of vesting is known.
4. Jason Windsor was appointed to the Board effective 23 October 2023. All figures reflect amounts paid/awarded since the date of appointment. The
value of buyout awards above represents the buyout awards granted without performance conditions. The value of the LTIP with period ending in
the year relates to the proportion of his 2021 Long-Term Incentive Buyout award subject to abrdn performance conditions. For further information,
see pages 126 and 127.
5. Stephanie Bruce stepped down from the Board effective 11 May 2023. All figures reflect amounts paid/awarded until this point. See pages 123 and
124 for further information on payments made to Stephanie Bruce as a past director.
6. Details of the 2021-2023 LTIP outturn for Stephanie Bruce are presented on page 124.

Base Salary (audited)

There was no change to the base salaries of executive Directors in 2023.

Pension (audited)

Under the Policy approved at the 2023 AGM, the executive Directors received a cash allowance in lieu of pension
contribution of 18% of base salary.

Annual Bonus Plan

The following section contains details on the targets and the Remuneration Committee’s assessment of outcomes for theperiod 1 January 2023 to 31 December 2023 against each of the elements of the executive Director bonus scorecard.

Financial performance metrics – 65% of total scorecard outcome
Investment performance – % AUM above
benchmark average of three-year for all asset
classesCore Investment net flows2 (£bn)
UK Savings & Wealth (Adviser & ii) net flows (£bn)
Adjusted operating profit before tax3 (£m)

Weighting(% of overall
scorecard)Threshold(25% ofmaximum)

Stretch(100% ofmaximum)

ActualResult(% of overalloutcome)1

15%

50%

70%

42%

0%

9.75%
5.25%
35%

(8.4)
3.5
247

2.8
9.7
324

(14.1)
0.7
249

0%
0%
9.42%

1. Straight-line vesting between threshold and stretch targets.
2. Excluding cash/liquidity and Insurance.
3. Targets and actual outcome exclude US Private Equity franchise for Q4 2023 in line with completion of sale of the US Private Equity franchise in Q4 2023.

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121

GOVERNANCE

The following table sets out the single total figure of remuneration for each of the individuals who served as an executive
Director at any time during the financial year ending 31 December 2023:

Corporate governance statement continued
Non-financial performance metrics – 35% of total scorecard outcome
Category

Highlights from assessment

Strategic (10%):
Achievement of
key strategic
actions acrossour businesses

There were a number of strategic initiatives across our three businesses that werecritical to the long-term success of the Group. Three key strategic measures werechosen; one for each of our businesses.

Result(% of overalloutcome)8%– Investments: through a number of actions to simplify the business, including closing or
merging over 100 funds and the sale of our US Private Equity franchise, we went beyond our£75m cost reduction target to deliver savings of £102m.

– Adviser: delivered the largest and most advanced technology release ever completed
on the Wrap platform., setting us up to further enhance our platform proposition with
the impending launch of adviserOS in 2024.
– ii: excluding recently migrated customers, customer numbers of ii increased by 4%,
despite a subdued market. ii’s market share also increased over 2023 and its
proposition was significantly enhanced with the launch of Investor Essentials, Pension
Essentials and the pilot of ii community. ii also launched new website infrastructure in
January 2023, modernising the design and improving user experience.
Environment(5%):
Progresstowards
portfolio
decarbonisation
and Operational
Net Zero targets

The environmental measures we selected focused on the important contribution our
Company has to make as a global institutional investor and a responsible Company. The
Remuneration Committee considered more than five quantitative and qualitative
measures. Our Sustainability and TCFD report, available on our website, contains further
detail on our performance in this area. Key factors in the determination were:– Targeted engagement continued with our largest financed emitters and encouraged
improvement through 162 resolutions voted on in 2023.
– We continue to enhance the tools to measure carbon intensity and in 2023, we weretracking at a 41% carbon intensity reduction in in-scope public market portfolios
compared to our 2019 baseline (25% reduction in in-scope real estate portfolio),
remaining on track for our target of a 50% reduction versus our 2019 baseline by 2030.
– For our own operational net zero, we remain well on track to meet our long-term net
zero carbon emission target of 50% less than our 2018 baseline by 2025, with a 69%
reduction versus our 2018 baseline in 2023.

5%Social/people(10%):
Noteworthy
steps taken totransform theculture at abrdn,
maintenance ofengagementscore andsustained
progress ongenderrepresentationand ethnicity
diversity targets

abrdn is a people business and we believe that in order to succeed it needs to embed
diversity, equity and inclusion within a strong and shared cultural framework, enabling us
to continue to attract and maintain an engaged and diverse talent base. The
Remuneration Committee considered more than 15 quantitative and additional
qualitative measures, including data points relating to gender representation across theworkforce, employee engagement, gender and ethnicity data and new hire statistics.
– Despite difficult market conditions and continued large-scale transformation andorganisational change, our People engagement levels held steady at 54% (2022:50%). We recognise that there is still more to do to improve employee engagementlevels in our business.
– 2023 saw noteworthy steps taken to transform the culture at abrdn, with the culture
programme work completing and the final phase of our ‘Commitments’ work
delivered.
– Our Gender Pay Gap has been reduced for the sixth consecutive year.
– Females and individuals identifying as minority ethnic in total new hires both increased
year on year to 44% and 9% respectively.
– Maintained strong scores on employee perceptions of abrdn as an inclusive
organisation and whether people from diverse backgrounds can succeed at abrdn.

6%

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Result(% of overalloutcome)Highlights from assessment

Customer(10%):
Measuredacross theAdviser, ii andInvestments
businesses

Our three-business model gives us a diverse customer base, from institutional to adviser
to retail. We measure our success in delivering for our customers with reference tobusiness-specific quantitative and qualitative metrics that holistically capture theexperience of our different client groups. The Remuneration Committee consideredmore than 20 quantitative and qualitative measures from internal and external sources.
Key factors in the determination were:– In the Investments business, good relationships with clients persisted withindependent client survey feedback highlighting good client service and accountmanagement. Client relationship meetings with Phoenix highlighted transparency,
trust and responsiveness via high-quality resolutions as key attributes of thepartnership.
– In Adviser, our ‘Return to Green’ activity in H2 2023 saw service levels and client
satisfaction improve from the early disruption caused by the technology upgrade
implementation headwinds. AdviserAsset, which provides an external view of ourclient service and user experience, rated Elevate and Wrap as Platinum for the 6th
and 9th consecutive years respectively.
– In ii, there was an increase in customer numbers, an increase in market share andcontinued positive feedback from customers regarding their customer experience
with ii.

7.5%

GOVERNANCE

Category

In considering whether the bonus outcomes derived from the scorecards were fair in the context of the overall results, theRemuneration Committee took into account the feedback received from the Audit Committee and the Risk and CapitalCommittee on material accounting, reporting and disclosure matters and the management of risk within the business.

2021-2023 LTIP outcome

The following table details the targets and assessment of outcomes for the 2021-2023 LTIP. The performance period forthis award concluded on 31 December 2023. The Remuneration Committee concluded that the performance for the
Adjusted Diluted Capital Generation per share (CAGR) metric was between threshold and target and, therefore, theoverall award will vest at 18.75%.
Threshold (25%)

Maximum (100%)

Actual outcome% vesting

8%

20%

10%

37.5%

MedianUpper quartile

Below median0%

Adjusted Diluted Capital Generation
per share (CAGR) (50%)
Relative TSR (50%)1

1. The peer group was made up of the following global peers: Man Group, Ameriprise, M&G, Affiliated Managers, Alliance Bernstein, Franklin Resources, SEI
Investments, DWS Group, Amundi, Janus Henderson Group, Invesco, Schroders, T Rowe Price, St James’ Place, Quilter, Ashmore and Jupiter FundManagement.

As a result of the above outcomes, details of the awards that vested are as follows:
Executive
Number of shares
Proportion of award
Number of shares
Directors
grantedvesting
vesting1
Stephen Bird
Jason Windsor3

1,033,650
11,530418.75%
18.75%

Value of vested shares(£)2

193,809
2,162

322,7313,600

1. Excluding dividend equivalents.
2. Based on average abrdn plc share price over the quarter ending 31 December 2023 (166.52). The amount attributable to share price appreciation is £nil.
3. Values for Jason Windsor reflect the proportion of his 2021 Long-Term Incentive Buyout award subject to abrdn performance conditions. See pages 126
and 127 for further information.
4. Number of shares granted to Jason Windsor is the number of abrdn plc shares granted under his 2021 Long-Term Incentive Buyout, which is 183,024,
multiplied by the proportion of his 2021 Long-Term Incentive Buyout subject to abrdn performance conditions, which is 6.3%. See pages 126 and 127 forfurther information.

Payments to past Directors and payments for loss of office (audited)

Payments made to former executive Directors that have not been previously reported elsewhere are reported if they are
in excess of £20,000.
Stephanie Bruce stepped down from the Board effective 11 May 2023 and went on garden leave effective 11 May 2023 to
her termination date of 31 December 2023. Between 11 May 2023 and 31 December 2023, Stephanie received salary,pension allowance and taxable benefits, totalling £409,218.
The Company has also made a payment in lieu of notice of basic salary, pension allowance and taxable benefits, inmonthly instalments (subject to mitigation) over the remainder of Stephanie Bruce’s contract (being a further two months
Annual report 2023

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123

Corporate governance statement continued
and eight days to 8 March 2024). The final monthly instalment is due to be paid in March 2024. The total of the three
payments will be £121,071.
Stephanie Bruce was entitled to a capped contribution towards legal fees incurred in connection with her exit
arrangements. The contribution towards legal fees did not exceed £20,000.
The table below summarises total payments to Stephanie Bruce as a past director for 2023:
Amount (£)

Payment element409,218
121,071
113,4171

Salary, pension allowance and taxable benefits whilst on garden leave
Payment in lieu of notice of basic salary, pension allowance and taxable benefits
2021 – 2023 LTIP

1. Based on average abrdn plc share price over the quarter ending 31 December 2023 (166.52 pence). The amount attributable to share price appreciationis £nil.

For Stephanie’s outstanding incentive awards, in accordance with the relevant plan rules, the following treatment applied:– Unvested deferred bonus awards (including the pro-rated 2023 bonus) will continue to vest on normal vesting dates andwill remain subject to malus and clawback.
– Unvested LTIP awards will continue to vest on normal vesting dates and will remain subject to the satisfaction of therelevant performance conditions (measured over the full performance period), holding periods and malus andclawback. All LTIP awards will be prorated based on the proportion of the performance period completed to Stephanie’s
termination date.
– The Company's post-cessation shareholding requirements apply for a two-year period from Stephanie’s date ofdeparture from the Board on 11 May 2023.

Shareholdings and outstanding share awards

This section reports our executive Directors’ interests in shares.

Directors’ interests in shares (audited)

Our shareholding requirements for executive Directors are detailed on page 120. The Policy requires executive Directors toaccumulate and maintain a material long-term investment in abrdn plc shares. The Remuneration Committee reviews
progress against the requirements annually. Personal investment strategies (such as hedging arrangements) are notpermitted for the purposes of reducing the economic exposure arising from the shareholding requirements.
The following table shows the total number of abrdn plc shares held by the executive Directors and their connected
persons:
Unvested shares
Total number ofshares owned at 1
January 2023

Shares acquired
during the period 1
January 2023 and
31 December 2023

StephenBird

782,355

Jason
Windsor
Stephanie
Bruce4

Total shares
owned as at 31
December 2023

Options exercised
during the period 1
January 2023 and
31 December 2023

Vested but
unexercised
share
options

Subject toperformance
conditions1

Not subject toperformance
conditions2

Shares lapsed3-

782,355-

190,610

3,992,940

532,499

945,765

-

-

-

-

-

1,320,515

450,611-606,633

41,757648,390

81,8799,496

879,438

234,742

1,092,457

1. Includes: 2021, 2022 and 2023 LTIP awards for Stephen Bird and Stephanie Bruce (awards subject to performance targets over three-year periods) andLong-Term Incentive Buyout awards for Jason Windsor (see details on pages 126 and 127). The number of share options presented under awards subject toperformance conditions exclude shares to be awarded in lieu of dividend equivalents.
2. Includes: deferred bonus awards for Stephen Bird and Stephanie Bruce and Bonus Award Buyouts for Jason Windsor. The number of share options
presented under awards not subject to performance conditions include shares to be awarded in lieu of dividend equivalents.
3. For Stephen Bird, the share options lapsed relate to the outcome of the 2020 LTIP award – see page 109 of the 2022 Annual report and accounts. For
Stephanie Bruce, the share options lapsed relate to the outcome of the 2020 LTIP award, the 2019 Executive Incentive Plan (EIP) and the prorating of her
2022 and 2023 LTIP awards for time employed during the performance periods.
4. On 30 November 2023, Stephanie Bruce exercised the second tranche of the deferred portion of her 2020 annual bonus award and the first tranche of thedeferred portion of her 2021 annual bonus award. The vested but unexercised share options for Stephanie are the share options under the first tranche of her
2019 EIP award, prorated for the vesting outcome – see page 111 of the 2022 Annual report and accounts.

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The following table shows the number of qualifying awards included in assessing achievement towards the shareholding
requirement, as at 31 December 2023. The total Qualifying holding includes shares held outright (which derive from vested
and exercised awards plus any purchased shares) as well as Qualifying unvested or unexercised awards. Purchased
shares are valued at the higher of the cost of the purchase as disclosed in RNS announcements or the closing market priceon 31 December 2023. Qualifying unvested or unexercised awards include 50% of the value (as a proxy for the payment oftax due on the exercise of the awards) of awards not subject to performance conditions and which have not yet vested.

Number of shares
under thedeferred shareplan which are
not subject toperformance
conditions

Stephen Bird
Jason
Windsor
Stephanie
Bruce3

Number of shares
under option underlong-term incentive
plans which are nolonger subject toperformance
conditions

Total Qualifying
holding (shares
owned from table
above and 50% of
Qualifying unvested
or unexercised
awards)1

723,109–450,611-225,248

18,990Total of the value ofshares owned and
50% of the value ofqualifying awards
at 31 December
2023 as a % ofsalaryShareholding
requirementmet?

350% £875,000275%

In progress£402,508

225% £675,000

60%

In progress

770,509 £1,458,340

300% £538,125

271%

In progress

Value ofholding2

1,143,910 £2,408,664
225,306

Shareholding
requirement(as % salary)Basicsalary1. Of the total number of shares shown, Stephen Bird purchased 750,000 shares at a total cost of £1,705k and Stephanie Bruce purchased 238,571 shares at
a total cost of £508k.
2. The closing market price at 31 December 2023 used to determine the value of non-purchased shares was 178.65 pence.
3. The 18,990 shares under option under long-term incentive plans which are no longer subject to performance conditions, for Stephanie Bruce, are thesecond and third tranches of her 2019 EIP award, prorated for the vesting outcome – see page 111 of the 2022 Annual report and accounts.

Executive Directors who have not yet satisfied the shareholding requirement are expected to accumulate shares until they
have fully met their shareholding requirement. They are required to hold 100% of vested shares (post-tax) granted under
the Company’s share plans (including any dividend equivalents) until they have met their shareholding requirement. Allother shares acquired and held by the executive Director or owned indirectly by a partner or family trust also counttowards the shareholding requirement.
Stephen Bird and Jason Windsor, who were appointed during 2020 and 2023 respectively, have not yet met theshareholding requirement. However, the Remuneration Committee is satisfied with the progress they have made towards
their respective requirements given their tenure.
Under the Policy, an executive Director is required to hold shares up to the value of their shareholding requirement for 24months following departure from the Board. However, if at the date of departure from the Board, the executive Director
holds shares with a value lower than the value of the requirement, the number of shares held at the date of departure fromthe Board must be retained for 24 months thereafter. Any self-purchased shares are not subject to this requirement.
Accordingly, Stephanie Bruce is required to retain any shares (excluding self-purchased shares) until 11 May 2025.

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125

GOVERNANCE

Qualifying unvested or unexercised
awardsCorporate governance statement continued
Awards granted in 2023 (audited)

The table below shows the key details of the LTIP, deferred and buyout awards granted in 2023:
Participant

Stephen
Bird

Jason
Windsor

Stephanie
Bruce

Type ofaward

Basis of award% ofsalaryFace value
at grant

Number ofsharesawarded

Nil-cost
option

LTIP1

350%

£3,062,500

1,512,121

Nil-cost
optionDeferred Bonus1

Not
applicable£330,859

163,363

Nil-cost
optionNil-cost
optionNil-cost
option2021 Long-Term
Incentive Buyout2
2022 Long-Term
Incentive Buyout2
2023 Long-Term
Incentive Buyout2£289,233

183,024£816,441

516,637£981,136

620,854

Nil-cost
optionNil-cost
optionNil-cost
option2021 Bonus Award
Buyout (bought-out)2
2021 Bonus Award
Buyout2
2022 Bonus Award
Buyout2£85,697

54,228£257,860

163,171£368,545

233,212Not
applicableNot
applicable

Nil-cost
optionLTIP1, 3200%£1,076,250

531,402

Nil-cost
optionDeferred Bonus1

Not
applicable£122,087

60,281% payable
for thresholdperformance

Details on performance
conditions

Award is subject toperformance against
targets measured overthree years as set out
25%
on page 107 of the2022 Annual reportand accounts
Not
Not applicableapplicableSee ‘Chief Financial
Officer buyout awards’
section below

Not applicableAward is subject toperformance against
targets measured over25%
three years as set out
on page 107 of the2022 Annual reportand accounts
NotapplicableNot applicable

1. The share price used to calculate the number of shares for the LTIP and Deferred Bonus awards was 202.53 pence (the five-day average price over the fivedealing days prior to the grant date of 11 April 2023).
2. The share price used to calculate the number of shares for the Buyout awards was 158.03 pence (the five-day average price over the five dealing days
prior to Jason Windsor’s date of appointment on 23 October 2023).
3. As set out in the announcement on 12 April 2023, time pro-rating will be applied to the number of shares (if any) over which the Stephanie Bruce’s 2023 LTIP
award vests by reference to the proportion of the award performance period that had elapsed at her termination date of 31 December 2023.

Chief Financial Officer buyout awards

Jason Windsor was granted buyout awards to compensate for remuneration he forfeited on leaving his previous employer
to join abrdn. As set out in the announcement on 6 November 2023, buyout awards granted to replace forfeited awards
that were subject to performance conditions remain subject to performance conditions. The relevant proportion of eachbuyout award will be adjusted to reflect the actual vesting of the relevant forfeited awards they replace.
The following principles were applied in agreeing these buyout awards:– The buyout awards do not exceed the value of the awards forfeited. A conversion rate was used to calculate the numberof abrdn plc shares awarded using the five-day average abrdn plc and Persimmon Plc share prices over the five dealing
days prior to Jason Windsor’s date of appointment to the Board.
– The vesting timelines of the buyout awards are the same as those which applied to the forfeited awards.
– Buyout awards granted to replace forfeited awards that were subject to performance conditions remain subject toperformance conditions. These awards are subject to:o abrdn performance conditions for the proportion of the original performance period for which Jason Windsor isan abrdn employee.
o Performance conditions set by his previous employers for the proportion of the original performance period forwhich Jason Windsor was not an abrdn employee.
– The buyout awards were granted subject to continued employment and the malus and clawback conditions in the
Policy approved at the 2023 AGM.

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Jason is eligible to receive a buyout award in relation to the potential bonus foregone for the period 1 January to 13
October 2023 as a result of leaving his previous employer. This buyout award will reflect the performance outcome of his
previous employer (Persimmon plc) and will be determined by the Remuneration Committee following the publication of
the Persimmon plc 2023 Annual report and accounts. Any buyout award will be made 50% in cash and 50% in deferredshares and will be disclosed in the 2024 Annual report and accounts.

Proportion subject to performance conditions set byprevious employer1

Proportion subject to abrdn performance conditions

2021 Long-Term Incentive Buyout

93.7% (Aviva performance conditions)

6.3% (2021-2023 performance conditions)2022 Long-Term Incentive Buyout

60.3% (Persimmon performance conditions)

39.7% (2022-2024 performance conditions)2023 Long-Term Incentive Buyout

26.9% (Persimmon performance conditions)

73.1% (2023-2025 performance conditions)Award

1. Awards will vest subject to the Remuneration Committee’s assessment of the extent to which the original performance conditions set by previous employers
would have vested. The assessment will be informed by the previous employers’ public disclosures.

Share dilution limits

All share plans operated by the Company which permit awards to be satisfied by issuing new shares contain dilution limits
that comply with the guidelines produced by the Investment Association (IA). On 31 December 2023, the Company’s
standing against these dilution limits was 0.00% where the guideline is no more than 5% in any 10 years under all
discretionary share plans in which the executive Directors participate and 0.51% where the guideline is no more than 10%
in any 10 years under all share plans.
As is normal practice, there are employee trusts that operate in conjunction with the Executive LTIP, the abrdn
Discretionary Plan, the deferred elements of the abrdn plc annual bonus plan, the Aberdeen Asset Management deferredplans and the abrdn all-employee plans. On 31 December 2023, the trusts held 58,344,840 shares acquired to satisfy theseawards. Of these shares, 11,469,400 committed to satisfying vested but unexercised option awards. The percentage ofshare capital held by the employee trusts is 3.17% of the issued share capital of the Company – within the 5% best practicelimit endorsed by the IA.

Promoting all-employee share ownership

The Company promotes employee share ownership with a range of initiatives, including:– The abrdn plc (Employee) Share Plan which allows eligible UK employees (our largest jurisdiction) to buy abrdn plc
shares directly from earnings. A similar tax-approved plan is used in Ireland. At 31 December 2023, 1,338 individuals in the
UK and Ireland were actively making monthly contributions averaging £74. At 31 December 2023, 1,632 individuals wereabrdn plc shareholders through participation in the Plan.
– The Sharesave Plan which was offered in 2023 to eligible employees in the UK. This plan allows UK tax resident employees
to save towards the exercise of options over abrdn plc shares with the option price set at the beginning of the savings
period at a discount of up to 20% of the market price. At 31 December 2023, 1,472 employees were saving towards one
or more of the Sharesave offers.

Executive Directors’ service contracts

Service contracts for both executive Directors are not for a fixed term but have notice periods in line with the executive
Director’s role:– Six months by the executive Director to the employer.
– Up to 12 months by the employer to the executive Director.

Executive Directors’ external appointments

Executive Directors can accept a limited number of external appointments to the boards of other organisations and canretain any fees paid for these services. Stephen Bird and Stephanie Bruce held representative directorships on behalf of theGroup during the year. Jason Windsor is a Governor of Felsted School and a Director of Felsted School Trustees Limited.
The executive Directors received no fees for their external appointments in 2023. Significant external positions held during
the year are set out below.
Executive Director

Role and Organisation

2023 Fees

Stephen Bird

Member of the Financial Services Growth & Development Board1
Board member at the Investment Association2
Member of the President’s Committee for the Confederation of British Industry3
Member of the Lord Mayor’s Strategic Advisory Board for the Finance for Growth Project4

£nil
£nil
£nil
£nil

1. Appointed on 17 January 2022.
2. Appointed on 27 April 2022.
3. Appointed on 3 February 2023.
4. Appointed on 18 April 2023.

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127

GOVERNANCE

For the awards granted in respect of the forfeited Long Term Incentive awards, the following proportion of each award is
subject to abrdn / previous relevant employer performance conditions respectively.

Corporate governance statement continued

Executive Directors’ remuneration in context
Pay compared toperformance

Total shareholder return of abrdn plc compared to the FTSE 350 index

The graph shows thedifference in the total
shareholder return at
31 December 2023 if, on
1 January 2014, £100 had
been invested in abrdn
plc and in the FTSE 350
respectively. It is
assumed dividends are
reinvested in both. The
FTSE 350 has beenchosen as abrdn plc has
been a member of thisindex for the full 10-year
period.

300

250

Value (£)

200

150

100

00

Dec-13

Dec-14

Dec-15

Dec-16

FTSE 350

Dec-17

Dec-18Dec-19Dec-20

abrdn

Dec-21

Dec-22

Dec-23

Source: Datastream

The following table shows the single figure of total remuneration for the Director in the role of Chief Executive Officer for thesame 10 financial years as shown in the graph above. Also shown are the annual incentive awards and LTIP awards which
vested based on performance in those years.
Year ended
31 December

Chief Executive
Officer

2023
2022
2021

Stephen Bird
Stephen Bird
Stephen Bird
Stephen Bird
Keith Skeoch
Keith Skeoch
Keith Skeoch
Martin Gilbert
Keith Skeoch
Martin Gilbert
Keith Skeoch
Keith SkeochDavid Nish
David Nish

2020
20191
20181,2
20172
2016
2015
2015
2014

Chief Executive Officer single total
figure of remuneration (£000s)

Bonus outcome/ annual incentive rates
against maximum opportunity (%)

Long-term incentive plan vesting rates
against maximum opportunity (%)

2,143
1,696
2,795
1,044
1,075
1,050
814
814
3,028
1,317
2,746
1,411
2,143
6,083

35.92
30.25
80.5
48
48
9
10
10
82
56
81
87
90
95

18.75
–
–
–
–
–
70
–
31.02
40.77
40.77
100

1. The outcome has been updated to reflect the EIP vesting.
2. Co-CEOs.

Relative importance of spend on pay

The following table compares what the Company spent on employee remuneration to what is paid in the form of
dividends to the Company’s shareholders. Also shown is the Company’s adjusted profit before tax which is provided forcontext as it is one of our key performance measures:2023% change2022

Remuneration payable to all Group employees (£m)1

529

-4%

549

Dividends paid in respect of financial year (£m)

267

-9%

295

Share buybacks and return of capital (£m)

302

0%

302

Adjusted profit before tax (£m)

330

30%

253

1. In addition, staff costs and other employee related costs of £78m (2022: £88m) and £4m (2022: £11m) are included in restructuring and corporatetransaction expenses and in cost of sales respectively. See Note 6 of the Group financial statements for further information.

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Annual percentage change in remuneration of Directors compared to UK based employees

The table below shows the percentage year-on-year change in salary, benefits and annual bonus in the relevant year forthe executive Directors, along with any percentage change in fees for the non-executive Directors, compared to theaverage Group employee. Year-on-year movement on base salaries or Director fees is primarily attributable to part-year
appointment changes.

Executive
Directors

2021

2020

2023

2022

2021

2020

2023

2022

2021

2020

-

-

100%

–

19%

-62%

234%

–

-

-

-

–

-

-

-

-

-

-

-

-

-

-

-

-

Stephanie Bruce

-64%

-

-

74%

-58%

-62%

69%

54%

-100%

-

-

100%

Sir Douglas Flint

-

-

-

-

-

-

–

–

-

-

-

-

Jonathan Asquith

-

-

-

202%

-

-

–

–

-

-

–

–

Catherine Bradley

20%

-

-

-

-

-

-

-

-

-

-

-

Stephen Bird
2

Jason Windsor

3

Non-executive
Directors4, 5% Benefits1

Annual bonus outcome

2022

-

6%

-3%

-2%

-

-

–

–

-

-100%

–

-100%

Hannah Grove

21%

334%

-

-

-

-

-

-

-

-

-

-

Pam Kaur

72%

-

-

-

-

-

-

-

-

-

-

-

Brian McBride

-69%

-13%

59%

–

-

-

–

–

-

-

–

–

Michael O’Brien

72%

-

-

-

-

-

-

-

-

-

-

-

1%

10%

-

-

-

-

–

–

-

-

–

-100%

2.5%

-20%

-52.5%

-

-

-

17%

John Devine

Cathleen Raffaeli
6Group employees

5.4%

-

-

-47%

50%

1. The change in benefits figures for employees (including executive Directors) are based on the change in medical premium paid by the Group on theirbehalf. Benefits do not include pension contributions for these purposes.
2. Jason Windsor was appointed to the Board effective 23 October 2023. Therefore, there are no prior years’ remuneration figures to use for comparison.
3. Stephanie Bruce stepped down from the Board effective 11 May 2023. 2023 remuneration figures for Stephanie used for the purposes of year-on-yearcomparison reflect amounts paid until the date on which she stepped down from the Board.
4. Remuneration for non-executive Directors and the Chairman is disclosed on page 131.
5. Brian McBride stepped down from the Board effective 10 May 2023. Catherine Bradley was appointed to the Board effective 4 January 2022 and Pam Kaurand Michael O’Brien were appointed to the Board effective 1 June 2022. See the single total figure of remuneration – non-executive Directors table on page
131 for more detail on differences in year-on-year remuneration.
6. Disclosure is made on the basis of the period 1 April 2022 to 1 April 2023.

How pay was set across the wider workforce in 2023

Our principles for setting pay across the wider workforce are consistent with those for our executive Directors, in that the
proportion of the remuneration package which is linked to performance increases for more senior roles within the
Company as responsibility and accountability increase.
Base salaries are targeted at an appropriate level in the relevant markets in which the Group competes for talent. The
Remuneration Committee considers the base salary percentage increases for the Group’s broader UK and international
employee populations when determining any annual salary increases for the executive Directors. In 2023, Group-wide pay
was determined with a focus on factors such as individual skills and experience and position relative to market. Having
considered the market position of our executive Director pay, the Remuneration Committee determined that there waslimited scope to make any adjustment and, therefore, no increases were applied in 2023.
The eligibility criteria for participation in variable pay plans is set so that more senior individuals have a greater proportion of
their pay linked to performance. For roles where variable remuneration eligibility is retained, our clear approach is designed
to support and reward performance at a Company, team and individual level. Performance related variable remuneration
includes deferred variable compensation at a suitable level for the employee’s role, ensuring a performance link over alonger time horizon than a single year. Variable remuneration for employees, including executive Directors, is determined
as a total pool which is distributed across the business based on the performance of each business line and function.
Individuals are then considered for a bonus payment on the basis of their individual performance objectives and goals,
taking into account conduct.
The Group operates a Compensation Committee comprising the Chief People Officer (Chair), Chief Financial Officer andChief Risk Officer, the role of which is to consider the implementation of the remuneration policy across the Group. The
terms of reference of the Compensation Committee are set by the Remuneration Committee and the Chair of theCompensation Committee formally reports to the Remuneration Committee on all matters which fall within theCompensation Committee’s remit.

Pay ratio

The table below sets out the ratio of CEO pay to the median, 25th and 75th percentile total remuneration of full-time
equivalent UK employees. We have identified the relevant employees for comparison using our gender pay gap data set
Annual report 2023

abrdn.com

129

GOVERNANCE% Base salary/fee2023

Corporate governance statement continued(snapshot data from 5 April 2023), referred to as Methodology B in the legislation. This was chosen by the Remuneration
Committee as it utilised a data set which had already been processed and thoroughly reviewed and this enabled timely
reporting for disclosure purposes. Some employing entities are excluded from the gender pay gap calculation in line withthe regulations due to the number of individuals employed by these entities being less than 250. The Remuneration
Committee considered this would not have a material impact on the outcome of the pay ratio calculation given the limited
number of individuals this excludes, relative to the total population being captured, and the range of the remuneration for
those excluded individuals, which was spread across quartiles.
The remuneration paid to each of the individuals identified under methodology B was reviewed against other individuals
within the quartile both above and below. The individuals identified at the 50th and 75th percentiles had been promoted in
the year; therefore, the next identified individuals were selected. Benefits figures were based on the medical premium paidby the Company on behalf of employees.
The ratio has increased from 2022, which reflects the fact that the CEO has a greater level of remuneration at risk which isdependent on Company performance; based on both financial and non-financial performance in 2023, the bonus for the
CEO paid out at 35.92% of maximum, compared to 30.25% of maximum in 2022 and the LTIP vested at 18.75% of
maximum in 2023 compared to it lapsing in its entirety in 2022. External market conditions have been challenging for abrdn
in recent years and this has heavily impacted both executive and employee pay outcomes. By design, there aredifferences in the priorities which drive how these two populations are remunerated; as a result, their relative experiences
can be different.
The Remuneration Committee is comfortable that the pay ratio reflects the pay and progression policies andRemuneration Philosophy across the Company as set out above. Further detail on the make up of workforce pay is set out
below.
Stephen Bird
Stephen Bird
Stephen Bird
Stephen Bird/Keith Skeoch
Keith Skeoch
Keith Skeoch

Year

Method25th percentile

50th percentile

75th percentile

2023
2022
2021
2020
2019
2018

Option B
Option B
Option B
Option B
Option B
Option B

39
35
62
49
34
30

27
25
45
30
23
19

19
16
25
18
13
12

Base salary(£000s)Total pay(£000s)

875
46
66
80

2,143
55
78
113

CEO remuneration
25th percentile employee
50th percentile employee
75th percentile employee

130

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Annual report 2023

Remuneration for non-executive Directors and the Chairman

Single total figure of remuneration – non-executive Directors (audited)

The following table sets out the single total figure of remuneration for each of the non-executive Directors who served as a
Director at any time during the financial year ending 31 December 2023. Non-executive Directors do not participate inbonus or long-term incentive plans and do not receive pension funding.

Sir Douglas Flint1
Jonathan Asquith
Catherine Bradley2
John Devine
Hannah Grove3
Pam Kaur4
Brian McBride5
Michael O’Brien4
Cathleen Raffaeli6

Taxable benefits inyear ended
31 December£000s

Total remuneration
for the year ended
31 December
£000s

475
475
139
139
131
109
131
131
159
126
109
63
33
105
109
63
166
164

–
–

475
475
139
139
131
109
131
131
159
126
109
63
33
105
109
63
166
164

2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022

1. Sir Douglas Flint is eligible for life assurance of 4x his annual fee. This is a non-taxable benefit.
2. Catherine Bradley was appointed to the Board effective 4 January 2022, appointed to the Nomination and Governance Committee and as Chair of the Audit
Committee effective 18 May 2022 and appointed to the Risk and Capital Committee effective 1 October 2022.
3. The subsidiary Board fees for a member of the Standard Life Savings Limited and Elevate Portfolio Services Limited Boards increased from £37,500 to £50,000
p.a. effective 1 August 2023. Total fees include subsidiary Board fees of £50,000 p.a. (previously £37,500 p.a.) as a member of the Standard Life Savings Limited
and Elevate Portfolio Services Limited Boards and Board Employee Engagement fee of £15,000 p.a. Hannah Grove was also appointed to the Remuneration
Committee effective 1 October 2022.
4. Pam Kaur and Michael O’Brien were appointed to the Board and the Audit and Risk and Capital Committees effective 1 June 2022.
5. Brian McBride stepped down from the Board effective 10 May 2023.
6. The subsidiary Board fees as Chair of the Standard Life Savings Limited and Elevate Portfolio Services Limited Boards increased from £55,000 p.a. to £60,000
p.a. effective 1 August 2023.Total fees include subsidiary Board fees of £60,000 p.a. (previously £55,000 p.a.) as Chair of the Standard Life Savings Limited andElevate Portfolio Services Limited Boards.

The non-executive Directors, including the Chairman, have letters of appointment that set out their duties andresponsibilities. The key terms are set out in the Policy which can be found in the 2022 Annual report and accounts on
pages 120 - 130. The service agreements/letters of appointment for Directors are available to shareholders to view onrequest from the Company Secretary at the Company’s registered address (which can be found in the Shareholder
information section) and will be accessible for the 2024 AGM. Details of the date of appointment to the Board and date ofelection by shareholders are set out below:
Chairman/ non-executive Director

Chairman
Sir Douglas Flint
Senior Independent Director
Jonathan Asquith
Non-executive Directors
Catherine Bradley
John Devine
Hannah Grove
Brian McBride
Cathleen Raffaeli
Pam Kaur
Michael O’Brien

Initial appointment to the Board

Initial election by shareholders

1 November 2018

AGM 2019

1 September 2019

AGM 2020

4 January 2022
4 July 2016
1 September 2021
1 May 2020
1 August 2018
1 June 2022
1 June 2022

AGM 2022
AGM 2017
AGM 2022
AGM 2020
AGM 2019
AGM 2022
AGM 2022

Annual report 2023

abrdn.com

131

GOVERNANCE

Non-executive Directors

Fees for year ended
31 December£000sCorporate governance statement continued
Implementation of policy for non-executive Directors in 2024

The following table sets out abrdn non-executive Director fees to be paid in 2024. Fees for 2024 remain at the current level.
Role

Chairman’s fees1
Non-executive Director fee2
Additional fees:
Senior Independent Director
Chair of the Audit Committee
Chair of the Risk and Capital Committee
Chair of the Remuneration Committee
Committee membership (Audit, Risk and Capital and Remuneration Committees)
Committee membership (Nomination Committee)
Employee engagement2024 fees

2023 fees£475,000£73,500£475,000£73,500£25,000£30,000£30,000£30,000£17,500£10,000£15,000£25,000£30,000£30,000£30,000£17,500£10,000£15,000

1. The Chairman’s fees are inclusive of the non-executive Directors’ core fees and no additional fees are paid to the Chairman where he chairs, or is amember of, other committees/boards. The Chairman is eligible to receive life assurance, which is a non-taxable benefit.
2. For non-executive Directors, individual fees are constructed by taking the core fee and adding extra fees for being the Senior Independent Director, chairor member of committees and/or subsidiary boards where a greater responsibility and time commitment is required.

Non-executive Directors’ interests in shares (audited)

The following table shows the total number of abrdn plc shares held by each of the non-executive Directors and theirconnected persons:Total number of shares owned
at 1 January 2023 or date of
appointment if later

Shares acquired during the period
1 January 2023 to
31 December 2023

Total number of shares owned at
31 December 2023 or date ofcessation if earlier

200,000
153,714
12,181
28,39933,0009,315

52,15024,514
173,780-

200,000
205,864
12,181
52,91333,000173,780
9,315

Sir Douglas Flint
Jonathan Asquith
Catherine Bradley
John Devine
Hannah Grove
Pam Kaur
Brian McBride1
Michael O’Brien
Cathleen Raffaeli
1. Stepped down from the Board effective 10 May 2023.

Sir Douglas Flint, as Chairman, is subject to a shareholding guideline of 100% of the value of his annual fee in abrdn plc
shares to be reached within four years of appointment. The total investment cost of Sir Douglas Flint’s shareholding was£495k, equivalent to 104% of his annual fee.

132

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Annual report 2023

The Remuneration Committee
Membership

During 2023, the Remuneration Committee was made up of independent non-executive Directors. For their names, thenumber of meetings and committee member attendance during 2023, please see the table on page 96.

The role of the Remuneration Committee

The Remuneration Committee’s work in 2023
Jan-MarApr-Jun

Jul-Sep

Oct-Dec– 2022 Directors’ remuneration report and Policy.
– Approve performance for the 2022 bonus targets and 2020 LTIP targets.
– Set 2023 annual bonus scorecard targets and 2023 LTIP targets.
– Updates from the Risk and Audit Committees on relevant matters for the Committee’s consideration
when determining pay outcomes.
– Approve Stephanie Bruce’s exit remuneration arrangements.
– Review remuneration outcomes for executive Directors and the Material Risk Taker population.
– Review and update the Group Remuneration Policy to reflect regulatory changes.
– Approve Jason Windsor’s remuneration package.
– Update on external market trends.
– Review regulatory remuneration disclosures and documentation.
– Agree pay ratios with regard to the relevant regulations.
– Remuneration decisions for senior employees within the Remuneration Committee’s remit.
– Mid-year review of performance against targets for annual bonus and in-flight LTIP awards for the
executive Directors.
– Update the Remuneration Committee and Compensation Committee’s Terms of Reference.
– Review gender pay gap data.
– Review Group Remuneration Policy for 2024 implementation.
– Review bonus pool allocation principles and approve overall funding.
– Review 2023 remuneration proposals.

At various points throughout the year the Remuneration Committee also:– Made remuneration decisions for the executive leadership team and other senior employees within the Remuneration
Committee’s remit, including approving the design of one-off incentive plans linked to transformation projects.
– Received updates relating to regulatory changes and market best practice.
– Reviewed minutes of subsidiary Committee meetings and their governance documents.

External advisers

During the year, the Remuneration Committee took advice from PwC LLP (a member of the Remuneration Consultants
Group (RCG)) who were appointed by the Remuneration Committee after a retender process was conducted in 2022, as
disclosed in the 2022 Annual report and accounts on page 118. As PwC LLP is a member of the RCG, the Remuneration
Committee is satisfied that the advice given from PwC LLP during the year was objective and independent. The
remuneration advisors do not have connections with abrdn that might impair their independence.
A representative from our external adviser attends, by invitation, all Remuneration Committee meetings to provide
information and updates on external developments affecting remuneration as well as specific matters raised by the
Remuneration Committee. Outside the meetings, the Remuneration Committee’s Chair seeks advice on remuneration
matters on an ongoing basis. As well as advising the Remuneration Committee, PwC LLP also provided tax, accounting
support, risk management, consultancy and assurance services to the Company during the year.
Fees paid to PwC LLP during 2023 for professional advice to the Remuneration Committee were £130,250.
Where appropriate, the Remuneration Committee receives input from the Chairman, Chief Executive Officer, Chief
Financial Officer, Chief People Officer, Global Head of Reward and the Chief Risk Officer. This input never relates to theirown remuneration. The Remuneration Committee also receives input from the Risk and Capital Committee and the Audit
Committee.

Annual report 2023

abrdn.com

133

GOVERNANCE

To consider and make recommendations to the Board in respect of the total remuneration policy across the Company,
including:– Rewards for the executive Directors, senior employees and the Chairman.
– The design and targets for any employee share plan.
– The design and targets for annual cash bonus plans throughout the Company.
– Changes to employee benefit structures (including pensions) throughout the Company.

Corporate governance statement continued
Remuneration Committee effectiveness

The Remuneration Committee reviews its remit and effectiveness each year. Following the externally facilitated review in
2022, the 2023 review was conducted internally, on behalf of the Board, by the Company Secretary. As part of the review
the views of the Board were sought on the performance of the Remuneration Committee and how Directors felt they were
updated on its activities following each meeting. This was supplemented by any matters a Director wished to raise as partof their year-end 1:1 discussion with the Chairman.
The review concluded that the Remuneration Committee continued to operate effectively during 2023 with no material
issues or concerns raised. The main areas in which the Remuneration Committee looked to see continued improvement in
2024 were in relation to the insight and brevity of materials presented and avoiding duplication across agendas of thisCommittee and others. More information about the process involved, and its outcomes, can be found on page 94.

Shareholder voting

We remain committed to ongoing shareholder dialogue and take an active interest in voting outcomes.
The Policy was last subject to a vote at the 2023 AGM on 10 May 2023 and the following table sets out the outcome.
Policy 2023 AGM

ForAgainst% of total votes

94.29%

5.71%

No. of votes cast

675,020,934

40,860,480

Withheld

189,168,584

The Directors’ remuneration report was subject to a vote at the 2023 AGM on 10 May 2023 and the following table sets out
the outcome.
2022 Directors’ remuneration report% of total votes
No. of votes cast134

abrdn.com

Annual report 2023

For

AgainstWithheld

93.76%
666,444,586

6.24%
44,325,192

194,280,220

Directors’ report

For clarity, some of the matters that would otherwise havebeen included in the Directors’ report have been includedin the Strategic report on pages 2 to 79, as the Board
considers they fit better within that report. Specifically,
these are:– Future business developments.
– Risk management.
– Our approach to managing, and reporting, on our
global greenhouse gas emission impact(s).
– Information on how the Directors have had regard for
the Company’s stakeholders (also covered in the
Corporate governance statement on pages 88 and 89).
– Information on our people including employee
engagement, diversity and inclusion, and talent andreward (details of the Board’s diversity statement canbe found in the Corporate governance statement on
page 92).

Reporting for the year ended 31 December 2023

During 2023, the Group operated primarily in the UK, rest ofEurope, Asia and the Americas. More information about
the relevant activities of the Company’s principal
subsidiary undertakings are in the Strategic report on
pages 2 to 79.
The Chief Executive Officer’s overview in the Strategic
report outlines the main trends and factors likely to affectthe future development, performance and position of
the Group. Reviews of the operating and financial
performance of the Group for the year ended
31 December 2023 are also given in the Strategic report.
The Chair’s statement, the Directors’ responsibility
statement and the Corporate governance statement
form part of this Directors’ report. The Corporate
governance statement on pages 86 to 134 is submitted by
the Board.
The results of the Group are presented in the Groupfinancial statements on pages 160 to 270. A detailed
description of the basis of preparation of the IFRS results(including adjusted profit) is set out in the Group financial
statements section. The Group uses derivative financial
instruments in the normal course of its business andinformation covering these instruments and related
financial risk management matters can be found in Note
18 and Note 34 to the Group financial statements. These
notes are incorporated into this report by reference.
This report forms part of the management report for the
purposes of the Disclosure Guidance and Transparency
Rules (DTR 4.1.8R) of the Financial Conduct Authority(FCA).

Dividends

The Board recommends paying a final dividend for 2023 of
7.30p per ordinary share. This will be paid on 30 April 2024
to shareholders whose names are on the register ofmembers at the close of business on 15 March 2024,
subject to shareholder approval at the 2024 AGM.
The total payment is estimated at £130m for the final
dividend and together with the interim dividend of 7.30p
per share totalling £137m paid on 26 September 2023,
the total dividend for 2023 will be 14.60p per share(2022: 14.60p) totalling £267m (2022: £295m).

Share capital

The Company’s issued share capital as at 31 December
2023 comprised a single class of ordinary share. Full detailsof the Company’s share capital, including movements in
the Company’s issued ordinary share capital during theyear, are in Note 24 to the Group financial statements,
which is incorporated into this report by reference. An
analysis of registered shareholdings by size, as at
31 December 2023, can be found in the Shareholder
information section on page 303.
On 5 June 2023, the Company announced thecommencement of a share buyback programme of theCompany’s ordinary shares up to a maximum aggregate
consideration of £150m. On 8 August 2023, the Company
extended the programme such that the maximum
consideration was increased from £150m to £300m. The
purpose of this programme was to return value toshareholders, reduce the share capital of the Company
and increase the earnings per share as a result. A sharebuyback was considered the most efficient method toachieve this. All shares purchased have been cancelled. In
total 161,153,949 shares were cancelled through thisprogramme.
As at 31 December 2023, there were 1,840,740,364
ordinary shares in issue held by 85,184 registeredmembers. The abrdn Share Account (the Companysponsored nominee) held 629,199,041 of those shares onbehalf of 872,299 participants. No person has any special
rights of control over the Company’s share capital and allissued shares are fully paid.
Between 1 January 2023 and the date this report was
signed, the Company received the following notification in
respect of major shareholdings and major proportions ofvoting rights in accordance with the Disclosure Guidance
and Transparency Rules of the FCA:
Number of
voting rights
Type offollowing thetransaction transaction

Percentage ofvoting rights
following thetransaction

Shareholder

Date oftransaction

BlackrockInc

17 March2023

Disposal 197,569,201
of votingrights9.85%

BlackrockInc

31 August Disposal 139,928,114
2023
of votingrights

7.25%

Annual report 2023

abrdn.com

135

GOVERNANCE

The Directors present their annual report on the affairs of
the abrdn group of companies (the Group), together withthe audited International Financial Reporting Standards(IFRS) consolidated financial statements for the Group,
financial information for the Group and financial
statements for abrdn plc (the Company) for the year
ended 31 December 2023.

Directors’ report continued
In accordance with the terms of the abrdn Employee Trust(formerly named the Standard Life Employee Trust) Deed,the trustees waived all entitlements to current or future
dividend payments for shares they hold.
Similarly, in accordance with the terms of The Aberdeen
Asset Management Employee Benefit Trust 2003 and The
abrdn Employee Benefit Trust 2019 (formerly named theStandard Life Aberdeen Employee Benefit Trust 2019), thetrustees waived all entitlements to current or future
dividend payments for shares they hold other than
dividends payable on any shares held by the trustee asnominee for any other person.
The trustees of the abrdn plc (Employee) Share Plan voted
the appropriate shares in accordance with any
instructions received from participants in the plan.

Restrictions on the transfer of shares andsecurities

Except as listed below, there are no specific restrictions on
the size of a holding or on the transfer of shares. Both aregoverned by the general provisions of the Company’s
articles of association (the Articles) and current legislation
and regulation. There are no restrictions on voting rights.
A copy of the Articles can be obtained from Companies
House or by writing to the Company Secretary at our
registered address (details of which can be found in theContact us section). The Articles may only be amended bya special resolution passed by the shareholders.
The Articles are on our website atwww.abrdn.com/annualreport

The Board may decline to register the transfer of:– A share that is not fully paid.
– A certificated share, unless the instrument of transfer isduly stamped or duly certified and accompanied by therelevant share certificate or other evidence of the rightto transfer, is in respect of only one class of share and isin favour of a sole transferee or no more than four joint
transferees.
– An uncertificated share, in the circumstances set out inthe uncertificated securities rules (as defined in the
Articles) and, in the case of a transfer to joint holders,
where the number of joint holders to whom the share is
to be transferred does not exceed four.
– A certificated share by a person with a 0.25 per centinterest (as defined in the Articles) in the Company, ifthat person has been served with a restriction noticeunder the Articles, after failing to provide the Company
with information about interests in those shares as set
out in the Companies Act 2006 (unless the transfer isshown to the Board to be pursuant to an arm’s lengthsale under the Articles).
These restrictions are in line with the standards set out in
the FCA’s Listing Rules and are considered to be standard
for a listed company.
The Directors are not aware of any other agreements
between holders of the Company’s shares that may result
in restrictions on the transfer of securities or on voting
rights.

136

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Annual report 2023

Rights attached to shares

Subject to applicable statutes, any resolution passed by
the Company under the Companies Act 2006 and othershareholders’ rights, shares may be issued with such rights
and restrictions as the Company may decide by ordinary
resolution, or (if there is no such resolution or if it does notmake specific provision) as the Board may decide. Subject
to the Articles, the Companies Act 2006 and othershareholders’ rights, unissued shares are at the disposal of
the Board.
Every member and duly appointed proxy present at a
general meeting or class meeting has one vote on a showof hands, provided that where a proxy is appointed bymore than one shareholder entitled to vote on a resolution
and is instructed by one shareholder to vote ‘for’ theresolution and by another shareholder to vote ‘against’ theresolution, then the proxy will be allowed two votes on ashow of hands – one vote ‘for’ and one vote ‘against’. On apoll, every member present in person or by proxy has one
vote for every share they hold. For joint shareholders, thevote of the senior joint shareholder who tenders a vote, in
person or by proxy, will be accepted and will exclude thevotes of the other joint shareholders. For this purpose,seniority is determined by the order that the names
appear on the register of members for joint shareholders.
A member will not be entitled to vote at any general
meeting or class meeting in respect of any share they holdif any call or other sum then payable by them for thatshare remains unpaid or if they have been served with arestriction notice (as defined in the Articles) after failing toprovide the Company with information about interests in
those shares required to be provided under theCompanies Act 2006.
The Company may, by ordinary resolution, declare
dividends up to the amount recommended by the Board.
Subject to the Companies Act 2006, the Board may also
pay an interim dividend, and any fixed rate dividend,
whenever the financial position of the Company, in theopinion of the Board, justifies its payment. If the Board actsin good faith, it is not liable to holders of shares withpreferred or pari passu rights for losses that arise frompaying interim or fixed dividends on other shares.
The Board may withhold payment of all or part of any
dividends or other monies payable in respect of theCompany’s shares from a person with a 0.25 per centinterest (as defined in the Articles) if that person has been
served with a restriction notice (as defined in the Articles)
after failure to provide the Company with information
about interests in those shares, which is required under theCompanies Act 2006.
Subject to the Companies Act 2006, rights attached to anyclass of shares may be varied with the written consent of
the holders of not less than three-quarters in nominal valueof the issued shares of that class (excluding any shares
held as treasury shares). These rights can also be variedwith the approval of a special resolution passed at a
separate general meeting of the holders of those shares.
At every separate general meeting (except an adjourned
meeting) the quorum shall be two persons holding, orrepresenting by proxy, not less than one-third in nominalvalue of the issued shares of the class (calculated
excluding any shares held as treasury shares).

Power to purchase the Company’s own shares

At the 2023 Annual General Meeting (AGM), shareholders
granted the Directors limited powers to:– Allot ordinary shares in the Company up to a maximum
aggregate amount of £140,209,795.
– Disapply, up to a maximum total nominal amount of£60,981,469 of its issued ordinary share capital,
shareholders’ pre-emption rights in respect of new
ordinary shares issued for cash.
– Make market purchases of the Company’s ordinary
shares up to a maximum of 300,083,639 of its issued
ordinary shares which represented 14.99% of the sharecapital at the time.
During 2023, under the authority granted at the 2023 AGM,
the Company purchased 161,153,949 of its ordinary
shares of 13 61/63 pence each, paying an aggregate
amount of £299,999,999. As at 31 December 2023, thepercentage of share capital represented by thesepurchased shares was approximately 9%.

Significant agreements

Certain significant agreements to which the Company, or
one of its subsidiaries, is party entitle the counterparties toexercise termination or other rights in the event of achange of control of the Company. These agreements arenoted in the paragraphs below.

Credit Facility

Under a £400m revolving credit facility between the
Company and the banks and financial institutions named
therein as lenders (Lender) dated 12 February 2021 (theFacility), in the event that any persons or group of persons
acting in concert, gain control of the Company, then any
Lender may elect within a prescribed time frame to cancel
its outstanding commitment under the Facility and declareits participation in all outstanding loans, together with
accrued interest and all amounts accrued, immediately
due and payable, whereupon the commitment of that
Lender under the Facility will be cancelled and all suchoutstanding amounts will become immediately due andpayable.

China

Under a joint venture agreement dated 12 October 2009(as amended) between the Company and Tianjin TEDA
International Holding (Group) Co. Limited (TEDA),
pursuant to which the Company holds its interest in Heng
An Standard Life Insurance Company Limited (Heng An
Standard Life), upon a change of control of the Company,
TEDA has the right to terminate the venture and topurchase, or nominate a third party to purchase, theCompany’s shares in Heng An Standard Life for a pricedetermined in accordance with the agreement.

A number of other agreements contain provisions that
entitle the counterparties to exercise termination or otherrights in the event of a change of control of the Company.
However, these agreements are not considered to besignificant in terms of their likely impact on the business of
the Group as a whole.
The Directors are not aware of any agreements with any
employee that would provide compensation for loss ofoffice or employment resulting from a takeover. The
Company also has no agreement with any Director toprovide compensation for loss of office or employment
resulting from a takeover.

Appointment and retirement of Directors

The appointment and retirement of Directors is governedby the Articles, the Companies Act 2006, the UK Corporate
Governance Code and related legislation.
Brian McBride stepped down from the Board on 10 May
2023 and Stephanie Bruce stepped down on 11 May 2023.
As announced, Catherine Bradley will not stand for reelection at the 2024 AGM on 24 April 2024 and will standdown from the Board from that date.
All remaining Directors as at the date of the 2024 AGM, will
retire and stand for election or re-election.
The powers of the Directors can also be found in the
Articles.

Directors and their interests

The Directors who served during the year, and up to thedate the report was signed were:
Sir Douglas Flint (Chair)
Stephen Bird
Stephanie Bruce2
Jason Windsor3
Jonathan Asquith
Catherine Bradley

John Devine
Hannah Grove
Pam Kaur
Brian McBride1
Michael O’Brien
Cathi Raffaeli

1. Retired 10 May 2023.
2. Retired 11 May 2023
3. Appointed 23 October 2023.

Biographies of the current Directors can be found on pages 82
to 85.

Details of the Directors’ interests in the Company’s ordinary
shares, the abrdn plc (Employee) Share Plan, the abrdn
Sharesave Plan and the share-based discretionary plans
are set out in the Directors’ remuneration report together
with details of the executive Directors’ service contracts
and non-executive Directors’ appointment letters.

Annual report 2023

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137

GOVERNANCE

A shareholder’s rights will not change if additional sharesranking pari passu with their shares are created or issued –unless this is expressly provided in the rights attaching totheir shares.

Other agreements

Directors’ report continued
No Director has any interest in the Company’s listed debt
securities or in any shares, debentures or loan stock of theCompany’s subsidiaries. No Director has any materialinterest in any contract with the Company or a subsidiary
undertaking which was significant in relation to theCompany’s business, except for the following:– The benefit of a continuing third party indemnity
provided by the Company (in accordance withcompany law and the Articles).
– Service contracts between each executive Director
and subsidiary undertakings (Aberdeen Corporate
Services Limited and abrdn Holdings Limited).
Copies of the following documents can be viewed at theCompany’s registered office (details of which can befound in the Contact us section) during normal businesshours (9am to 5pm Monday to Friday) and are available
for inspection at the Company’s AGM:
– The Directors’ service contracts or letters of
appointment.
– The Directors’ deeds of indemnity, entered into inconnection with the indemnification of Directors
provisions in the Articles.
– The rules of the abrdn plc Executive Long-Term
Incentive Plan.
– The rules of the abrdn plc Deferred Share Plan.
– The Company’s Articles.

Directors’ liability insurance

During 2023, the Company maintained directors’ andofficers’ liability insurance on behalf of its Directors andofficers to provide cover should any legal action bebrought against them. The Company also maintained
pension trustee liability indemnity policies (which includes
third party indemnity) for the boards of trustees of the UK
and Irish staff pension schemes where required to do so.

Our people

Our people are central to delivering our strategy, and weare focused on helping them thrive.
More on our people strategy can be found in the Strategic
report section of this report.

Communicating with and engaging employees

In 2022 we set out to redefine our culture at abrdn, which
supports the delivery of our purpose and strategy. This
involved looking across the business to understand what
our colleagues feel proud of and reflecting on what ourclients need from us. Our Commitments were the outputof this work.
During 2023 we have focussed on integrating ourcommitments into every stage of colleague experience,
supported by powerful storytelling and robust feedback
mechanisms. Our objective was to create an environment
where colleagues feel empowered to speak up, where weare ambitious in what we do, but also transparent in how
we go about it, ensuring we enable our clients to be better
investors. We have been focussed on taking actions toimprove transparency, communication, and recognition
across the organisation, with a series of engagement
programmes. We continue to intentionally focus onbuilding a tone of openness and honesty where we talk to
our people, hear their questions and respond in real time.
Colleagues come together regularly in our all-colleague
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‘Let’s Hear It’ events to hear directly from the ELT, havetheir say and get their questions answered. In 2023 werolled out ‘Engage’, a new technology tool enablingcolleagues to have direct and open communication witheach other and leadership teams across the business. We
inform and engage colleagues on key topics through aregular drum beat of messaging, from strategy andexternal context, to day-to-day activity that supports ourbusiness.
We listen closely to our colleagues – via our regular Pulse
surveys and anecdotal feedback - continuously shaping
our activity. Colleague recognition has been a focus in
2023. We launched our in-house ‘abrdn awards’ this year
in line with our culture Commitments, building greater
momentum and supporting positive change. Colleagues
have the opportunity to be recognised for excellence andcontribution both to abrdn and our clients and for the work
they do in their wider communities and with charities they
support outside the organisation. Our ‘Praise Board’ hasalso been well used this year, with thousands of colleagues
taking time out to nominate colleagues and provide ‘in the
moment’ recognition for their peers and teams for thegreat work they are doing. We continue to support our
performance culture – guiding leaders and colleagues
through meaningful conversations, as well through our mid
and end of year reviews. This includes a goal aligned to ourculture Commitments, where every colleague globallysets a goal directly related to their role in making abrdn agreat place to work.

Diversity, equity and inclusion

Disability statement
We have specific policies to ensure that colleagues withdisabilities face no discrimination or obstacles in relation tojob applications, training, promotion and careerdevelopment. Reasonable adjustments are also made totrain and enable employees who become disabled toallow them to continue and progress in their career.
In 2023 abrdn became a Disability Confident employer
under the UK Government’s scheme. Although we had
always offered candidates the ability to make adjustments
they needed to our recruitment process for their disability,
by joining this scheme we further committed to visibly
removing barriers for people with disabilities. We revised
the diversity statement on our interview letters andtemplates to include specific wording and guidance forcandidates with a disability or who are neurodivergent.
DEI policy, how it is implemented, progress made against it
To complement the Board’s formal diversity statement
www.abrdn.com/corporate/about-us/governance, theexecutive leadership team put in place a Global Diversity,
Equity and Inclusion policy in 2019www.abrdn.com/corporate/about-us/diversity-andinclusion It affirms that diversity, equity and inclusion remain
as fundamental pillars supporting all our decisions. We
have always considered diversity in the broadest sense –all the ways we differ and are similar; both our visible andinvisible characteristics, as well as how we think, how wework, and the experience we bring. By valuing a diverse
and inclusive workplace, we enable and empower ourpeople to be themselves and deliver the best possible
outcomes for our clients and customers.

Gender representation
Gender Diversity

31 December 2023

Target by 2025

Women at plc
Board

40%
(4 of 10)40% women | 40%
men | 20% any
gender

Women in seniorleadership1

34%(33 of 96)

40% women | 40%
men | 20% any
gender

Women in global
workforce2

43%(2049 of 4742)

50% (+/- 3%
tolerance)

Auditors

The Audit Committee is responsible for considering theGroup’s external audit arrangements. Resolutions
proposing the re-appointment of KPMG LLP as auditors of
the Company and giving authority to the Audit Committee
to determine their remuneration will be submitted at the2024 AGM.

Disclosure of information to the auditors

The Directors who held office at the date of the approval ofthis Directors’ report confirm that, so far as they are eachaware, there is no relevant audit information of which theCompany’s auditor is unaware; and each Director hastaken all the steps that he or she ought to have taken as a
Director to make himself or herself aware of any relevant
audit information and to establish that the Company’s
auditor is aware of that information.

Annual General Meeting1.

Relates to leaders one and two levels below the Chief Executive Officer,
including Company Secretary, excluding administration roles, andindividuals on garden leave.

The 2024 AGM is scheduled to take place on 24 April 2024
in Edinburgh. Details of the meeting content can be foundin our AGM guide 2024. The AGM guide and othermaterials will be published online at www.abrdn.com inadvance of this year’s AGM.

2.

63 colleagues without gender data on our people system are excluded
from the headcount data.

Post balance sheet events

Ethnicity recommendations
As evidence of our commitment to ethnic diversity, we
introduced an ethnicity target for the first time which tookeffect on 1 January 2021, following the recommendationsof the Sir John Parker review. Since 2019 we have met therecommendation to have at least one Board member
who identifies as ethnic minority. The Board Charter
mandates appointments to be based on merit, with due
consideration given to the Board’s gender and ethnicity
balance.

Sustainability

The commercial aims of our business are linked to its
environmental, social and governance responsibilities.
More details about how we aim to run the businesssustainably can be found throughout the Strategic report.
The non-financial information statement on page 57
summarises where key information on the approach canbe found. For details of greenhouse gas emissions, pleasesee pages 46 and 47.

On 24 January 2024, the Group announced a newtransformation programme targeting an annualised
cost reduction of at least £150m by the end of 2025. The
bulk of the savings will be in non-staff costs. However,the programme is expected to result in the reduction of
approximately 500 roles. To achieve the desired
simplification and cost savings, total implementation
costs are estimated to be around £150m.
On 14 February 2024, the agreed sale of the Group’s
interest in Virgin Money UTM to its joint venture partner,
Clydesdale Bank, was announced. The interest in Virgin
Money UTM does not form part of the Group’s reportablesegments. The sale is expected to complete in H1 2024.
The Group’s interest in Virgin Money UTM was classified asheld for sale at 31 December 2023 (refer Note 21). The
sale is expected to result in an IFRS profit on disposal ofinterests in joint ventures of approximately £11m.

Political donations

The Company has a long-standing policy of not making
political donations. The Company has limited authorisationfrom shareholders to make political donations and incur
political expenditure. This is requested as a precaution
against any inadvertent breach of political donations
legislation. While abrdn has regular interaction withgovernment and elected politicians in the UK and otherjurisdictions in which we operate, we are strictly apolitical.

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139

GOVERNANCE

We are making good progress against our DEI objectives
and are focused on building on this because we know
there is more to do at abrdn and across our industry. Our
2023 Sustainability and TCFD report describes ourprogress, priorities, and additional detail against out DEI
objectives. Our 2023 report can be found on our website atwww.abrdn.com/en-gb/corporate/corporatesustainability Progress against our diversity, equity andinclusion framework is reviewed twice a year by the
Nomination and Governance Committee.

Directors’ report continued

Other information

Under Listing Rule 9.8.4.CR, a listed company must include all information required by LR 9.8.4R in a single identifiablelocation or cross-reference table. For the purposes of LR 9.8.4CR, the information required to be disclosed can be found in
the following locations. All the relevant information cross-referenced below is hereby incorporated by reference into thisDirectors’ report.
Location
Topic

Directors’ report

Directors’
remuneration report

None/
Not applicable

Interest capitalisedx

Publication of unaudited financial information in a class 1 circular or in aprospectus, other than in accordance with Annexes 1 and 2 of the FCA’s
Prospectus Rulesx

Details of long-term incentive schemesx

Waiver of emoluments by a Directorx

Waiver of future emoluments by a Directorx

Non pre-emptive issues of equity for cashx

Non pre-emptive issues of equity for cash in relation to major subsidiary
undertakingsx

Parent participation in a placing by a listed subsidiaryxContracts of significancex

Provision of services by a controlling shareholderx

Shareholder waivers of dividendsxShareholder waivers of future dividendsxAgreements with controlling shareholdersx

Going concern

The Group’s business activities, together with the factors likely to affect its future development, performance and financial
position, are set out in the Strategic report. This includes details on our liquidity and capital management and our viability
statement in the Chief Financial Officer’s overview section and our principal risks in the Risk management section. The
Group financial statements include additional information relating to going concern in the basis of preparation section on
page 173.
The Group continues to meet group and individual entity capital requirements and day-to-day liquidity needs. The
Company has a revolving credit facility of £400m as part of our contingency funding plans and this is due to mature in 2026.
The Group has considerable financial resources together with a diversified business model, with a spread of business andgeographical reach. As a consequence, the Directors believe that the Group is well placed to manage its business risks
successfully.
After making enquiries and having assessed the principal risks and all other available information, the Directors are satisfied
that the Group and Company have and will maintain sufficient resources to enable them to continue operating for at least
12 months from the date of approval of the financial statements and therefore consider it appropriate to adopt the going
concern basis of accounting in preparing the financial statements. There are no material uncertainties relating to this going
concern conclusion. In addition, the Directors have assessed the Group’s viability over a period of three years.
The Directors’ report was approved by the Board and signed on its behalf by:

Julian Baddeley
Company Secretary
26 February 2024

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Statement of Directors’ responsibilities in respect of theAnnual report and the financial statements

Company law requires the Directors to prepare Groupand Company financial statements for each financial
year. Under that law they are required to prepare theGroup financial statements in accordance with UKadopted international accounting standards andapplicable law and have elected to prepare the Company
financial statements in accordance with UK accounting
standards and applicable law, including FRS 101 Reduced
Disclosure Framework.
Under company law the Directors must not approve thefinancial statements unless they are satisfied that they givea true and fair view of the state of affairs of the Group andCompany and of the Group’s profit or loss for that period.
In preparing each of the Group and Company financial
statements, the Directors are required to:– Select suitable accounting policies and then apply themconsistently.
– Make judgements and estimates that are reasonable,
relevant, reliable and prudent.
– For the Group financial statements, state whether they
have been prepared in accordance with UK-adopted
international accounting standards.
– For the Company financial statements, state whether
applicable UK accounting standards have been
followed, subject to any material departures disclosed
and explained in the Company financial statements.
– Assess the Group’s and Company’s ability to continue
as a going concern, disclosing, as applicable, mattersrelated to going concern.
– Use the going concern basis of accounting unless theyeither intend to liquidate the Group or the Company or
to cease operations, or have no realistic alternative but
to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonableaccuracy at any time the financial position of theCompany and enable them to ensure that its financial
statements comply with the Companies Act 2006. They
are responsible for such internal control as they determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open
to them to safeguard the assets of the Group and toprevent and detect fraud and other irregularities.

included on the Company’s website. Legislation in the UK
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance andTransparency Rule 4.1.16R, the financial statements will
form part of the annual financial report prepared underDTR 4.1.17R and 4.1.18R. The auditor’s report on thesefinancial statements provides no assurance over whether
the annual financial report has been prepared inaccordance with those requirements.

Responsibility statement of the Directors in
respect of the annual financial report

We confirm that to the best of our knowledge:– The financial statements, prepared in accordance withthe applicable set of accounting standards, give a trueand fair view of the assets, liabilities, financial positionand profit or loss of the Company and the undertakings
included in the consolidation taken as a whole.
– The Strategic report and Directors’ report include a fairreview of the development and performance of thebusiness and the position of the Company and theundertakings included in the consolidation taken as awhole, together with a description of the principal risks
and uncertainties that they face.
We consider the Annual report and accounts, taken as awhole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess theGroup’s position and performance, business model andstrategy.

By order of the Board

Sir Douglas Flint
Chairman

Jason Windsor
Chief Financial Officer

26 February 2024

26 February 2024

Under applicable law and regulations, the Directors arealso responsible for preparing a Strategic report, Directors’
report, Directors’ remuneration report and Corporate
governance statement that complies with that law andthose regulations.
The Directors are responsible for the maintenance andintegrity of the corporate and financial information

Annual report 2023

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141

GOVERNANCE

The Directors are responsible for preparing the Annual
report and accounts and the Group and Company
financial statements in accordance with applicable law
and regulations.

Financial information

142

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Annual report 2023

144
160
271
286

Note
1
2
3
4

Page
175
178
182
186

5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

Group structure
Segmental analysis
Net operating revenue
Net gains or losses on financial instruments
and other income
Administrative and other expenses
Staff costs and other employee–related
costs
Auditors’ remuneration
Restructuring and corporate transaction
expenses
Taxation
Earnings per share
Adjusted profit and adjusting items
Dividends on ordinary shares
Intangible assets
Investments in associates and joint ventures
Property, plant and equipment
LeasesFinancial assets
Derivative financial instruments
Receivables and other financial assets
Other assets
Assets and liabilities held for sale
Cash and cash equivalents
Unit linked liabilities and assets backing unit
linked liabilities

187
187
188
188
189
193
194
195
196
203
206
208
211
212
214
214
215
216
217

Note
24 Issued share capital and share premium
25 Shares held by trusts
26 Retained earnings
27 Movements in other reserves
28 Other equity and non-controlling interests
29 Financial liabilities
30 Subordinated liabilities
31 Pension and other post-retirement benefit
provisions

Page
220
220
221
221
224
224
225
226

32
33
34
35
36
37
38
39
40

Other financial liabilities
Provisions and other liabilities
Financial instruments risk management
Structured entities
Fair value of assets and liabilities
Statement of cash flows
Contingent liabilities and contingent assets
Commitments
Employee share-based payments anddeferred fund awards

233
234
235
242
243
248
250
251
252

41
42
43
44

Related party transactions
Capital management
Events after the reporting date
Related undertakings

256
257
258
259

How to navigate our Group financial statements
The Group’s significant accounting policies are included at the beginning

The Group’s critical accounting estimates and assumptions areof the relevant notes to the Group financial statements with thissummarised in the Presentation of consolidated financial statements

background colour. Critical judgements in applying accounting policies

section which follows the primary financial statements. Further detail on

are summarised in the Presentation of consolidated financial

these critical accounting estimates and assumptions is provided in thestatements section which follows the primary financial statements.

relevant note with this background colour.

Accounting policies that are relevant to the financial statements as awhole are also set out in that section.

Annual report 2023

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143

FINANCIAL INFORMATION

Contents
Independent auditor’s report
Group financial statements
Company financial statements
Supplementary information

Independent auditor’s report to the membersof abrdn plc
1. Our opinion is unmodified

In our opinion:– The financial statements of abrdn plc give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as of 31 December 2023, and of the Group’s profit for the year then ended.
– The Group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards.
– The Parent Company financial statements have been properly prepared in accordance with UK accounting standards,
including FRS 101 Reduced Disclosure Framework.
– The Group and Parent Company financial statements have been prepared in accordance with the requirements of
the Companies Act 2006.

What our opinion covers

We have audited the Group and Parent Company financial statements of abrdn plc (‘the Parent Company’ or ‘theCompany’) for the year ended 31 December 2023 (FY23) included in the Annual report and accounts, which comprise:Group

Parent Company (abrdn plc)

Consolidated income statement
Company statement of financial position
Consolidated statement of comprehensive income
Company statement of changes in equity
Consolidated statement of financial position
Notes A to R to the Parent Company financial statements,
Consolidated statement of changes in equity
including the accounting policies in the Company accounting
Consolidated statement of cash flows
policies section.
Notes 1 to 42(a) and 43 to 44 to the Group financial
statements, including the accounting policies in those notes
and in the Presentation of consolidated financial statements
section.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate
basis for our opinion. Our audit opinion and matters included in this report are consistent with those discussed and included
in our reporting to the Audit Committee (AC).
We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethicalrequirements including the FRC Ethical Standard as applied to listed public interest entities.

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2. Overview of our audit
Factors
driving ourview of risks

Key audit matters
Following our prior year (FY22) audit and consideringdevelopments affecting the abrdn plc Group since then, we have
Recoverability of certain
updated our risk assessment.
goodwill and certain of the
Parent Company’s
Much of the uncertainty in the macro-economic environment
investments in subsidiaries
that existed at the end of FY22 remains. Increased market
turbulence and continued performance challenges within theInvestments business have negatively contributed to fee-based Valuation of the principal
revenue and profit during the financial year. This has been offset UK defined benefit
in part by the first full year inclusion of the interactive investor
pension scheme present
results and the increased contribution of that component to the value of funded obligation
overall Group’s results.
Revenue recognition:
As a result, fee-based revenue has remained broadly flat year on management fee
revenue from contracts
year and our materiality levels have remained at a similar level.
Our consideration in respect of Key Audit Matters identified are in with customers

vs FY22

Item

4.1



4.2



4.3

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145

FINANCIAL INFORMATIONlarge part consistent with the prior year and are explained below.
– During FY22, given the challenging global economic
environment as well as the Group’s wider financial
performance, we identified that the risks around therecoverability of certain of the Group’s goodwill balances andcertain of the Parent Company’s investments in subsidiaries
had increased. Due to continued market uncertainty andperformance challenges in FY23, we believe that the risk of
impairments to both Investment in Subsidiaries or Goodwill
balances remains significant. We identified the risks
associated with the key assumptions used in determining theestimated recoverable amount for the applicable cash
generating units supporting certain recognised goodwill andthe estimated recoverable amount of certain investments in
subsidiaries (including forecast cash flows, market multiples(and applicable premiums/discounts) and discount rates (asapplicable)) as significant.
– As part of our risk assessment, we maintained our focus on
future economic and operational assumptions used by theGroup in estimates. The most significant area that these could
impact the financial statements (outside of goodwill andinvestment in subsidiaries as noted above) is in the valuation of
the defined benefit pension obligation. As a result, this wasmaintained as a Key Audit Matter.
– Revenue from contracts with customers is comprised ofvarious different revenue streams. The area of revenue which
had the greatest effect on our overall Group audit and audit
effort in the current period is management fee income(institutional, retail wealth and insurance partners). In our view,the nature and complexity of management fee calculations
has remained consistent year on year, while market volatility
and uncertainty continue to drive an increased revenue focus
for users of the financial statements.
– The FY22 Key Audit Matter over the Accounting implicationsof the acquisition of interactive investor was event driven andas such is no longer relevant during FY23.

While not reported as Key Audit Matters, we also identified that
the Group’s ongoing cost control transformation programme andcorporate transactions would have financial reporting
implications that would require consideration in the Group andParent Company financial statements.

Annual report 2023

Independent auditor’s report to the members of abrdn plc continued
Audit
Committee
interaction

During the year, the AC met six times. KPMG are invited to attend all AC meetings and are provided with anopportunity to meet with the AC in private sessions without the Executive Directors being present. The Group
engagement partner met with the Audit Committee Chair privately before each AC and also attended all Risk
and Capital Committee meetings held during the year. For each Key Audit Matter, we have set out
communications with the AC in section 6, including matters that required particular judgement for each.
The matters included in the Audit Committee Chair’s report on pages 98 to 106 are materially consistent with ourobservations of those meetings.

We have fulfilled our ethical responsibilities under, and we
Our
Independence remain independent of the Group in accordance with, UK
ethical requirements including the FRC Ethical Standard as
applied to listed public interest entities.
We have not performed any non-audit services during FY23
or subsequently which are prohibited by the FRC EthicalStandard.

Total audit fee£7.2m

Audit related fees (includinginterim review)£2.8m

Other services£1.0m

Non-audit fee as a % of total
audit and audit related fee %10%

We were first appointed as auditor by the shareholders for theyear ended 31 December 2017. The period of total
Date first appointed
uninterrupted engagement is for the seven financial years
ended 31 December 2023.
Uninterrupted audit tenure

16 May 2017
7 years

The Group engagement partner is required to rotate every
five years. As these are the second set of the Group’s financial Next financial period whichstatements signed by Richard Faulkner, he will be required to requires a tenderrotate off after the FY26 audit.
Tenure of Group engagement
partner
The average tenure of partners responsible for component
audits as set out in section 7 below is 2 years, with the shortest Average tenure of component
being one year and the longest being four years.
signing partners
Materiality
The scope of our work is influenced by our view of(item 6 below) materiality and our assessed risk of material
misstatement.
We have determined overall materiality for the Groupfinancial statements as a whole at £13.7m (FY22: £14.0m)
and for the Parent Company financial statements as awhole at £13.0m (FY22: £5.6m).
Consistent with FY22, we determined that total revenue
remains the benchmark for the Group as underlying
performance is such that a normalised profit benchmark
would indicate materiality which is inappropriate for thesize and scale of the Group. As such, we based our Groupmateriality on total revenue, of which it represents 0.9%
(FY22: 0.9%).

Materiality for the parent company financial
statements was determined with reference to abenchmark of parent company total assets, limited tobe less than materiality for the group financial
statements as a whole. In 2022, we applied thecomponent materiality to our audit of the parent
company balance sheet. Our materiality in both
periods was lower than we would have determinedwith reference to a benchmark of parent company
total assets. It represents 0.2% (2022: 0.1%) of thestated benchmark.

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Annual report 2023

FY27
2 years
2 years

Materiality levels used in our audit
Group
Materiality

13.7
14

Group
Performance
Materiality

6.9
9.1

HighestComponent
Materiality

6.9
6.3

ParentCompany
Materiality
LowestComponent
Materiality
Audit
Misstatement
Posting
Threshold

FY23 £m
FY22 £m

13.0
5.6
1.4
0.7
0.69
0.7

Group Scope(Item 7 Below)

We have performed risk assessment and planning
procedures to determine which of the Group’s components
are likely to include risks of material misstatement to theGroup financial statements, the type of procedures to be
performed at these components and the extent of
involvement required from our component auditors aroundthe world.
Of the Group’s 313 (FY22: 311) reporting components, we
subjected 13 (FY22: 19) to full scope audits for Grouppurposes, and 6 (FY22: 2) to specified risk focused audit
procedures. The latter were not financially significant enoughto require an audit for Group reporting purposes but did
present specific individual risks that needed to be addressed.

Coverage of Group financial statements
16%
4%Profit/loss
before tax

80%
8%
21%

Total assets

In addition, we have performed Group level analysis on theremaining components to determine whether further risks ofmaterial misstatement exist in those components.
We consider the scope of our audit, as communicated to the
Audit Committee, to be an appropriate basis for our audit
opinion.

FINANCIAL INFORMATIONThe components within the scope of our work accounted forthe percentages illustrated opposite.

71%
16%
4%

Total revenue

80%

Full scope audit
Specified risk-focused audit procedures
Remaining components

The impact of In planning our audit we have considered the potential impacts of climate change on the Group’s business andclimate change its financial statements. Climate change impacts the Group in a number of ways: through its own operations
on our audit(including potential reputational risk associated with the Group’s delivery of its climate related initiatives), throughits portfolio of investments and its stewardship role, and the greater emphasis on climate related narrative anddisclosure in the Annual report and accounts.
As disclosed in note 31, the Group’s direct exposure to climate change in the financial statements is primarily
through its investment holdings, as the key valuation assumptions and estimates may be impacted by climate
risks. As part of our audit, we have made enquiries of Directors and the Group’s Corporate Sustainability team tounderstand the extent of the potential impact of climate change risk on the Group’s financial statements andthe Group’s preparedness for this.
We have performed a risk assessment of how the impact of climate change may affect the financial
statements and our audit, in particular with respect to investment holdings. We consider that the impact ofclimate risk on level 1 and level 2 investments is already reflected in the market prices used to value theseholdings at year end. As such, the impact of climate change was limited to the valuation of level 3 investment
holdings; taking into account the relative size of the level 3 investments balance, we assessed that the impact ofclimate change was not a significant risk for our audit nor does it constitute a key audit matter. We did notconsider the potential impact of climate change on the sustainability of earnings or cashflow forecasts to bematerial.
We held discussions with our own climate change professionals to challenge our risk assessment. We have also
read the Group’s disclosure of climate related information in the front half of the Annual report and accounts as
set out on pages 38 to 47 and considered consistency with the financial statements and our audit knowledge.

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Independent auditor’s report to the members of abrdn plc continued

3. Going concern, viability and principal risks and uncertainties

The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or
the Parent Company or to cease their operations, and as they have concluded that the Group’s and the Parent Company’s
financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have castsignificant doubt over their ability to continue as a going concern for at least a year from the date of approval of the financial
statements (the going concern period).
Going Concern
We used our knowledge of the Group, its industry and operating
model, and the general economic environment to identify the inherent
risks to its business model and analysed how those risks might affect
the Group’s and the Parent Company’s financial resources or ability tocontinue operations over the going concern period. The risk that we
considered most likely to adversely affect the Group’s and Parent
Company’s available financial resources over this period wasincreased market volatility.

Our conclusions– We consider that the Directors’ use of the going
concern basis of accounting in the preparation of
the financial statements is appropriate;– We have not identified, and concur with the
Directors’ assessment that there is not, a material
uncertainty related to events or conditions that,
individually or collectively, may cast significant
doubt on the Group’s or Parent Company's ability to
We considered whether these risks could plausibly affect the liquidity
continue as a going concern for the going concern
in the going concern period by assessing the degree of downsideperiod;assumption that, individually and collectively, could result in a liquidity– We have nothing material to add or draw attention
issue, taking into account the Group’s and Parent Company’s current
to in relation to the Directors’ statement in section
and projected cash and facilities (a reverse stress test). We also(a)(v) of the presentation of consolidated financial
assessed the completeness of the going concern disclosure.
statements on the use of the going concern basis ofaccounting with no material uncertainties that may
Accordingly, based on those procedures, we found the Directors’ use ofcast significant doubt over the Group’s and Parent
the going concern basis of accounting without any material uncertainty
Company’s use of that basis for the going concern
for the Group and Parent Company to be acceptable. However, as weperiod, and we found the going concern disclosure
cannot predict all future events or conditions and as subsequent eventsin section (a)(v) to be acceptable; andmay result in outcomes that are inconsistent with judgements that were – The related statement under the Listing Rules set
reasonable at the time they were made, the above conclusions are not aout on page 140 is materially consistent with thefinancial statements and our audit knowledge.
guarantee that the Group or the Parent Company will continue inoperation.

Disclosures of emerging and principal risks and longer-term viability
Our responsibility
We are required to perform procedures to identify whether there is a material inconsistency between
the Directors’ disclosures in respect of emerging and principal risks and the viability statement, and thefinancial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in relation to:– The Directors’ confirmation within the Risk Management disclosures on page 77 that they have carriedout a robust assessment of the emerging and principal risks facing the Group, including those that would
threaten its business model, future performance, solvency and liquidity;– The Risk Management disclosures describing these risks and how emerging risks are identified andexplaining how they are being managed and mitigated; and– The Directors’ explanation in the Viability Statement of how they have assessed the prospects of theGroup, over what period they have done so and why they considered that period to be appropriate, andtheir statement as to whether they have a reasonable expectation that the Group will be able tocontinue in operation and meet its liabilities as they fall due over the period of their assessment, including
any related disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement set out on page 74 under the Listing Rules.
Our work is limited to assessing these matters in the context of only the knowledge acquired during ourfinancial statements audit. As we cannot predict all future events or conditions and as subsequent events
may result in outcomes that are inconsistent with judgements that were reasonable at the time they were
made, the absence of anything to report on these statements is not a guarantee as to the Group’s andParent Company’s longer-term viability.

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Our reporting
We have nothingmaterial to add or
draw attention to
in relation to these
disclosures.
We haveconcluded thatthese disclosures
are materiallyconsistent with thefinancialstatements andour audit
knowledge.

4. Key audit matters
What we mean

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of thefinancial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by us, including those which had the greatest effect on:– The overall audit strategy.
– The allocation of resources in the audit.
– Directing the efforts of the engagement team.

4.1 Recoverability of certain goodwill (Group) and of certain of the Parent Company’s investments in
subsidiaries (Parent Company)
Financial Statement Elements

Our assessment of risk vs FY22

Goodwill of:

FY23
£843m

FY22
£879m

Impairment of goodwill1(£36m)(£0m)

Investment in subsidiaries:£3,594m£3,843m

Impairment of investments
in subsidiaries2(£261m)(£923m)

Our findings

Our assessment is that the risk hasslightly increased relative to FY22.
This reflects the continued market
volatility and resulting impact on theperformance of the Group, in
addition to the wider performancechallenges the Group continues toface (in particular within theInvestments business)

FY23: Balanced
FY22: Balanced

Description of the Key Audit Matter

Our response to the risk

As noted in the Strategic report, the results in the Investments businesshave been impacted by the external market environment in addition to
wider performance challenges. Subsidiaries aligned to that businessexperienced indicators of impairment (abrdn Holdings Limited FY23:£1,218m, FY22: £1,258m; abrdn Investment Holdings Limited FY23:£819m, FY22: £988m).

We performed the procedures below rather
than seeking to rely on any of the Group’s
controls because the nature of the balances are
such that we would expect to obtain audit
evidence primarily through the detailed
procedures described.

In addition to the Investments business, there is focus on the following
businesses:– interactive investor (FY23: £1,512m, FY22: £1,512m), given the size ofthe acquisition which occurred in the prior period and its
significance to Group strategy going forward.
– The financial planning business (abrdn Financial Planning Limited,
FY23: £45m, FY22: £85m), given its performance.

Our procedures included:

Further, the net assets attributable to equity holders of the Parent
Company exceeded the Group’s market capitalisation at the balance
sheet date.
These factors mean there is an increased risk associated with therecoverability of the associated Parent Company investments in thesesubsidiaries and, in relation to interactive investor and the financial
planning business, goodwill balances allocated to the corresponding
cash generating units (CGUs) in the Group financial statements(interactive investor goodwill FY23: £819m, FY22: £819m; financial
planning business goodwill FY23: £24m, FY22: £60m).
In the prior year, this Key Audit Matter included recoverability of the
goodwill associated with the Finimize CGU. The impairment recognisedin that period reduced the carrying value of this goodwill to a level atwhich we have determined that the recoverability of this balance is nolonger part of the Key Audit Matter.

Our sector expertise: We critically assessed theGroup’s assessment of whether there were any
impairment indicators for the Parent Company’s
investment in subsidiaries, including comparing
the carrying value of Parent Company’s net
assets with the Group’s market capitalisationand considering the subsidiaries’ businessperformance.
Our sector expertise: We assessed theappropriateness of the Group’s conclusion thatthe recoverable amount of goodwill andinvestment in subsidiaries should be based on
FVLCD.
Our valuation expertise: Using our own valuation
specialists, we assessed the appropriateness of
the Group’s FVLCD methodology and theappropriateness of the input assumptions usedin calculating the FVLCD of the CGUs or groupsof CGUs to which certain goodwill is allocatedand of certain of the Parent Company’s
investment in subsidiaries.

1.

Financial planning business impairment: £36m (FY22: £nil).

2.

aHL impairment: £40m (FY22: £847m); aIHL impairment: £169m (FY22: £51m); aFPL impairment: £52m (FY22: £25m).

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We summarise below the Key Audit Matters in decreasing order of audit significance, in arriving at our audit opinion above,
together with our key audit procedures to address those matters and our findings from those procedures in order that theCompany’s members, as a body, may better understand the process by which we arrived at our audit opinion. These
matters were addressed, and our findings are based on procedures undertaken, in the context of, and solely for the
purpose of, our audit of the financial statements as a whole and in forming our opinion thereon, and consequently areincidental to that opinion, and we do not provide a separate opinion on these matters.

Independent auditor’s report to the members of abrdn plc continued
Goodwill and Investment in Subsidiaries - subjective estimate
Goodwill is tested for impairment at least annually whether or notindicators of impairment exist.
For goodwill, the impairment assessment is performed by comparing
the carrying amount of each CGU or group of CGUs to which goodwill
is allocated with its recoverable amount being the higher of its value in
use (VIU) or fair value less costs of disposal (FVLCD). Similarly, forinvestments in subsidiaries the carrying value of the investment in thesubsidiary is compared with the recoverable amount of thatinvestment being the higher of its VIU or FVLCD.
In determining the FVLCD the key assumptions are forecast cashflows,market multiples (including applicable premiums/discounts) anddiscount rates (as applicable). In determining the VIU, which is
calculated using a discounted cash flow method, the key assumptions
are forecast cash flows and discount rates.

Benchmarking assumptions: We compared theGroup’s assumptions to externally derived data
in relation to key inputs such market multiples
and discount rates.
Sensitivity analysis: We performed our own
sensitivity analysis which included assessing theeffect of reasonable alternative assumptions in
respect of forecast cash flows, market multiples(and applicable premiums/discounts) anddiscount rates (as applicable) to evaluate theimpact on the FVLCD of the CGUs or groups of
CGUs to which certain goodwill is allocated andof certain of the Parent Company’s investment in
subsidiaries.

Assessing transparency: We assessed whether
the Group’s disclosures (in respect of goodwill)
The resulting recoverable amounts, in particular for the CGUs, groups of and the Parent Company’s disclosures (inCGUs and investments in subsidiaries set out above, are subjective due respect of investment in subsidiaries) about theto the inherent uncertainty in determining these assumptions and are
sensitivity of the outcome of the impairment
therefore also susceptible to management bias.
assessment to changes in key assumptions
reflect the risks inherent in the recoverable
The effect of these matters is that, as part of our risk assessment, weamount of goodwill and investment in
subsidiaries.
determined that the recoverable amount of certain goodwill and of
certain investments in subsidiaries have a high degree of estimation
uncertainty, with a potential range of reasonable outcomes greaterthan our materiality for the financial statements as a whole andpossibly many times that amount. The financial statements (notes 13
and A) disclose the sensitivity estimated by the Group and Parent
Company.

Communications with the abrdn plc Audit Committee
Our discussions with and reporting to the Audit Committee included:– Our definition of the key audit matter relating to the recoverability of certain goodwill and certain investments in subsidiaries
including our assessment of the risks associated with individual goodwill balances.
– Our audit response to the key audit matter which included the use of specialists to challenge key aspects of the Group’s andParent Company’s determination of the recoverable amount and level of impairment.
– The findings of our procedures.
Areas of particular auditor judgement
We identified the following as the areas of particular auditor judgement:– Subjective and complex auditor judgement was required in evaluating the key assumptions used by the Group and Parent
Company (including forecast cash flows, market multiples (and applicable premiums/discounts) and discount rates (asapplicable)).
Our findings
We found the Group’s estimated recoverable amount of certain goodwill and the related impairment charges to be balanced(FY22: balanced) with proportionate (FY22: proportionate) disclosures of the related assumptions and sensitivities.
We found the Parent Company’s estimated recoverable amount of certain of its investments in subsidiaries and the related
impairment charges to be balanced (FY22: balanced) with proportionate (FY22: proportionate) disclosures of the related
assumptions and sensitivities.

Further information in the Annual Report and Accounts: See the Audit Committee Report on pages 98 to 106 for details on
how the Audit Committee considered the Group’s goodwill and the Parent Company’s Investment in Subsidiaries as areasof significant attention, pages 196 to 202 for the accounting policy on goodwill and financial disclosures, page 275 for theinvestment in subsidiaries accounting policy and pages 276 to 279 for the investment in subsidiaries financial disclosures.

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4.2 Valuation of the principal UK defined benefit pension scheme present value of funded obligation(Group)Financial Statement Elements

Present value of funded
obligation:

Our assessment of risk vs FY22FY23£1,784m

FY22£1,755m

Our assessment is that the risk issimilar to FY22. Market volatility
remains high and the risk
associated with the selection of
economic assumptions remains
similar to FY22.

Our findings

FY23: Balanced
FY22: Balanced

Our response to the risk

Subjective valuation
The present value of the Group’s funded obligation forthe principal UK defined benefit pension scheme (“abrdn
UK Group (SLSPS) plan") is an area that involves
significant judgement over the uncertain future
settlement value. The Group is required to use
judgement in the selection of key assumptions coveringboth operating assumptions and economic assumptions.

We performed the procedures below rather than seeking to rely on
any of the Group’s controls because the nature of the balance issuch that we would expect to obtain audit evidence primarily
through the detailed procedures described.

The key operating assumptions are base mortality andmortality improvement. The key economic assumptions
are the discount rate and inflation. The risk is that
inappropriate assumptions are used in determining thepresent value of the funded obligation.
The effect of these matters is that, as part of our risk
assessment, we determined that the valuation of thepension scheme obligation has a high degree of
estimation uncertainty, with a potential range ofreasonable outcomes greater than our materiality forthe financial statements as a whole and possibly manytimes that amount. The financial statements (note 31)
disclose the sensitivity estimated by the Group.

Our procedures included:
Assessing actuaries’ credentials: We evaluated the competency andobjectivity of the Group’s experts who assisted them in determining
the actuarial assumptions used to calculate the defined benefit
obligation.
Benchmarking assumptions: We considered, with the support of ourown actuarial specialists, the appropriateness of the base mortality
assumption by reference to scheme and industry data on historicalmortality experience and the outcome of the latest triennial report.
We considered, with the support of our own actuarial specialists, theappropriateness of the mortality improvement assumptions byreference to industry-based expectations of future mortality
improvements and the appropriateness of the discount rate andinflation assumptions by reference to industry practice.
Assessing transparency: In conjunction with our own actuarial
specialists, we considered whether the Group’s disclosures in relation
to the assumptions used in the calculation of the present value of thefunded obligation appropriately represent the sensitivities of theobligation to the use of alternative assumptions.

Communications with the abrdn plc Audit Committee
Our discussions with and reporting to the Audit Committee included:– Our identification of the key audit matter relating to the valuation of the defined benefit pension obligation.
– Our audit response to the key audit matter which included the use of our own specialists to challenge key aspects of theGroup’s actuarial valuation.
– The findings of our procedures.
Areas of particular auditor judgement
We identified the following as the areas of particular auditor judgement:– Subjective and complex auditor judgement was required in evaluating the key assumptions used by the Group (including thediscount rate, inflation and mortality assumptions).
Our findings
We found the Group’s valuation of the UK defined benefit pension scheme obligation to be balanced (FY22: balanced) withproportionate (FY22: proportionate) disclosures of the related assumptions and sensitivities.

Further information in the Annual report and accounts: See the Audit Committee Report on pages 98 to 106 for details on
how the Audit Committee considered the valuation of the UK defined benefit pension scheme obligation as an area ofsignificant attention, page 226 for the accounting policy on the valuation of the UK defined benefit pension scheme
obligation, and note 31 for the financial disclosures.

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Description of the Key Audit MatterIndependent auditor’s report to the members of abrdn plc continued

4.3 Revenue recognition: management fee revenue from contracts with customers (Group)
Financial Statement Elements

Management fee
revenue fromcontracts withcustomers:

Our assessment of risk vs FY22

FY23
FY22
£901m £1,068m



Our assessment is that the risk is similar to FY22.
The nature and complexity of management fee
calculations remains at a similar level to last year
whilst market volatility and uncertainty mean acontinued revenue focus.

Our findings

FY23 and FY22: We
found no significant
items, either unadjusted
or adjusted for.

Description of the Key Audit Matter

Our response to the risk

Data capture and calculation error
Revenue from contracts with customers is the mostsignificant item in the consolidated statement ofcomprehensive income and represents one of theareas that had the greatest effect on the overall Groupaudit. In addition, market volatility and uncertainty has
driven increased revenue focus. The balancecomprises various different revenue streams as
outlined in note 3.

Our procedures included:
Procedures in relation to fee rates
We performed the detailed procedures below in relation to fee rates
rather than seeking to rely on the Group’s controls as our knowledge
indicated that we would be unlikely to obtain the required evidence tosupport reliance on the controls.

The area of revenue which had the greatest effect on
our overall Group audit and audit effort in the current
period is management fee income (institutional, retail
wealth and insurance partners) which is the mostsignificant and, in certain areas, for example forsegregated account management fee calculations,complex item. The nature and complexity ofmanagement fee calculations has largely remained
stable year on year.
The two key components in calculating management
fee income are fee rates to be applied and the amountof assets under management (AUM) resulting in thefollowing key risks:– Fee rates: There is a risk that fee rates have notbeen entered appropriately into the fee calculation
and billing systems when the Group’s clients areonboarded or agreements are amended.
– AUM: There is a risk that AUM from third-party
service providers or client appointed administrators
and/or custodians does not exist and/or is
inaccurate.
– Calculation: There is a risk that management fee
income, including accrued income balances, isincorrectly calculated.

Test of details: We agreed a selection of fee rates used in thecalculation to the investment management agreements (IMAs), fee
letters or fund prospectuses outlining the effective fee rates.
Procedures in relation to AUM Control design and operation: We assessed
the design and operating effectiveness of controls at third party
service providers over the production of AUM data that is used in
calculating management fees. This included inspecting the internal
controls reports prepared by relevant outsourced service
organisations covering the design and operation of key controls overthe production of AUM data used in the calculation of management
fees.
Enquiry of clients: Where AUM data is produced by a client appointed
administrator and/or custodian we obtained AUM data directly fromthe client, client appointed administrator or custodian and used this in
our management fee recalculations and tests of detail below.
Calculation Procedures
Tests of details and substantive analytical procedures: Where AUM data
was obtained from third party service organisations (and where we
had tested the controls over the AUM data) we independently
recalculated management fees. Where AUM data was obtained
from a client appointed administrator and/or custodian (and so we
could not test controls over the AUM data) we independently
recalculated management fees and/or agreed a selection ofamounts billed and received to invoice and bank statements.

Communications with the abrdn plc Audit Committee
Our discussions with and reporting to the Audit Committee included:– Our definition of the key audit matter relating to revenue recognition: management fee revenue from contracts withcustomers.
– Our audit response to the key audit matter which included use of data and analytics technology to complete certain of therecalculations.
– The findings of our procedures.
Our findings– We found no significant items, either unadjusted or adjusted for, in the Group’s management fee revenue from contracts withcustomers (FY22: no significant items either unadjusted or adjusted for).

Further information in the Annual report and accounts: See page 182 for the accounting policy on revenue from contracts
with customers and note 3 for the financial disclosures.
We continue to perform procedures over the recoverable value of the investment in subsidiary (Parent Company) andgoodwill (Group) balances recognised on the acquisition of interactive investor. However, as the acquisition occurred in theprior year we do not need to perform procedures this year over the fair value of intangible assets recognised on theacquisition of interactive investor and as a result, the accounting implications of the acquisition of interactive investor are
not separately identified as a Key Audit Matter in our report this year.
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5. Our ability to detect irregularities, and our response
Fraud - identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud (fraud risks) we assessed events or conditions that could
indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk
assessment procedures included:– Enquiring of the Directors, the Group Audit Committee, Group Internal Audit and the Group’s Legal teamand inspection of policy documentation as to the Group’s high-level policies and procedures to prevent anddetect fraud, including the internal audit function, and the Group’s channel for ‘whistleblowing’, as well as
whether they have knowledge of any actual, suspected or alleged fraud.
– Reading Board and certain other committee minutes and attending Group Audit Committee and Risk andCapital Committee meetings.
– Considering the findings of Group Internal Audit’s reviews covering the financial year.
– Considering remuneration incentive schemes and performance targets for management and the
Directors.

Risk
communications

We communicated identified fraud risks throughout the audit team and remained alert to any indications offraud throughout the audit. This included communication from the Group audit team to full scope component
audit teams of relevant fraud risks identified at the Group level and request to full scope component audit teams
to report to the Group audit team any instances of fraud that could give rise to a material misstatement at theGroup level.

Fraud risks

As required by auditing standards, and taking into account possible pressures to meet profit targets and ouroverall knowledge of the control environment, we perform procedures to address the risk of management
override of controls, in particular the risk that Group and component management may be in a position to
make inappropriate accounting entries, and the risk of bias in accounting estimates and judgements such as
impairment and pension assumptions.
On this audit we do not believe there is a fraud risk related to revenue recognition, given the relative simplicity ofthe most significant revenue streams and the segregation of duties between management and third party
service providers.
We also identified fraud risks related to:– The recoverability of certain of the Group’s goodwill and certain of the Parent Company’s investment in
subsidiaries in response to the high degree of estimation uncertainty due to increased market volatility andbusiness performance in the year, and the impact of these on the profit or loss of the Group, and thesusceptibility of these estimates to management bias.
– The classification of certain expenses as restructuring, given the extent of restructuring in the Group’s costbase, and the level of market interest in the delivery of both transformation programmes and cost savings,
the impact of these on both the incentive to classify items as restructuring expenses and the consequencesof an error or deliberate misstatement in classification on the adjusted operating profit reported.

Link to KAMs

Further detail in respect of the risk of fraud over the recoverability of certain of the Group’s goodwill and certainof the Parent Company’s investment in subsidiaries, including our procedure to compare certain key input
assumptions to external market data, is set out in the key audit matter disclosures in section 4.1 of this report.

Procedures toaddress fraudrisks

Our audit procedures included evaluating the design, implementation, and where relevant operating
effectiveness of internal controls relevant to mitigate these risks.
To address the risk of fraud over the classification of restructuring expenses we tested a sample of expenses
and challenged finance management in relation to the classification of those selected expenses against theGroup’s adjusted profit methodology. Based on the evidence obtained, we assessed whether each sampledexpense related to a transaction or event that met the definition of restructuring, to determine whether there
were indications of inconsistent classification or indicators of management bias.
We also performed substantive audit procedures including:– Identifying journal entries and other adjustments to test for all Group components based on risk criteria andcomparing the identified entries to supporting documentation. These included journal entries posted bysenior finance management and those posted to unusual accounts, as well as those which comprised
unexpected posting combinations.
– Evaluating the business purpose of significant unusual transactions.
– Assessing significant accounting estimates for bias, including whether the judgements made in making
accounting estimates are indicative of a potential bias.

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Fraud risk
assessment

Independent auditor’s report to the members of abrdn plc continued
Laws and regulations - identifying and responding to risks of material misstatement relating to compliance with laws and regulations

Laws andregulations risk
assessment

We identified areas of laws and regulations that could reasonably be expected to have a material effect on thefinancial statements. For this risk assessment matters considered included the following:– Our general commercial and sector experience.
– Discussion with the Directors and other management (as required by auditing standards).
– Inspection of the Group’s regulatory and legal correspondence.
– Inspection of the policies and procedures regarding compliance with laws and regulation.
As the Group and many of its subsidiaries are regulated, our assessment of risks involved gaining an
understanding of the control environment including the entity’s procedures for complying with regulatory
requirements, how they analyse identified breaches and assessing whether there were any implications ofidentified breaches on our audit.

Risk
communications

We communicated identified laws and regulations throughout the audit team and remained alert to any
indications of non-compliance throughout the audit. This included communication from the Group audit team
to full scope component audit teams of relevant laws and regulations identified at Group level, and a request for
full scope component auditors to report to the Group audit team any instances of non-compliance with laws
and regulations that could give rise to a material misstatement at the Group level.
The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the Group is subject to laws and regulations that directly affect the financial statements including
Direct laws
context and link to financial reporting legislation (including related companies legislation), distributable profits legislation, taxation
audit
legislation and pensions regulations and we assessed the extent of compliance with these laws and regulations
as part of our procedures on the related financial statement items.
Most significant
indirect law/regulation areas

Secondly, the Group is subject to many other laws and regulations where the consequences of noncompliance could have a material effect on amounts or disclosures in the financial statements, for instancethrough the imposition of fines or litigation.
We identified the following areas as those most likely to have such an effect:– Specific areas of regulatory capital and liquidity.
– Conduct, including Client Assets.
– Anti-money laundering, and market abuse regulations.
– Certain aspects of company legislation recognising the financial and regulated nature of the Group’s
activities and its legal form.
Auditing standards limit the required audit procedures to identify non-compliance with these laws andregulations to enquiry of the Directors and other management and inspection of regulatory and legal
correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident fromrelevant correspondence, an audit will not detect that breach.

Actual orsuspected
breaches
discussed withAC

We discussed with the Audit Committee matters related to actual or suspected breaches of laws or
regulations, for which disclosure is not necessary, and considered any implications for our audit.

Context

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected someContext of theability of the audit material misstatements in the financial statements, even though we have properly planned and performed ourto detect fraud or audit in accordance with auditing standards. For example, the further removed non-compliance with laws andbreaches of law regulations is from the events and transactions reflected in the financial statements, the less likely the inherentlyor regulation
limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained
a higher risk of non-detection of fraud, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected todetect non-compliance with all laws and regulations.

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6. Our determination of materiality

The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlaid
qualitative considerations to help us determine the scope of our audit and the nature, timing and extent of our procedures,and in evaluating the effect of misstatements, both individually and in the aggregate, on the financial statements as awhole.

What we mean
£13.7mA quantitative reference for the purpose of planning and performing our audit.
(FY22: £14.0m)
Materiality for theBasis for determining materiality and judgements appliedgroup financial
Materiality for the Group financial statements as a whole was set at £13.7m (FY22: £14.0m). This wasstatements as adetermined with reference to a benchmark of total revenue.
whole

Our Group materiality of £13.7m was determined by applying a percentage to the total revenue. When using abenchmark of total revenue to determine overall materiality, KPMG’s approach for listed entities considers aguideline range of 0.5% to 1% of the measure. In setting overall Group materiality, we applied a percentage of
0.9% (FY22: 0.9%) to the benchmark.
Materiality for the Parent Company financial statements as a whole was set at £13.0m (FY22: £5.6m),

determined with reference to a benchmark of parent company total assets, limited to be less thanmateriality for the group financial statements as a whole. In 2022, we applied the component materiality
to our audit of the parent company balance sheet. Our materiality in both periods was lower than wewould have determined with reference to a benchmark of parent company total assets. It represents
0.2% (2022: 0.1%) of the stated benchmark.
£6.9m(FY22: £9.1m)
Performancemateriality

What we mean
Our procedures on individual account balances and disclosures were performed to a lower threshold,performance materiality, so as to reduce to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material amount across the financial statements as awhole.
Basis for determining performance materiality and judgements applied
We have considered performance materiality at a level of 50% (FY22: 65%) of materiality for abrdn plc’s Groupfinancial statements as a whole to be appropriate.
The Parent Company performance materiality was set at £6.5m (FY22: £3.6m), which equates to 50% (FY22:65%) of materiality for the Parent Company financial statements as a whole.
We applied this reduced percentage in our determination of performance materiality for the Group and Parent
Company financial statements in the current year as we identified specific factors indicating an elevated levelof aggregation risk. These factors included the ongoing level of restructuring and change impacting the Group.

£0.69m
(FY22: £0.7m)
Audit
misstatement
posting threshold

What we mean
This is the amount below which identified misstatements are considered to be clearly trivial from a quantitative
point of view. We may become aware of misstatements below this threshold which could alter the nature,timing and scope of our audit procedures, for example if we identify smaller misstatements which are indicatorsof fraud.
This is also the amount above which all misstatements identified are communicated to abrdn plc’s Audit
Committee.
Basis for determining the audit misstatement posting threshold and judgements applied
We set our audit misstatement posting threshold at 5% (FY22: 5%) of our materiality for the Group financial
statements. We also report to the Audit Committee any other identified misstatements that warrant reportingon qualitative grounds.

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155

FINANCIAL INFORMATION

Consistent with FY22, we determined that total revenue remains the benchmark for the Group given theperformance is such that a normalised profit benchmark would indicate materiality which is inappropriate forthe size and scale of the Group.

Independent auditor’s report to the members of abrdn plc continued
The overall materiality for the Group financial statements of £13.7m (FY22: £14.0m) compares as follows to the main
financial statement caption amounts:
Total Group revenue
FY23

Financial statement caption
Group materiality as % of caption

FY22Group profit/(loss) before tax1
FY23
FY22

Total Group assets 1
FY23

FY22

£1,474m£1,538m(£6m)(£612m)£8,031m£9,212m

0.9%

0.9%

(228.3%)

2.3%

0.2%

0.2%

1. Comparatives for FY22 have been restated for the implementation of IFRS 17.

7. Scope of our audit
Group scope

What we mean
How the Group audit team determined the procedures to be performed across the Group.
The Group has 313 (FY22: 311) reporting components. In order to determine the work performed at thereporting component level, we identified those components that we considered to be of individual financial
significance, those which were significant due to risk and those remaining components on which we required
procedures to be performed to provide us with the evidence we required in order to conclude on the Groupfinancial statements as a whole.
We determined individually financially significant components as those contributing at least 10% (FY22: 10%) ofGroup total revenue, Group net assets or total profits and losses that made up Group loss before tax. We
selected these metrics because these are the most representative of the relative size of the components. We
identified 8 (FY22: 7) components as individually financially significant components and performed full scope
audits on all of these components.
In addition to the individually financially significant components, we identified 2 (FY22: 2) components as
significant, owing to significant risks of material misstatement affecting the Group financial statements. We
performed full scope audits for these 2 components (FY22: 2).
In addition, to enable us to obtain sufficient appropriate audit evidence for the Group financial statements as awhole, we selected 9 (FY22: 12) further components on which to perform procedures. Of these components,
we performed full scope audits for 3 components (FY22: 10) and performed specific risk-focused audit
procedures over revenue on 2 components (FY22: 1) and over investment and unit-linked liability valuation andfair value gains and losses on 4 components (FY22: 1).
The components within the scope of our work accounted for the following percentages of the Group’s results,
with the prior year comparatives indicated in brackets:
Number ofcomponents

Range ofmateriality applied

Full scope audit

13 (19)Specific audit
procedures

6 (2)

Scope

Total

19 (21)

Group revenue

Total profits and losses
that made up Group PBTGroup net assets£2.7m - £6.9m(£0.7m - £8.6m)

80% (83%)

80% (82%)

84% (89%)£5.5m - £1.4m(£1.4m - £2.8m)

4% (3%)

4% (2%)

6% (4%)

84% (86%)

84% (84%)

90% (93%)

In addition, we instructed one component team to perform specific procedures to inform our risk assessment ofaccounting adjustments required for the first-year implementation of IFRS 17 by a Joint Venture. As theseprocedures did not identify material risks to our audit we did not scope the component in for further audit
procedures.
The remaining 16% (FY22: 14%) of total Group revenue, 16% (FY22: 16%) of total profits and losses that made up
Group profit before tax and 10% (FY22: 7%) of Group net assets is represented by 294 (FY22: 290) reporting
components, none of which individually represented more than 2.5% (FY22: 2.0%) of any of total Group revenue,
total profits and losses that made up Group profit before tax or Group net assets. For these components, we
performed analysis at an aggregated Group level to re-examine our assessment that there were no significant
risks of material misstatement within these.
The work on 11 of the 19 components (FY22: 17 of the 21 components) was performed by component auditors
and the rest, including the audit of the Parent Company, was performed by the Group team.
Testing over all KAMs included in Section 4 was performed by the Group team, with the exception of testing overmanagement fee revenue from contracts with customers, which is performed by our component auditors. In
addition, the Group team has also performed audit procedures on the following key areas on behalf of thecomponents:

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–––

Testing of IT Systems in those instances where Group and components use common systems.
Testing over the completeness of journal postings in the period in those instances where Group andcomponents use common systems.
Testing of cash bonus and deferred bonus award charges in the period.

These items were audited by the Group team because the consistency of these systems and processes meantthat this was the most effective way to obtain audit evidence. The Group team communicated the results ofthese procedures to the component teams.
The Group team instructed component auditors as to the significant areas to be covered, including the relevantrisks detailed above and the information to be reported back. The Group team approved the component
materialities, as detailed in the table above, having regard to the mix of size and risk profile of the Group acrossthe components.

Group audit team What we mean
The extent of the Group audit team’s involvement in component audits.
oversight
In working with component auditors, the Group audit team:

–
–
–
–

–

Held a virtual global planning and risk assessment meeting led by the Group audit engagement
partner to discuss key audit risks and obtain input from component teams.
Held planning calls and meetings with component audit teams to discuss the significant areas of theaudit relevant to the components, including the key audit matter identified in respect of recognition ofmanagement fee revenue from contracts with customers.
Issued Group audit instructions to component auditors, on the scope of their work, including specifying
the minimum procedures to perform in their audit of revenue within the Investments business andcash.
Visited four (FY22: three) of the four (FY22: four) component teams not located in the UK, to assess theaudit risk and strategy. Video and telephone conference meetings were also held with thesecomponent auditors. At these subsequent virtual meetings, the findings reported to the Group team
were discussed in more detail, and any further work required by the Group team was then performedby the component audit teams.
Inspected component audit team’s key working papers within component audit files (using remotetechnology capabilities) to understand and challenge the audit approach and audit findings of eachcomponent.

8. Other information in the Annual report and accounts

The Directors are responsible for the other information presented in the Annual report together with the financial
statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do
not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
All other information

Our responsibility
Our responsibility is to read the other information and, in doing so, consider whether,based on our financial statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or our audit knowledge.

Our reporting
Based solely on that work wehave not identified material
misstatements or inconsistencies
in the other information.

Strategic report and Directors’ report

Our responsibility and reporting
Based solely on our work on the other information described above we report to you asfollows:– We have not identified material misstatements in the Strategic report and the
Directors’ report.
– In our opinion the information given in those reports for the financial year is consistent
with the financial statements.
– In our opinion those reports have been prepared in accordance with the Companies
Act 2006.

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157

FINANCIAL INFORMATIONThe scope of the audit work performed was predominately substantive as we placed limited reliance upon theGroup's internal control over financial reporting.

Independent auditor’s report to the members of abrdn plc continued
Directors’ remuneration report

Our responsibility
We are required to form an opinion as to whether the part of the Directors’
remuneration report to be audited has been properly prepared in accordance with theCompanies Act 2006.

Our reporting
In our opinion the part of the
Directors’ remuneration report
to be audited has been properly
prepared in accordance with
the Companies Act 2006.

Corporate governance disclosures

Our responsibility
We are required to perform procedures to identify whether there is a materialinconsistency between the financial statements and our audit knowledge, and:– The Directors’ statement that they consider that the annual report and financial
statements taken as a whole is fair, balanced and understandable, and provides theinformation necessary for shareholders to assess the Group’s position andperformance, business model and strategy.
– The section of the annual report describing the work of the Audit Committee,
including the significant issues that the Audit Committee considered in relation to thefinancial statements, and how these issues were addressed.
– The section of the annual report that describes the review of the effectiveness of theGroup’s risk management and internal control systems.

Our reporting
Based on those procedures, wehave concluded that each ofthese disclosures is materiallyconsistent with the financial
statements and our audit
knowledge.

We are also required to review the part of the Corporate Governance Statement
relating to the Group’s compliance with the provisions of the UK Corporate
Governance Code specified by the Listing Rules for our review.

We have nothing to report inthis respect.

Other matters on which we are required to report by exception
Our responsibility
Under the Companies Act 2006, we are required to report to you if, in our opinion:– Adequate accounting records have not been kept by the Parent Company orreturns adequate for our audit have not been received from branches not visited byus; or– The Parent Company financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with the accounting
records and returns; or– Certain disclosures of Directors’ remuneration specified by law are not made; or– We have not received all the information and explanations we require for our audit.

Our reporting
We have nothing to report inthese respects.

9. Respective responsibilities
Directors’ responsibilities

As explained more fully in their statement set out on page 141, the Directors are responsible for: the preparation of thefinancial statements including being satisfied that they give a true and fair view; such internal control as they determine isnecessary to enable the preparation of financial statements that are free from material misstatement, whether due tofraud or error; assessing the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate theGroup or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonableassurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK)will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial statements in an annual financial report prepared under
Disclosure Guidance and Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report provides no assurance overwhether the annual financial report has been prepared in accordance with those requirements.

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10. The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of theCompanies Act 2006 and the terms of our engagement by the Company. Our audit work has been undertaken sothat we might state to the Company’s members those matters we are required to state to them in an auditor’sreport, and the further matters we are required to state to them in accordance with the terms agreed with theCompany, and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for thisreport, or for the opinions we have formed.

FINANCIAL INFORMATION

Richard Faulkner (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Saltire Court
20 Castle Terrace
Edinburgh
EH1 2EG
26 February 2024

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159

Group financial statements
Consolidated income statement

For the year ended 31 December 2023

2023
£m

2022
restated1
£m

1,474
(76)

1,538
(82)

1,398

1,456

5

(152)

(214)

5

(63)

(369)

5
5
5

(126)
(529)
(593)

(125)
(549)

(1,463)(1,919)

4
4

(114)
116

(119)
(3)

2

(122)

Finance costs
Profit on disposal of subsidiaries and other operations

1

(25)
79

(29)
-

Profit on disposal of interests in associates
Reversal of impairment/(impairment) of interests in associates and joint ventures

1
14

–
2

6
(9)

Share of profit or loss from associates and joint ventures

14

Notes

Revenue from contracts with customers
Cost of sales

33

Net operating revenue
Restructuring and corporate transaction expenses
Impairment of intangibles acquired in business combinations and through thepurchase of customer contracts
Amortisation of intangibles acquired in business combinations and through thepurchase of customer contracts
Staff costs and other employee-related costs
Other administrative expenses
Total administrative and other expenses
Net gains or losses on financial instruments and other income
Fair value movements and dividend income on significant listed investments
Other net gains or losses on financial instruments and other income
Total net gains or losses on financial instruments and other income

Loss before tax
9Tax credit
Profit/(loss) for the year
Attributable to:Equity shareholders of abrdn plc
Other equity holders
Non-controlling interests – ordinary shares

28
28

(662)

1

5

(6)

(612)

18

66

12

(546)

1

(558)

11
–

11
1

12

(546)

0.1
0.1

(26.6)(26.6)

Earnings per share
Basic (pence per share)
Diluted (pence per share)

10
10

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.

The Notes on pages 167 to 270 are an integral part of these consolidated financial statements.

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Consolidated statement of comprehensive income
For the year ended 31 December 2023

2023

12

(546)

(139)
(4)

(793)
-

(143)

(793)

14

(40)
(35)
(27)

85
36
(57)

18
1
9

28
(1)
3

(78)
(2)

Total items that may be reclassified subsequently to profit or loss

(72)

(16)

Other comprehensive income for the year

(215)

(809)

Total comprehensive income for the year(203)

(1,355)

(214)
11
–

(1,367)
11
1

(203)

(1,355)abrdn.com

161

Notes

Profit/(loss) for the year
Items that will not be reclassified subsequently to profit or loss:
Remeasurement losses on defined benefit pension plans
Share of other comprehensive income of associates and joint ventures

31
14

Total items that will not be reclassified subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss:
Fair value (losses)/gains on cash flow hedges
Exchange differences on translating foreign operations
Share of other comprehensive income of associates and joint ventures
Items transferred to the consolidated income statement
Fair value losses/(gains) on cash flow hedges
Realised foreign exchange (gains)
Equity holder tax effect of items that may be reclassified subsequently to profit or loss

Attributable to:Equity shareholders of abrdn plc
Other equity holders
Non-controlling interests – ordinary shares

18

28
28

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.

The Notes on pages 167 to 270 are an integral part of these consolidated financial statements.

Annual report 2023

FINANCIAL INFORMATION

£m

2022
restated1£mGroup financial statements continued

Consolidated statement of financial position
As at 31 December 2023

2023

AssetsIntangible assets
Pension and other post-retirement benefit assets
Investments in associates and joint ventures accounted for using the equity method
Property, plant and equipment
Deferred tax assets
Financial investments
Receivables and other financial assets
Current tax recoverable
Other assets
Assets of operations held for sale
Cash and cash equivalents
Assets backing unit linked liabilities
Financial investments
Receivables and other unit linked assets
Cash and cash equivalents
Total assets

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Notes

£m

2022
restated1
£m

13
31
14
15
9
17
19
9
20
21
22

1,578
740
229
163
215
2,047
1,071
10
77
19
1,196
7,345

1,619
831
232
201
212
2,939
907
7
92
87
1,133
8,260

669
4
13
686
8,031

924
5
23
952
9,212

23

2023

Liabilities
Third party interest in consolidated funds
Subordinated liabilities
Pension and other post-retirement benefit provisions
Deferred tax liabilities
Current tax liabilities
Derivative financial liabilities
Other financial liabilities2
Provisions
Other liabilities
Liabilities of operations held for sale

£m

29
30
31
9
9
29
32
33
33
21

187
599
12
129
6
9
1,241
66
4
2
2,255

242
621
12
211
11
1
1,201
97
8
14
2,418

684
–
2
686
2,941

773
173
6
952
3,370

257
(141)
640
4,449
(327)
4,878
207
5
5,090
8,031

280
(149)
640
4,986
(129)
5,628
207
7
5,842
9,212

23

Total liabilities
EquityShare capital
Shares held by trusts
Share premium reserve
Retained earnings
Other reserves
Equity attributable to equity shareholders of abrdn plc
Other equity
Non-controlling interests - ordinary shares
Total equity
Total equity and liabilities

24
25
24
26
27
28
28

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
2. The Group has made a presentational change to show Deferred income within Other financial liabilities. Refer Note 32.

The Notes on pages 167 to 270 are an integral part of these consolidated financial statements.

The consolidated financial statements on pages 160 to 270 were approved by the Board and signed on its behalf by thefollowing Directors:

Sir Douglas Flint
Chairman

Jason Windsor
Chief Financial Officer

26 February 2024

26 February 2024

Annual report 2023

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163

FINANCIAL INFORMATION

Unit linked liabilities
Investment contract liabilities
Third party interest in consolidated funds
Other unit linked liabilities

Notes

2022
restated1£mGroup financial statements continued

Consolidated statement of changes in equity
For the year ended 31 December 2023

Share Shares held
capitalby trusts
Notes

31 December 2022

31 December 2023

Other
equityTotalequity1

£m

£m

£m

£m

£m

£m

£m

£m

£m

(149)

640

4,986

(129)

5,628

207

7

5,842

–

–

–

51

–

51

–

–

51

280

(149)

640

5,037

(129)

5,679

207

7

5,893

–

–

–

1

–

1

11

–

12

–

–

–

(170)

(45)

(215)

–

–

(215)

–
–

–
–

–
–

(169)
–

(45)
–

(214)
–

11
–

–
–

(203)
–

–
–
(23)

–
–
–

–
–
–

(279)
–
(302)

–
–
23

(279)
–
(302)

–
(11)
–

–
–
–

(279)
(11)
(302)

–

–

–

–

–

–

–

(2)

(2)

–

–

–

–

24

24

–

–

24

–

–

–

31

(31)

–

–

–

–

–

–

–

169

(169)

–

–

–

–

–

(27)

–

–

–

(27)

–

–

(27)

Profit for the year
Other comprehensive income
for the year
Total comprehensive income forthe year26, 27
Issue of share capital
24
Dividends paid on ordinary
shares12
Interest paid on other equity
28
Share buyback
24, 26, 27
Other movements in noncontrolling interests in the year
28
Reserves credit for employee
share-based payments
27
Transfer to retained earnings forvested employee share-based
payments
26, 27
Transfer between reserves on
impairment of subsidiaries
26, 27
Shares acquired by employee
trusts25
Shares distributed by employee
and other trusts and related
dividend equivalents
25, 26

Retainedearnings1

Noncontrollinginterests ordinary
shares280

Effect of application of IFRS 9 on
Investments in associates andjoint ventures accounted forusing the equity method1
1 January 2023

Sharepremium
reserve

Total equity
attributable
to equity
Other shareholders
reserves of abrdn plc1

–

35

–

(38)

–

(3)

–

–

(3)

257

(141)

640

4,449

(327)

4,878

207

5

5,090

1. The Group implemented IFRS 9 in 2019. However, as permitted under a temporary exemption granted to insurers in IFRS 4 Insurance Contracts, the Group’s
insurance joint venture, Heng An Standard Life Insurance Company Limited, applied IFRS 9 at 1 January 2023 following the implementation of the new
insurance standard, IFRS 17. Refer Basis of preparation.

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Notes

1 January 2022
(Loss)/profit for the year
Other comprehensive income
for the year

31 December 2022

Other
reserves2£m

Other
equity£m

Noncontrollinginterests ordinary
shares£m

Totalequityrestated1£m

Sharecapital£m

Sharesheld bytrusts
£m

305

(171)

640

5,766

1,094

7,634

207

6

7,847

–

–

–

(558)

–

(558)

11

1

(546)

–

–

–

(850)

41

(809)

–

–

(809)

–
–

–
–

–
–

(1,408)–41–(1,367)
–

11
–

1
–

(1,355)
–

–
–
(25)

–
–
–

–
–
–

(307)
–
(302)

–
–
25

(307)
–
(302)

–
(11)
–

–
–
–

(307)
(11)
(302)

–

–

–

1,059

(1,059)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

24

24

–

–

24

–

–

–

63

(63)

–

–

–

–

–

–

–

1

(1)

–

–

–

–

–

–

–

207

(207)

–

–

–

–

–

(46)

–

–

–

(46)

–

–

(46)

–
–

68
–

–
–

(70)
(23)

–
17

(2)
(6)

–
–

–
–

(2)
(6)

280

(149)

640

4,986

(129)

5,628

207

7

5,842

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
2. Other movements for 2022 included the transfer of (£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. Prior periods were not restatedas the impact on prior periods was not considered material. There was no impact on net assets for any period presented.

The Notes on pages 167 to 270 are an integral part of these consolidated financial statements.

Annual report 2023

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165

FINANCIAL INFORMATION

Total comprehensive income forthe year
Issue of share capital
24
Dividends paid on ordinary
shares12
Interest paid on other equity
Share buyback
24, 26, 27
Cancellation of capital
redemption reserve26, 27
Other movements in noncontrolling interests in the year
Reserves credit for employee
share-based payments
27
Transfer to retained earnings forvested employee share-based
payments
26, 27
Transfer between reserves on
disposal of subsidiaries
Transfer between reserves on
impairment of subsidiaries
26, 27
Shares acquired by employee
trusts25
Shares distributed by employee
and other trusts and related
dividend equivalents
25, 26
Other movements2
26, 27

Share
Retainedpremium
earnings
reserve restated1, 2£m£m

Total equity
attributable
to equity
shareholders
of abrdn plc
restated1£mGroup financial statements continued

Consolidated statement of cash flows
For the year ended 31 December 2023

2023
Notes

Cash flows from operating activities
Loss before tax
Change in operating assets
Change in operating liabilities
Adjustment for non-cash movements in investment income
Other non-cash and non-operating items
Taxation paid2

37
37
37

Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Acquisition of subsidiaries and unincorporated businesses net of cash acquired
Disposal of subsidiaries net of cash disposed ofAcquisition of investments in associates and joint ventures
Proceeds in relation to contingent consideration
Payments in relation to contingent consideration
Disposal of investments in associates and joint ventures
Purchase of financial investments
Proceeds from sale or redemption of financial investments
Taxation paid on sale or redemption of financial investments2
Prepayment in respect of potential acquisition of customer contracts
Acquisition of intangible assets

1(b)
37
14
36
36
1(c)
17
39(b)

Net cash flows from investing activities
Cash flows from financing activities
Repayment of subordinated liabilities
Payment of lease liabilities – principal
Payment of lease liabilities - interest
Shares acquired by trusts
Interest paid on subordinated liabilities and other equity
Other interest paid
Cash received relating to collateral held in respect of derivatives hedging
subordinated liabilities
Share buyback
Ordinary dividends paid

30

24
12

Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year

22

Supplemental disclosures on cash flows from operating activities
Interest received
Dividends received
Rental income received on investment property
1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
2. Total taxation paid was £75m in 2023 (2022: £64m).

The Notes on pages 167 to 270 are an integral part of these consolidated financial statements.

166

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£m

2022
restated1
£m

(6)
157
(109)
3
210
(34)

(612)
916
(725)
–
567
(36)

221

110

(18)
(108)
139
(2)
21
(12)
–
(445)
1,029
(41)
20
(41)

(21)
(1,378)
–
(20)
18
(7)
6
(297)
1,633
(28)
14
(6)

542

(86)

–
(24)
(6)
(27)
(20)
(3)

(92)
(46)
(6)
(46)
(34)
(2)

(50)
(302)
(279)

74
(302)
(307)

(711)

(761)

52

(737)

1,166
(8)

1,875
28

1,210

1,166

85
91
3

38
110
2

Presentation of consolidated financial statements
The Group’s significant accounting policies are included at the beginning of the relevant notes to the consolidated
financial statements. This section sets out the basis of preparation, a summary of the Group’s critical accounting
estimates and judgements in applying accounting policies, and other significant accounting policies which have been
applied to the financial statements as a whole.

(a)Basis of preparation

These consolidated financial statements have been prepared in accordance with UK-adopted international accounting
standards. The consolidated financial statements have been prepared on a going concern basis and under the historicalcost convention, as modified by the revaluation of owner-occupied property, derivative instruments and other financial
assets and financial liabilities at fair value through profit or loss (FVTPL).

The current inflationary environment has also been taken into consideration in the preparation of the consolidated
financial statements. Again this primarily relates to fair value calculations and impairment assessments. The impact ofinflation has been factored into budgeted cash flows used in these calculations and assessment. However, terminal growth
rates are still based on longer term inflation expectations which are largely unchanged.
The principal accounting policies set out in these consolidated financial statements have been consistently applied to all
financial reporting periods presented except as described below.

(a)(i) New standards, interpretations and amendments to existing standards that have been adopted by theGroup
The Group has adopted the following new International Financial Reporting Standards (IFRSs), interpretations andamendments 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 andcontracts 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 forsuch 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 implementationof IFRS 9 until the implementation of IFRS 17.
IFRS 17 must be applied retrospectively, however as permitted by the standard, HASL has applied IFRS 9 prospectively.
Consequently, the combined impact of the change of accounting policy comes through at 1 January 2023. The net impactof 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 measurement models: the general measurement model; the variable fee approach and thepremium 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 othercomprehensive income (OCI) options under IFRS 17 to take elements of the movements in the measurement of insurance
contract through OCI to minimise income statement volatility.

Annual report 2023

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FINANCIAL INFORMATION

Climate risks have been taken into consideration in the preparation of the consolidated financial statements, primarily in
relation to fair value calculations and impairment assessments. Refer Note 34(a) for further details of our consideration ofclimate impact including our current assessment that the impact on the consolidated financial statements is not material.

Group financial statements continued
The impact of the restatement in 2022 below partly reflects that the measurement of investment contracts under thevariable 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 measurement of
the insurance contracts is also impacted by the use of lower discount rates to discount liabilities under IFRS 17 as comparedto 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 aspreviously
presented£m

Impact 1 January 2022 asof IFRS 17
restated£m£mConsolidated statement of financial position
Carrying value of HASL
Investments in associates and joint ventures accounted for using the equity method
Total assets

258
274
11,418

(9)
(9)
(9)

249
265
11,409Retained earnings
Total equity attributable to equity shareholders of abrdn plc
Total equity
Total equity and liabilities

5,775
7,643
7,856
11,418

(9)
(9)
(9)
(9)

5,766
7,634
7,847
11,409168

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Annual report 2023

The carrying value of HASL and the movements in the carrying value as at 31 December 2022 have also been restated.
Impactof IFRS 17£m

2022 as restated£m

Consolidated income statement
Share of profit or loss from associates and joint ventures
Loss before tax
Loss for the year

2
(615)
(549)

3
3
3

5
(612)
(546)

Attributable to:Equity shareholders of abrdn plc

(561)

3

(558)

Earnings per share
Basic (pence per share)
Diluted (pence per share)(26.8)(26.8)

0.2
0.2(26.6)(26.6)

Consolidated statement of comprehensive income
Loss for the year

(549)

3

(546)

Share of other comprehensive income of associates and joint ventures
Total items that may be reclassified subsequently to profit or loss
Other comprehensive income for the year
Total comprehensive income for the year

(28)
13
(780)
(1,329)

(29)
(29)
(29)
(26)

(57)
(16)
(809)
(1,355)Attributable to:Equity shareholders of abrdn plc(1,341)(26)(1,367)

Share of profit or loss from associates and joint ventures
Total adjusting items including results of associates and joint ventures

2
(868)

3
3

5
(865)

Loss for the year attributable to equity shareholders of abrdn plc
Loss for the year

(561)
(549)

3
3

(558)
(546)

Analysis of adjusted profit
Adjusted for the following items

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FINANCIAL INFORMATION

2022 aspreviously
presented£mGroup financial statements continued
31 December
2022 aspreviously
presented£m

Impactof IFRS 17£m

31 December
2022 as restated£m

Consolidated statement of financial position
Carrying value of HASL
Investments in associates and joint ventures accounted for using the equity method
Total assets

245
267
9,247

(35)
(35)
(35)

210
232
9,212

Retained earnings
Total equity attributable to equity shareholders of abrdn plc
Total equity
Total equity and liabilities

5,021
5,663
5,877
9,247

(35)
(35)
(35)
(35)

4,986
5,628
5,842
9,212

Consolidated statement of changes in equity
Opening retained earnings
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Closing retained earnings

5,775
(561)
(821)
(1,382)
5,021

(9)
3
(29)
(26)
(35)

5,766
(558)
(850)
(1,408)4,986

Opening total equity attributable to equity shareholders of abrdn plc
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Closing total equity attributable to equity shareholders of abrdn plc

7,643
(561)
(780)
(1,341)
5,663

(9)
3
(29)
(26)
(35)

7,634
(558)
(809)
(1,367)
5,628Opening total equity
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Closing total equity

7,856
(549)
(780)
(1,329)
5,877

(9)
3
(29)
(26)
(35)

7,847
(546)
(809)
(1,355)
5,842

The restatement has no overall impact on the cash flows of the Group but does impact certain line items in the
consolidated statement of cash flows:

Consolidated statement of cash flows
Loss before tax
Other non-cash and non-operating items

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31 December
2022 aspreviously
presented

Impactof IFRS 17

31 December
2022 as restated

£m

£m

£m

(615)
570

3
(3)

(612)
567

In line with the approach adopted by the Group on its implementation of IFRS 9 on 1 January 2019 and as permitted by IFRS
9, 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.
Impactof IFRS 9£m£m

1 January 2023£m

Consolidated statement of financial position
Carrying value of HASL
Investments in associates and joint ventures accounted for using the equity method
Total assets

210
232
9,212

51
51
51

261
283
9,263

Retained earnings
Total equity attributable to equity shareholders of abrdn plc
Total equity
Total equity and liabilities

4,986
5,628
5,842
9,212

51
51
51
51

5,037
5,679
5,893
9,263

Amendments to existing standards
International Tax Reform – Organization for Economic Cooperation and Development (OECD) Pillar Two Model Rules Amendments to IAS 12
In May 2023, amendments to IAS 12 were issued which were endorsed by the UK endorsement board on 19 July 2023. The
amendments were effective immediately.
The amendments clarify that IAS 12 applies to income taxes arising from tax law enacted or substantively enacted to
implement the Pillar Two Model Rules published by the OECD, including tax law that implements qualified domestic
minimum top-up taxes. However, the amendments also introduce a mandatory exception in IAS 12 from recognising anddisclosing deferred tax assets and liabilities related to Pillar Two income taxes which the Group has applied.
The amendments introduce new disclosure requirements in relation to Pillar Two income taxes including qualitative andquantitative information about Group’s exposure to Pillar Two income taxes in relation to Pillar Two legislation enacted or
substantively enacted but not yet effective at the end of the reporting period. Refer Note 9(e) for the information on thisexposure.
Other amendments– 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 other amendments. Management considers theimplementation of the above amendments to existing standards has had no significant impact on the Group’s financial
statements.

(a)(ii) Standards, interpretations and amendments to existing standards that are not yet effective and havenot been early adopted by the Group

Certain new standards, interpretations and amendments to existing standards have been published that are mandatory
for the Group’s annual accounting periods beginning after 1 January 2023. The Group has not early adopted thestandards, amendments and interpretations described below.
There are no other new standards, interpretations and amendments to existing standards that have been published thatare expected to have a significant impact on the consolidated financial statements of the Group.

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FINANCIAL INFORMATION

31 December
2022 as restatedfor IFRS 17

Group financial statements continued(a)(iii) Critical accounting estimates and judgements in applying accounting policies

The preparation of financial statements requires management to exercise judgements in applying accounting policies andmake estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses arising during the year. Judgements and sources of
estimation uncertainty are continually evaluated and based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The areas where judgements have the most significant effect on the amounts recognised in the consolidated financial
statements are as follows:
Financial statement area

Critical judgements in applying accounting policies

Related note

Defined benefit pension plans

Assessment of whether the Group has an unconditional right to a refund of
the surplus.
Treatment of tax relating to the surplus.

Note 31

Intangible assets

Identification and valuation of intangible assets arising from businesscombinations, and the determination of useful lives.

Note 13

The following changes have been made to the Group’s critical judgements:– In addition to identification and valuation of the intangible assets, the allocation to cash generating units of goodwill
arising from the acquisition was considered a critical judgement during 2022 in relation to the acquisition of ii (refer Note1(b)(ii)). This is not considered as a critical judgement in relation to the 2023 acquisition of the healthcare fundmanagement capabilities of Tekla Capital Management LLC (Tekla) (refer Note 1(b)(i)).
– Following the final release of the Group’s separation costs provision (refer Note 33 for further details), determining
whether a provision is required for separation costs is not considered as a critical judgement.
There are no other changes to critical judgements in applying accounting policies from the prior year.
The areas where assumptions and other sources of estimation uncertainty at the end of the reporting period have asignificant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are as follows:
Financial statement area

Critical accounting estimates and assumptions

Related note

Intangible assets

Determination of the recoverable amount in relation to the impairment of
goodwill.

Note 13

Financial instruments at fair value Determination of the fair value of contingent consideration
through profit or loss
liabilities relating to the acquisition of Tritax.

Notes 34 and 36

Defined benefit pension plans

Note 31

Determination of principal UK pension plan assumptions for mortality,
discount rate and inflation.

All other critical accounting estimates and assumptions are the same as the prior year.
Further detail on critical accounting estimates and assumptions is provided in the relevant note.

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(a)(iv) Foreign currency translation
The consolidated financial statements are presented in million pounds Sterling.
The statements of financial position of Group entities, including associates and joint ventures accounted for using theequity method, that have a different functional currency than the Group’s presentation currency are translated into thepresentation currency at the year end exchange rate and their income statements and cash flows are translated ataverage exchange rates for the year. All resulting exchange differences arising are recognised in other comprehensive
income and the foreign currency translation reserve in equity. On disposal of a Group entity the cumulative amount of
any such exchange differences recognised in other comprehensive income is reclassified to profit or loss.
Foreign currency transactions are translated into the functional currency at the exchange rate prevailing at the date of
the transaction. Gains and losses arising from such transactions and from the translation at year end exchange rates ofmonetary assets and liabilities denominated in foreign currencies are recognised in the relevant line in the consolidated
income statement.

(a)(v) Going concern

The Group’s business activities, together with the factors likely to affect its future development, performance and financial
position, are set out in the Strategic report. This includes details on our liquidity and capital management and our viability
statement in the Chief Financial Officer’s overview section and our principal risks in the Risk management section including
the impacts of the macroeconomic environment and global and regional geopolitical events on these principal risks. In
addition, these financial statements include notes on the Group’s subordinated liabilities (Note 30), management of its risks
including market, credit and liquidity risk (Note 34), its contingent liabilities and commitments (Notes 38 and 39), and its
capital structure and position (Note 42).
In preparing these financial statements on a going concern basis, the Directors have considered the following matters andhave taken into account market uncertainty.
– The Group has cash and liquid resources of £1.8bn at 31 December 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 Common Equity Tier 1 (CET1) capital surplus on an IFPR basis was £876m in excess ofcapital requirements at 31 December 2023. The regulatory CET1 capital surplus does not include the value of theGroup’s significant listed investment in Phoenix Group Holdings (Phoenix).
– The Group performs regular stress and scenario analysis as described in the Annual report and accounts 2023 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 ofservices by key outsource providers.
Based on a review of the above factors the Directors are satisfied that the Group and Company have and will maintainsufficient resources to enable them to continue operating for at least 12 months from the date of approval of the 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.

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FINANCIAL INFORMATION

Translation differences on non-monetary items, such as equity securities held at fair value through profit or loss, arereported as part of the fair value gain or loss within Net gains or losses on financial instruments and other income in the
consolidated income statement. Translation differences on financial assets and liabilities held at amortised cost areincluded in the relevant line in the consolidated income statement.

Group financial statements continued(b)Basis of consolidation

The Group’s financial statements consolidate the financial statements of the Company and its subsidiaries.
Subsidiaries are all entities (including investment vehicles) over which the Group has control. Control arises when theGroup is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. For operating entities this generally accompanies a shareholding of 50% ormore in the entity. For investment vehicles, including structured entities, the control assessment also considers theremoval rights of other investors and whether the Group acts as principal or agent in assessing the link between power
and variable returns. In determining whether the Group acts as principal, and therefore controls the entity, the removal
rights of other investors and the magnitude of the variability associated with the returns are also taken into account. As aresult, the Group often is considered to control investment vehicles in which its shareholding is less than 50%.
Where the Group is considered to control an investment vehicle, such as an open-ended investment company, a unit
trust or a limited partnership, and it is therefore consolidated, the interests of parties other than the Group are assessed
to determine whether they should be classified as liabilities or as non-controlling interests. The liabilities are recognised in
the third party interest in consolidated funds line in the consolidated statement of financial position and any movements
are recognised in the consolidated income statement. The financial liability is designated at fair value through profit orloss (FVTPL) as it is implicitly managed on a fair value basis as its value is directly linked to the market value of theunderlying portfolio of assets. The interests of parties other than the Group in all other types of entities are recorded as
non-controlling interests.
All intra-group transactions, balances, income and expenses are eliminated in full.
The Group uses the acquisition method to account for acquisitions of businesses. At the acquisition date the assets andliabilities of the business acquired and any non-controlling interests are identified and initially measured at fair value on
the consolidated statement of financial position.
When the Group acquires or disposes of a subsidiary, the profits and losses of the subsidiary are included from the dateon which control was transferred to the Group until the date on which it ceases, with consistent accounting policies
applied across all entities throughout.

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Notes to the Group financial statements
1.
Group structure(a)Composition

The following diagram is an extract of the Group structure at 31 December 2023 and gives an overview of the compositionof the Group.

abrdn plc

abrdn Holdings
Limitedabrdn
Investments(Holdings) Limited

Interactive Investor
Heng Anabrdn Financial
LimitedStandard Life Insurance Planning Limited
Company LimitedStandard Life
Savings Limited

Aberdeen Corporate

Elevate Portfolio
Services Limited

Focus Business
Solutions Limited

Services Limited(China JV - 50%)
abrdn
Asia Limited

abrdn

abrdn
Hong Kong
Limitedabrdn
Fund Managers
Limitedabrdn
Investments
Luxembourg SA

abrdn Lifeand Pensions Limited

abrdn Inc

abrdn
Investment Group
Limitedabrdn
Investments Ireland
Limited

TritaxManagement LLP

Finimize
LimitedVirgin Money Unit
Trust Managers
LimitedPrivate Equity(Europe) Limited

abrdn Alternative
Funds Limited

abrdn Investments
LimitedInteractive Investor
Services Limited

FINANCIAL INFORMATION

abrdn Investment
Management
Limitedabrdn(Mauritius Holdings)
2006 Limited(UK JV - 50%)

A full list of the Company’s subsidiaries is provided in Note 44.

(b)

Acquisitions(b)(i) Current year acquisitions of subsidiaries and other operations

Healthcare fund management capabilities of Tekla Capital Management
On 27 October 2023, abrdn Inc. purchased the healthcare fund management capabilities of Tekla Capital Management
LLC (Tekla) through a purchase agreement. Tekla’s investment team transferred to the Group as part of the agreement.
The assets under management at the acquisition date were £2.3bn. The acquisition further strengthens abrdn’s closedend fund business and allows the Group to draw on Tekla’s expertise in investing in the healthcare sector as it looks to build
out its offering in this area.
At the acquisition date the consideration, net assets acquired and resulting goodwill were as follows:£m

27 October 2023

Cash consideration
Fair value of deferred and contingent consideration

108
11

Consideration

119

Fair value of net assets acquired
Intangible assets
Customer relationships and investment management contracts

78
78

Total assets–

Total liabilities

41

Goodwill

The fair value of the deferred and contingent consideration of £11m comprises:– A guaranteed deferred consideration of £7m which is payable in equal instalments on the first, second and third
anniversaries of the closing date.
– A contingent consideration with a fair value at acquisition of £4m. This has been calculated by reference to fee revenue
and could range from US$nil to US$20m. It is measured on the first, second and third anniversaries of the closing date.

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175

Group financial statements continued
The seller has elected that a portion of deferred and contingent consideration will be payable to employees thattransferred from Tekla to abrdn who are still employed by the Group at each anniversary date. Any consideration that wasallocated to employees that have left revert to the seller so this arrangement has no impact on the total value of theconsideration for the business acquired.
Intangible assets acquired in the business combination consist of investment management contract intangibles for the four
NYSE listed funds which were managed by Tekla. Refer Note 13 for details of the key assumptions used in measuring thefair value of these intangibles at the acquisition date.
The goodwill arising on acquisition is mainly attributable to:– The ability to develop and evolve the acquired product suite through the launch of other vehicles.
– The specialist knowledge in the equities and fixed income healthcare sector that the Tekla’s investment team brings to
the Group. This will generate market leading research and insights, which can be used by portfolio managers across ourInvestments segment.
The goodwill has been allocated to the abrdn Inc. cash generating unit. The goodwill is expected to be deductible for tax
purposes.
The amounts of revenue from contracts with customers and profit after tax contributed to the Group’s consolidated
income statement for the year ended 31 December 2023 from the acquired Tekla business were £4m and £2m
respectively. The profit contributed excludes amortisation of intangible assets acquired through business combinations. If
the acquisition had occurred on 1 January 2023, the Group’s total revenue from contracts with customers for the year
would have increased by £21m to £1,495m and the profit after tax would have increased by £13m to £25m.
Corporate transaction deal costs amounted to £2m of which were included within Restructuring and corporatetransaction expenses in the year ended 31 December 2023.

(b)(ii) Prior year 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. Refer Note A of the Company financial statements for further details.

(c)Disposals(c)(i) Current year disposal of subsidiaries and other operations

During 2023, the Group made two material disposals of subsidiaries and other operations:– On 1 September 2023, the Group completed the sale of abrdn Capital Limited (aCL), its discretionary fundmanagement business, to LGT UK Holdings Limited.
– On 2 October 2023, the Group completed the sale of its US Private Equity and Venture Capital capabilities to HighVista
Strategies LLC.
aCL and the Group’s US Private Equity and Venture Capital capabilities were reported in the ii (previously named Personal)
and Investments segments respectively.
Other disposals included the sale of abrdn Australia Ltd to Melbourne Securities Corporation Limited on 1 July 2023. The
disposal is not considered material to the Group.
Profit on disposal of subsidiaries and other operations for the year ended 31 December 2023 have been summarised
below.
2023£m

Disposal of aCL
Disposal of US Private Equity and Venture Capital capabilities
Other disposals

58
22
(1)

Profit on disposal of subsidiaries and other operations for the year ended 31 December 2023

79

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Annual report 2023

On disposal, a net gain of £1m was recycled from the translation reserve and was included in determining the profit on
disposal of subsidiaries and other operations for the year ended 31 December 2023.
aCL
The gain on sale, which is included in profit on disposals of subsidiaries and other operations in the consolidated income
statement for the year ended 31 December 2023 for aCL was calculated as follows:£m

1 September 2023

Total assets of operations disposed of
Total liabilities of operations disposed of(85)

Net assets of operations disposed of(75)

Cash consideration (less transaction costs) and amount receivable from aCL1

133

Gain on sale before tax

58

10

Prior to the completion of the sale, aCL was classified as an operation held for sale (refer Note 21).
US Private Equity and Venture Capital capabilities
The gain on sale, which is included in profit on disposals of subsidiaries and other operations in the consolidated income
statement for the year ended 31 December 2023 for US Private Equity and Venture Capital capabilities was calculated asfollows:
2 October 2023£m

Total assets of operations disposed of
Total liabilities of operations disposed of(1)
2

Net assets of operations disposed of1

Cash consideration (less transaction costs)

17

Fair value of earn-out payments and retained interest1

2

Gain recycled from the translation reserve

2

Gain on sale before tax

22

1. Following the sale, the Group has retained certain carried interest entitlements which was been recognised in the consolidated statement of financial position
at fair value.

(c)(ii) Prior year disposal of associates

Profit on disposal of interests in associates for the year ended 31 December 2022 of £6m relates to the sale of the Group’s
interest in Origo Services Limited in May 2022.

Annual report 2023

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177

FINANCIAL INFORMATION

1. Following the completion of the sale, an intercompany receivable due from aCL to abrdn Investments (Holdings) Limited of £3m which previously eliminatedon consolidation is now recognised as an asset of the Group.

Group financial statements continued

2.

Segmental analysis

The Group’s reportable segments have been identified in accordance with the way in which the Group is structured andmanaged. 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.
ii (previously named Personal)ii, our direct investing platform, following its acquisition in 2022 (refer Note 1(b)(ii) for further details) and our financial
planning business, abrdn Financial Planning and Advice. It also included the Group’s discretionary fund managementbusiness until the completion of the sale of aCL on 1 September 2023. Refer Note 1 (c)(i) for further details.
These are all reported to the level of adjusted operating profit.
In addition to the Group’s reportable segments above, the analysis of adjusted profit in Section b(i) below also reports thefollowing:
Other business operations and corporate costs (Other)
Other comprises of Finimize and our digital innovation group along with certain corporate costs.

(a)(ii) Changes to basis of segmentation

As noted above, the Group now reports Other in addition to its reportable segments. Previously the Group only reported
certain corporate costs in addition to its reportable segments (reported as Corporate/strategic). These costs are now
reported within Other along with Finimize and our digital innovation group which were previously reported within
Investments. Including Finimize and our digital innovation group within Other rather than the Investments reportablesegment is considered to provide a clearer depiction of business structure and performance. Comparative amounts forthe year ended 31 December 2022 have been prepared on a consistent basis.
In addition, from January 2023 and May 2023 respectively, threesixty and our Managed Portfolio Service (MPS) businesshave been reported within Adviser, both of which were previously reported within ii. Moving threesixty to Adviser brings
together our businesses which provide services to wealth managers and advisers and prior to the completion of the sale ofaCL, our MPS business, which was retained, moved from aCL to the Adviser business in order to maximise opportunities
available through the Adviser distribution model. The impact of these changes on the Adviser and ii segments is notmaterial and comparative amounts for the year ended 31 December 2022 have not been restated.

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(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.
31 December 2023

Notes

Net operating revenue
Adjusted operating expenses
Adjusted operating profit
Adjusted net financing costs and investment
returnInvestments£mAdviser
£m

ii1
£m

Other
£m

Total
£m

878
(828)

224
(106)

287
(173)

9
(42)

1,398
(1,149)

50

118

114

(33)

249
81
330
(50)

Adjusted profit after tax

280

Adjusted for the following items
Restructuring and corporate transaction
expenses
Amortisation and impairment of intangible
assets acquired in business combinations andthrough the purchase of customer contracts
Profit on disposal of subsidiaries and otheroperations
Change in fair value of significant listed
investments
Dividends from significant listed investments
Share of profit or loss from associates and joint
ventures2
Reversal of impairment of interests in joint
ventures
Other

5

(152)

5

(189)

1

79

4
4

(178)
64

14

1

14
11

2
37

Total adjusting items including results of associates
and joint ventures

(336)
68
(11)

Tax on adjusting items
Profit attributable to other equity holders
Profit attributable to non-controlling interests –ordinary shares–

Profit for the year attributable to equity
shareholders of abrdn plc

1

Profit attributable to other equity holders
Profit attributable to non-controlling interests –ordinary shares

11

Profit for the year12–

1. Previously named Personal.
2. Share of associates’ and joint ventures’ profit or loss primarily comprises the Group’s share of results of HASL, Virgin Money Unit Trust Managers (Virgin Money
UTM) and Tenet Group Limited (Tenet).

Net operating revenue is reported as the measure of revenue in the analysis of adjusted operating profit and relates torevenues generated from external customers.
In the year ended 31 December 2023, transactions with one external customer amounted to more than 10% of net
operating revenue (2022: one). This net operating revenue of £150m (2022: £180m) is included in the Investments andAdviser segments.
Adjusted operating expenses includes depreciation and amortisation of £33m (2022: £41m); £26m (2022: £36m) for theInvestments segment; £2m (2022: £2m) for the Adviser segment; and £5m (2022: £3m) for the ii segment. Interest income,interest expense and income tax expense are not analysed by segment in the information provided to the executive
leadership team.
Assets and liabilities by segment is not required to be presented as such information is not presented on a regular basis tothe executive leadership team.

Annual report 2023

abrdn.com

179

FINANCIAL INFORMATION

Adjusted profit before tax
Tax on adjusted profit

Group financial statements continued

31 December 2022

Notes

Net operating revenue
Adjusted operating expenses
Adjusted operating profit

Investments
restated1£m

Adviser
£m

1,060
(930)

185
(99)

130

86

ii2
£m

Other
restated1£m

Total
restated3
£m

201
(129)

10
(35)

1,456
(1,193)

72

(25)

263

Adjusted net financing costs and investment
return(10)

Adjusted profit before tax
Tax on adjusted profit

253
(22)

Adjusted profit after tax

231

Adjusted for the following items
Restructuring and corporate transaction
expenses
Amortisation and impairment of intangible
assets acquired in business combinations andthrough the purchase of customer contracts
Profit on disposal of interests in associates
Change in fair value of significant listed
investments
Dividends from significant listed investments
Share of profit or loss from associates and joint
ventures3,4
Impairment of interests in associates
Other

5

(214)

5
1

(494)
6

4
4

(187)
68

14
14
11

5
(9)
(40)

Total adjusting items including results of associates
and joint ventures(865)

Tax on adjusting items
Profit attributable to other equity holders
Profit attributable to non-controlling interests ordinary shares
Loss for the year attributable to equity
shareholders of abrdn plc

88
(11)
(1)
(558)

Profit attributable to other equity holders
Profit attributable to non-controlling interests –ordinary shares

11
1
(546)

Loss for the year

1. The breakdown of net operating revenue, adjusted operating expenses and adjusted operating profit for the year ended 31 December 2022 have been
restated in line with the changes to the Group’s reportable segments (refer Section (a)(ii) above).
2. Previously named Personal.
3. Comparatives for 2022 have been restated for the implementation of IFRS 17 (refer Basis of preparation).
4. Share of associates’ and joint ventures’ profit or loss comprises the Group’s share of results of HASL, Virgin Money UTM and Tenet.

(b)(ii) Reconciliation to the Consolidated income statement

Net operating revenue
The reconciliation of net operating revenue, as presented in the analysis of Group adjusted profit by segment to revenue
from contracts with customers, as presented in the Consolidated income statement, is included in Note 3.
Adjusted operating expenses
The following table provides a reconciliation of adjusted operating expenses, as presented in the analysis of Groupadjusted profit by segment, to total administrative and other expenses, as presented in the Consolidated income
statement.

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Annual report 2023

2023
£m

2022
£m

Total administrative and other expenses as presented in the Consolidated income statement(1,463)(1,919)Restructuring and corporate transaction expenses included in adjusting items
Amortisation and impairment of intangible assets acquired in business combinations andthrough the purchase of customer contracts included in adjusting items
Administrative and other expenses relating to the unit linked business
Other differences

152

214

189
1
(28)

494
1
17

Adjusted operating expenses as presented in the analysis of Group adjusted profit by segment(1,149)(1,193)

Other differences relate to items presented in adjusted net financing costs and investment return for segment reporting(see commentary under table below) and other items classified as adjusting items (refer Note 11).

Net gains or losses on financial instruments and other income as presented in the Consolidated
income statement
Finance costs separately disclosed in the Consolidated income statement
Change in fair value of significant listed investments included in adjusting items
Dividends from significant listed investments included in adjusting items
Net gains or losses on financial instruments and other income relating to the unit linked
business
Other differences
Adjusted net financing costs and investment return as presented in the analysis of Groupadjusted profit by segment

2023
£m

2022
£m

2

(122)

(25)
178
(64)

(29)
187
(68)

(4)
(6)

(5)
27

81

(10)

Other differences primarily relate to amounts presented in a different line item of the Consolidated income statement andother items classified as adjusting items. This includes the net interest credit relating to the staff pension schemes of £34m
(2022: £29m) which is presented in total administrative and other expenses in the Consolidated income statement and inadjusted net financing costs and investment return in the analysis of Group adjusted profit by segment.

(c)

Total net operating revenue by geographical location

Total net operating revenue1 split by geographical location is as follows:
2023
£m

2022
£m

UK
Europe, Middle East and Africa
Asia Pacific
Americas

1,037
107
137
117

1,041
114
164
137

Total

1,398

1,456

2023
£m

2022
£m

UK
Europe, Middle East and Africa
Asia Pacific
Americas

1,565
33
13
130

1,745
10
8
57

Total

1,741

1,820

1. Net operating revenue is allocated based on legal entity revenue recognition.

(d)Non-current non-financial assets by geographical location

Non-current non-financial assets for this purpose consist of property, plant and equipment and intangible assets.

Annual report 2023

abrdn.com

181

FINANCIAL INFORMATION

Adjusted net financing costs and investment return
The following table provides a reconciliation of adjusted net financing costs and investment return, as presented in theanalysis of Group adjusted profit by segment, to Net gains or losses on financial instruments and other income, aspresented in the Consolidated income statement.

Group financial statements continued

3.

Net operating revenue

Net operating revenue represents revenue from contracts with customers after deduction of cost of sales.
Revenue from contracts with customers is recognised as services are provided i.e. as the performance obligation issatisfied. Performance fees and carried interest are only recognised once it is highly probable that a significant reversal
will not occur in future periods. Where revenue is received in advance (front-end fees), this income is deferred andrecognised as a deferred income liability (refer Note 32) and released to the Consolidated income statement over theperiod services are provided.
Where revenue received relates to performance obligations whose fulfilment involves another external party, forexample fund accounting or custodian services, the Group assesses if it is acting as a principal with full responsibility forthe performance obligation and control over its fulfilment or solely responsible for arranging for the third party to fulfil theperformance obligation i.e. acting as an agent. Where the Group is acting as an agent, only its share of the revenue forthe arrangement of the relevant service is recognised within revenue from contracts from customers, therefore therevenue is recognised net of the revenue passed on to the third party.
Commission and other fee expenses which relate directly to revenue are presented as cost of sales. These expenses
include ongoing commission expenses payable to financial institutions, investment platform providers and financial
advisers that distribute the Group’s products which are generally based on an agreed percentage of AUM and arerecognised in the income statement as the service is received. Other cost of sales also includes amounts payable toemployees and others relating to carried interest and performance fee revenue.

(a)

Revenue from contracts with customers

The following table provides a breakdown of total revenue from contracts with customers.
2023

2022
restated1

£m

£m

769
132
18
27

901
167
41
28

Revenue from contracts with customers for the Investments segment
Adviser
Platform charges
Treasury income
Other revenue from contracts with customers

946

1,137

184
31
11

176
11
–

Revenue from contracts with customers for the Adviser segmentii5
Fee income – Advice and Discretionary
Account fees
Trading transactions
Treasury income

226

187

57
54
48
134

87
32
27
58

Revenue from contracts with customers for the ii segment5

293

204

9

10

1,474

1,538

Investments
Management fee income – Institutional and Retail Wealth2,3Management fee income – Insurance Partners2,4
Performance fees and carried interest
Other revenue from contracts with customers

Revenue from contracts with customers for Other
Total revenue from contracts with customers

1. The breakdown of revenue from contracts with customers for the year ended 31 December 2022 has been restated in line with the changes to the Group’sreportable segments. Refer Note 2 for further details.
2. In addition to revenues earned as a percentage of AUM, management fee income includes certain other revenues not based on a percentage of AUM.
3. Previously named Institutional and Wholesale.
4. Previously named Insurance.
5. Previously named Personal.

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Investments

Through a number of its subsidiaries, the Group provides asset management services to its customers. This performanceobligation is performed over time with the revenue recognised as the obligation is performed. The Group generally
receives asset management fees based on the percentage of the assets under management. The percentage varies
depending on the level and nature of assets under management. Asset management fees are either deducted fromassets or invoiced. Deducted fees are generally calculated, recognised and collected on a daily basis. Other asset
management fees are invoiced to the customer either monthly or quarterly with receivables recognised for unpaid
invoices. The payment terms for invoiced revenue vary but are typically 30 days from receipt of invoice. Accrued income isrecognised to account for income earned but not yet invoiced which is not dependent on any future performance.

AdviserThrough a number of its subsidiaries, the Group offers customers access to fund platforms. The platforms give customers
the ongoing functionality to manage and administer their investments. This performance obligation is performed over timewith the revenue recognised as the obligation is performed. Customers pay a platform charge which is generally
calculated as a percentage of their assets. The percentage varies depending on the level of assets on the specific platform.
The main platform charges are calculated either daily or monthly and are collected and recognised monthly. The charges
are collected directly from assets on the platform. There are no significant payment terms.
In addition, Adviser receives treasury income for providing management and administration of cash held in platform cash
accounts. The performance obligation for cash management and administration is performed over time with the revenue
recognised as the obligation is performed. The customer receives interest on their cash balances after deduction of a cash
management administration charge which is generally calculated as a percentage of their cash held in relevant accounts.
The percentage varies depending on the interest received from the banks used to provide the cash accounts. There are no
significant payment terms.

ii

Through a number of its subsidiaries, the Group also offers financial planning and discretionary fund management
services. The sale of the Group’s primary discretionary fund management business completed on 1 September 2023
(refer Note 1(c)(i) for further details) and the Managed Portfolio Service business has been reported within Adviser fromMay 2023 since its transfer from aCL.
Financial planning is either provided on a one-off basis or on an ongoing basis. The performance obligation for one-off
advice is performed at a point in time with the revenue recognised when the advice is provided. The performanceobligation for ongoing financial planning is performed over time with the revenue recognised as the obligation is
performed. The Group generally receives ongoing financial planning fees based on the percentage of the assets underadvice. One-off financial planning fees are invoiced to the customer following delivery of the advice. Ongoing financial
planning fees are invoiced to the customer or a designated financial provider either monthly or quarterly. Receivables arerecognised for unpaid invoices. The payment terms for invoiced revenue vary but are typically 30 days from receipt of
invoice. Accrued income is recognised to account for income earned but not yet invoiced which is not dependent on any
future performance. The performance obligation for discretionary fund management services is also performed over timewith the revenue recognised as the obligation is performed. The Group generally receives discretionary fundmanagement services fees based on the percentage of the assets under management. The percentage varies
depending on the level and nature of assets under management. Discretionary fund management services fees are
deducted from assets. Deducted fees are generally calculated, recognised and collected on a daily basis.
Through its subsidiary Interactive Investor Services Limited (ii), the Group offers a subscription-based trading and direct
investing platform. The services that ii offers are provided on both a point in time and an over time basis.
Customers pay monthly account fees as part of ii’s subscription model. Account fees are invoiced monthly and arepayable immediately from the customer’s account, with receivables recognised if there are insufficient funds available.
The account fees cover the performance obligation to provide the customer with access to the platform and custody
services. For certain subscription levels, the account fee also entitles the customer to receive trading credits which can beredeemed against future trades. For these subscription levels, the account fees also cover ii’s performance obligation to
perform these future trades. In accordance with IFRS 15, the account fees are allocated to the two performanceobligations. Access to the platform and custody services is provided over time and the account fees revenue allocated tothis performance obligation is recognised over the calendar month as the customer receives the benefit of these services.
Trading credits need to be used by the customer within 31 days of the credit arising, therefore the revenue is recognisedover the calendar month as a reasonable approximation of when the performance obligation is satisfied at a point in timewithin the month.
Annual report 2023

abrdn.com

183

FINANCIAL INFORMATION

There is also some use of performance fees and carried interest arrangements. Performance fees and carried interest areearned from some investment mandates when contractually agreed performance levels are exceeded within specified
performance measurement periods. Performance fees and carried interest are only recognised once it is highly probablethat a significant reversal will not occur in future periods. Given the unpredictability of future performance, the risk of asignificant reversal occurring will typically only be considered low enough to make recognition appropriate upon the
crystallisation event occurring.

Group financial statements continued
In addition, ii performs additional trades and foreign exchange transactions for its customers. These are performed at apoint in time with the revenue recognised at the trade date of the transaction. Trading fees for transactions not covered bytrading credits are generally charged on a flat fee basis with larger international share trades charged based on apercentage of the trade value. These are added to the cost of purchasing shares or deducted from the proceeds from thesale of shares with receivables recognised for unsettled trades. For foreign exchange trades, ii receives a margin (varying
depending on the size of the transaction) via a third party in the month following the transaction, with receivables
recognised prior to the payment.
In addition, ii is entitled to receive treasury income in relation to its performance obligations to the customer. Treasury
income is the interest earned on cash balances less the interest paid to customers based on the client money balancesheld with third party banks and by reference to the applicable interest rates. Treasury income is recognised on an overtime basis with accrued income recognised for unpaid interest.

(b)

Cost of sales

The following table provides a breakdown of total cost of sales.
2023
£m

2022
£m

Cost of sales
Commission expenses
Other cost of sales

64
12

66
16

Total cost of sales

76

82

Other cost of sales includes amounts payable to employees and others relating to carried interest and performance feerevenue. Cost of sales for each of the Group’s reportable segments is disclosed in Section (c) below.

(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 consolidated
income statement to net operating revenue as presented in the analysis of adjusted operating profit (see Note 2(b) for
each of the Group’s reportable segments).
Investments£mAdviser
£m

ii
£m

Other
£m

Total
£m

Revenue from contracts with customers
Cost of sales

946
(68)

226
(2)

293
(6)

9
–

1,474
(76)

Net operating revenue

878

224

287

9

1,398

Investments
restated1

Adviserii

Otherrestated1

Total

2023

£m

£m

£m

£m

£m

Revenue from contracts with customers
Cost of sales

1,137
(77)

187
(2)

204
(3)

10
–

1,538
(82)

Net operating revenue

1,060

185

201

10

1,456

2022

1. The breakdown for the year ended 31 December 2022 has been restated in line with the changes to the Group’s reportable segments. Refer Note 2 forfurther details.

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

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(d)Contract receivables, assets and liabilities

The Group has recognised the following receivables, assets and liabilities in relation to contracts with customers.

Amounts receivable from contracts with customers
Accrued income from contracts with customers
Cost of obtaining customer contracts
Deferred acquisition costs

31 December
2022£m

1 January
2022
£m

19
19
13
20

110
306
48
–

161
273
27
1

135
260
37
3

464

462

435

31 December
2023

31 December
2022

1 January
2022

Notes

£m

£m

£m

32

4

3

5

4

3

5

abrdn.com

185

Total contract receivables and assets

Deferred Income
Total contract liabilities

Annual report 2023

FINANCIAL INFORMATION

Notes

31 December
2023£mGroup financial statements continued

4.

Net gains or losses on financial instruments and other income

Gains and losses resulting from changes in both market value and foreign exchange on investments classified as fairvalue through profit or loss are recognised in the consolidated income statement in the period in which they occur. The
gains and losses include investment income received such as interest payments and dividend income. Dividend income
is recognised when the right to receive payment is established.
Interest income on financial instruments measured at amortised cost is separately recognised in the consolidated
income statement using the effective interest rate method. The effective interest rate method allocates interest andother finance costs at a constant rate over the expected life of the financial instrument, or where appropriate a shorter
period, by using as the interest rate the rate that exactly discounts the future cash receipts over the expected life to the
net carrying value of the instrument.
Other income includes income related to vacant property and fair value movements in contingent consideration.

2023
£m

2022
£m

Fair value movements on significant listed investments (other than dividend
income)Dividend income from significant listed investments

(178)
64

(187)
68

Total fair value movements and dividend income on significant listed investments

(114)

(119)

Non-unit linked business – excluding significant listed investments
Net gains or losses on financial instruments at fair value through profit or loss
Interest and similar income from financial instruments at amortised cost
Foreign exchange gains or losses on financial instruments at amortised cost
Other income

6
76
(7)
37

(83)
25
9
41

Net gains or losses on financial instruments and other income – non-unit linked
business – excluding significant listed investments

112

(8)

Unit linked businessNet 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
Change in non-participating investment contract financial liabilities
Change in liability for third party interests in consolidated funds

69
(65)
(1)

(130)
112
23

Total net gains or losses on financial instruments at fair value through profit or
loss

3

5

Interest and similar income from financial instruments at amortised cost

1

-

4

5

116

(3)

2

(122)

Notes

Fair value movements and dividend income on significant listed investments

Net gains or losses on financial instruments and other income – unit linked business1
Total other net gains or losses on financial instruments and other income
Total net gains or losses on financial instruments and other income

23

1. In addition to the Net gains or losses on financial instruments and other income – unit linked business of £4m (2022: £5m), there are administrative expenses
and policyholder tax of £1m (2022: £1m) and £3m (2022: £4m) respectively relating to unit linked business for the account of policyholders so the result
attributable to unit linked business for the year is £nil (2022: £nil). Refer Note 23 for further details.

Fair value movements on significant listed investments (other than dividend income) of losses of £178m (2022: losses of£187m) comprises losses of £5m relating to HDFC Life (2022: losses of £38m), losses of £96m relating to HDFC AssetManagement (2022: losses of £105m) and losses of £77m relating to Phoenix (2022: losses of £44m).
Dividend income from significant listed investments of £64m (2022: £68m) comprises £54m (2022: £52m) relating toPhoenix, £10m (2022: £15m) relating to HDFC Asset Management and £nil (2022: £1m) relating to HDFC Life.

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5.

Administrative and other expenses
Notes

2023
£m

2022
£m

8

152

214

13

63

368

Impairment of intangibles acquired through the purchase of customer
contracts

13

–

1

63

369

13

115

115

13

11

10

6

126
529
593

125
549
662

1,463

1,919

Total impairment of intangibles acquired in business combinations and throughthe purchase of customer contracts
Amortisation of intangibles acquired in business combinations and through thepurchase of customer contracts
Amortisation of intangibles acquired in business combinations
Amortisation of intangibles acquired through the purchase of customer
contracts
Total amortisation of intangibles acquired in business combinations and throughthe purchase of customer contracts
Staff costs and other employee-related costs
Other administrative expenses1,2
Total administrative and other expenses3

1. Other administrative expenses in 2022 included expense relating to a single process execution event provision. Other administrative expenses in 2023
includes a related credit for the recovery from the Group’s liability insurance for this provision which was received in 2023. Refer Note 33 for further details.
2. Other administrative expenses includes interest expense of £4m (2022: £2m). In addition, interest expense of £19m (2022: £23m) was incurred in respect ofsubordinated liabilities and the related cash flow hedge (refer Note 18) and interest expense of £6m (2022: £6m) in respect of lease liabilities (refer Note 16)
which are included in Finance costs in the consolidated income statement.
3. Total administrative and other expenses includes £1m (2022: £1m) relating to unit linked business. Refer Note 23 for further details.

6.

Staff costs and other employee-related costs
Notes

The aggregate remuneration payable in respect of employees:
Wages and salaries
Social security costs
Pension costs
Defined benefit plans
Defined contribution plans
Employee share-based payments and deferred fund awards

40

Total staff costs and other employee-related costs

2023
£m

2022
£m

443
51

452
50

(39)
55
19

(29)
56
20

529

549

In addition, wages and salaries of £18m (2022: £25m), social security costs of £4m (2022: £3m), pension costs – defined
benefit plans of £nil (2022: less than £1m), pension costs – defined contribution plans of less than £1m (2022: £1m),
employee share-based payments and deferred fund awards relating to transformation, leavers and corporatetransactions of £12m (2022: £6m) and termination benefits of £44m (2022: £53m) have been included in restructuring andcorporate transaction expenses. Refer Note 8. A further £4m (2022: £11m) of expenses are included in other cost of sales inrelation to amounts payable to employees and former employees relating to carried interest and performance feerevenue. Refer Note 3.
The following table provides an analysis of the average number of staff employed by the Group during the year.
2023

2022

Investments
Adviserii (previously named Personal)
IT and support functions1

2,132
536
1,138
1,252

2,344
658
928
1,369

Total employees

5,058

5,299

1. Previously named Operations, IT and support functions. All roles classified as Operations have been allocated directly to the reportable segment since 2022.

Annual report 2023

abrdn.com

187

FINANCIAL INFORMATION

Restructuring and corporate transaction expenses
Impairment of intangibles acquired in business combinations and through thepurchase of customer contracts
Impairment of intangibles acquired in business combinations

Group financial statements continued
Information in respect of Directors’ remuneration is provided in the Directors’ remuneration report on pages 115 to 134. In
addition to the total remuneration disclosed as paid to the Director for the prior year are amounts paid to those Directors
who stepped down from the Board during 2022 being £50,000 to Martin Pike, £42,000 to Jutta af Rosenberg and £81,000 to
Cecilia Reyes. This is as disclosed in the 2022 Directors’ remuneration report.

7.

Auditors’ remuneration

The following table shows the auditors’ remuneration during the year.
2023
£m

2022
£m

Fees payable to the Company’s auditors for the audit of the Company’s individual andconsolidated financial statements
Fees payable to the Company’s auditors for other services
The audit of the Company’s consolidated subsidiaries pursuant to legislation
Audit related assurance services

2.1

1.5

5.1
2.8

4.7
2.3

Total audit and audit related assurance fees

10.0

8.5

Other assurance services
Other non-audit fee services

1.0
–

1.0
0.3

Total non-audit fees

1.0

1.3

Total auditors’ remuneration

11.0

9.8

Auditors’ remuneration disclosed above excludes audit and non-audit fees payable to the Group’s principal auditor byGroup managed funds which are not controlled by the Group, and therefore not consolidated in the Group’s financial
statements.
During the year ended 31 December 2023 no audit fees were payable in respect of defined benefit plans to the Group’s
principal auditor (2022: £nil).
For more information on non-audit services, refer to the Audit Committee report in the Corporate governance statement.

8.

Restructuring and corporate transaction expenses

Total restructuring and corporate transaction expenses during the year were £152m (2022: £214m). Restructuring
expenses of £121m (2022: £169m) mainly consisting of property related impairments, severance, platform transformationand specific costs to effect savings in Investments. This was partly offset by a £32m release of the provision for separation
costs. Refer Note 33 for further details. Corporate transaction expenses were £31m (2022: £45m) and include deal costs
relating to acquisitions for the year ended 31 December 2023 of £2m (2022: £14m). Further information on restructuring
and corporate transaction expenses can be found in Section 1.1 of Supplementary information.

188

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Annual report 2023

9.

Taxation

The Group’s tax expense comprises both current tax and deferred tax expense.
Current tax is the expected tax payable on taxable profit for the year and is calculated using tax rates and laws
substantively enacted at the balance sheet date.

Deferred tax is recognised on temporary differences arising from investments in subsidiaries and associates unless thetiming of the reversal is in our control and it is expected that the temporary difference will not reverse in the foreseeable
future.
The Group applies the exception to recognising and disclosing information about deferred tax assets and liabilities
related to Pillar Two income taxes.
Current tax and deferred tax are recognised in the consolidated income statement except when it relates to items
recognised in other comprehensive income or directly in equity, in which case it is credited or charged to othercomprehensive income or directly to equity respectively.
The Group operates in a number of territories and during the normal course of business will be subject to audit or enquiry
by local tax authorities. At any point in time the Group will also be engaged in commercial transactions the tax outcomeof which may be uncertain due to their complexity or uncertain application of tax law. Tax provisions, therefore, aresubjective by their nature and require management judgement based on the interpretation of legislation, management
experience and professional advice. As such, this may result in the Group recognising provisions or disclosing contingent
liabilities for uncertain tax positions. Management will provide for uncertain tax positions where they judge that it isprobable there will be a future outflow of economic benefits from the Group to settle the obligation. Where a future
outflow of economic benefits is judged as less than probable but more than remote, a contingent liability will be
disclosed, where material. In assessing uncertain tax positions management considers each issue on its own merits
using their judgement as to the estimate of the most likely outcome. When making estimates, management considers
all available evidence. This may include forecasts of future profitability, the frequency and severity of any losses, andstatutory carry forward and carry back provisions as well as management experience of tax attributes expiring withoutuse. Where the final outcome differs from the amount provided this difference will impact the tax charge in future
periods. Management re-assesses provisions at each reporting date based upon latest available information.

(a)

Tax charge in the consolidated income statement(a)(i) Current year tax expense

2023
£m

2022
£m

Current tax:
UK
Overseas
Adjustment to tax expense in respect of prior years

17
51
(2)

5
45
(8)

Total current tax

66

42

Deferred tax:
Deferred tax credit arising from the current year
Adjustment to deferred tax in respect of prior years

(69)
(15)

(104)
(4)

Total deferred tax

(84)

(108)

Total tax credit 1

(18)

(66)

1. The tax credit of £18m (2022: £66m) includes a tax expense of £3m (2022: £4m) relating to unit linked business. Refer Note 23 for further details.

In 2023 unrecognised tax losses from previous years were used to reduce the current tax expense by £2m (2022: £3m).
Current tax recoverable and current tax liabilities at 31 December 2023 were £10m (2022: £7m) and £6m (2022: £11m)
respectively. In addition current tax recoverable and current tax liabilities in relation to unit linked business were £nil (2022:
less than £1m) and £nil (2022: less than £1m) respectively. Current tax assets and liabilities are expected to be recoverable
or payable in less than 12 months at both 31 December 2023 and 31 December 2022.
Annual report 2023

abrdn.com

189

FINANCIAL INFORMATIONA deferred tax asset represents a tax deduction that is expected to arise in a future period. It is only recognised to theextent that it is probable that the tax deduction will be capable of being offset against taxable profits and gains in future
periods. A deferred tax liability represents taxes which will become payable in a future period as a result of a current or
prior year transaction. Where local tax law allows, deferred tax assets and liabilities are netted off on the statement offinancial position. The tax rates used to determine deferred tax are those enacted or substantively enacted at thebalance sheet date that are expected to apply when the deferred tax asset or liability are realised. Any tax
consequences of distributions on other equity instruments are credited to the statement in which the profit distributed
originally arose.

Group financial statements continued(a)(ii) Reconciliation of tax expense
2023
£m

2022
restated1£m

Loss before tax

(6)

(612)

Tax at 23.5% (2022: 19%)
Remeasurement of deferred tax due to rate changes
Permanent differences
Non-taxable dividends from significant listed investments
Non-taxable fair value movements on significant listed investments
Tax effect of accounting for Share of profit or loss from associates and joint ventures
Tax effect of distributions on other equity instruments
Impairment losses on goodwill
Impairment of investment in associates and joint ventures
Differences in overseas tax rates
Adjustment to current tax expense in respect of prior years
Recognition of previously unrecognised deferred tax credit
Deferred tax not recognised
Adjustment to deferred tax expense in respect of prior years
Non-taxable profit or loss on sale of subsidiaries, associates and significant listed investments
Other

(1)
(5)
1
(13)
18
–
(3)
15
–
4
(2)
(1)
2
(15)
(18)
-

(116)
(15)
1
(13)
21
(2)
(2)
65
2
5
(8)
(3)
4
(4)
(5)
4

Total tax credit for the year

(18)

(66)

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.

The standard UK Corporation Tax rate for the accounting period is 23.5%. The rate of UK Corporation Tax increased from
19% to 25% with effect from 1 April 2023.
The accounting for certain items in the consolidated income statement results in certain reconciling items in the table
above, the values of which vary from year to year depending upon the underlying accounting values.
Details of significant reconciling items are as follows:– Dividend income and fair value movements from our investments in Phoenix not being subject to tax.
– Movements in the fair value of our investment in HDFC Asset Management being tax effected at the Indian long-term
capital gains tax rate, which is lower than the UK Corporation Tax rate.
– Profit on the sale of abrdn Capital not being subject to tax.
– Goodwill impairments not deductible for tax purposes.
– Prior year adjustments to deferred tax liabilities on intangibles.

(b)

Tax relating to components of other comprehensive income

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

2023
£m

2022
£m

Tax relating to fair value gains and losses recognised on cash flow hedges
Tax relating to cash flow hedge gains and losses transferred to consolidated income statement

(10)
7

21
(19)

Equity holder tax effect relating to items that may be reclassified subsequently to profit or loss(3)

2

Tax relating to other comprehensive income(3)2

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

190

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Annual report 2023

(c)Deferred tax assets and liabilities(c)(i) Analysis of recognised deferred tax
2022£mDeferred tax assets comprise:
Losses carried forward
Depreciable assets
Employee benefits
Provisions and other temporary timing differences

160
35
20
7

170
33
26
5

Gross deferred tax assets

222

234

(7)

(22)

Deferred tax assets

215

212

Deferred tax liabilities comprise:
Unrealised gains on investments
Deferred tax on intangible assets acquired through business combinations
Other

4
124
8

60
162
11

Gross deferred tax liabilities

136

233

Less: Offset against deferred tax liabilities

(7)

(22)

Deferred tax liabilities

129

211

Net deferred tax asset at 31 December

861

Less: Offset against deferred tax assets

A deferred tax asset of £160m (2022: £170m) has been recognised by the Group in respect of losses of the parent
company and various subsidiaries. The decrease in this deferred tax asset in 2023 reflects the utilisation of brought forward
losses against taxable profits in the year.
Deferred tax assets are recognised to the extent that it is probable that the losses will be capable of being offset against
taxable profits and gains in future periods. The value attributed to them takes into account the certainty or otherwise of theirrecoverability. Their recoverability is measured against the reversal of deferred tax liabilities and anticipated taxable profits
and gains based on business plans. The deferred tax asset recognised on losses relates to UK entities where there is currently
no restriction on the period of time over which losses can be utilised. Recognition of this deferred tax asset requires thatmanagement must consider if it is more likely than not that this asset will be recoverable in future periods against future profits
arising in the UK. In making this assessment management have considered future operating plans and forecast taxable
profits and are satisfied that, following completion of transformation activities, forecast taxable profits will be sufficient toenable recovery of the UK tax losses. The financial forecasts considered were consistent with those used for the assessmentof the Group’s intangible assets (refer Note 13). Based upon the level of forecast taxable profits management do not consider
there is significant risk of a material adjustment to the carrying amount of the deferred tax asset on UK tax losses within thenext financial year. Management expect the deferred tax asset to be utilised over a period of between five and seven years.
Deferred tax liabilities relating to unrealised gains on investments at 31 December 2022 of £60m included £52m relating to
the Group’s investment in HDFC Asset Management. This investment was sold in 2023 (refer Note 11(a) for further details).
Deferred tax assets of £215m (2022: £212m) and liabilities of £129m (2022: £211m) are expected to be recovered or
settled after more than 12 months.

(c)(ii) Movements in deferred tax assets and liabilities

Losses carriedforwardDepreciable
assetsProvisions andothertemporary
Employeetimingbenefits
differences

Unrealised
gains oninvestments

Deferred tax
on intangible
assetsacquiredthroughbusiness
combinations

Net deferred
tax asset

£m

£m

£m

£m

£m

£m

Other
£m

At 1 January 2023

170

33

26

5

(60)

(162)

(11)

1

Amounts (expensed) in/credited to theconsolidated income statement
Tax on cash flow hedge
Other

(10)
–
–

2
–
–

(6)
–
–

2
–
–

56
–
–

38
–
–

2
3
(2)

84
3
(2)

At 31 December 2023

160

35

20

7

(4)

(124)

(8)

86

abrdn.com

191

Annual report 2023

£m

FINANCIAL INFORMATION

2023
£m

Group financial statements continued

Lossescarriedforward£m

Depreciable
assets£m

Employeebenefits£m

Provisions
and other
temporarytimingdifferences£m

Deferred tax
on intangible
assetsacquired
Unrealised
throughgains onbusiness
investments combinations
£m
£m

Other
£m

Net deferred
tax asset
£m

129

25

30

4

(104)

(72)

(9)

3

Acquired through businesscombinations

–

5

–

–

–

(114)

–

(109)

Amounts (expensed) in/credited to theconsolidated income statement
Tax on cash flow hedge
Other

41
–
–

3
–
–

(5)
–
1

1
–
–

44
–
–

24
–
–

–
(2)
–

108
(2)
1

At 31 December 2022

170

33

26

5

(60)

(162)

(11)

1

At 1 January 2022(d)Unrecognised deferred tax

Due to uncertainty regarding recoverability, deferred tax assets have not been recognised in respect of the following:– Cumulative losses carried forward of £91m (2022: £81m) in the UK and losses and other temporary differences of£360m (2022: £275m) in the US, losses of £10m in China (2022: £11m), losses of £10m in Japan (2022: £13m) and lossesof £9m (2022: £19m) in other overseas jurisdictions.
Of these unrecognised deferred tax assets, certain losses have expiry dates as follows:– US losses of £140m with expiry dates between 2035-2037 (2022: £79m).
– Other overseas losses of £21m with expiry dates between 2024-2033 (2022: £27m).
The following table provides an analysis of the losses with expiry dates for unrecognised deferred tax assets.
2023
£m

2022
£m

Less than 1 year
Greater than or equal to 1 year and less than 5 years
Greater than or equal to 5 years and less than 10 years
Greater than 10 years

4
9
8
140

5
11
11
79

Total losses with expiry dates

161

106

There is unrecognised deferred tax of £18m (2022: £nil) relating to temporary timing differences associated withinvestments in subsidiaries, branches and associates and interests in joint arrangements.

(e) Pillar Two taxes

The Group is within the scope of the OECD Pillar Two model rules. Pillar Two legislation was enacted in the UK, thejurisdiction in which abrdn plc is incorporated, and came into effect from 1 January 2024. The Group expects to be subject
to top-up taxes in relation to its operations in Guernsey, where the statutory rate is below 15% and in Singapore wherecertain qualifying income is subject to a concessionary tax rate of 10% under the Singapore Financial Sector Incentive forFund Managers. The Group also expects to be subject to top up taxes in the UK, in relation to its overseas joint ventures witha local effective tax rate below 15%. However, since the newly enacted tax legislation is only effective from 1 January 2024,
there is no current tax impact for the year ended 31 December 2023.
As noted above, the Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the
top-up tax and accounts for it as a current tax when it is incurred.
If the top-up tax had applied in 2023, then the associated profits relating to the Group’s operations for the year ended 31
December 2023 that would be subject to it amount to £48.6m, with the average effective tax rate applicable to those
profits during 2023 being 12 percent.

192

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Annual report 2023

10.

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 havenot vested unconditionally to employees.
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue during theperiod to assume the conversion of all dilutive potential ordinary shares, such as share options granted to employees.
Details of the share options and awards issued under the Group’s employee plans are provided in Note 40.
Adjusted earnings per share is calculated on adjusted profit after tax attributable to ordinary equity holders of theCompany.

2023
£m

2022
restated1£m

Adjusted profit before tax
Tax on adjusted profit

330
(50)

253
(22)

Adjusted profit after tax

280

231

Attributable to:
Other equity holders
Non-controlling interests – ordinary shares

(11)
–

(11)
(1)

Adjusted profit after tax attributable to equity shareholders of abrdn plc

269

219

Total adjusting items including results of associates and joint ventures
Tax on adjusting items

(336)
68

(865)
88

1

(558)

Profit/(loss) attributable to equity shareholders of abrdn plc

2023

2022

Millions

Millions

Weighted average number of ordinary shares outstanding
Dilutive effect of share options and awards

1,902
28

2,094
16

Weighted average number of diluted ordinary shares outstanding

1,930

2,110

In accordance with IAS 33, no share options and awards were treated as dilutive for the year ended 31 December 2022
due to the loss attributable to equity holders of abrdn plc in that period. This resulted in the diluted earnings per share andadjusted diluted earnings per share being calculated using the weighted average number of ordinary shares of 2,094
million.
2023

2022
restated1

Pence

Pence

0.1

(26.6)

Diluted earnings per share

0.1(26.6)

Adjusted earnings per share

14.1

10.5

Adjusted diluted earnings per share

13.9

10.5

abrdn.com

193

Basic earnings per share

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.

Annual report 2023

FINANCIAL INFORMATION

Basic earnings per share was 0.1p (2022: 26.6p) and diluted earnings per share was 0.1p (2022: 26.6p) for the year ended
31 December 2023. The following table shows details of basic, diluted and adjusted earnings per share.

Group financial statements continued

11.

Adjusted profit and adjusting items

Adjusted profit excludes the impact of the following items:– Restructuring and corporate transaction expenses. Restructuring includes the impact of major regulatory change.
– Amortisation and impairment of intangible assets acquired in business combinations and through the purchase ofcustomer contracts.
– Profit or loss arising on the disposal of a subsidiary, joint venture or equity accounted associate.
– Change in fair value of/dividends from significant listed investments (see (a) below).
– Share of profit or loss from associates and joint ventures.
– Impairment loss/reversal of impairment loss recognised on investments in associates and joint ventures accounted
for using the equity method.
– Fair value movements in contingent consideration.
– Items which are one-off and, due to their size or nature, are not indicative of the long-term operating performance of
the Group.
The tax charge or credit allocated to adjusting items is based on the tax treatment of each adjusting item.
The operating, investing and financing cash flows presented in the 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 fromassociates to equity securities and considered significant listed investments of the Group. Fair value movements on theseinvestments 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 year ended 31 December 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 sharesthrough 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 year ended 31 December 2023 include:– £36m for an insurance liability recovery in relation to the single process execution event in 2022. The £41m provision
expense was included in other adjusting items for the year ended 31 December 2022. Refer Note 33.
– A £23m gain (2022: £35m gain) for net fair value movements in contingent consideration.
– £21m for provision expense relating to a potential tax liability. Refer Note 33.
– A £5m fair value loss (2022: £11m loss) on a financial instrument liability related to a prior period acquisition.
– A gain of £4m (2022: loss of £13m) in relation to market gains and 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.

194

abrdn.com

Annual report 2023

12.

Dividends on ordinary shares

Dividends are distributions of profit to holders of abrdn plc’s share capital and as a result are recognised as a deduction in
equity. Final dividends are announced with the Annual report and accounts and are recognised when they have been
approved by shareholders. Interim dividends are announced with the Half year results and are recognised when they
are paid.

2023
Pence per share

Prior year’s final dividend paid
Interim dividend paid

7.30
7.30

142
137

2022
Pence per share

7.30
7.30

279

Total dividends paid on ordinary shares
7.30

130

£m

154
153
307

7.30

142

1. Estimated for current year final recommended dividend.

The final recommended dividend will be paid on 30 April 2024 to shareholders on the Company’s register as at 15 March
2024, subject to approval at the 2024 Annual General Meeting. After the current year final recommended dividend, thetotal dividend in respect of the year ended 31 December 2023 is 14.60p (2022: 14.60p).

Annual report 2023

abrdn.com

195

FINANCIAL INFORMATION

Current year final recommended dividend£m1Group financial statements continued

13.

Intangible assets

Goodwill is created when the Group acquires a business and the consideration exceeds the fair value of the net assets
acquired. In determining the net assets acquired in business combinations, intangible assets are recognised where they
are separable or arise from contractual or legal rights. Intangible assets acquired by the Group through businesscombinations consist mainly of customer relationships and investment management contracts, technology and brands.
Any remaining value that cannot be identified as a separate intangible asset on acquisition forms part of goodwill.
In addition to intangible assets acquired through business combinations, the Group recognises as intangible assets
software which has been developed internally and other purchased technology which is used in managing andexecuting our business. Costs to develop software internally are capitalised after the research phase and when it has
been established that the project is technically feasible and the Group has both the intention and ability to use thecompleted asset.
Intangible assets are recognised at cost and amortisation is charged to the income statement over the length of time
the Group expects to derive benefits from the asset. The allocation of the income statement charge to each reporting
period is dependent on the expected pattern over which future benefits are expected to be derived. Where this pattern
cannot be determined reliably the charge is allocated on a straight-line basis.
Goodwill is not charged to the income statement unless it becomes impaired.
The Group also recognises the cost of obtaining customer contracts (refer Note 3) as an intangible asset. These costs
primarily relate to the cost of acquiring existing investment management contracts from other asset managers andcommission costs for initial investors into new closed-end funds where these are borne by the Group. For the cost ofobtaining customer contracts, the intangible asset is amortised on the same basis as the transfer to the customer of theservices to which the intangible asset relates.
Acquired through business combinations

Goodwill

Customer
relationships andinvestment
management
Brand
contracts

Technology
and other

Internallydeveloped
software1

Purchased
softwareand other

Cost ofobtainingcustomer
contracts

Total

£m

£m

£m

£m

£m

£m

£m

£m

Gross amountAt 1 January 2022
Reclassified as held for sale during the year
Disposals and adjustments
Additions – ii
Additions – other

3,721
(49)
–
993
–

94
–
–
16
–

1,088
(28)
2
421
–

69
–
–
32
–

131
–
–
–
6

5
–
–
–
–

104
–
1
–
–

5,212
(77)
3
1,462
6

At 31 December 2022

4,665

110

1,483

101

137

5

105

6,606

–
41
(2)

1
–
–

(4)
78
(4)

–
–
–

2
8
–

–
–
–

–
33
(1)

(1)
160
(7)

At 31 December 2023

4,704

111

1,553

101

147

5

137

6,758

Accumulated amortisation and impairment
At 1 January 2022
Reclassified as held for sale during the year
Amortisation charge for the year2
Impairment losses recognised3(3,390)
–
–
(340)

(82)
–
(14)
–

(774)
19
(91)
(28)

(64)
–
(10)
–

(127)
–
(3)
–

(4)
–
(1)
–

(67) (4,508)–
19(10) (129)(1) (369)

At 31 December 2022

(3,730)

(96)

(874)

(74)

(130)

(5)

(78) (4,987)

–
(62)

(4)
–

(99)
(1)

(12)
–

(2)
(2)

–
–

(11)
–

At 31 December 2023

(3,792)

(100)

(974)

(86)

(134)

(5)

(89) (5,180)

Carrying amountAt 1 January 2022
At 31 December 2022
At 31 December 2023

331
935
912

12
14
11

314
609
579

5
27
15

4
7
13

1
–
–

37
27
48

Disposals and adjustments
Additions
Foreign exchange adjustment

Amortisation charge for the year2
Impairment losses recognised3

(128)
(65)

704
1,619
1,578

1. Included in the internally developed software of £13m (2022: £7m) is £10m (2022: £5m) relating to intangible assets not yet ready for use.
2. For the year ended 31 December 2023, £126m (2022: £125m) of the amortisation charge is recognised in Amortisation of intangibles acquired in businesscombinations and through the purchase of customer contracts with £2m (2022: £4m) recognised in Other administrative expenses.
3. For the year ended 31 December 2023, £63m (2022: £369m) of impairment is recognised in Impairment of intangibles acquired in business combinations andthrough the purchase of customer contracts with £2m (2022: £nil) recognised in Restructuring and corporate transaction expenses.

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At 31 December 2023, there was:– £39m (2022: £nil) of goodwill attributable to the abrdn Inc. cash-generating unit (CGU) in the Investments segment inrelation to the acquisition of the healthcare fund management capabilities of Tekla (refer Note 1(b)(i) for further
details).
– £819m (2022: £819m) and £24m (2022: £60m) of goodwill attributable to the ii CGU and abrdn financial planningbusiness CGU respectively in the ii segment (previously named Personal). At 31 December 2022 goodwill of £49m
relating to the ii segment was classified as held for sale in relation to the sale of aCL which completed in 2023 (refer Note1(c)(i) for further details).
– £25m (2022: £25m) of goodwill is attributable to an Adviser segment CGU. Prior to January 2023, this goodwill which
relates to the acquisition of threesixty was attributable to a CGU in the ii segment.
– £5m (2022: £31m) of goodwill attributable to the Finimize CGU which is reported within Other business operations andcorporate costs. Finimize was previously included within the Investments segment.

Tekla investment management contract intangible assets

Investment management
contract intangible asset

Description

Useful life atacquisition date

Tekla Healthcare
Opportunities Fund
Tekla Healthcare
Investors

Investment management contract with
Tekla Healthcare Opportunities Fund
Investment management contract with
Tekla Healthcare Investors

12.1 years
12.1 years£m

Carrying
value
2023
£m

Carrying
value
2022
£m

28

26

N/A

25

23

N/A

Fair value on
acquisition date

The key assumptions, other than the useful life, in measuring the fair value of the investment contract intangible assets at
acquisition date were as follows:– Revenue growth – this assumption was based on past experience of growth for each fund in prior periods before
reverting to a long term growth in line with inflation estimates. Management fee rates are assumed to stay in line withcurrent rates.
– Operating margin – this assumption was based on the expected EBITDA of each acquired investment management
contract.
– Discount rate – this assumption was based on a risk adjusted internal rate of return (IRR) of the transaction.
As with prior significant acquisitions, the Group made use of assistance from a third-party valuation specialist in
determining the value of the customer intangibles.
As the investment management contracts relate to closed-end funds, the straight-line method of amortisation isconsidered appropriate for these intangibles. There has been no change to the useful lives and therefore the residual usefullife of these investment management contract intangible assets is 11.9 years.

ii intangible assets

On acquisition of ii, customer relationships, brand and technology and other intangibles of £421m, £16m and £32m
respectively were recognised. Identification and valuation of intangible assets acquired in business combinations is a key
judgement. The description of the individually material intangible asset including the estimated useful life at the acquisition
date of 27 May 2022 was as follows:
Customer relationshipintangible asset

Description

Useful life atacquisition date

Customer baseii’s customer base at the date of acquisition

15 years£m

Carrying value2023£m

Carrying value
2022
£m

421

340

390

Fair value on
acquisition date

The key assumptions in measuring the fair value of this intangible asset at acquisition date were as follows:– Revenue per customer growth – comprises expected growth in account fees, treasury income and tradingtransactions revenue from ii business plans. Treasury income is the interest earned on cash balances less the interest
paid to customers and was assumed to grow in line with assets under administration. Market interest rates wereassumed to remain at or above 1%.
– Customer attrition – customer attrition represents the expected rate of existing customers leaving ii. This assumption
was primarily based on historical attrition rates and was assumed to remain constant over time.
– Operating margin - this assumption was based on the current operating margins adjusted for marketing costs which
are not attributable to the servicing of existing customers. Expected future operating margins are adjusted to take into
account that increased treasury income does not result in higher costs.
– Discount rate - this assumption was based on a market participant weighted average cost of capital.
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FINANCIAL INFORMATION

On acquisition of the healthcare fund management capabilities of Tekla, £78m of customer relationships and investment
management contract intangibles were recognised. These assets primarily relate to investment management contracts
with the four NYSE listed funds. The description of the individually material intangible assets including the estimated usefullife at the acquisition date of 27 October 2023 were as follows:Group financial statements continued
The above assumptions, and in particular the customer attrition assumption, were also used to determine the 15 year
useful economic life at the acquisition date. There has been no change to the useful life and therefore the residual useful lifeof the customer relationships intangible asset is 13.4 years. The reducing balance method of amortisation is consideredappropriate for this intangible, consistent with the attrition rate being constant over time.
The technology intangible asset relates to ii’s internally generated technology which has been valued based on thereplacement cost method. The brand intangible asset relates to the ii brand and has been valued based on applying anassumed royalty rate to revenue forecasts.
Following the valuation of the ii intangibles discussed above goodwill of £993m was recognised. The allocation of thisgoodwill to cash-generating units was a key judgement in 2022. The goodwill was allocated to cash-generating units
based on expected earnings contribution, including in relation to revenue synergies, at the time of the transaction. We
considered an earnings contribution method of allocation to be appropriate as earnings multiples are a primary valuation
method for businesses such as ii. This resulted in the goodwill being primarily allocated to the ii cash-generating unit in the ii
segment (£819m), with £132m and £42m allocated to the asset management group of cash-generating units in theInvestments segment and a cash-generating unit in the ii segment respectively. As noted below, the £132m allocated tothe asset management group of cash-generating units was subsequently impaired in 2022. The £42m allocated to a cashgenerating unit in the ii segment was transferred to held for sale at 31 December 2022 and disposed of during 2023. Refer
Note 21 for further details.

Tritax investment management contract intangible assets

On acquisition of Tritax, £71m of customer relationships and investment management contracts intangibles wererecognised. These assets primarily relate to Tritax’s investment management contracts with Tritax Big Box REIT plc andTritax Euro Box plc which are listed closed-end real estate funds. The description of the individually material intangible asset
including the estimated useful life at the acquisition date of 1 April 2021 was as follows:
Investment management
contract intangible asset

Description

Useful life atacquisition date

Tritax Big Box REIT plc

Investment management contract with
Tritax Big Box REIT plc

13 years£m

Carrying
value
2023
£m

Carrying
value
2022
£m

50

40

43

Fair value on
acquisition date

The key assumptions, other than the useful life, in measuring the fair value of the investment contract intangible assets at
acquisition date were as follows:– Revenue growth – this assumption was based on the fund growth (from markets and investment performance)
included in the Tritax business plan as adjusted for the impact of fund raisings which commenced prior to the acquisition
date. Management fee rates are assumed to stay in line with current rates.
– Operating margin – this assumption was based on the current operating margins adjusted for expected cost synergies.
– Discount rate – this assumption was based on a market participant weighted average cost of capital.
As the investment management contracts relate to closed-end funds, the straight-line method of amortisation isconsidered appropriate for these intangibles. There has been no change to the useful lives and therefore the residual usefullife of these investment management contract intangible assets is 10.25 years.

abrdn Holdings Limited (aHL) intangibles

On the acquisition of aHL in 2017, we identified intangible assets in relation to customer relationships, brand and technology
as being separable from goodwill. Identification and valuation of intangible assets acquired in business combinations is a
key judgement.
The customer relationships acquired through aHL were grouped where the customer groups have similar economic
characteristics and similar useful economic lives. This gave rise to three separate intangible assets which we termed Lloyds
Banking Group, Open ended funds, and Segregated and similar.
In relation to the Open ended funds we considered that it was most appropriate to recognise an intangible asset relating tocustomer relationships between aHL and open ended fund customers, rather than an intangible asset relating toinvestment management agreements between aHL and aHL’s open ended funds. Our judgement was that the value
associated with the open ended fund assets under management was predominantly derived from the underlying
customer relationships, taking into account that a significant proportion of these assets under management are frominstitutional clients.

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The intangible asset for Lloyds Banking Group had a carrying value of £nil at the end of 2019. The description of theremaining two separate intangible assets including their estimated useful life at the acquisition date of 14 August 2017 was
as follows:
Customer relationshipintangible asset

Description

Useful life atacquisition date

Fair value on
acquisition date£m

Carrying
value
2023
£m

Carrying
value
2022
£m

Open ended funds

Separate vehicle group – open ended
investment vehicles

11 years

223

30

45

Segregated andsimilarAll other vehicle groups dominated bysegregated mandates which represent 75% of
this group

12 years

427

43

63

The above assumptions, and in particular the net attrition assumption, were also used to determine the useful economic lifeat the acquisition date of each asset used for amortisation. The reducing balance method of amortisation is consideredappropriate for these intangibles, consistent with the attrition pattern on customer relationships which means that theeconomic benefits delivered from the existing customer base will reduce disproportionately over time.
There has been no change to the useful lives of the Open ended funds and Segregated and similar customer relationshipintangible assets. Therefore the residual useful life of the Open ended funds customer relationship intangible asset is 4.6
years and the residual life of the Segregated and similar customer relationship intangible asset is 5.6 years.

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199

FINANCIAL INFORMATION

Measuring the fair value of intangible assets acquired in business combinations required further assumptions andjudgements. Customer relationships were valued using discounted cash flow projections. The key assumptions inmeasuring the fair value of the customer relationships at the acquisition date were as follows:– Net attrition – net attrition represents the expected rate of outflows of assets under management net of inflows fromexisting customers. This assumption was primarily based on recent experience.
– Market growth – a market growth adjustment was applied based on the asset class.
– Operating margin – this assumption was consistent with forecast margins and included the impact of synergies thatwould be expected by any market participant and impacted the customer relationship cash flows.
– Discount rate – this assumption was based on the internal rate of return (IRR) of the transaction and is consistent with amarket participant discount rate.

Group financial statements continued

Estimates and assumptions

The key estimates and assumptions in relation to intangible assets are:– Determination of the recoverable amount of goodwill and customer intangibles.
– Determination of useful lives.
The determination of the recoverable amount of the interactive investor CGU is a key area of estimation uncertainty at
31 December 2023, and further details of assumptions and sensitivities are disclosed in this section.

Determination of the recoverable amount of goodwill and customer intangibles

For all intangible assets including goodwill, an assessment is made at each reporting date as to whether there is anindication that the goodwill or intangible asset has become impaired. If any indication of impairment exists then therecoverable amount of the asset is determined. In addition, the recoverable amount for goodwill must be assessedannually.
The recoverable amounts are defined as the higher of fair value less costs of disposal (FVLCD) and the value in use (VIU)
where the value in use is based on the present value of future cash flows. Where the carrying value exceeds therecoverable amount then the carrying value is written down to the recoverable amount.
In assessing value in use or FVLCD measured using a discounted cash flow approach, expected future cash flows are
discounted to their present value using a pre-tax discount rate for VIU or a post-tax discount rate for FVLCD. Judgement
is required in assessing both the expected cash flows and an appropriate discount rate which is based on current
market assessments of the time value of money and the risks associated with the asset.

Goodwill

In 2023 impairments of goodwill of £62m (2022: £340m) have been recognised. The goodwill impairment for the year
ended 31 December 2023 comprises £36m relating to the abrdn Financial Planning Limited (aFPL) CGU which isincluded in the ii segment and £26m relating to the Finimize CGU which is reported within Other business operations andcorporate costs. The goodwill impairment for the year ended 31 December 2022 comprised £299m relating to the asset
management group of CGUs and £41m relating to the Finimize CGU. Both impairments relate to assets which were
included in the Investments segment. As noted above, the Finimize CGU is now reported within Other business
operations and corporate costs.
The impairments are included within Impairment of intangibles acquired in business combinations and through thepurchase of customer contracts in the consolidated income statement.

aFPL

The aFPL CGU comprises the Group’s financial planning business. A total impairment of £36m has been recognised in
the year ended 31 December 2023 of which £23m was initially recognised at 30 June 2023. The impairments resulted
from lower projected revenues as a result of lower markets and macroeconomic conditions and the impact of businessrestructuring. Following the impairment, the goodwill allocated to the aFPL CGU was £24m (2022: £60m).
The recoverable amount of the aFPL CGU which was its FVLCD at 31 December 2023 was £45m. This was also thecarrying value of the CGU at 31 December 2023. The FVLCD considered a number of valuation approaches, with theprimary approach being a multiples approach based on price to revenue and price to assets under advice (AUAdv).
Multiples were based on trading multiples for aFPL’s peer companies, adjusted to take into account profitability whereappropriate, and were benchmarked against recent transactions. Revenue was based on actual 2023 and forecast
2024 revenue and AUAdv were based on forecast 2024 AUAdv. The expected cost of disposal was based on pastexperience of previous transactions. This is a level 3 measurement as they are measured using inputs which are notbased on observable market data.
As the carrying value of the CGU is 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 £11m. A 20%
reduction in multiples would result in a further impairment of £11m.
No impairment of this goodwill was recognised in 2022. At 31 December 2022, the carrying value of this CGU was equal
to the recoverable amount. As above, the recoverable amount was based on FVLCD which similarly considered anumber of valuation approaches, with the primary approach being a multiples approach based on price to revenue
and price to AUAdv.

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Finimize

The Finimize CGU comprises the Finimize business. A total impairment of £26m has been recognised in the year ended
31 December 2023 of which £14m was initially recognised at 30 June 2023. The impairments resulted from lower shortterm projected growth following a strategic shift that prioritises profitability over revenue growth in the pursuit of asustainable, resilient if lower growing business in the short term and broader market conditions. Following theimpairment, the goodwill allocated to the Finimize CGU was £5m (2022: £31m).

The residual goodwill allocated to the Finimize CGU is not significant in comparison to the total carrying amount of
goodwill.
The goodwill allocated to the Finimize CGU was also impaired in 2022 by £41m. The recoverable amount of the Finimize
CGU at 31 December 2022 was £35m which was based on FVLCD. As above, the FVLCD considered a number ofvaluation approaches, with the primary approach being a revenue multiple approach.

Asset management

At 31 December 2023, there is no goodwill allocated to the asset management group of CGUs (2022: none). The
goodwill of £41m in relation to the acquisition of healthcare fund management capabilities of Tekla has been allocatedto the abrdn Inc. CGU (see below).
As noted above, an impairment of £299m was recognised in 2022 in relation to goodwill allocated to the asset
management group of CGUs. The asset management group of CGUs comprised the Investments segment (excluding
Finimize) which was the lowest group of CGUs to which the asset management goodwill had been allocated at thistime. The goodwill prior to impairment of £299m included additions in 2022 of £132m allocated to the asset
management group of CGUs for revenue synergies in our Investments segment in relation to the acquisition of ii. The
recoverable amount of this group of CGUs at 31 December 2022 was £1,532m which was based on FVLCD. The FVLCD
considered a number of valuation approaches, with the primary approach being a discounted cash flow approach.

interactive investor

Goodwill of £819m (2022: £819m) is allocated to the interactive investor CGU which comprises the interactive investor
business in the ii segment. The recoverable amount of this CGU was determined based on FVLCD. The FVLCD wasbased on an earnings multiple approach. This is a level 3 measurement as it is measured using inputs which are notbased on observable market data.
The key assumptions used in determining the earnings multiple valuation were future post tax adjusted earnings, whichwere based on management’s business plan projections and reflected past experience and market price to earnings
multiples, which were based on multiples of a peer group of comparable listed direct-to-consumer investment platform
providers.

Sensitivities of key assumptions

The business plan projections used to determine the future earnings are based on macroeconomic forecasts includinginterest rates and inflation, and forecast levels of client activity, market pricing, the percentage of client funds held incash and expenses. The projections are therefore sensitive to these assumptions. Given current macroeconomic
uncertainties a 20% reduction in forecast earnings has been provided as a sensitivity.
The market price to earnings multiple used in the valuation is 16x based on multiples of a peer group of comparable
listed direct-to-consumer investment platform providers. This assumption is sensitive to general equity market
fluctuations and to market views on UK direct-to-consumer investment platform companies. Taking into accounthistoric equity market fluctuations a 25% sensitivity to an earnings multiple has been provided as a sensitivity.
The recoverable amount at 31 December 2023 exceeds the carrying amount of the cash-generating unit by £398m.
The impact of sensitivities to a single variable and the change required to reduce headroom to zero are shown in thetables below.

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201

FINANCIAL INFORMATIONThe recoverable amount of the Finimize CGU at 31 December 2023 was £10m which was based on FVLCD. This was
also the carrying value of the CGU at 31 December 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 acontinued level of revenue growth, and market multiples. Market multiples were based on broadly comparable listedcompanies, with appropriate discounts applied to take into account profitability, track record, revenue growth potential,
and net premiums for control. This is a level 3 measurement as they are measured using inputs which are not based on
observable market data.

Group financial statements continued
Reduction in headroom for illustrative sensitivities£m

20% reduction in forecast post tax adjusted earnings(346)

25% reduction in market multiple(433)

Change required to reduce headroom to zero%

Change in forecast post tax adjusted earnings(24)

Reduction in market multiple(24)

We consider the 24% reduction in market multiple assumption to 12x to reduce the headroom to zero to be areasonably possible change.

Other goodwill

Goodwill of £39m (2022: £nil) is attributable to the abrdn Inc. CGU in the Investments segment. As noted above, thisrelates to the acquisition of healthcare fund management capabilities of Tekla. Refer Note 1(b)(i) for further details. No
impairment of this goodwill has been identified since acquisition.
Goodwill of £25m (2022: £25m) is attributable to an Adviser segment CGU (included in an ii segment CGU in 2022).
These goodwill balances are not significant in comparison to the total carrying amount of goodwill.

Customer relationship and investment management contract intangibles

An impairment of customer relationship and investment management contract intangibles of £1m has beenrecognised in 2023.
In 2022, an impairment of £28m was recognised in relation to customer relationship and investment management
contract intangibles. The impairment was included within Impairment of intangibles acquired in business combinations
and through the purchase of customer contracts in the consolidated income statement. The impairment related to the
Phoenix Life business intangible asset which was recognised on the acquisition of Ignis Asset Management in 2014, andwas part of the Investments segment. The recoverable of this intangible asset at 31 December 2022 was £nil which was
based on its FVLCD, based on a discounted cash flow approach based on expected future cashflows for the Phoenix
Life business.

Determination of useful lives

The determination of useful lives requires judgement in respect of the length of time that the Group expects to derive
benefits from the asset and considers for example expected duration of customer relationships and when technology is
expected to become obsolete for technology based assets. The amortisation period and method for each of theGroup’s intangible asset categories is as follows:– Customer relationships acquired through business combinations – generally between 7 and 15 years, generally
reducing balance method.
– Investment management contracts acquired through business combinations – between 10 and 17 years,
straight-line.
– Brand acquired through business combinations – between 2 and 5 years, straight-line.
– Technology and other intangibles acquired through business combinations – between 1 and 6 years, straight-line.
– Internally developed software – between 2 and 6 years. Amortisation is on a straight-line basis and commences once
the asset is available for use.
– Purchased software – between 2 and 6 years, straight-line.
– Costs of obtaining customer contracts – between 3 and 12 years, generally reducing balance method.

Internally developed software

There was an impairment of internally developed software of £2m in 2023 (2022: £nil).

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14.

Investments in associates and joint ventures

Associates are entities where the Group can significantly influence decisions made relating to the financial andoperating policies of the entity but does not control the entity. For entities where voting rights exist, significant influence ispresumed where the Group holds between 20% and 50% of the voting rights. Where the Group holds less than 20% of
voting rights, consideration is given to other indicators and entities are classified as associates where it is judged thatthese other indicators result in significant influence.
Joint ventures are strategic investments where the Group has agreed to share control of an entity’s financial andoperating policies through a shareholders’ agreement and decisions can only be taken with unanimous consent.
Associates, other than those accounted for at fair value through profit or loss, and joint ventures are accounted for using
the equity method from the date that significant influence or shared control, respectively, commences until the date thisceases with consistent accounting policies applied throughout.

Subsequently the carrying value is adjusted for the Group’s share of post-acquisition profit or loss and othercomprehensive income of the associate or joint venture, which are recognised in the consolidated income statement
and other comprehensive income respectively. The Group’s share of post-acquisition profit or loss includes amortisation
charges based on the valuation exercise at acquisition. The carrying value is also adjusted for any impairment losses.
On partial disposal of an associate, a gain or loss is recognised based on the difference between the proceeds received
and the equity accounted value of the portion disposed of. Indicators of significant influence are reassessed based on
the remaining voting rights. Where significant influence is judged to have been lost, the investment in associate isreclassified to interests in equity securities and pooled investment funds measured at fair value. If an entity is reclassified,the difference between the fair value and the remaining equity accounted value is accounted for as a reclassification
gain or loss on disposal.
Where the Group has an investment in an associate, a portion of which is held by, or is held indirectly through, a mutual
fund, unit trust or similar entity, including investment-linked insurance funds, that portion of the investment is measured at
FVTPL. In general, investment vehicles which are not subsidiaries are considered to be associates where the Group holds
more than 20% of the voting rights.
The level of future dividend payments and other transfers of funds to the Group from associates and joint ventures
accounted for using the equity method could be restricted by the regulatory solvency and capital requirements of theassociate or joint venture, certain local laws or foreign currency transaction restrictions.

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203

FINANCIAL INFORMATION

Under the equity method, investments in associates and joint ventures are initially recognised at cost. When an interest is
acquired at fair value from a third party, the value of the Group’s share of the investee’s identifiable assets and liabilities isdetermined applying the same valuation criteria as for a business combination at the acquisition date. This is comparedto the cost of the investment in the investee. Where cost is higher the difference is identified as goodwill and the investee
is initially recognised at cost which includes this component of goodwill. Where cost is lower a bargain purchase hasarisen and the investee is initially recognised at the Group’s share of the investee’s identifiable assets and liabilities unlessthe recoverable amount for the purpose of assessing impairment is lower, in which case the investee is initiallyrecognised at the recoverable amount.

Group financial statements continued(a) Investments in associates and joint ventures accounted for using the equity method
2022

2023
Associates

Joint ventures

Total

Associates

£m

£m

£m

Opening balance carried forward
Effect of application of IFRS 92

14
–

218
51

Opening balance at 1 January
Reclassified as held for sale during the year
Exchange translation adjustments
Additions
Profit/(loss) after tax
Other comprehensive income
Reversal of impairment/(impairment)

14
–
–
2
(1)
–
–

At 31 December

15£mJoint ventures
restated1£m

Total
restated1
£m

232
51

10
–

255
–

265
–

269
(9)
(19)
–
2
(31)
2

283
(9)
(19)
2
1
(31)
2

10
–
–
18
(5)
–
(9)

255
–
8
2
10
(57)
–

265
–
8
20
5
(57)
(9)

214

229

14

218

232

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
2. The Group implemented IFRS 9 in 2019. However, as permitted under a temporary exemption granted to insurers in IFRS 4 Insurance Contracts, HASL applied
IFRS 9 at 1 January 2023 following the implementation of the new insurance standard, IFRS 17. Refer Basis of preparation.

The following joint venture is considered to be material to the Group as at 31 December 2023.

Name

Nature of relationshipPrincipal place ofbusiness

Heng An Standard Life Insurance
Company Limited (HASL)

Joint venture

China

Measurement method

Equityaccounted

Interest held by
the Group at 31
December 2023

Interest held by
the Group at 31
December 2022

50.00%

50.00%

The country of incorporation or registration is the same as the principal place of business. The interest held by the Group is
the same as the proportion of voting rights held. HASL is not listed.

(b) Investments in associates accounted for using the equity method
Carrying value of associates accounted for using the equity method
Share of profit/(loss) after tax

2023
£m

2022
£m

15
(1)

14
(5)

Investments in associates accounted for using the equity method primarily relates to the Group’s interests in Archax
Holdings Limited (Archax) and Tenet Group Limited (Tenet).
During the year ended 31 December 2023, the Group increased its interest in Archax from 9.8% to 11% following a further£2m investment. The classification of Archax as an associate reflects the Group’s additional rights under Archax’s articles
of association as a large external investor. There are no indicators of impairment in relation to Archax at 31 December
2023.
During the year ended 31 December 2022, the Group recognised an impairment of £9m in relation to its interest in Tenet
which reduced its value to £nil. There has been no further investment into Tenet in 2023 and no further impairment has
been recognised.

(c)

Investments in joint ventures
HASL
2023

Carrying value of joint ventures accounted for using theequity method
Dividends received
Share of profit/(loss) after tax

Other
2023

2022

2023

£m

£m

£m

£m

2022
restated1
£m

214
–
3

210
–
10

–
–
(1)

8
–
-

214
–
2

218
–
10

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.

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Annual report 2023

Total

2022
restated1
£m

HASL

The Group has a 50% share in HASL, one of China’s leading life insurance companies offering life and health insurance
products. HASL is an investment which gives the Group access to one of the world’s largest markets. The table below
provides summarised financial information for HASL, the joint venture which is considered to be material to the Group.
HASL’s year-end date is 31 December, however, HASL is not required to adopt IFRS 17 and IFRS 9 for its local reporting until
2026. Consequently, HASL has provided additional financial information on an IFRS 17 and IFRS 9 basis for the purposes ofthe preparation of the Group’s consolidated financial statements.
For further details of HASL’s implementation of IFRS 17 and IFRS 9, refer Basis of Preparation.
HASL
2023
£m

154
6
97
2
(1)
6
(62)
(56)
5,267
4,839
179
428
428
50%
214

162
6
93
2
6
20
(114)
(94)
4,348
3,928
130
420
420
50%
210

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
2. As a liquidity presentation is used by insurance companies when presenting their statement of financial position, an analysis of total assets and total liabilities
between current and non-current has not been provided for HASL.

In relation to HASL, there are no indicators that the recoverable amount of the Group’s investment in HASL is less than theGroup’s share of net assets.

Virgin Money UTM

The carrying value of joint ventures accounted for using the equity method for Other at 31 December 2022 primarily
related to the Group’s interest in Virgin Money UTM. As detailed in Note 43, the agreed sale of the Group’s interest in Virgin
Money UTM to its joint venture partner, Clydesdale Bank, has been announced. At 31 December 2023, a sale wasconsidered as highly probable and the Group’s interest in Virgin Money UTM was transferred to held for sale at this date at a
carrying value of £9m (refer Note 21).
The sale was also considered as an indicator that there was a small reversal of the £45m impairment of the interest thatwas recognised in 2020. The carrying value prior to reversal of impairment was £7m. The recoverable amount of Virgin
Money UTM prior to transfer was £20m which was based on FVLCD and determined based on the agreed sale price.
However, as the Group had recognised £11m for its share of Virgin Money UTM’s losses since the previous impairment, thereversal of impairment recognised prior to the transfer was limited to £2m. The reversal of impairment is included in
Reversal of impairment/(impairment) of interests in associates and joint ventures in the consolidated income statement.
The interest in Virgin Money UTM does not form part of the Group’s reportable segments.

(d)Investments in associates measured at FVTPL

The aggregate fair value of associates accounted for at FVTPL included in equity securities and interests in pooled
investment funds (refer Note 17) at 31 December 2023 is £10m (2022: £46m) none of which are considered individuallymaterial to the Group.

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205

FINANCIAL INFORMATION

Summarised financial information of joint venture:
Revenue
Depreciation and amortisation
Interest income
Interest expense
Income tax (expense)/credit
Profit after tax
Other comprehensive income
Total comprehensive income
Total assets2
Total liabilities2
Cash and cash equivalents
Net assets
Attributable to investee’s shareholders
Interest held
Share of net assets

2022
restated1£mGroup financial statements continued

15.

Property, plant and equipment

Property, plant and equipment consists primarily of property owned and occupied by the Group and the computerequipment used to carry out the Group’s business along with right-of-use assets for leased property and equipment.
Owner occupied property: Owner occupied property is initially recognised at cost and subsequently revalued to fairvalue at each reporting date. Depreciation, being the difference between the carrying amount and the residual value ofeach significant part of a building, is charged to the consolidated income statement over its useful life. The useful life ofeach significant part of a building is estimated as being between 30 and 50 years. A revaluation surplus is recognised inother comprehensive income unless it reverses a revaluation deficit which has been recognised in the consolidated
income statement.
Equipment: Equipment is initially recognised at cost and subsequently measured at cost less depreciation. Depreciation ischarged to the income statement over 2 to 15 years depending on the length of time the Group expects to derive
benefit from the asset.
Right-of-use asset: Refer Note 16 below for the accounting policies for right-of-use assets.
Owner occupied
property

Right-of-use
assets – property

Right-of-use
assets –equipment

£m

£m

Total
£m

£m

Equipment
£m

2
–
–
–

104
–
24
(11)

322
(1)
36
(41)

3
–
1
–

431
(1)
61
(52)

–
–

–
3

(6)
11

–
–

(6)
14

At 31 December 2022

2

120

321

4

447

Additions
Disposals and adjustments1
Derecognition of right-of-use assets relating tosubleases classified as finance leases
Foreign exchange adjustment

–
–

18
(8)

30
(10)

1
(1)

49
(19)

–
–

–
(2)

(24)
(4)

–
–

(24)
(6)

At 31 December 2023

2

128

313

4

447

(1)
–
–
–

(54)
–
(18)
10

(187)
1
(20)
38

(2)
–
(1)
–

(244)
1
(39)
48

–
–
–

–
–
(3)

3
(7)
(5)

–
–
–

3
(7)
(8)

At 31 December 2022

(1)

(65)

(177)

(3)

(246)

Depreciation charge for the year2
Disposals and adjustments1
Derecognition of right-of-use assets relating tosubleases classified as finance leases
Impairment3
Reversal of impairment3
Foreign exchange adjustment

–
–

(15)
7

(16)
9

(1)
–

(32)
16

–
–
–

–
(11)
–
2

20
(39)
3
2

–
–
–
1

20
(50)
3
5

At 31 December 2023

(1)

(82)

(198)

(3)

(284)

Carrying amountAt 1 January 2022
At 31 December 2022
At 31 December 2023

1
1
1

50
55
46

135
144
115

1
1
1

187
201
163

Cost or valuation
At 1 January 2022
Reclassified as held for sale during the year
Additions
Disposals and adjustments1
Derecognition of right-of-use assets relating tosubleases classified as finance leases
Foreign exchange adjustment

Accumulated depreciation and impairment
At 1 January 2022
Reclassified as held for sale during the year
Depreciation charge for the year2
Disposals and adjustments1
Derecognition of right-of-use assets relating tosubleases classified as finance leases
Impairment3
Foreign exchange adjustment

1. For the year ended 31 December 2023, £5m (2022: £1m) of disposals and adjustments relates to equipment with net book value of £nil which is no longer inuse.
2. Included in other administrative expenses.
3. Included in restructuring and corporate transaction expenses.

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Included in property right-of-use assets, are right-of-use assets that meet the definition of investment property. Their
carrying amount at 31 December 2023 is £31m (2022: £14m). This comprises a gross carrying value of £134m (2022:£49m) and accumulated depreciation and impairment of £103m (2022: £35m). Rental income received and direct
operating expenses incurred to generate that rental income in the year to 31 December 2023 were £3m (2022: £3m) and£2m (2022: £3m) respectively. In addition, there were direct expenses of £1m (2022: £1m) in relation to investment
properties not currently generating income.
The movements during the period of the carrying value of the Group’s investment property is analysed below.
2022£m

At start of period
Transfers to investment property
Transfers from investment property
Depreciation
Derecognition related to new subleases classified as finance leases
Impairments
Reversal of impairment
Disposals and adjustments

14
63
(3)
(4)
(3)
(39)
3
–

21
–
–
(2)
(1)
(3)
–
(1)

At end of period

31

14

The transfers to investment property relate to a number of properties in the UK and the US that will no longer be used
operationally by the Group. The right-of-use assets were assessed for impairment at the point of transfer. Impairments of£39m have been recognised in the year ended 31 December 2023 in relation to these properties and one other property in
the UK previously transferred to investment property. The right-of-use assets are related to the Investments segment(£27m impairment) ii segment (£1m impairment) and Other business operations and corporate costs (£11m impairment).
The recoverable amount for the properties in the UK, which was based on value in use, was £27m using a pre-tax discountrate of 6%. The recoverable amount for the properties in the US, which was based on value in use, was £4m using a pre-tax
discount rate of 7%. The cash flows were based on the rental income expected to be received under subleases during theterm of the lease and the direct expenses expected to be incurred in managing the leased property, discounted using a
discount rate that reflects the risks inherent in the cash flow estimates. The assessment of the cash flows takes into
consideration climate related factors such as the energy efficiency of the buildings. It is not based on valuations by anindependent valuer.
The transfers from investment property relate to a property in the UK which was not being used operationally but following
the review of properties in the UK is being brought back into operational use. The right-of-use asset was assessed forreversal of impairment at the point of transfer. The Group has recognised a reversal of impairment of £3m in the year
ended 31 December 2023 in relation to this property. The recoverable amount for this property was its carrying value at 30
June 2023 if it had not previously been impaired. The right-of-use asset is also related to the Investments segment.
The fair value of investment property included within right-of-use assets at 31 December 2023 is £36m (2022: £14m). The
valuation technique used to determine the fair value considers the rental income expected to be received under subleases
during the term of the lease and the direct expenses expected to be incurred in managing the leased property, discounted
using a discount rate that reflects the risks inherent in the cash flow estimates. It is not based on valuations by anindependent valuer. This is a Level 3 valuation technique as defined in Note 36.
If owner occupied property was measured using the cost model, the historical cost before impairment would be £1m(2022: £1m). As the expected residual value of owner occupied property is in line with the current fair value, no depreciation
is currently charged.
Further details on the leases under which the Group’s right-of-use assets are recognised are provided in Note 16 below.

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207

FINANCIAL INFORMATION

2023
£m

Group financial statements continued

16.

LeasesA contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period oftime in exchange for consideration. At inception of a contract, the Group assesses whether a contract is, or contains, alease. In 2019, on adoption of IFRS 16 the Group used the practical expedient permitted to apply the new standard at
transition solely to leases previously identified in accordance with IAS 17 and IFRIC 4 Determining whether an
Arrangement Contains a Lease.
Right-of-use assets are measured at cost less accumulated depreciation and impairment losses and are presented inproperty, plant and equipment (refer Note 15). The Group does not revalue its right-of-use assets. This applies to allright-of-use assets, including those that are assessed as meeting the definition of investment property. The cost
comprises the amount of the initial measurement of the lease liability plus any initial direct costs and expected
restoration costs not relating to wear and tear. Costs relating to wear and tear are expensed over the term of the lease.
Depreciation is charged on right-of-use assets on a straight -line basis from the lease commencement date to theearlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group assesses right-of-use
assets for impairment when such indicators exist, and where required, reduces the value of the right-of-use asset
accordingly.
The related lease liability (included in other financial liabilities – refer Note 32) is calculated as the present value of the
future lease payments. The lease payments are discounted using the rate implicit within the lease where readily
available or the Group’s incremental borrowing rate where the implicit rate is not readily available. Interest is calculatedon the liability using the discount rate and is charged to the consolidated income statement under finance costs.
In determining the value of the right-of-use assets and lease liabilities, the Group considers whether any leases containlease extensions or termination options that the Group is reasonably certain to exercise.
Where a leased property has been sublet, the Group assesses whether the sublease has transferred substantially all therisk and rewards of the right-of-use asset to the lessee under the sublease. Where this is the case, the right-of-use asset
is derecognised and a net investment in finance leases (included in Receivables and other financial assets – refer Note19) is recognised, calculated as the present value of the future lease payments receivable under the sublease. Where aproperty is only partially sublet, only the portion of the right-of-use asset relating to the sublet part of the property isderecognised and recognised as a net investment in finance leases.
Any difference between the initial value of the net investment in finance leases and the right-of-use asset derecognised
is recognised in the consolidated income statement (within other income or expenses). Interest is calculated on the net
investment in finance lease using the discount rate and is recognised in the consolidated income statement as interest
income.
Where the sublease does not transfer substantially all the risk and rewards of the right-of-use assets to the lessee under
the sublease, the Group continues to recognise the right-of-use asset. The sublease is accounted for as an operatinglease with the lease payments received recognised as property rental income in other income in the consolidated
income statement. Lease incentives granted are recognised as an integral part of the property rental income and are
spread over the term of the lease.
The Group does not recognise right-of-use assets and lease liabilities for short-term leases (less than one year frominception) and leases where the underlying asset is of low value.

208

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Annual report 2023

(a)Leases where the Group is lessee

The Group leases various offices and equipment used to carry out its business. Leases are generally for fixed periods but
may be subject to extensions or early termination clauses. The remaining periods for current leases range from less than 1
year to 15 years (2022: less than 1 year to 16 years). A number of leases which are due to end in 2031 contain options thatwould allow the Group to extend the lease term. The Group reviews its property use on an ongoing basis and these
extensions have not been included in the right-of-use asset or lease liability calculations. The Group has committed to one
lease at 31 December 2023 which had not commenced at this date. The expected lease liability for these leases is not
significant to the Group.
The Group has recognised the following assets and liabilities in relation to these leases where the Group is a lessee:2022£mRight-of-use assets:
Property
Equipment

115
1

144
1

Total right-of-use assets

116

145

Lease liabilities

(223)

(224)

Details of the movements in the Group’s right-of-use assets including additions and depreciation are included in Note 15.
The interest on lease liabilities is as follows:

Interest on lease liabilities

2023
£m

2022
£m

6

6

The total cash outflow for lease liabilities recognised in the consolidated statement of cash flows for the year ended
31 December 2023 was £30m (2022: £52m). Refer Note 37(f) for further details.
The following table provides a maturity analysis of the contractual undiscounted cash flows for the lease liabilities.
2023
£m

2022
£m

Less than 1 year
Greater than or equal to 1 year and less than 2 years
Greater than or equal to 2 years and less than 3 years
Greater than or equal to 3 years and less than 4 years
Greater than or equal to 4 years and less than 5 years
Greater than or equal to 5 years and less than 10 years
Greater than or equal to 10 years and less than 15 years
Greater than or equal to 15 years

26
25
26
26
25
91
32
–

29
24
23
24
23
99
38
4

Total undiscounted lease liabilities

251

264

The Group does not recognise right-of-use assets and lease liabilities for short-term leases and leases where theunderlying asset is of low value. The expenses for these leases for the year ended 31 December 2023 were £1m(2022: £3m). The Group has no lease commitments for short-term leases at 31 December 2023 (2022: none).

(b)

Leases where the Group is lessor (subleases)

Where the Group no longer requires a leased property, the property may be sublet to a third party. The sublease may be
for the full remaining term of the Group’s lease or only part of the remaining term.
At 31 December 2023, the Group had a net investment in finance leases asset of £31m (2022: £29m) for subleases which
had transferred substantially all the risk and rewards of the right-of-use assets to the lessee under the sublease. All othersubleases are accounted for as operating leases.

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209

FINANCIAL INFORMATION

2023
£m

Group financial statements continued(b)(i) Finance leases

During the year ended 31 December 2023, the Group received finance income on the net investment in finance leases
asset of less than £1m (2022: less than £1m). The Group recorded an initial gain of £6m in relation to new subleases
entered into during the year ended 31 December 2023 (2022: £1m). The following table provides a maturity analysis of the
future contractual undiscounted cash flows for the net investment in finance leases and a reconciliation to the net
investment in finance leases asset.
2023
£m

2022
£m

Less than 1 year
Greater than or equal to 1 year and less than 2 years
Greater than or equal to 2 years and less than 3 years
Greater than or equal to 3 years and less than 4 years
Greater than or equal to 4 years and less than 5 years
Greater than or equal to 5 years and less than 10 years
Greater than or equal to 10 years and less than 15 years

3
4
4
4
4
14
1

3
3
4
4
4
12
2

Total contractual undiscounted cash flows under finance leases
Unearned finance income

34
(3)

32
(3)

Total net investment in finance leases

3129(b)(ii) Operating leases

During the year ended 31 December 2023, the Group received property rental income from operating leases of £3m(2022: £3m).
The following table provides a maturity analysis of the future contractual undiscounted cash flows for subleases classified
as operating leases.
2023
£m

2022
£m

Less than 1 year
Greater than or equal to 1 year and less than 2 years
Greater than or equal to 2 years and less than 3 years
Greater than or equal to 3 years and less than 4 years

2
2
1
–

1
1
1
1

Total contractual undiscounted cash flows under operating leases

5

4

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Annual report 2023

17.

Financial assets

Financial assets are initially recognised at their fair value. Subsequently all equity securities and interests in pooled
investment funds and derivative instruments are measured at fair value. All equity securities and interests in pooled
investment funds are classified as FVTPL on a mandatory basis. Changes in their fair value are recognised in Net gains orlosses on financial instruments and other income in the consolidated income statement. The classification of derivatives
and the accounting treatment of derivatives designated as a hedging instrument are set out in Note 18.
The subsequent measurement of debt instruments depends on whether their cash flows are solely payments ofprincipal and interest and the nature of the business model they are held in as follows:Business model

Classification

Yes
Yes

A: Objective is to hold to collect contractual cash flows

Amortised cost2

B: Objective is achieved by both collecting contractual cash
flows and selling
C: Objective is neither A nor B
N/A

Fair value through other comprehensive
income (FVOCI)2
FVTPL
FVTPL

Yes
No

1. Solely payments of principal and interest.
2. May be classified as FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an‘accounting mismatch’) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.

The Group has no direct holding in debt instruments that are managed within a business model whose objective isachieved both by collecting contractual cash flows and selling and therefore there are no debt instruments classified as
FVOCI. The Group’s Chinese joint venture, HASL, does hold debt securities classified as FVOCI. Refer Basis of Preparation
for further details. Debt instruments classified as FVTPL are classified as such due to the business model they are
managed under, predominantly being held in consolidated investment vehicles.
The methods and assumptions used to determine fair value of financial assets at FVTPL are discussed in Note 36.
Amortised cost is calculated, and related interest is credited to the consolidated income statement, using the effective
interest method. Impairment is determined using an expected credit loss impairment model which is applied to all
financial assets measured at amortised cost. Financial assets measured at amortised cost attract a loss allowanceequal to either:– 12 month expected credit losses (losses resulting from possible default within the next 12 months).
– Lifetime expected credit losses (losses resulting from possible defaults over the remaining life of the financial asset).
Financial assets attract a 12 month ECL allowance unless the asset has suffered a significant deterioration in credit
quality or the simplified approach for calculation of ECL has been applied. As permitted under IFRS 9 Financial
Instruments, the Group has applied the simplified approach to calculate the ECL allowance for trade receivables andcontract assets recognised under IFRS 15 Revenue from Contracts with Customers and lease receivables recognised
under IFRS 16 Leases. Under the simplified approach the ECL is always equal to the lifetime expected credit loss.
The table below sets out an analysis of financial assets excluding those assets backing unit linked liabilities which are set out
in Note 23.
At fair value through profit
or loss1

Derivative financial assets
Equity securities and interests inpooled investment funds
Debt securities

Total

At amortised cost

Total

Notes

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

18

2

19

41

85

–

–

43

104

36
36

1,139
740

2,033
592

–
–

–
–

–
125

–
210

1,139
865

2,033
802

1,881

2,644

41

85

125

210

2,047

2,939

11
–

19
–

–
–

–
–

1,060
1,196

888
1,133

1,071
1,196

907
1,133

1,892

2,663

41

85

2,381

2,231

4,314

4,979

Financial investments
Receivables and other financial
assetsCash and cash equivalents

Cash flow
hedge219
22

1. All financial assets measured at fair value through profit or loss have been classified at FVTPL on a mandatory basis. The Group has not designated any
financial assets as FVTPL.
2. Changes in fair value are recognised in the Cash Flow Hedges Reserve (refer Note 27) but may be reclassified subsequently to profit or loss.

Annual report 2023

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211

FINANCIAL INFORMATIONSPPI1 test satisfied?

Group financial statements continued
The amount of debt securities expected to be recovered or settled after more than 12 months is £8m (2022: £2m). Due tothe nature of equity securities and interests in pooled investment funds, there is no fixed term associated with thesesecurities. The amount of equity securities and interests in pooled investment funds expected to be recovered or settled
after more than 12 months is £1,139m (2022: £669m).
Included in Proceeds from sale or redemption of financial investments of £1,029m (2022: £1,633m) within the consolidated
statement of cash flows are £576m (2022: £789m) in relation to sales of significant listed investments. Refer Note 11 forfurther details of the sales in 2023.

18.

Derivative financial instruments

A derivative is a financial instrument that is typically used to manage risk and whose value moves in response to anunderlying variable such as interest or foreign exchange rates. The Group uses derivative financial instruments in orderto match subordinated debt liabilities and to reduce the risk from potential movements in foreign exchange rates onseed capital and co-investments and potential movements in market rates on seed capital. Certain consolidated
investment vehicles may also use derivatives to take and alter market exposure, with the objective of enhancing
performance and controlling risk.
Management determines the classification of derivatives at initial recognition. All derivative instruments are classified as
at FVTPL except those designated as part of a cash flow hedge or net investment hedge. Derivatives at FVTPL aremeasured at fair value with changes in fair value recognised in the consolidated income statement.
On adoption of IFRS 9 Financial instruments in 2019, the Group has elected to continue applying the hedge accounting
requirements of IAS 39. The accounting treatment below applies to derivatives designated as part of a hedging
relationship.
Using derivatives to manage a particular exposure is referred to as hedging. For a derivative to be considered as part ofa hedging relationship its purpose must be formally documented at inception. In addition, the effectiveness of the hedge
must be initially high and be able to be reliably measured on a regular basis. Derivatives used to hedge variability in future
cash flows such as coupons payable on subordinated liabilities or revenue receivable in a foreign currency aredesignated as cash flow hedges, while derivatives used to hedge currency risk on investments in foreign operations aredesignated as net investment hedges.
Where a derivative qualifies as a cash flow or net investment hedge, hedge accounting is applied. The effective part ofany gain or loss resulting from the change in fair value is recognised in other comprehensive income, and in the cash flowor net investment hedge reserve in equity, while any ineffective part is recognised immediately in the consolidated
income statement. If a derivative ceases to meet the relevant hedging criteria, hedge accounting is discontinued.
For cash flow hedges, the amount recognised in the cash flow hedge reserve is transferred to the consolidated income
statement (recycled) in the same period or periods during which the hedged item affects profit or loss and is transferred
immediately if the cash flow is no longer expected to occur. For net investment hedges, the amount recognised in the
net investment hedge reserve is transferred to the consolidated income statement on disposal of the investment.

2022

2023
Notes

Contract amount£m

Cash flow hedges
FVTPL

17,29
17,29

588
628

41
2

–
9

623
638

85
19

–
1

Derivative financial instruments

36

1,216

43

9

1,261

104

1

Derivative financial
instruments backing unit linked
liabilities

23

2

–

–

258

1

2

1,218

43

9

1,519

105

3

Total derivative financial
instruments

Fair value assets£m

Fair value liabilities£mContract amount£m

Fair value assets Fair value liabilities£m£m

Derivative assets of £41m (2022: £85m) are expected to be recovered after more than 12 months. There are no derivative
liabilities (2022: none) expected to be settled after more than 12 months.

(a)

Hedging strategy

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The Group generally does not hedge the currency exposure relating to revenue and expenditure, nor does it hedgetranslation of overseas profits in the income statement. Where appropriate, the Group may use derivative contracts to
reduce or eliminate currency risk arising from individual transactions or seed capital and co-investment activity.

Annual report 2023

(a)(i) Cash flow hedges

On 18 October 2017, the Group issued subordinated notes with a principal amount of US$750m. In order to manage its
foreign exchange risk relating to the principal and coupons payable on these notes the Group entered into a crosscurrency swap which is designated as a cash flow hedge. The cash flow hedge was fully effective during the year. The
cross-currency swap has the effect of swapping the 4.25% US Dollar fixed rate subordinated notes into 3.2% Sterling fixed
rate subordinated notes with a principal amount of £569m. The cross-currency swap has a fair value asset position of£41m (2022: £85m asset). During the year ended 31 December 2023 fair value losses of £40m (2022: gains of £85m) wererecognised in other comprehensive income in relation to the cross-currency swap. Losses of £35m (2022: gains of £70m)
were transferred from other comprehensive income to Net gains or losses on financial instruments and other income in the
consolidated income statement in relation to the cross-currency swap during the year. In addition, forward points of £6m(2022: £6m) and gains of £1m (2022: gains of £2m) were transferred from other comprehensive income to Finance costsin the consolidated income statement.

(a)(ii) FVTPL

2022

2023
Contract amount£m

Equity derivatives:
Futures
Swaps
Bond derivatives:
FuturesInterest rate derivatives:
Swaps
Foreign exchange derivatives:
Forwards
Other derivatives:
Credit default swaps
Derivative financial instruments at FVTPL(b)Fair value assets Fair value liabilities Contract amount
£m
£m
£m

Fair value assets Fair value liabilities
£m
£m

130
13

–
–

5
–

137
–

3
–

–
–

46

–

2

–

–

–

21

1

–

18

1

–

339

1

–

678

16

3

81

–

2

63

–

–

630

2

9

896

20

3

Maturity profile

The maturity profile of the contractual undiscounted cash flows in relation to derivative financial instruments is as follows:
Within 1
year

1-5
years

5-10
years

Total

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

Cash inflows
Derivative financial assets
Derivative financial liabilities

339
25

569
138

677
–

107
–

–
–

637
–

1,016
25

1,313
138

Total

364

707

677

107

–

637

1,041

1,451

Cash outflows
Derivative financial assets
Derivative financial liabilities

(331)
(25)

(541)
(141)

(632)
(2)

(91)
–

–
–

(578)
–

(963)
(27)

(1,210)
(141)

Total

(356)

(682)

(634)

(91)

–

(578)

(990)

(1,351)

8

25

43

16

–

59

51

100

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213

Net derivative financial
instruments cash inflows

Annual report 2023

FINANCIAL INFORMATION

Derivative financial instruments classified as FVTPL include those that the Group holds as economic hedges of financial
instruments that are measured at fair value. FVTPL derivative financial instruments are also held by the Group to match
contractual liabilities that are measured at fair value or to achieve efficient portfolio management in respect of instruments
measured at fair value.

Group financial statements continued
Included in the above maturity profile are the following cash flows in relation to cash flow hedge assets:
Within 1
year

Cash inflows
Cash outflows
Net cash flow hedge cash
inflows

1-5
years

5-10
years

Total

2023
£m

20222
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

25
(18)

26
(18)

676
(632)

106
(91)

–
–

637
(578)

701
(650)

769
(687)

7

8

44

15

–

59

51

82

Cash inflows and outflows are presented on a net basis where the Group is required to settle cash flows net.

19.

Receivables and other financial assets
Notes

Amounts receivable from contracts with customers
Accrued income
Amounts due from counterparties and customers for
unsettled trades and fund transactions
Net investment in finance leases
Collateral pledged in respect of derivative contracts
Contingent consideration assets
Other

3(d)

34
36

Receivables and other financial assets

2023
£m

2022
£m

110
310

161
278

477
31
19
11
113

317
29
14
19
89

1,071

907

The carrying amounts disclosed above reasonably approximate the fair values as at the year end.
The amount of receivables and other financial assets expected to be recovered after more than 12 months is £67m
(2022: £34m).
Accrued income includes £306m (2022: £273m) of accrued income from contracts with customers (refer Note 3(d)).

20.

Other assets
2023
£m

2022
£m

Prepayments
Deferred acquisition costs
Other

75
–
2

89
1
2

Other assets

77

92

The amount of other assets expected to be recovered after more than 12 months is £24m (2022: £21m).
Prepayments includes £23m (2022: £43m) relating to the Group’s future purchase of certain products in the Phoenix
Group’s savings business offered through abrdn’s adviser platforms together with the Phoenix Group’s trustee investment
plan business for UK pension scheme clients. Refer Note 39(b) for further details.
All deferred acquisition costs above are costs deferred on investment contracts (deferred origination costs) which relate tocontracts with customers (refer Note 3(d)). The amortisation charge for deferred origination costs relating to contracts
with customers for the year was £1m (2022: £2m).

214

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Annual report 2023

21.

Assets and liabilities held for sale

Assets and liabilities held for sale are presented separately in the consolidated statement of financial position and consistof operations and individual non-current assets whose carrying amount will be recovered principally through a saletransaction (expected within one year) and not through continuing use.
Operations held for sale, being disposal groups, and investments in associates accounted for using the equity method
are measured at the lower of their carrying amount and their fair value less disposal costs. No depreciation oramortisation is charged on assets in a disposal group once it has been classified as held for sale.

Certain amounts seeded into funds are classified as interests in pooled investment funds. Investment property andowner occupied property held for sale relates to property for which contracts have been exchanged but the sale had
not completed during the current financial year. Interests in pooled investment funds and investment property held forsale continue to be measured based on the accounting policies that applied before they were classified as held for sale.

Assets of operations held for sale
abrdn Capital Limited
European-headquartered Private Equity business
Investments in joint ventures accounted for using the equity method
Virgin Money UTM

2023
£m

2022
£m

–
10

87
–

9

–

Assets held for sale

19

87

Liabilities of operations held for sale
abrdn Capital Limited
European-headquartered Private Equity business

–
2

14
–

Liabilities of operations held for sale

2

14

(a)

14, 43

European-headquartered Private Equity businessOn 16 October 2023, the Group announced the proposed sale of its European-headquartered Private Equity business
which is in the Investments segment. The sale is expected to complete in the first half of 2024 and this business has beenclassified as an operation held for sale. At 31 December 2023, this disposal group was measured at its carrying amount andcomprised the following assets and liabilities:
2023£m

Assets of operations held for sale
Receivables and other financial assets
Cash and cash equivalents

91

Total assets of operations held for sale

10

Liabilities of operations held for sale
Other financial liabilities

2

Total liabilities of operations held for sale2

Net assets of operations held for sale8

Net assets of operations held for sale were net of intercompany balances between the European-headquartered Private
Equity business and other group entities, the net assets on a gross basis as at 31 December 2023 were £8m.

Annual report 2023

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215

FINANCIAL INFORMATION

Operations held for sale include newly established investment vehicles which the Group has seeded but is actively
seeking to divest from. For these investment funds, which do not have significant liabilities or non-financial assets,financial assets continue to be measured based on the accounting policies that applied before they were classified asheld for sale. The Group classifies seeded operations as held for sale where the intention is to dispose of the investment
vehicle in a single transaction. Where disposal of a seeded investment vehicle will be in more than one tranche theoperations are not classified as held for sale in the consolidated statement of financial position.

Group financial statements continued(b)abrdn Capital Limited (aCL)

On 1 September 2023, the Group completed the sale of aCL. Refer Note 1 (c)(i). aCL was reported in the ii segment(previously named Personal).
At 31 December 2022, this disposal group was measured at its carrying amount and comprised the following assets andliabilities:
2022£m

Assets of operations held for sale
Intangible assets
Property, plant and equipment
Receivables and other financial assets
Other assets
Cash and cash equivalents

58
–
15
1
13

Total assets of operations held for sale87

Liabilities of operations held for sale
Other financial liabilities

14

Total liabilities of operations held for sale

14

Net assets of operations held for sale73

Net assets of operations held for sale were net of intercompany balances between abrdn Capital Limited and other group
entities, the net assets of abrdn Capital Limited on a gross basis as at 31 December 2022 were £70m.

22.

Cash and cash equivalents

Cash and cash equivalents include cash at bank, money at call and short notice with banks, money market funds andany highly liquid investments with less than three months to maturity from the date of acquisition. For the purposes of theconsolidated statement of cash flows, cash and cash equivalents also include bank overdrafts which are included inother financial liabilities on the consolidated statement of financial position where the overdraft is repayable on demandand forms an integral part of the Group’s cash management.
Where the Group has a legally enforceable right of set off and intention to settle on a net basis, cash and overdrafts areoffset in the consolidated statement of financial position.
2023
£m

2022
£m

704

783

301
191

236
114

1,196

1,133

Notes

2023
£m

2022
£m

23
21
32

1,196
13
1
–

1,133
23
13
(3)

1,210

1,166

Cash at bank and in hand
Money at call, term deposits, reverse repurchase agreements and debt instruments with lessthan three months to maturity from acquisition
Money market funds
Cash and cash equivalents

Cash and cash equivalents
Cash and cash equivalents backing unit linked liabilities
Cash and cash equivalents classified as held for saleBank overdrafts
Total cash and cash equivalents for consolidated statement of cash flows

Cash at bank, money at call and short notice and deposits are subject to variable interest rates.
Cash and cash equivalents in respect of unit linked funds (including third party interests in consolidated funds) are held inseparate bank accounts and are not available for general use by the Group.

216

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Annual report 2023

23.

Unit linked liabilities and assets backing unit linked liabilities

The Group operates unit linked life assurance businesses through an insurance subsidiary. This subsidiary provides
investment products through a life assurance wrapper. These products do not contain any features which transfer
significant insurance risk and therefore are classified as investment contracts. Unit linked non-participating investment
contracts are separated into two components being an investment management services component and a financial
liability. All fees and related administrative expenses are deemed to be associated with the investment management
services component (refer Note 3). The financial liability component is designated at FVTPL as it is implicitly managed ona fair value basis as its value is directly linked to the market value of the underlying portfolio of assets.
Where the Group is deemed to control an investment vehicle as a result of holdings in that vehicle by subsidiaries to backunit linked non-participating investment contract liabilities, the assets and liabilities of the vehicle are consolidated within
the Group’s statement of financial position. The liability for third party interest in such consolidated funds is presented asa unit linked liability.
FINANCIAL INFORMATION

Unit linked liabilities and assets backing unit linked liabilities are presented separately in the consolidated statement offinancial position except for those held in operations held for sale, which are presented in assets and liabilities held forsale in the consolidated statement of financial position.
Contributions received on non-participating investment contracts and from third party interest in consolidated funds
are treated as deposits and not reported as revenue in the consolidated income statement.
Withdrawals paid out to policyholders on non-participating investment contracts and to third party interest inconsolidated funds are treated as a reduction to deposits and not recognised as expenses in the consolidated income
statement.
Investment return and related benefits credited in respect of non-participating investment contracts and third party
interest in consolidated funds are recognised in the consolidated income statement as changes in investment contract
liabilities and changes in liability for third party interest in consolidated funds respectively. Investment returns relating tounit linked business are for the account of policyholders and have an equal and opposite effect on income and expenses
in the consolidated income statement with no impact on profit or loss after tax.
Assets backing unit linked liabilities comprise financial investments, which are all classified as FVTPL on a mandatory
basis, and receivables and other financial assets and cash and cash equivalents which are measured at amortised cost.

(a)Result for the year attributable to unit linked business
2023
£m

2022
£m

4
5

4
(1)

5
(1)

3

4

9

(3)

(4)

–

–

Notes

Net gains or losses on financial instruments and other income
Other administrative expense
Profit before tax
Tax expense attributable to unit linked businessProfit after tax(b)Financial instrument risk management

The shareholder is not directly exposed to market risk or credit risk in relation to the financial assets backing unit linked
liabilities. The shareholder’s exposure to market risk on these assets is limited to variations in the value of future revenue as
fees are based on a percentage of fund value.
The shareholder is exposed to liquidity risk relating to unit linked funds. For the unit linked business, liquidity risk is primarily
managed by holding a range of diversified instruments which are assessed against cash flow and funding requirements. A
core portfolio of assets is maintained and invested in accordance with the mandates of the relevant unit linked funds. Given
that unit linked policyholders can usually choose to surrender, in part or in full, their unit linked contracts at any time, thenon-participating investment contract unit linked liabilities are designated as payable within one year. Such surrenders
would be matched in practice, if necessary, by sales of underlying assets. Policyholder behaviour and the trading position ofasset classes are actively monitored. The Group can delay settling liabilities to unit linked policyholders to ensure fairness
between those remaining in the fund and those leaving the fund. The length of any such delay is dependent on theunderlying financial assets.

Annual report 2023

abrdn.com

217

Group financial statements continued(c)

Fair value measurement of unit linked financial liabilities and financial assets backing unit linked
liabilities

Each of the unit linked financial liabilities and the financial assets backing unit linked liabilities has been categorised below
using the fair value hierarchy as defined in Note 36. Refer Note 36 for details of valuation techniques used.
Level 1

Level 2

Level 3

Not at fair value

Total

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

Financial investments
Receivables and other financial assets
Cash and cash equivalents

396
–
–

601
–
–

273
–
–

322
–
–

–
–
–

1
–
–

–
4
13

–
5
23

669
4
13

924
5
23

Total financial assets backing unit linked
liabilities

396

601

273

322

–

1

17

28

686

952

Investment contract liabilities
Third party interest in consolidated funds
Other unit linked financial liabilities

–
–
–

–
–
–

684
–
–

772
173
2

–
–
–

1
–
–

–
–
2

–
–
4

684
–
2

773
173
6

Total unit linked financial liabilities

–

–

684

947

–

1

2

4

686

952

In addition to financial assets backing unit linked liabilities and unit linked financial liabilities shown above there is a current
tax asset of £nil (2022: less than £1m) included in unit linked assets and a current tax liability of £nil (2022: less than £1m)
included in unit linked liabilities.
The financial investments backing unit linked liabilities comprise equity securities and interests in pooled investment funds of£667m (2022: £811m), debt securities of £2m (2022: £112m) and derivative financial assets of £nil (2022: £1m).
The fair value of financial instruments not held at fair value approximates to their carrying value at both 31 December 2023
and 31 December 2022.
There were no significant transfers from level 1 to level 2 during the year ended 31 December 2023. There were transfersfrom level 1 to level 2 of £52m during the year ended 31 December 2022. The Group now considers government bonds notissued by the G7 countries or the European Union as level 2. There were no significant transfers from level 2 to level 1 during
the year ended 31 December 2023 (2022: £nil). Transfers are deemed to have occurred at the end of the calendar quarter
in which they arose.
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

31 Dec2023£m

31 Dec2022£m

31 Dec2023£m

31 Dec2022£m

At start of period
Sales

1
(1)

1
–

(1)
1

(1)
–

At end of period

–

1

–

(1)

Unit linked level 3 assets related to holdings in real estate funds. No individual unobservable input is considered significant.
Changing unobservable inputs in the measurement of the fair value of these unit linked level 3 financial assets and liabilities
to reasonably possible alternative assumptions would have no impact on profit attributable to equity holders or on total
assets.
Transfers of unit linked assets and liabilities to level 3 generally arise when external pricing providers stop providing prices
for the underlying assets and liabilities in the funds or where the price provided is considered stale.

218

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Annual report 2023

(d)Change in non-participating investment contract liabilities

The change in non-participating investment contract liabilities was as follows:
2023
£m

2022
£m

At 1 January
Contributions
Account balances paid on surrender and other terminations in the year
Change in non-participating investment contract liabilities recognised in the consolidated income
statement
Recurring management charges

773
54
(206)

1,088
36
(237)

65
(2)

(112)
(2)

At 31 December

684

773

(e)

Derivatives

Related amounts not offset on the consolidated
statement of financial position
Gross amounts of financial
instruments as presented on the
consolidated statement of financial
position

Financial
instruments

Financial collateralpledged/(received)

Net position

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

Financial assets
Derivatives1

–

1

–

–

–

–

–

1

Total financial
assets

–

1

–

–

–

–

–

1

Financial liabilities
Derivatives1

–

(1)

–

–

–

–

–

(1)

Total financial
liabilities

–

(1)

–

–

–

–

–

(1)

1. Only OTC derivatives subject to master netting agreements have been included above.

Annual report 2023

abrdn.com

219

FINANCIAL INFORMATION

The treatment of collateral accepted and pledged in respect of financial instruments and the Group’s approach tooffsetting financial assets and liabilities is described in Note 34. The following table presents the impact of master netting
agreements and similar arrangements for derivatives backing unit linked liabilities.

Group financial statements continued

24.

Issued share capital and share premium

Shares are classified as equity instruments when there is no contractual obligation to deliver cash or other assets toanother entity on terms that may be unfavourable. The Company’s share capital consists of the number of ordinary
shares in issue multiplied by their nominal value. The difference between the proceeds received on issue of the sharesand the nominal value of the shares issued is recorded in share premium.
Where the Company undertakes share buybacks, the reduction to retained earnings is accounted for on the trade dateof the transaction of each repurchase with a liability recognised for unsettled trades, unless the Company has anirrevocable contractual obligation with a third party. Where the Company has an irrevocable contractual obligation, thefull contractual value of the buyback programme is recognised as a liability and as a reduction to retained earnings on
the date of the agreement. The reduction to share capital for the cancellation of the shares and the related credit to thecapital redemption reserve is always accounted for on the settlement date for the repurchases.
The movement in the issued ordinary share capital and share premium of the Company was:
2022

2023
Ordinary share capital
13 61/63p each£mIssued shares fully paid

Share premium£mOrdinary share capital
13 61/63p each£m

Share premium£m

At 1 January
Shares issued in respect of share incentive
plans
Share buyback

2,001,891,899

280

640

2,180,724,786

305

640

2,414
(161,153,949)

–
(23)

–
–

2,381
(178,835,268)

–
(25)

–
–

At 31 December

1,840,740,364

257

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. On 8 August 2023, theCompany announced the extension of this programme to £300m. The share buyback commenced on 5 June 2023 andwas completed on 19 December 2023. During the year ended 31 December 2023, the Company had bought back andcancelled 161,153,949 shares as part of this programme. The total consideration was £302m which includes transaction
costs.
During the year ended 31 December 2022, the Company bought back and cancelled 178,835,268 shares. The total
consideration was £302m which included transaction costs. There were no unsettled purchases at 31 December 2022.
The share buyback has resulted in a reduction in retained earnings of £302m (2022: £302m).
In addition, an amount of £23m (2022: £25m) has been credited to the capital redemption reserve relating to the nominal
value of the shares cancelled.
The Company can issue shares to satisfy awards granted under employee incentive plans which have been approved byshareholders. Details of the Group’s employee plans are provided in Note 40.

25.

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), theabrdn Employee Trust (formerly named the Standard Life Employee Trust)(abrdn ET) and the Aberdeen AssetManagement Employee Benefit Trust 2003 (AAM EBT).
The abrdn EBT, abrdn 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. Where new shares areissued to the abrdn EBT, abrdn 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:
Number of shares held by trusts
abrdn Employee Benefit Trustabrdn Employee Trust
Aberdeen Asset Management Employee Benefit Trust 2003

220

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Annual report 2023

2023

2022

34,076,343
22,187,644
2,080,853

36,112,240
22,629,035
2,264,591

26.

Retained earnings

The following table shows movements in retained earnings during the year.
2023

Opening balance carried forward
Effect of application of IFRS 9 on Investments in associates and joint ventures accounted
for using the equity method2

4,986

5,766

51

–

Opening balance at 1 January

5,037

5,766

1

(558)

(139)
(31)

(793)
(57)

(169)

(1,408)

(279)
(302)
–
31
–
169
(38)
–

(307)
(302)
1,059
63
1
207
(70)
(23)

Notes

Recognised in comprehensive income
Recognised in profit/(loss) for the year attributable to equity holders1
Recognised in other comprehensive income
Remeasurement losses on defined benefit pension plans
Share of other comprehensive income of associates and joint ventures1

31

Total items recognised in comprehensive income
Recognised directly in equity
Dividends paid on ordinary shares
Share buyback
Cancellation of capital redemption reserve
Transfer for vested employee share-based payments
Transfer between reserves on disposal of subsidiaries
Transfer between reserves on impairment of subsidiaries
Shares distributed by employee and other trusts
Other movements3

24
27

27

Total items recognised directly in equity

(419)

628

At 31 December

4,449

4,986

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.
2. The Group implemented IFRS 9 in 2019. However, as permitted under a temporary exemption granted to insurers in IFRS 4 Insurance Contracts, the Group’s
insurance joint venture, Heng An Standard Life Insurance Company Limited, applied IFRS 9 at 1 January 2023 following the implementation of the new
insurance standard, IFRS 17. Refer Basis of preparation.
3. Other movements in 2022 included the transfer of (£17m) previously recognised in the foreign currency translation reserve (which is part of Other reserves)
to Retained earnings. In prior years we have considered the functional currency of an intermediate subsidiary holding the Group’s investment in HDFC Life to
be US Dollars. We now consider that the functional currency should have been GBP, resulting in the current period transfer between reserves. Prior periods
have not been restated as the impact on prior periods is not considered material.

27.

Movements in other reserves

In July 2006 Standard Life Group demutualised and during this process the merger reserve, the reserve arising on Group
reconstruction and the special reserve were created.
Merger reserve: the merger reserve consists of two components. Firstly at demutualisation in July 2006 the Company
issued shares to former members of the mutual company. The difference between the nominal value of these sharesand their issue value was recognised in the merger reserve. The reserve includes components attaching to eachsubsidiary that was transferred to the Company at demutualisation based on their fair value at that date. Secondly
following the completion of the merger of Standard Life plc and Aberdeen Asset Management PLC on 14 August 2017,an additional amount was recognised in the merger reserve representing the difference between the nominal value ofshares issued to shareholders of Aberdeen Asset Management PLC and their fair value at that date. On disposal or
impairment of a subsidiary any related component of the merger reserve is released to retained earnings.
Reserve arising on Group reconstruction: The value of the shares issued at demutualisation was equal to the fair value ofthe business at that date. The business’s assets and liabilities were recognised at their book value at the time ofdemutualisation. The difference between the book value of the business’s net assets and its fair value was recognised in
the reserve arising on Group reconstruction. The reserve comprises components attaching to each subsidiary that wastransferred to the Company at demutualisation. On disposal of such a subsidiary any related component of the reserve
arising on Group reconstruction is released to retained earnings.
Special reserve: Immediately following demutualisation and the related initial public offering, the Company reduced its
share premium reserve by court order giving rise to the special reserve. Dividends can be paid out of this reserve.
Capital redemption reserve: In August 2018, as part of the return of capital and share buyback the capital redemption
reserve was created. Additional capital redemption reserve is created by subsequent buybacks (refer Note 24). See
below for the cancellation of the capital redemption reserve as at 1 July 2022.

Annual report 2023

abrdn.com

221

FINANCIAL INFORMATION

£m

2022
restated1£mGroup financial statements continued
The following tables show the movements in other reserves during the year.
Cash flow
hedges£m

Foreigncurrencytranslation£m

Mergerreserve£m

Equitycompensation
reserve£m

Capitalredemption
reserve
£m

Total
£m

1 January 2023

23

70

275

48

115

Recognised in othercomprehensive income
Fair value losses on cash
flow hedges
Exchange differences ontranslating foreign
operations

(685)

25

(129)

(40)

–

–

–

–

–

–

(40)

–

(35)

–

–

–

–

–

(35)

28

(1)

–

–

–

–

–

27

3

–

–

–

–

–

–

3

(9)

(36)

–

–

–

–

–

(45)

–

–

–

–

–

–

23

23

–

–

–

24

–

–

–

24

–

–

–

(31)

–

–

–

(31)

–

–

(169)

–

–

–

–

(169)

Total items recognised
directly within equity

–

–

(169)

(7)

–

–

23

(153)

At 31 December 2023

14

34

106

41

115

(685)

48

(327)

Notes

Items transferred to profit
or loss
Aggregate tax effect ofitems recognised in othercomprehensive income
Total items recognised inother comprehensive
incomeRecognised directly inequityShare buyback
Reserves credit for
employee share-based
payments
Transfer to retained
earnings for vested
employee share-based
payments
Transfer between
reserves on impairment ofsubsidiaries

24

SpecialReserve arising on
reserve Group reconstruction£m£m

The merger reserve includes £94m (2022: £263m) in relation to the Group’s asset management businesses. During 2023,
following the impairment of the Company’s investment in abrdn Investments (Holdings) Limited, £169m was transferredfrom the merger reserve to retained earnings. During 2022, following the impairment of the Company’s investments inabrdn Holdings Limited and abrdn Investments (Holdings) Limited, £207m was transferred from the merger reserve toretained earnings. Refer to the Company financial statements for further details on these impairments.

222

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Annual report 2023

Foreign
currencytranslation£m

Mergerreserve£m

Equitycompensation
reserve£m

Specialreserve£m

Reserve arising on
Groupreconstruction£mCapitalredemption
reserve
£m

Total
£m

1 January 2022

18

17

483

87

115

(685)

1,059

1,094

Recognised in othercomprehensive income
Fair value gains on cash
flow hedges
Exchange differences ontranslating foreign
operations

85

–

–

–

–

–

–

85

–

36

–

–

–

–

–

36

(78)

–

–

–

–

–

–

(78)

(2)

–

–

–

–

–

–

(2)

5

36

–

–

–

–

–

41

–

–

–

–

–

–

25

25

–

–

–

–

–

–

–

–

–

24

–

–

–

24

–

–

–

(63)

–

–

–

(63)

–

–

(1)

–

–

–

–

(1)

–
–

–
17

(207)
–

–
–

–
–

–
–

–
–

(207)
17

Notes

Items transferred to profit
or loss
Aggregate tax effect ofitems recognised in othercomprehensive income
Total items recognised inother comprehensive
incomeRecognised directly inequityShare buyback
Cancellation of capital
redemption reserve
Reserves credit for
employee share-based
payments
Transfer to retained
earnings for vested
employee share-based
payments
Transfer between
reserves on disposal ofsubsidiaries
Transfer between
reserves on impairment ofsubsidiaries
Other movements1

24

Total items recognised
directly within equity

–

17

(208)

(39)

–

–

At 31 December 2022

23

70

275

48

115

(685)

(1,059) (1,059)(1,034) (1,264)
25

(129)

1. Other movements included the transfer of (£17m) previously recognised in the foreign currency translation reserve to Retained earnings. In prior periods we
had considered the functional currency of an intermediate subsidiary holding the Group’s investment in HDFC Life to be US Dollars. We now consider that thefunctional currency should have been GBP, resulting in the transfer between reserves. Prior periods were not restated as the impact on prior periods was notconsidered material. There was no impact on net assets for any period presented.

On 1 July 2022, the Company’s capital redemption reserve at this date was cancelled in accordance with section 649 of
the Companies Act 2006 resulting in a transfer of £1,059m to retained earnings.

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223

FINANCIAL INFORMATIONCash flow
hedges£mGroup financial statements continued

28.

Other equity and non-controlling interests

Perpetual subordinated notes issued by abrdn plc are classified as other equity where no contractual obligation todeliver cash exists.

(a)Other equity – perpetual subordinated notes

5.25% Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes

On 13 December 2021, the Company issued £210m of 5.25% Fixed Rate Reset Perpetual Subordinated Contingent
Convertible Notes (the ‘Notes’). These were classified as other equity and initially recognised at £207m (proceeds received
less issuance costs of £3m).
The Notes initially bear interest on their principal amount at 5.25% per annum payable semi-annually in arrears on 13 Juneand 13 December in each year. The interest rate is subject to reset on 13 June 2027 and then every five years thereafter.
The payments of interest are discretionary and non-cumulative. The interest paid is recognised as profit attributable toother equity when paid. The profit for the year attributable to other equity was £11m (2022: £11m).
The Notes have no fixed redemption date. The Company has the option to redeem the Notes (in full) between 13
December 2026 and 13 June 2027 and every five years thereafter. The Notes are convertible to ordinary shares in abrdn
plc at a conversion price of £1.6275 (fixed subject to adjustment for share corporate actions e.g. share consolidations inaccordance with the terms and conditions of the Notes) if the Group IFPR CET1 Ratio falls below 70%. The IFPR CET1 ratioat 31 December 2023 was 467% (2022: 408%).

(b)

Non-controlling interests – ordinary shares

29.

Financial liabilities

Non-controlling interests – ordinary shares of £5m were held at 31 December 2023 (2022: £7m). The profit for the year
attributable to non-controlling interests – ordinary shares was less than £1m (2022: £1m).

Management determines the classification of financial liabilities at initial recognition. Financial liabilities which aremanaged and whose performance is evaluated on a fair value basis are designated as at fair value through profit orloss. Changes in the fair value of these financial liabilities are recognised in the consolidated income statement.
Derivatives are also measured at fair value. Changes in the fair value of derivatives are recognised in Net gains or losses
on financial instruments and other income in the consolidated income statement except for derivative instruments thatare designated as a cash flow hedge or net investment hedge. The classification of derivatives and the accounting
treatment of derivatives designated as a hedging instrument are set out in Note 18.
Except for contingent consideration liabilities which are measured at fair value, other financial liabilities are classified as
being subsequently measured at amortised cost. Amortised cost is calculated, and the related interest expense isrecognised in the consolidated income statement, using the effective interest method.
All financial liabilities are initially recognised at fair value less, in the case of financial liabilities subsequently measured atamortised cost, transaction costs that are directly attributable to the issue of the liability.
Where the terms of a financial liability measured at amortised cost are modified and the modification does not result in
the derecognition of the liability, the liability is adjusted to the net present value of the future cash flows less transaction
costs with a modification gain or loss recognised in the income statement.
The methods and assumptions used to determine fair value of financial liabilities measured at fair value through profit orloss and derivatives are discussed in Note 36.
The table below sets out an analysis of financial liabilities excluding unit linked financial liabilities which are set out in Note 23.
At fair value through profit or loss1

Third party interest in consolidated funds
Subordinated liabilities
Derivative financial liabilities
Other financial liabilities2

At amortised cost

Total

Notes

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

30
18
32

187
–
9
129

242
–
1
143

–
599
–
1,112

–
621
–
1,058

187
599
9
1,241

242
621
1
1,201

325

386

1,711

1,679

2,036

2,065

Total

1. All financial liabilities measured at fair value through profit or loss have been classified at FVTPL on a mandatory basis except for third party interest inconsolidated funds which the Group has designated as at FVTPL.
2. The Group has made a presentational change to show Deferred income within Other financial liabilities. Refer Note 32.

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30.

Subordinated liabilities

Subordinated liabilities are debt instruments issued by the Company which rank below its other obligations in the eventof liquidation but above the share capital. Subordinated liabilities are initially recognised at the value of proceeds
received after deduction of issue expenses. Subsequent measurement is at amortised cost using the effective interest
rate method.
2022

2023
Notes

Subordinated notes
4.25% US Dollar fixed rate due 30 June 2028
Total subordinated liabilities

Principal
amountCarrying
value

Principal
amountCarrying
value

$750m

£599m

$750m

£621m

£599m

36

£621m
FINANCIAL INFORMATION

A description of the key features of the Group’s subordinated liabilities as at 31 December 2023 is as follows:
4.25% US Dollar fixed rate1

Principal amount$750m

Issue date18 October 2017

Maturity date

30 June 2028

Callable at par at option of the Company from

Not applicable

If not called by the Company interest will reset to

Not applicable

1. The cash flows arising from the US dollar subordinated notes give rise to foreign exchange exposure which the Group manages with a cross-currency swap
designated as a cash flow hedge. Refer Note 18 for further details.

The difference between the fair value and carrying value of the subordinated liabilities is presented in Note 36. A
reconciliation of movements in subordinated liabilities in the year is provided in Note 37.
The principal amount of the subordinated liabilities is expected to be settled after more than 12 months. The accrued
interest on the subordinated liabilities of £13m (2022: £nil) is expected to be settled within 12 months.
During the year ended 31 December 2022, the Group redeemed subordinated liabilities with the following key features:
5.5% Sterling fixed rate

Principal amount£92m

Issue date

4 December 2012

Maturity date

4 December 2042

Callable at par at option of the Company from4 December 2022 and on every interest
payment date (semi-annually) thereafter

If not called by the Company interest will reset to4.85% over the five-year gilt rate(and at each fifth anniversary)

The 5.5% Sterling fixed rate subordinated notes with a principal amount of £92m were redeemed on 4 December 2022.

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225

Group financial statements continued

31.

Pension and other post-retirement benefit provisions

The Group operates two types of pension plans:– Defined benefit plans which provide pension payments upon retirement to members as defined by the plan rules. Allof the Group’s defined benefit plans, with the exception of a small plan in Ireland, are closed to future service accrual.
– Defined contribution plans where the Group makes contributions to a member’s pension plan but has no further
payment obligations once the contributions have been paid.
The Group’s liabilities in relation to its defined benefit plans are valued by at least annual actuarial calculations. The
Group has funded these liabilities in relation to its UK and Ireland defined benefit plans by ring-fencing assets in trusteeadministered funds. The Group has further smaller defined benefit plans some of which are unfunded.
The statement of financial position reflects a net asset or net liability for each defined benefit pension plan. The liability
recognised is the present value of the defined benefit obligation (estimated future cash flows are discounted using theyields on high quality corporate bonds) less the fair value of plan assets, if any. If the fair value of the plan assets exceeds
the defined benefit obligation, a pension surplus is only recognised if the Group considers that it has an unconditionalright to a refund of the surplus from the plan. The amount of surplus recognised will be limited by tax and expenses. Our
judgement is that, in the UK, an authorised surplus tax charge is not an income tax. Consequently, any UK surplus isrecognised net of this tax charge rather than the tax charge being included within deferred taxation.
For the principal defined benefit plan (abrdn UK Group plan), the Group considers that it has an unconditional right to arefund of a surplus, assuming the gradual settlement of the plan liabilities over time until all members have left the plan.
The plan trustees can purchase annuities to insure member benefits and can, for the majority of benefits, transfer theseannuities to members. The trustees cannot unconditionally wind up the plan or use the surplus to enhance member
benefits without employer consent. Our judgement is that these trustee rights do not prevent us from recognising an
unconditional right to a refund and therefore a surplus.
Net interest income (if a plan is in surplus) or interest expense (if a plan is in deficit) is calculated using yields on highquality corporate bonds and recognised in the consolidated income statement. A current service cost is also recognised
which represents the expected present value of the defined benefit pension entitlement earned by members in the
period. A past service cost is also recognised which represents the change in the present value of the defined benefit
obligation for service in prior periods, resulting from an amendment or curtailment to a plan.
Remeasurements, which include gains and losses as a result of changes in actuarial assumptions, the effect of the limiton the plan surplus and returns on plan assets (other than amounts included in net interest) are recognised in othercomprehensive income in the period in which they occur. Remeasurements are not reclassified to profit or loss insubsequent periods.
For defined contribution plans, the Group pays contributions to separately administered pension plans. The Group has
no further payment obligations once the contributions have been paid. The contributions are recognised in current
service cost in the consolidated income statement as staff costs and other employee-related costs when they are due.

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Defined contribution plans

The defined contribution plans comprise a mixture of arrangements depending on the employing entity and other factors. Someof these plans are located within the same legal vehicles as defined benefit plans. The Group contributes a percentage ofpensionable salary to each employee’s plan. The contribution levels vary by employing entity and other factors.
Defined benefit plans
UK plans

These plans are governed by trustee boards, which comprise employer and employee nominated trustees and an independent
trustee. The plans are subject to the statutory funding objective requirements of the Pensions Act 2004, which require that plans
be funded to at least the level of their technical provisions (an actuarial estimate of the assets needed to provide for benefits
already built-up under the plan). The trustees perform regular valuations to check that the plans meet the statutory funding
objective.

The trustees set the plan investment strategy to protect the ratio of plan assets to the trustees’ measure of the value of assets
needed to meet the trustees’ objectives. This investment strategy does not aim to protect the IAS 19 surplus or the ratio of plan
assets to the IAS 19 measure of liabilities.
After consulting the relevant employers, the trustees prepare statements of funding and investment principles and set a scheduleof contributions. If necessary, this schedule includes a recovery plan that aims to restore the funding level to the level of thetechnical provisions.
abrdn UK
This is the Group’s principal defined benefit plan. The plan closed to new membership in 2004 and changed from aGroupfinal salary basis to a revalued career average salary basis in 2008. Accrual ceased in April 2016.
(SLSPS) plan
Following a High Court ruling against a third party’s pension scheme in 2018, that required pension schemes to(principal
address inequalities for the effect of unequal GMPs accrued between May 1990 and April 1997, an allowance forplan)
assumed equalisation was recognised as a past service cost for our principal defined benefit plan in 2018 and thisadjustment has been carried forward to 2023. There was a further judgement in 2020 requiring pension schemes toaddress inequalities for the effect of unequal GMPs for those beneficiaries that transferred out of the scheme
between May 1990 and October 2018. The estimated impact is immaterial and was recognised as a past service
cost in 2020 and this adjustment has been carried forward to 2023.
The funding of the plan depends on the statutory valuation performed by the trustee, and the relevant employers,
with the assistance of the scheme actuary – i.e. not the IAS 19 valuation. The funding valuation was last completed
at 31 December 2022, and measured plan assets and liabilities to be £3.0bn and £2.1bn respectively. This
corresponds to a surplus of £0.9bn and a funding level of 144%. As there is currently no deficit, no recovery plan isrequired.
As part of ongoing actions taken in recent years to reduce risk in abrdn’s principal defined benefit pension plan, thetrustee 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 andsufficient provision made for: (i) any remaining liabilities; and (ii) expenses of completing the winding-up of thepension 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 thetrustee. The IAS 19 defined benefit plan asset is not included in abrdn’s regulatory capital.
Other UKplans

The Group also operates two UK defined benefit plans as a result of the acquisition of Aberdeen AssetManagement PLC (now renamed abrdn Holdings Limited) in 2017. These plans are final salary based, with benefits
depending on members’ length of service and salary prior to retirement. At the last statutory valuation date (30June 2022), one plan, the Edinburgh Fund Managers Group Scheme (the EFM Scheme) was in deficit and theGroup agreed funding plans with the plan’s trustees which aimed to eliminate the deficit. The other plan, the MurrayJohnstone Limited Retirement Benefits Plan (the MJ Plan), was in surplus. Refer Section 31(d) for details of the buy-in
undertaken on the MJ Plan in 2023.

Other plans

abrdn ROI
plan

In December 2009, this plan closed to new membership and changed from a final salary basis to a career averagerevalued earnings (CARE) basis. Following the sale of the UK and European insurance business in 2018, there remain
two employees who continue to accrue benefits under this plan.
At the last funding valuation, effective 1 January 2022, the plan was in deficit and as above, the Group agreed
funding plans with the plan’s trustees which aimed to eliminate the deficit.

Other

The Group operates smaller funded and unfunded defined benefit plans in other countries.

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227

FINANCIAL INFORMATION

While the IAS 19 valuation reflects a best estimate of the financial position of the plan, the funding valuation reflects a prudent
estimate. There is no material difference in how assets are measured. The funding measure of liabilities (technical provisions) andthe IAS 19 measure are materially different. The key differences are the discount rate and inflation assumptions. While IAS 19
requires that the discount rate reflect corporate bond yields, the funding measure discount rate reflects a prudent estimate of
future investment returns based on the actual investment strategy. The funding valuation adopts a market consistent measure of
inflation without any adjustment. The IAS 19 RPI inflation assumption is derived from market-implied RPI inflation with an
adjustment to remove the inflation risk premium believed to exist within market prices, with an additional deduction required toderive the IAS 19 CPI inflation assumption (to reflect differences between RPI and CPI).

Group financial statements continued
Plan regulations

The plans are administered according to local laws and regulations in each country. Responsibility for the governance ofthe plans rests with the relevant trustee boards (or equivalent). The UK pensions market is regulated by the Pensions
Regulator whose statutory objectives and regulatory powers are described on its website,
www.thepensionsregulator.gov.uk(a)Analysis of amounts recognised in the consolidated income statement

The amounts recognised in the consolidated income statement for defined contribution and defined benefit plans are as
follows:
2023
£m

2022
£m

Current service cost
Past service cost
Net interest income
Administrative expenses

55
(5)
(38)
4

56
–
(32)
3

Expense recognised in the consolidated income statement

16

27

Contributions made to defined contribution plans are included within current service cost.
Contributions to defined benefit plans in the year ended 31 December 2023 comprised £8m (2022: £14m) to the Other UK
plans and the abrdn ROI plan. Contributions are expected to be £5m in 2024 and are not expected to materially change inthe two subsequent years. These contributions include a mixture of deficit funding and funding to achieve a targeted levelof overall financial strength.

(b)Analysis of amounts recognised in the consolidated statement of financial position
2022

2023

Present value of funded obligation
Present value of unfunded
obligation
Fair value of plan assets
Net asset/(liability) before the limit
on plan surplus
Effect of limit on plan surplus1, 2
Net asset/(liability)

Principal
plan
£m

Other
£m

(1,784)Total£m

Principal
plan
£m

Other
£m

Total
£m

(234)

(2,018)(1,755)(228)(1,983)

–
2,912

(2)
233

(2)
3,145

–
3,001

(3)
251

(3)
3,252

1,128
(394)

(3)
(3)

1,125
(397)

1,246
(436)

20
(11)

1,266
(447)

734

(6)

728

810

9

819

1. UK recoverable surpluses are reduced to reflect an authorised surplus payments charge of 35% that would arise on a refund. This applies to both the principal
plan surplus and the defined benefit plan within Other which has a net asset of £6m at 31 December 2023 (2022: £21m).
2. The UK Government announced in the Autumn Statement a proposed reduction in the authorised pension surplus charge from 35% to 25% to be effectivefrom 6 April 2024. This change has not yet been enacted. The impact of the change would have been to increase the pension asset by £113m.

Other comprises a defined benefit plan asset of £6m (2022: £21m) and a number of other defined benefit plans with a total
liability of £12m (2022: £12m).
A pension plan surplus is considered to be recoverable where an unconditional right to a refund exists. The principal plansurplus had reduced significantly in 2022 due to market movements, primarily driven by the increase in UK high qualitybond yields with a smaller impact from UK inflation changes during 2022. There was further impact from these in 2023 but
this was less significant.

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(c)Movement in the net defined benefit asset
Present valueof obligation

At 1 January
Total expense
Current service cost
Past service cost
Interest (expense)/income
Administrative expenses

Remeasurements
Return on plan assets, excluding
amounts included in interest
incomeGain from change indemographic assumptions(Loss)/gain from change infinancial assumptions
Experience gains/(losses)
Change in effect of limit on plansurplusEffect of limit on plansurpluses

Net asset/(liability)

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

(1,986)(3,252)

3,252

5,686

1,266

2,434

(447)

(865)

819

1,569

–
5
(88)
(4)

–
–
(65)
(3)

–
–
146
–

–
–
115
–

–
5
58
(4)

–
–
50
(3)

–
–
(20)
–

–
–
(18)
–

–
5
38
(4)

–
–
32
(3)

(87)

(68)

146

115

59

47

(20)

(18)

39

29

–

–

(186) (2,473)(186)(2,473)

–

–

(186)

(2,473)

31

5

–

–

31

5

–

–

31

5

(56)
2

1,450
(211)

–
–

–
–

(56)
2

1,450
(211)

–
–

–
–

(56)
2

1,450
(211)

–

–

–

–

70

436

70

436

(186) (2,473)––

Remeasurement (losses)/gains
recognised in other comprehensive
income

(23)

1,244

(209)

(1,229)

70

436

(139)

(793)

Exchange differences
Employer contributions
Benefit payments

4
–
72

(6)
–
96

(4)
8
(71)

5
14
(95)

–
8
1

(1)
14
1

–
–
–

–
–
–

–
8
1

(1)
14
1

(2,020)(1,986)

3,145

3,252

1,125

1,266

(397)

(447)

728

819

At 31 December

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229

FINANCIAL INFORMATION

Total (expense)/income
recognised in consolidated income
statement

Net asset/(liability)
before the limit on plansurplusFair value ofplan assets

Group financial statements continued(d)Defined benefit plan assets

Investment strategy is directed by the trustee boards (where relevant) who pursue different strategies according to thecharacteristics and maturity profile of each plan’s liabilities. Assets and liabilities are managed holistically to create a
portfolio with the dual objectives of return generation and liability management. In the principal plan this is achieved
through a diversified multi-asset absolute return strategy seeking consistent positive returns, and hedging techniques
which protect liabilities against movements arising from changes in interest rates and inflation expectations. Derivative
financial instruments support both of these objectives and may lead to increased or decreased exposures to the physicalasset categories disclosed below.
To provide more information on the approach used to determine and measure the fair value of the plan assets, the fairvalue hierarchy has been used as defined in Note 36. Those assets which cannot be classified as level 1 have beenpresented together as level 2 or 3.
The distribution of the fair value of the assets of the Group’s funded defined benefit plans is as follows:
Principal plan

Other

Total

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

Assets measured at fair value based on level 1 inputs
Derivatives
Equity securities
Debt securities

–
–
1,403

9
55
2,186

–
–
–

–
–
93

–
–
1,403

9
55
2,279

Total assets measured at fair value based on level 1 inputs

1,403

2,250

–

93

1,403

2,343

Assets measured at fair value based on level 2 or 3 inputs
Derivatives
Equity securities
Interests in pooled investment funds
Debt
EquityMulti-asset private markets
Property
Absolute return
Cash
Debt securities
Qualifying insurance policies

(3)
44

(7)
55

(2)
–

(3)
–

(5)
44

(10)
55

286
–
230
82
–
9
1,110
2

284
–
224
95
–
39
581
2

19
7
–
11
9
73
2
125

16
6
–
12
24
41
12
45

305
7
230
93
9
82
1,112
127

300
6
224
107
24
80
593
47

Total assets measured at fair value based on level 2 or 3 inputs

1,760

1,273

244

153

2,004

1,426

Cash and cash equivalents
Liability in respect of collateral held

103
(354)

160
(682)

4
(15)

5
–

107
(369)

165
(682)

Total

2,912

3,001

233

251

3,145

3,252

Further information on risks is provided at Section (g) of this Note. The £2,515m (2022: £2,872m) of debt securities includes£1,608m (2022: £2,550m) of government bonds (including conventional and index-linked). Of the remaining £907m (2022:£322m) debt securities, £815m (2022: £190m) are investment grade corporate bonds or certificates of deposit.
Included in the qualifying insurance policy asset of £127m (2022: £47m) is £121m (2022: £42m) in relation to two insurance
policies purchased by the trustees of Other UK defined benefit plans to protect the plans against future investment andactuarial risks.
– £43m (2022: £42m) in relation to the partial buy-in completed on the EFM Scheme in 2015.
– £78m (2022: £nil) in relation to the substantially full buy-in completed on the MJ Plan in 2023. The premium paid was£99m.
The MJ Plan buy-in is not considered to be a settlement therefore, as noted above, the insurance policy has beenrecognised within the plan assets. The buy-in transaction was an investment decision made by the trustee to increase thesecurity of plan benefits. The insurance policy does provide the option to convert the buy-in into individual policies which
would transfer the future obligation to pay pensions to the insurer for the members covered by the policy (known as a buyout). However, this obligation remains with the Group and while the conversion to a buy-out may be considered in the
future, a separate decision will be required, and certain conditions will need to be met, including changes to the MJ Plan'strust deed and rules, before any buy-out can be executed. Consequently the difference between the valuation of thepolicy and the premium paid has been recognised within Remeasurement (losses)/gains recognised in othercomprehensive income.

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On completion of the MJ Plan buy-in, a contract in place to hedge longevity risk for pensioners on this plan wasderecognised. The fair value of this derivative at 31 December 2022 was a liability of £1m.
The £369m liability in respect of collateral held (2022: £682m) consists of repurchase agreements of £353m (2022: £652m),
margins on derivatives of (£8m) (2022: (£10m)) and collateral of £24m (2022: £40m).

(e)

Estimates and assumptions

Determination of the valuation of principal plan liabilities is a key estimate as a result of the assumptions made relating toboth 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:
2022
%

4.60

4.85

2.65
3.00

2.75
3.10

The changes in economic assumptions over the period reflect changes in both corporate bond prices and market
implied inflation. The underlying methodology used to set these assumptions has not changed over the reporting period.
The population of corporate bond prices excludes bonds issued by UK universities. The inflation assumption reflects the
future reform of RPI effective from 2030 as described in Section (g)(i) below.
The most significant non-economic assumption for the principal plan is post-retirement longevity which is inherently
uncertain. These non-economic assumptions have been updated for the current reporting date. The longevity
assumptions (along with sample expectations of life) are illustrated below:
Expectation of life from NRA
2023 Table

Plan specific basis(calibrated by Club
Vita) reflecting
membership
demographics

ImprovementsCore parameterisation of the CMI
2021 mortality improvements model(SK parameter of 7.0), with an initial
improvement (or ‘A’) parameter of+0.5% for males and females, and along-term rate of improvement of
1.5%.

Normal Retirement Age(NRA)Male age today

60

Female age today

NRA

40

NRA

40

27

28

29

31

Expectation of life from NRA
2022 Table

Plan specific basis(calibrated by Club
Vita) reflecting
membership
demographics

ImprovementsCore parameterisation of the CMI
2019 mortality improvements model(SK parameter of 7.0), with an initial
improvement (or ‘A’) parameter of+0.5% for males and females, and along-term rate of improvement of
1.5%.

Normal Retirement
Age (NRA)

Male age today

Female age today

NRA

40

NRA

40

27

29

29

31

60

These assumptions reflect a cautious allowance for the recently observed slowdown in longevity improvements. The
updated mortality improvement assumptions are in line with CMI 2021 but with a 10% weighting on 2020 and 2021 data.
This makes some allowance for recent post-pandemic experience whilst recognising that greater stability in recent
2022 mortality experience may be indicative of expected future trends.

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231

FINANCIAL INFORMATION

Discount rate
Rates of inflation
Consumer Price Index (CPI)
Retail Price Index (RPI)2023%

Group financial statements continued(f)

Duration of defined benefit obligation

The graph below provides an illustration of the undiscounted expected benefit payments included in the valuation of theprincipal plan obligations.

Undiscounted benefit payments (£m)
140
120

100
80
Non-current pensioner

60

Current pensioner
40

20

0

2024

2030

2040

2050

2060

2070

2080

2090

Weighted average duration

Current pensioner
Non-current pensioner

2100

2110

2120

2023
years

2022
years

11
22

11
22

The weighted average duration is calculated based on discounted benefit payments so is impacted by changes in the
discount and inflation rates used (Refer Section (e)).

(g)

Risk

(g)(i) Risks and mitigating actions

The Group’s consolidated statement of financial position is exposed to movements in the defined benefit plans’ net asset. In
particular, the consolidated statement of financial position could be materially sensitive to reasonably likely movements inthe principal assumptions for the principal plan. By having offered post-retirement defined benefit pension plans the Groupis exposed to a number of risks. An explanation of the key risks and mitigating actions in place for the principal planis given below.
Asset volatility
Investment strategy risks include underperformance of the absolute return strategy and underperformance of the liability
hedging strategy. As the trustees set investment strategy to protect their own view of plan strength (not the IAS 19 position),changes in the IAS 19 liabilities (e.g. due to movements in corporate bond prices) may not always result in a similar
movement in plan assets.
Failure of the asset strategy to keep pace with changes in plan liabilities would expose the plan to the risk of a deficit
developing, which could increase funding requirements for the Group. abrdn and the trustees are working together todetermine the most appropriate de-risking strategy to best protect against the risk that this plan strength deteriorates in
the future.
Yields/discount rate
Falls in yields would in isolation be expected to increase the defined benefit plan liabilities.
The principal plan uses both bonds and derivatives to hedge out yield risks on the relevant plan basis in order to meet thetrustee’s objectives, rather than the IAS 19 basis, which is expected to minimise the plan’s need to rely on support from theGroup.

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Inflation
Increases in inflation expectations would in isolation be expected to increase the defined benefit plan liabilities.
The principal plan uses both bonds and derivatives to hedge out inflation risks on the relevant plan basis in order to meet theobjectives, rather than the IAS 19 basis, which is expected to minimise the plan’s need to rely on support from the Group.
In the principal plan, pensions in payment are generally linked to CPI, however inflationary risks are hedged using RPI
instruments due to lack of availability of CPI linked instruments. Therefore, the plan is exposed to movements in the actualand expected long-term gap between RPI and CPI.

Life expectancy
Increases in life expectancy beyond those currently assumed will lead to an increase in plan liabilities. Regular reviews oflongevity assumptions are performed to ensure assumptions remain appropriate.
ClimateThe principal plan adopts a low-risk strategy to investment, with the majority of plan assets invested in UK government
bonds. The trustees have assessed the principal plan’s exposure to severe climate change as being minimal, as a result of
the low-risk investment strategy alongside the plan’s strong funding level.

(g)(ii) Sensitivity to key assumptions

The sensitivity of the principal plan’s obligation and assets to the key assumptions is disclosed below.
2022

2023

Change in assumption(Increase)/decreasein present valueof obligation£m

Increase/(decrease)in fair value ofplan assets£m(Increase)/decreasein present valueof obligation£m

Increase/(decrease)in fair value ofplan assets
£m

(342)
266

566
(432)

(341)
268

698
(525)

Yield/discount rate Decrease by 1% (e.g. from
4.60% to 3.60%)
Increase by 1%
Rates of inflation

Decrease by 1%
Increase by 1%

233
(306)

(371)
485

235
(305)

(445)
591

Life expectancy

Decrease by 1 year
Increase by 1 year

54
(54)

N/A
N/A

60
(60)

N/A
N/A

32.

Other financial liabilities
Notes

Accruals
Amounts due to counterparties and customers for unsettled
trades and fund transactions
Lease liabilities
Cash collateral held in respect of derivative contracts
Bank overdrafts
Contingent consideration liabilities
Deferred income1
Other

16
34
22
36

Other financial liabilities

2023
£m

2022
£m

284

326

464
223
40
–
114
4
112

300
224
109
3
132
3
104

1,241

1,201

1. The Group has made a presentational change to show Deferred income within Other financial liabilities.

The amount of other financial liabilities expected to be settled after more than 12 months is £323m (2022: £318m).

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233

FINANCIAL INFORMATIONA House of Lords report in 2019 raised the potential for changes to the RPI measure of inflation, which was followed byrecommendations from the UK Statistics Authority. The results of the consultation on the reform of RPI (announced on 25
November 2020) confirmed that RPI will be aligned to CPIH (CPI excluding owner occupiers’ housing costs) as proposed,
but not before 2030. While uncertainty remains, there is a risk that future cash flows from, and thus the value of, the plan’s
RPI-linked assets fall without a corresponding reduction in the plan’s CPI-linked liabilities. While not directly observable frommarket data, the plan’s RPI-linked asset values may already reflect an element of the expected changes and risk of suchchanges.

Group financial statements continued

33.

Provisions and other liabilities

Provisions are obligations of the Group which are of uncertain timing or amount. They are recognised when the Group
has a present obligation as a result of a past event, it is probable that a loss will be incurred in settling the obligation and a
reliable estimate of the amount can be made.
Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, aseparate reimbursement asset is recognised when it is virtually certain that reimbursement will be received if the Groupsettles the obligation.

(a)Provisions

The movement in provisions during the year is as follows:
Separation costs

At 1 January
Reclassified as held for sale during theyear
Charged/(credited) to theconsolidated income statement
Additional provisions
Release of unused provision
Used during the year
At 31 December

Process execution

Tax related provisions

Other provisions

Total provisions

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

33

35

41

–

–

23

14

97

49

–

–

–

–

–

–
–

–

(2)

–

(2)

–
(32)
(1)

–
–
(2)

–
–
(41)

41
–
–

42
–
–

–
–
–

33
(4)
(28)

18
(1)
(6)

75
(36)
(70)

59
(1)
(8)

–

33

–

41

42

–

24

23

66

97

The separation cost provision recognised at 31 December 2022 of £33m was in respect of costs expected to be incurredfollowing the sale of the UK and European insurance business to Phoenix. Following the completion of the separation
programme during the year ended 31 December 2023 the Group expects no further costs to be incurred and £32m (2022:
less than £1m) was released from the provision. The remaining costs covered by the provision at 31 December 2022 were
expected to be incurred in the next year.
A provision for a potential liability of £42m (2022: £nil) relates to a disputed tax matter which is the subject of an ongoingappeal. Any resolution is expected to be after 12 months. A reimbursement asset has been recognised for £18m (2022:£nil) which is an expected recovery in the event of any settlement.
The process execution provision recognised at 31 December 2022 for £41m in respect of a payment required tocompensate an asset management client relating to the provision of certain services has been fully utilised in the year
ended 31 December 2023 to fully settle the compensation.
Following the settlement, the Group had agreed a recovery of £36m from its liability insurance, being the cost of thecompensation net of a £5m excess of which £36m had been received by 31 December 2023. The recovery has beencredited against Other administrative expenses in the consolidated income statement.
Other provisions primarily relates to restructuring and dilapidations on leased properties. Restructuring provisions are
generally expected to be settled within 12 months. Dilapidations are generally expected to be settled after more than 12
months. Refer Note 16 for further details of the Group’s leases.
The amount of provisions expected to be settled after more than 12 months is £45m (2022: £3m).

(b)

Other liabilities

As at 31 December 2023, other liabilities totalled £4m (2022: £8m). The amount of other liabilities expected to be settled
after more than 12 months is £nil (2022: £3m).

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34.
(a)

Financial instruments risk management
Overview

The principal risks and uncertainties that affect the Group’s business model and the Group’s approach to risk
management are set out in the Risk management section of the Strategic report.
The Group’s exposure to financial instrument risk is derived from the financial instruments that it holds directly, the assets
and liabilities of the unit linked funds of the life operations of the Group and the Group’s defined benefit pension plans. In
addition due to the nature of the business, the Group’s secondary exposure extends to the impact on treasury income andinvestment management and other fees that are determined on the basis of a percentage of AUMA and are therefore
impacted by financial risks borne by third party investors. In this Note, exposures and sensitivities provided relate to thefinancial instrument assets and liabilities, in scope of IFRS 7, to which the shareholder is directly exposed.

Unit linked funds are excluded from the analysis in this Note. Details regarding the financial risks of instruments relating to
the Group’s unit linked funds can be found in Note 23 and the risks relating to the Group’s principal defined benefit pension
plan are explained in Note 31.
Third party interests in consolidated funds do not expose the shareholder to market, credit or liquidity risk since the financial
risks from the assets and obligations are borne by third parties. As a result equity risk, interest rate risk and credit risk
quantitative disclosures in this Note exclude these assets.
Under IFRS 7 the following financial instruments are excluded from scope:– Interests in subsidiaries, associates and joint ventures.
– Rights and obligations arising from employee benefit plans.
– Insurance contracts as defined by IFRS 17.
– Share-based payment transactions.
For the purposes of managing risks to the Group’s financial instrument assets and liabilities, the Group considers thefollowing categories:
Risk

Definition and exposure

Market

The risk of financial loss as a result of adverse financial market movements. The shareholder is directly
exposed to the impact of movements in equity prices, interest rates and foreign exchange rates on the valueof assets held by the shareholder business.

Credit

The risk of financial loss as a result of the failure of a counterparty, issuer or borrower to meet their obligations
or perform them in a timely manner. The shareholder is directly exposed to credit risk from holding cash, debt
securities, derivative financial instruments and receivables and other financial assets.

Liquidity

The risk of financial loss as a result of being unable to settle financial obligations when they fall due, as a resultof having insufficient liquid resources or being unable to realise investments and other assets other than atexcessive costs. The shareholder is directly exposed to the liquidity risk from the shareholder business if it isunable to realise investments and other assets in order to settle its financial obligations when they fall due, or
can do so only at excessive cost.

As set out in the Risk management section of the Strategic report, the Group reviews and manages climate related risks.
We continue to assess the potential impacts on our business with a view to the resilience of our operations and investment
strategies. This is monitored through our climate risk and opportunity radar to ensure we are well positioned to realise
opportunities and mitigate risks. Our day-to-day business is predominantly exposed to transition risk as markets, policy,
and reputations come to terms with alignment to net zero. We have a critical role to play as stewards of clients’ capital andthis is reflected in our business strategy and our commitment to reduce the carbon intensity of our portfolios and absoluteemissions from our direct operations. The Group is also exposed to climate risk in relation to its investment property which
are primarily properties which are no longer being used operationally by the Group and are being sublet. Refer Note 15 fordetails of the Group’s consideration of climate related factors in relation to investment property. We have considered theimplications of climate related risk, including transition risks, for the 2023 financial statements, and have concluded that
there are no material impacts on the valuation of the Group’s assets and liabilities including the valuation of financial
instruments held at fair value through profit or loss (in particular in relation to level 3 investments) or at amortised cost (inparticular in relation to expected credit losses).
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235

FINANCIAL INFORMATION

For the purposes of this Note:– Shareholder business refers to the assets and liabilities to which the shareholder is directly exposed. The shareholder
refers to the equity holders of the Company.
– Unit linked funds refers to the assets and liabilities of the unit linked funds of the life operations of the Group. It does notinclude the cash flows (such as asset management charges or investment expenses) arising from the unit linked fundcontracts. These cash flows are included in shareholder business.
– Third party interest in consolidated funds and non-controlling interests refers to the assets and liabilities recorded on theGroup’s consolidated statement of financial position which belong to third parties. The Group controls the entities which
own the assets and liabilities but the Group does not own 100% of the equity or units of the relevant entities.

Group financial statements continued(b)Market risk

The Group’s largest exposure to market risk relates to our investment in Phoenix. Other market risk exposures primarily
arise as a result of holdings in newly established investment vehicles which the Group has seeded and co-investments inproperty and infrastructure funds in the Investments segment. Seed capital is classified as held for sale when it is theintention to dispose of the vehicle in a single transaction and within one year. Co-investments are typically held for a longer
term and align the Group’s economic interests with those of property, private equity and infrastructure fund co-investors.
The consolidated statement of financial position includes the following amounts in respect of seed capital and coinvestments.
2023

2022

£m

£m

Equity securities and interests in pooled investment funds at FVTPL
Debt securities

209
86

213
76

Total seed capital

295

289

Equity securities and interests in pooled investment funds at FVTPL

116

107

Total co-investments

116

107

The Group sets limits for investing in seed capital and co-investment activity and regularly monitors exposures arising fromthese investments. The Group will consider hedging its exposure to market risk in respect of seed capital investments
where it is appropriate and efficient to do so. The Group will also consider hedging its exposure to currency risk in respect of
co-investments where it is appropriate and efficient to do so. Other market risks associated with co-investments are nothedged given the need for the Group’s economic interests to be aligned with those of the co-investors.

(b)(i) Elements of market risk

The main elements of market risk to which the Group is exposed are equity risk, interest rate risk and foreign currency risk,
which are discussed on the following pages.
Information on the methods used to determine fair values for each major category of financial instrument measured at fairvalue is presented in Note 36.
(b)(i)(i) Exposure to equity risk
The Group is exposed to the risk of adverse equity market movements which could result in losses. This applies to dailychanges in the market values and returns on the holdings in equity securities.
At 31 December 2023 the shareholder exposure to equity markets was £792m (2022: £1,577m) in relation to equity
securities. This primarily relates to the Group’s investments in Phoenix of £557m (2022: £634m), seed capital investments of£151m (2022: £171m), and equity securities held by the abrdn Financial Fairness Trust of £64m (2022: £61m). At 31
December 2022, equity securities also included the Group’s investments in HDFC Life of £203m and HDFC AssetManagement of £477m.
The Group is also exposed to adverse market price movements on its interests in pooled investment funds. The
shareholder exposure of £235m (2022: £268m) to pooled investment funds primarily relates to £174m (2022: £149m) of
seed capital and co-investments, investments in certain managed funds to hedge against liabilities from variable pay
awards that are deferred and settled in cash by reference to the price of those funds of £35m (2022: £37m), pooled
investment funds held by the abrdn Financial Fairness Trust of £22m (2022: £25m) and corporate funds held in absolute
return funds of £nil (2022: £50m).
The Equities and interests in pooled investment funds at FVTPL included in the consolidated statement of financial position
includes £112m (2022: £188m) relating to third party interest in consolidated funds and non-controlling interests – ordinary
shares to which the shareholder is not exposed.
Exposures to equity risk are primarily managed though the hedging of market risk in respect of seed capital investments
where it is appropriate and efficient to do so. Additionally limits are imposed on the amount of seed capital and coinvestment activity that may be undertaken. The Group does not hedge equity risk in relation to its investment in Phoenix.

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(b)(i)(ii) Exposure to interest rate risk
Interest rate risk is the risk that arises from exposures to changes in the shape and level of yield curves which could result in
losses due to the value of financial assets and liabilities, or the cash flows relating to these, fluctuating by different amounts.
The main financial assets held by the Group which give rise to interest rate risk are debt securities and cash and cash
equivalents. The Group is also exposed to interest rate risk on its investments in pooled investment funds where theunderlying instruments are exposed to interest rate risk.
Interest rate exposures are managed in line with the Group’s risk appetite.

The table below summarises the financial instrument exposure to foreign currency risks in UK Sterling.
UK
Sterling

Financial assets
Financialliabilities1
Cash flow
hedgesNondesignatedderivatives

Indian Rupee

US
DollarEuro

Singapore
DollarOther
currencies

Total

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

2023

Notes

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

17

3,280

3,237

–

680

204

219

612

585

59

48

159

210 4,314

4,979

29 (1,130) (1,205)

–

–

(48)

(53) (823) (776)

(15)

(8)

(20)

(23) (2,036) (2,065)

(588)

–

–

–

588

–

–

–

(623)

–

623

–

–

2022

–

296

296

–

–

(66)

(68) (186) (182)

–

–

(44)

(46)

–

–

1,858

1,705

–

680

90

98

191

44

40

95

141 2,278

2,914

250

1. The Group has made a presentational change to show Deferred income within Other financial liabilities which is part of Financial liabilities. Refer Note 32.

The Indian Rupee exposure at 31 December 2022 primarily related to the Group’s investments in HDFC Life and HDFC
Asset Management which were fully disposed of in 2023. Refer Note 11 for further details. Other currencies include assetsof £41m (2022: £85m) and liabilities of £nil (2022: £1m) in relation to the fair value of derivatives used to manage currencyrisk.
On 18 October 2017, the Group issued US dollar subordinated notes with a principal amount of US$750m. The related cash
flows expose the Group to foreign currency risk on the principal and coupons payable. The Group manages the foreignexchange risk with a cross-currency swap which is designated as a cash flow hedge.
Non-designated derivatives relate to foreign exchange forward contracts that are not designated as cash flow hedges or
net investment hedges and primarily relate to the management of currency risk arising from seed capital and coinvestment activity.
In addition to financial instruments analysed above, the principal source of foreign currency risk for shareholders arises
from the Group’s investments in overseas subsidiaries and associates and joint ventures accounted for using the equity
method. The carrying value of the Group’s Chinese joint venture is disclosed in Note 14. The Group does not hedge foreign
currency risk in relation to these investments.

(b)(ii) Sensitivity of financial instruments to market risk analysis

The Group’s profit/loss after tax and equity are sensitive to variations in respect of the Group’s market risk exposures and asensitivity analysis is presented below. The analysis has been performed by calculating the sensitivity of profit after tax andequity to changes in equity security prices (equity risk), changes in interest rates (interest rate risk) and changes in foreignexchange rate (foreign currency risk) as at the reporting date applied to assets and liabilities other than those classified asheld for sale, and after allowing for the Group’s hedging strategy.
The variables used in the sensitivity analysis are considered reasonable assumptions and are consistent with market peers.
Changes to variables are provided by internal specialists who determine what are reasonable assumptions.

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237

FINANCIAL INFORMATION(b)(i)(iii) Exposure to foreign currency risk
Foreign currency risk arises where adverse movements in currency exchange rates impact the value of revenues received
from, and the value of assets and liabilities held in, currencies other than UK Sterling. The Group’s financial assets are
generally held in the local currency of its operational geographic locations. The Group generally does not hedge thecurrency exposure relating to revenue and expenditure, nor does it hedge translation of overseas profits in the income
statement. Where appropriate, the Group may use derivative contracts to reduce or eliminate currency risk arising fromindividual transactions or seed capital and co-investment activity.

Group financial statements continued
Profit/loss after tax and equity sensitivity to market risk
31 December 2022

31 December 2023
A reasonable change in thevariable within the next
calendar year

Increase/(decrease) in
post-tax profit

A reasonable change inthe variable within thenext calendar year

Increase/(decrease) in
post-tax profit

%

£m

%

£m

Equity prices

Increase
Decrease

10
10

74
(74)

10
10

148
(148)

US Dollar against Sterling

Strengthen
Weaken

10
10

12
(9)

10
10

14
(11)

Euro against Sterling

Strengthen
Weaken

10
10

10
(8)

10
10

11
(9)

The reasonable change in variables have no impact on any other components of equity. These sensitivities concern only
the impact on financial instruments and exclude indirect impacts of the variable on fee income and certain costs which
may be affected by the changes in market conditions.
Interest rate sensitivity to a reasonable change in the variable within the next calendar year is not material in either 2023 or
2022.
Limitations
The sensitivity of the Group’s profit after tax and equity may be non-linear and larger or smaller impacts should not bederived from these results. The sensitivities provided illustrate the impact of a reasonably possible change in a single
sensitivity factor, while the other sensitivity factors remain unchanged. Correlations between the different risks and/or
other factors may mean that experience would differ from that expected if more than one risk event occurred
simultaneously.

(c)Credit risk

Exposures to credit risk and concentrations of credit risk are managed by setting exposure limits for different types offinancial instruments and counterparties. The limits are established using the following controls:
Financial instrument with credit risk exposure

Control

Cash and cash equivalents

Maximum counterparty exposure limits are set with reference to internal credit
assessments.

Derivative financial instruments

Maximum counterparty exposure limits, net of collateral, are set with reference to internal
credit assessments. The forms of collateral that may be accepted are also specified andminimum transfer amounts in respect of collateral transfers are documented.

Debt securities

The Group’s policy is to set exposure limits by name of issuer, sector and credit rating.

Other financial instruments

Appropriate limits are set for other financial instruments to which the Group may have
exposure at certain times.

Group Treasury perform central monitoring of exposures against limits and are responsible for the escalation of any limit
breaches to the Chief Risk Officer.
Expected credit losses (ECL) are calculated on financial assets which are measured at amortised cost.
Financial assets attract an ECL allowance equal to either:
12 month ECL (losses resulting frompossible default within the next 12months)No significant increase in credit risk since initial recognition.
Trade receivables or contract assets with significant financing component, or leasereceivables if lifetime ECL measurement has not been elected.

Lifetime ECL (losses resulting frompossible defaults over the remaining
life of the financial asset)

Significant increase in credit risk since initial recognition.
Trade receivables or contract assets with no significant financing component.
Trade receivables or contract assets with significant financing component, or leasereceivables for which lifetime ECL measurement has been elected.

Changes in Lifetime ECL

Credit-impaired at initial recognition.

In determining whether a default has taken place, or where there is an increased risk of a default, a number of factors aretaken into account including a deterioration in the credit quality of a counterparty, the number of days that a payment ispast due, and specific events which could impact a counterparty’s ability to pay.

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The Group assumes that a significant increase in credit risk has arisen when contractual payments are more than 30 days
past due. The Group assumes that credit risk on a financial instrument has not increased significantly since initialrecognition if the financial instrument is determined to have low credit risk at the reporting date. Financial instruments withan external rating of ‘investment grade’ are presumed to have low credit risk in the absence of evidence to the contrary.
Investment grade financial instruments are financial assets with credit ratings assigned by external rating agencies withclassification within the range of AAA to BBB. If a financial asset is not rated by an external agency it is classified as ‘notrated’.
The Group applies the simplified approach, as permitted under IFRS 9, to calculate the ECL allowance for trade receivables
and contract assets including accrued income from contracts with customers and lease receivables. Under the simplified
approach, the ECL allowance is calculated over the remaining life of the asset, using a provision matrix approach based on
historic observed default rates adjusted for knowledge of specific events which could influence loss rates.

The Group is exposed to a higher level of credit risk within its ii segment (previously named Personal), primarily in relation toii. Trade debtors past due for the ii segment at 31 December 2023 were £5m (2022: £5m), the majority of which wereconsidered to be credit impaired. A lifetime loss allowance of £2m (2022: £3m) has been recognised based on expected
recovery.

(c)(i) Credit exposure

The following table presents an analysis of the credit quality of shareholder financial assets and the maximum exposure tocredit risk without taking into account any collateral held.
Amortised cost
Fair value throughprofit or loss

12 month
ECL

Cash flow hedge

Lifetime ECL1

Total

2023

2022

2023

2022

2023

2022

2023

2022

2023

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

AAA
AA+ to AAA+ to ABBBBB
Not rated

30
169
405
86
–
12

–
164
327
76
–
21

–
–
41
–
–
–

–
–
85
–
–
–

115
76
977
127
–
610

89
162
953
126
–
429

–
–
–
–
–
452

–
–
–
–
–
463

145
245
1,423
213
–
1,074

89
326
1,365
202
–
913

Gross carrying amount
Loss allowance

702
–

588
–

41
–

85
–

1,905
–

1,759
–

452
(2)

463
(3)

3,100
(2)

2,895
(3)

Carrying amount

702

588

41

85

1,905

1,759

450

460

3,098

2,892

Derivative financial assets
Debt securities
Receivables and other financial assets
Cash and cash equivalents

2
689
11
–

19
550
19
–

41
–
–
–

85
–
–
–

–
125
610
1,170

–
210
428
1,121

–
–
450
–

–
–
460
–

43
814
1,071
1,170

104
760
907
1,121

Carrying amount

702

588

41

85

1,905

1,759

450

460

3,098

2,892

2022

1. As noted in Section (c) above, Lifetime ECL balances include trade debtors with a gross carrying value of £5m (2022: £5m) which are credit impaired forwhich a loss allowance of £2m (2022: £3m) has been recognised. All other Lifetime ECL balances are not credit impaired.

In the table above debt securities exclude debt securities relating to third party interests in consolidated funds of £51m
(2022: £42m). Cash and cash equivalents exclude cash and cash equivalents relating to third party interests inconsolidated funds of £26m (2022: £12m). The shareholder is not exposed to the credit risk in respect of third party
interests in consolidated funds since the financial risk of the assets are borne by third parties.

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239

FINANCIAL INFORMATIONAt 31 December 2023 the Group does not hold significant financial assets at amortised cost that it regards as creditimpaired or for which it considers the probability of default would result in material expected credit losses in its Investments
and Adviser segments. Historically, default levels have been insignificant for the Group’s customers within these segments.
Trade debtors past due but not in default at 31 December 2023 for these segments were £71m (2022: £84m) of which£36m was over 90 days past due (2022: £33m). We have not identified significant credit risk with counterparties withbalances over 90 days past due and recovery is still expected. Consequently, the expected credit losses recognised wereless than £1m (2022: less than £1m). In making this assessment the Group has considered if any evidence is available toindicate the occurrence of an event which would result in a detrimental impact on the estimated future cash flows of theseassets.

Group financial statements continued(c)(ii) Collateral accepted and pledged in respect of financial instruments

Collateral in respect of bilateral over-the-counter (OTC) derivative financial instruments and bilateral repurchaseagreements is accepted from and provided to certain market counterparties to mitigate counterparty risk in the event ofdefault. The use of collateral in respect of these instruments is governed by formal bilateral agreements between theparties. For OTC derivatives the amount of collateral required by either party is determined by the daily bilateral OTC
exposure calculations in accordance with these agreements and collateral is moved on a daily basis to ensure there is fullcollateralisation. Under the terms of these agreements, collateral is posted with the ownership captured under title transferof the contract. With regard to either collateral pledged or accepted, the Group may request the return of, or be required
to return, collateral to the extent it differs from that required under the daily bilateral OTC exposure calculations.
Where there is an event of default under the terms of the agreements, any collateral balances will be included in the closeout calculation of net counterparty exposure. At 31 December 2023, the Group had pledged £19m (2022: £14m) of cashand £nil (2022: £nil) of securities as collateral for derivative financial liabilities. At 31 December 2023, the Group had
accepted £40m (2022: £109m) of cash and £35m (2022: £nil) of securities as collateral for derivatives financial assets andreverse repurchase agreements. None of the securities were sold or repledged at the year end.

(c)(iii) Offsetting financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported on the consolidated statement of financial position
only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
The Group does not offset financial assets and liabilities on the consolidated statement of financial position, as there are no
unconditional rights to set off. Consequently, the gross amount of other financial instruments presented on the
consolidated statement of financial position is the net amount. The Group’s bilateral OTC derivatives are all subject to an
International Swaps and Derivative Association (ISDA) master agreement. ISDA master agreements and reverse
repurchase agreements entered into by the Group are considered master netting agreements as they provide a right of
set off that is enforceable only in the event of default, insolvency, or bankruptcy.
The Group does not hold any other financial instruments which are subject to master netting agreements or similararrangements.
The following table presents the effect of master netting agreements and similar arrangements.
Related amounts not offset on the consolidated
statement of financial position
Gross amounts of financial
instruments as presented on the
consolidated statement offinancial position

Financial assets
Derivatives1
Reverse repurchaseagreements

Financial
instruments

Financial collateralpledged/(received)

Net position

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

43

102

(2)

(1)

(39)

(100)

2

1

35

-

–

–

(35)

-

–

–

Total financial assets

78

102

(2)

(1)

(74)

(100)

2

1

Financial liabilities
Derivatives1

(2)

(1)

2

1

–

–

–

-

Total financial liabilities

(2)

(1)

2

1

–

–

–

-

1. Only OTC derivatives subject to master netting agreements have been included above.

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(d)Liquidity risk

The shareholder is exposed to liquidity risk if the Group is unable to realise investments and other assets in order to settle its
financial obligations when they fall due, or can do so only at excessive cost. The following quantitative liquidity risk
disclosures are provided in respect of these financial liabilities.
The Group has a liquidity risk framework and processes in place for monitoring, assessing, and managing liquidity risk.
This framework ensures that liquidity risks are identified across the Group and, where relevant, mitigation measures are put
in place. Stress testing of the residual risks is performed to understand the quantum of risk under stress conditions. This theninforms the level of liquid resources that need to be maintained. Where appropriate, this is enhanced with external credit
facilities and the Group has a syndicated revolving credit facility of £400m which was undrawn at 31 December 2023.
The level of liquid resources in the Group is also projected under a number of adverse scenarios. These are described more
fully in the Viability Statement.

As a result of the policies and processes established to manage risk, the Group expects to be able to manage liquidity risk
on an ongoing basis. We recognise there are a number of scenarios that can impact the liquid resources of a business as
discussed in the Risk management section of the Strategic report.

(d)(i) Maturity analysis

The analysis that follows presents the undiscounted cash flows payable under contractual maturity at the reporting date
for all financial liabilities, other than those related to unit linked funds which are discussed in Note 23.
Within1 year

1-5
years

5-10
years

10-15
years

15-20
years

Greater than
20 years

Total

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

£m

Subordinatedliabilities
Other financial
liabilities1

24

24

647

94

–

577

–

–

–

–

–

–

671

695

950

894

185

198

97

105

46

48

6

6

–

15

1,284

1,266

Total

974

918

832

292

97

682

46

48

6

6

–

15

1,955

1,961

1. The Group has made a presentational change to show Deferred income within Other financial liabilities. Refer Note 32.

Refer Note 18 for the maturity profile of undiscounted cash flows of derivative financial instruments.
The Group also had unrecognised commitments in respect of financial instruments as at 31 December 2023 (refer Note39) with a contractual maturity of within one year, between one and five years and over five years of £2m, £29m and £36m
respectively (2022: £3m, £32m and £37m). The commitments may generally be requested anytime up to the contractual
maturity.

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241

FINANCIAL INFORMATION

A contingency funding plan is maintained to ensure that if liquidity risk did materialise, processes and procedures are
already in place to assist with resolving the issue. Regular monitoring of liquid resources is performed and projections
undertaken (under both base and stressed conditions) to understand the outlook.

Group financial statements continued

35.

Structured entities

A structured entity is an entity that is structured in such a way that voting or similar rights are not the dominant factor in
deciding who controls the entity. The Group has interests in structured entities through investments in a range ofinvestment vehicles including:– Pooled investment funds managed internally and externally, including OEICs, SICAVs, unit trusts and limited
partnerships.
– Debt securitisation vehicles which issue asset-backed securities.
The Group consolidates structured entities which it controls. Where the Group has an investment in, but not control overthese types of entities, the investment is classified as an investment in associate when the Group has significant
influence. Investments in associates at FVTPL are included in equity securities and pooled investment funds in theanalysis of financial investments.
The Group also has interests in structured entities through asset management fees and other fees received from these
entities.

(a)Consolidated structured entities(b)

Unconsolidated structured entities

As at 31 December 2023 and 31 December 2022, the Group has not provided any non-contractual financial or othersupport to any consolidated structured entity and there are no current intentions to do so.
As at 31 December 2023 and 31 December 2022, the Group has not provided any non-contractual financial or othersupport to any unconsolidated structured entities and there are no current intentions to do so.
The following table shows the carrying value of the Group’s interests in unconsolidated structured entities by line item in the
consolidated statement of financial position.
2023
£m

2022
£m

Financial investments
Equity securities and interests in pooled investment funds
Debt securities

482
–

558
–

Total financial investments

482

558

Receivables and other financial assets
Other financial liabilities

196
114

215
95

The Group’s exposure to loss in respect of unconsolidated structured entities is limited to the carrying value of the Group’s
investment in these entities and the loss of future asset management and other fees received by the Group for the
management of these entities. Exposure to loss arising from market and credit risk in relation to investments held in the unit
linked funds and relating to third party interest in consolidated funds and non-controlling interests – ordinary shares is notborne by the shareholder.
Additional information on the Group’s exposure to financial risk and the management of these risks can be found in Note 23
and Note 34.
The total assets under management of unconsolidated structured entities are £108,993m at 31 December 2023 (2022:£126,019m). The fees recognised in respect of these assets under management during the year to 31 December 2023
were £453m (2022: £566m).
As at 31 December 2023, the Group had no investments in unconsolidated structured debt securitisation vehicles (2022:£nil).

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36.

Fair value of assets and liabilities

The Group uses fair value to measure many of its assets and liabilities. Fair value is the amount for which an asset could
be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction.
An analysis of the Group’s financial assets and financial liabilities in accordance with the categories of financial instrument
set out in IFRS 9 Financial Instruments is presented in Notes 17, 23 and 29 and includes those financial assets and liabilities
held at fair value.

(a)Fair value hierarchy

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

Level 1Equity instruments listed on a recognised exchange valued using prices
sourced from their primary exchange.

Debt securities listed
Exchange tradedon a recognised
derivatives
exchange valued using valued using
prices sourced fromprices sourced
their primaryfrom the relevant
exchange.
exchange.

Derivatives3

Level 2Pooled investment funds where daily unit prices are available and reference Debt securities valued
is made to observable market data.
using prices received
from external pricing
providers based onquotes received froma number of market
participants.

Level 3

These relate primarily to interests in private equity, real estate andinfrastructure funds which are valued at net asset value. Underlying realestate and private equity investments are generally valued in accordancewith independent professional valuation reports or International Private
Equity and Venture Capital Valuation Guidelines where relevant. The
underlying investments in infrastructure funds are generally valued basedon the phase of individual projects forming the overall investment anddiscounted cash flow techniques based on project earnings.

Over-thecounter
derivatives
measured usinga range ofvaluation models
including
discounting
Debt securities valued future cash flows
and option
using models andvaluation
standard valuation
techniques.
formulas based on
observable market
data4.

Where net asset values are not available at the same date as the reporting
date, the latest available valuations are reviewed and, where appropriate,adjustments are made to reflect the estimated impact of changes inmarket conditions between the date of the valuation and the end of thereporting period.

Debt securities valued N/Ausing prices received
from external pricing
providers based on asingle broker indicative
quote.
Debt securities valued
using models andstandard valuation
formulas based on
unobservable market
data4.

Other unlisted equity securities are generally valued using a calibration to
the price of a recent investment.
1. Investments in associates at FVTPL are valued in the same manner as the Group’s equity securities and interests in pooled investment funds.
2. Where pooled investment funds have been seeded and the investment in the funds have been classified as held for sale, the costs to sell are assumed to be
negligible. The fair value of pooled investment funds held for sale is calculated as equal to the observable unit price.
3. Non-performance risk arising from the credit risk of each counterparty is also considered on a net exposure basis in line with the Group’s risk management
policies. At 31 December 2023 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.

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243

FINANCIAL INFORMATIONIn 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 theasset 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).

Group financial statements continued
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 theunderlying 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 fairvalue hierarchy. Contingent consideration assets and liabilities have been recognised in respect of acquisitions anddisposals. Generally valuations are based on unobservable assumptions regarding the probability weighted cash flows
and, where relevant, discount rate.

(a)(i) Fair value hierarchy for assets measured at fair value in the statement of financial position

The table below presents the Group’s non-unit linked assets measured at fair value by level of the fair value hierarchy (refer
Note 23 for fair value analysis in relation to assets backing unit linked liabilities).
Fair value hierarchy
Total

Level 1

Level 2

Level 3

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

Owner occupied property
Derivative financial assets
Equity securities and interests inpooled investment vehicles1
Debt securities
Contingent consideration assets

1
43

1
104

–
–

–
3

–
43

–
101

1
–

1
–

1,139
740
11

2,033
592
19

769
7
–

1,621
2
–

137
732
–

181
588
–

233
1
11

231
2
19

Total assets at fair value

1,934

2,749

776

1,626

912

870

246

253

1. Includes £557m (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 year ended 31 December
2023 (HDFC Asset Management: 2022: £477m, HDFC Life: 2022: £203m).

There were no significant transfers from level 1 to level 2 during the year ended 31 December 2023 (2022: none). There
were also no significant transfers from level 2 to level 1 during the year ended 31 December 2023 (2022: none). Transfers
generally relate to assets where changes in the frequency of observable market transactions resulted in a change inwhether the market was considered active and are deemed to have occurred at the end of the calendar quarter in which
they arose.
Refer Section (a)(iii) below for details of movements in level 3.

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(a)(ii) Fair value hierarchy for liabilities measured at fair value in the statement of financial position

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

Liabilities in respect of third party
interest in consolidated funds1
Derivative financial liabilities
Contingent consideration
liabilities
Other financial liabilities2
Total liabilities at fair value

Level 1

Level 2

Level 3

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

187
9

242
1

–
7

–
-

117
2

168
1

70
–

74
–

114
15

132
11

–
–

–
–

–
–

–
–

114
15

132
11

325

386

7

-

119

169

199

217

2. Excluding contingent consideration liabilities.

There were no significant transfers between levels 1 and 2 during the year (2022: none). Refer Section (a)(iii) below for
details of movements in level 3. Transfers are deemed to have occurred at the end of the calendar quarter in which theyarose.

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

The movements during the year of level 3 assets and liabilities held at fair value, excluding unit linked assets and liabilities
and assets and liabilities held for sale, are analysed below.
Equity securities
and interests inpooled investment
funds

Owner occupied property

Liabilities in respect of third party
interest in consolidated funds

Debt securities

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

At 1 January
Total gains recognised in the
consolidated income
statement
Purchases
Sales and other adjustments

1

1

231

106

2

1

(74)

–

–
–
–

–
–
–

1
18
(17)

2
139
(16)

–
–
(1)

(2)
3
–

–
–
4

–
(70)
(4)

At 31 December

1

1

233

231

1

2

(70)

(74)

Contingent
consideration assets

Contingent
consideration liabilities

Other financial liabilities1

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

At 1 January
Total amounts recognised in the consolidated income statement
Additions
Settlements
Other movements

19
7
7
(21)
(1)

31
3
1
(18)
2

(132)
16
(11)
12
1

(165)
32
(6)
7
–

(11)
(5)
–
1
–

–
(11)
–
–
–

At 31 December

11

19

(114)

(132)

(15)

(11)

1. Excluding contingent consideration liabilities.

For the year ended 31 December 2023, gains of £19m (2022: gains of £24m) were recognised in the consolidated income
statement in respect of non-unit linked assets and liabilities held at fair value classified as level 3 at the year end, excluding
assets and liabilities held for sale. Of this amount, gains of £19m (2022: gains of £24m) were recognised in Net gains orlosses 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.

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245

FINANCIAL INFORMATION

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.

Group financial statements continued(a)(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 31 December 2023 with a fair value of £233m (2022: £231m).
Fair value
2023
£m

2022
£m Valuation technique

Private equity,
real estate,hedge andinfrastructure
funds

221

219 Net asset value

Net asset value statements provided for a A range of unobservable inputs
large number of funds including nine
is not applicable as we havesignificant funds (fair value >£5m).
determined that the reported
NAV represents fair value at theend of the reporting period.

Other unlisted
equitysecurities

12

12 Indicative share
price

Calibration to the price of a recent
investment.

Unobservable input

Range (weighted average)

A range of unobservable inputs
is not applicable as we havedetermined that the calibration
to the price of a recent
investment represents fair value
at the end of the reporting
period.

The unobservable input for the Group’s related liabilities in respect of third party interest in consolidated funds categorised
as level 3 instruments at 31 December 2023 with a fair value of (£70m) (2022: (£74m)) are the same as for the private
equity, real estate, hedge and infrastructure funds above. There are no single significant funds in relation to liabilities inrespect of third party interest in consolidated funds.
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 31 December 2023 with a fair value of(£118m) (2022: (£124m)).
Fair value

Contingent
consideration
assets andliabilities andother financial
instrument
liabilities

2023

2022

£m

£m

(118)

Valuation technique(124) Probability
weighted cash
flow and whereapplicablediscount rates

Unobservable input

Unobservable inputs relate to probability
weighted cash flows and, where relevant,discount rates.
The most significant unobservable inputs
relate to assumptions used to value thecontingent consideration liability related tothe acquisition of Tritax of £90m (2022:£112m). For Tritax a number of scenarios
were prepared, around a base case, withprobabilities assigned to each scenario(based on an assessment of the likelihoodof each scenario). The value of thecontingent consideration was determinedfor each scenario, and these were thenprobability weighted, with this probability
weighted valuation then discounted fromthe payment date to the balance sheet
date. It was assumed that the timing of theexercise of the earn out put options
between 2024, 2025 and 2026 would bethat which is most beneficial to the holdersof the put options.

Input used

The base scenario for Tritax
contingent consideration useda revenue compound annual
growth rate (CAGR) from 31
March 2023 to 31 March 2026
of 9% (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 c56%
(2022: c52%) with otherscenarios using a range of
cost/income ratios around thisbase.
The risk adjusted contingent
consideration cash flows havebeen discounted using a
primary discount rate of 4%(2022: 4.5%).

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

At 31 December 2023 the shareholder is directly exposed to movements in the value of all non-unit linked level 3
instruments. See Note 23 for unit linked level 3 instruments.
Sensitivities for material level 3 assets and liabilities are provided below. Changing unobservable inputs in the measurementof the fair value of the other level 3 financial assets and financial liabilities to reasonably possible alternative assumptions
would not have a material impact on loss attributable to equity holders or on total assets.

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(a)(v)(i) Equity securities and interests in pooled investment funds/ liabilities in respect of third party interest inconsolidated funds

As noted above, of the level 3 equity securities and interests in pooled investment funds, £221m relates to private equity,
real estate, hedge and infrastructure funds (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 theinvestments by £22m (2022: £22m).

(a)(v)(ii) Liabilities in respect of third party interest in consolidated funds

As noted above, £70m of liabilities in respect of third party interest in consolidated funds of the level 3 equity securities andinterests in pooled investment funds (2022: £74m) are also 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 liability by £7m (2022:£7m).

(a)(v)(iii) Contingent consideration assets and liabilities and other financial instrument liabilities

Assumption

Consequential increase/(decrease) in
contingent consideration liability

Change in assumption

2023
£m

Revenue compound annual growth rate (CAGR) from 31 March 2023
to 31 March 2026
Decreased by 5%
Increased by 10%
Cost/income ratio
Decreased by 5%
Increased by 5%
Discount rate
Decreased by 2%
Increased by 2%

(b)

(17)
34
14
(15)
4
(4)

Assets and liabilities not carried at fair value

The table below presents estimated fair values by level of the fair value hierarchy of non-unit linked financial assets andliabilities 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 the
consolidated statementof financial position line
item
Notes

AssetsDebt securities
Liabilities
Subordinated liabilities

30

Fair value

Level 1

Level 2

Level 3

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

125

210

125

211

–

-

125

210

–

1

599

621

534

550

–

–

534

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.

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247

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

Group financial statements continued

37.

Statement of cash flows

The Group classifies cash flows in the consolidated statement of cash flows as arising from operating, investing or
financing activities.
Cash flows are classified based on the nature of the activity to which they relate and with consideration to generally
accepted presentation adopted by peers. For activities related to asset management business, cash flows arising fromthe sale and purchase of debt securities and equity securities and interests in pooled investment funds, with the
exception of those related to unit linked funds, are classified as cash flows arising from investing activities. For activities
related to insurance business, including those related to unit linked funds, cash flows arising from the sale and purchaseof debt securities and equity securities and interests in pooled investment funds are classified as cash flows arising fromoperating activities.
For activities related to the acquisition and disposal of subsidiaries, associates and joint ventures, cash flows are classified
as investing activities. The settlement of contingent and deferred amounts recognised on acquisitions and disposals areclassified as investing activities where there is not considered to be a significant financing component of the related
inflows or outflows.
Purchases and sales of financial investments are presented on a gross basis except for purchases and sales of shortterm instruments with a high turnover held in consolidated liquidity funds which are presented on a net basis.
Dividends received from associates and joint ventures are presented as cash flows arising from operating activities.
Movements in cash collateral held in relation to derivative contracts hedging subordinated debt are presented as cash
flows arising from financing activities.
The tables below provide further analysis of the balances in the consolidated statement of cash flows.

(a)Change in operating assets
2023
£m

2022
£m

Equity securities and interests in pooled investment funds
Debt securities
Derivative financial instruments
Receivables and other financial assets and other assets
Assets held for sale

314
13
30
(184)
(16)

680
89
(11)
174
(16)

Change in operating assets

157

916

2023
£m

2022
£m

Other financial liabilities, provisions and other liabilities1
Pension and other post-retirement benefit provisions
Investment contract liabilities
Change in liability for third party interest in consolidated funds
Liabilities held for sale

76
(48)
(90)
(53)
6

(179)
(44)
(315)
(196)
9

Change in operating liabilities

(109)

(725)

Change in operating assets includes related non-cash items.

(b)Change in operating liabilities

1. The change in Other financial liabilities, provisions and other liabilities for the year ended 31 December 2022 of (£179m) includes £1m previously separately
disclosed as Deferred income. The Group has made a presentational change to show Deferred income within Other financial liabilities.

Change in operating liabilities includes related non-cash items.

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(c)Other non-cash and non-operating items
2023

Gain on sale of subsidiaries and other operations
Profit on disposal of interests in associates(Gain)/loss on disposal or derecognition of property, plant and equipment
Depreciation of property, plant and equipment
Amortisation of intangible assets
Impairment losses on intangible assets(Reversal of impairment)/impairment of interests in associates and joint ventures
Impairment losses recognised on property, plant and equipment
Reversal of impairment losses recognised on property, plant and equipment
Movement in contingent consideration assets/liabilities
Equity settled share-based payments
Finance costs
Share of profit or loss from associates and joint ventures accounted for using the equity method

(79)
–
(6)
32
128
65
(2)
50
(3)
(23)
24
25
(1)

–
(6)
7
39
129
369
9
7
–
(35)
24
29
(5)

Other non-cash and non-operating items

210

567

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation.

(d)Disposal of subsidiaries and other operations
20231
£m

Notes

Intangibles
Other assets of operations disposed of
Other liabilities of operations disposed of

59
30
(12)

Net assets disposed of77

Items transferred to profit or loss on disposal of subsidiaries
Fair value of deferred and contingent consideration
Non-cash consideration
Gain on saleTransaction costs

(1)
(5)
(3)
79
13

1
1
1

160

Total cash consideration
Cash and cash equivalents disposed of(21)

Cash inflow from disposal of subsidiary139

1. Relates to a number of 2023 disposals. Refer Note 1(c)(i) for further details.

There were no operations disposed of in the year ended 31 December 2022.

(e)

Movement in subordinated liabilities

The following table reconciles the movement in subordinated liabilities in the year, split between cash and non-cash items.
2023
£m

2022
£m

At 1 January
Cash flows from financing activities
Repayment of subordinated liabilities
Interest paid1

621

644

–
(13)

(92)
(31)

Cash flows from financing activities
Non-cash items
Interest expense
Foreign exchange adjustment

(13)

(123)

26
(35)

30
70

At 31 December

599

621

1. Interest paid on subordinated liabilities and other equity in the consolidated statement of cash flows of £20m (2022: £34m) includes an inflow of £4m (2022:£8m) in relation to the related cash flow hedge (refer Note 18) and an outflow of £11m (2022: £11m) in relation to other equity (refer Note 28). Other
movements in the fair value of the cash flow hedge relate to non-cash movements. Cash collateral held in respect of derivative contracts of £40m (2022:£109m) in Other financial liabilities (refer Note 32) includes collateral held in respect of the cash flow hedge of £39m (2022: £89m).

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249

FINANCIAL INFORMATION

£m

2022
restated1£mGroup financial statements continued(f)Movement in lease liabilities

The following table reconciles the movement in lease liabilities in the year, split between cash and non-cash items.
2023
£m

2022
£m

At 1 January
Cash flows from financing activities
Payment of lease liabilities – principal
Payment of lease liabilities – interest

224

225

(24)
(6)

(46)
(6)

Cash flows from financing activities
Non-cash items
Additions
Disposals and adjustments
Interest capitalised
Foreign exchange adjustment

(30)

(52)

28
(2)
6
(3)

46
(8)
6
7

At 31 December

223

224

38.

Contingent liabilities and contingent assets

Contingent liabilities are possible obligations of the Group of which timing and amount are subject to significant
uncertainty. Contingent liabilities are not recognised on the consolidated statement of financial position but are
disclosed, unless they are considered remote. If such an obligation becomes probable and the amount can bemeasured reliably it is no longer considered contingent and is recognised as a liability.
Conversely, contingent assets are possible benefits to the Group. Contingent assets are only disclosed if it is probablethat the Group will receive the benefit. If such a benefit becomes virtually certain it is no longer considered contingent
and is recognised as an asset.

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 and tax authority
discussions and reviews in the normal course of its business. All such material matters are periodically reassessed, with theassistance 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. A subsidiary of the Group is currently responding tocertain information requests from an overseas Tax Authority in connection with its Income Tax Return. Interpretation of tax
legislation is complex and therefore, as part of the normal course of business, local tax authorities may sometimes request
further information in order to clarify facts and technical approach. These types of enquiries can sometimes be prolonged
due to inherent complexity. At this stage of enquiry, it is not possible to reliably predict the outcome.
There are no other identified contingent liabilities expected to lead to a material exposure.

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39.

Commitments

The Group has contractual commitments which will be payable in future periods. These commitments are notrecognised on the Group’s statement of financial position at the year end but are disclosed to give an indication of theGroup’s future committed cash flows.

(a)Unrecognised financial instruments(b)

Capital commitments

As at 31 December 2023, the Group has committed to investing an additional £67m (2022: £72m) into funds in which it
holds a co-investment interest.
As at 31 December 2023, the Group has no capital commitments other than in relation to financial instruments (2022:£2m).

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251

FINANCIAL INFORMATION

In addition, the Group has commitments relating to future acquisitions.
– 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 theGroup 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 consolidated statement of financial position with cash movements in relation to theconsideration included in prepayment in respect of potential acquisition of customer contracts in the consolidated
statement of cash flows.
– At 31 December 2023, the Group had other commitments for the cost of obtaining customer contracts for £22m. These
commitments are still subject to the satisfaction of certain conditions.

Group financial statements continued

40.

Employee share-based payments and deferred fund awards

The Group operates share incentive plans for its employees. These generally take the form of an award of options,conditional awards or restricted shares in abrdn plc (equity-settled share-based payments) but can also take the formof a cash award based on the share price of abrdn plc (cash-settled share-based payments). The Group also
incentivises certain employees through the award of units in Group managed funds (deferred fund awards) which are
cash-settled. All the Group’s incentive plans have conditions attached before the employee becomes entitled to theaward. These can be performance and/or service conditions (vesting conditions) or the requirement of employees tosave in the save-as-you-earn scheme (non-vesting condition). The period over which all vesting conditions are satisfied
is the vesting period and the awards vest at the end of this period.
For all share-based payments, services received for the incentive granted are measured at fair value.
For equity-settled share-based payment transactions, the fair value of services received is measured by reference tothe fair value of the equity instruments at the grant date. The fair value of the number of instruments expected to vest is
charged to the income statement over the vesting period with a corresponding credit to the equity compensation
reserve in equity.
At each period end the Group reassesses the number of equity instruments expected to vest and recognises any
difference between the revised and original estimate in the consolidated income statement with a corresponding
adjustment to the equity compensation reserve.
At the time the equity instruments vest, the amount recognised in the equity compensation reserve in respect of thoseequity instruments is transferred to retained earnings.
For cash-settled share-based payment and deferred fund awards transactions, services received are measured at thefair value of the liability. The fair value of the liability is remeasured at each reporting date and any changes in fair value
are recognised in the consolidated income statement.
The following plans made awards during the year ended 31 December 2023:
Plan

Options

Conditional
awardsRestricted
sharesTypical vesting
period (years)

Contractual life
for options

abrdn plc
Deferred Share
Plan/
Discretionary
Share
Plan/Executive
LTIP Plan1

Yes

Yes

No

1-3 years(3 years for
Executive
LTIP)

Up to 10years fromdate of
grant

Sharesave (Save- Yes
as-you-earn)NoNo

3 or 5Up to six
UK and Irish
monthsemployees
after vesting

Service only

No

No

Yes

3 years

Not
applicable

Service only

Share incentive
plan

Recipients

Executives
and senior
management

UK and Irish
employees

Conditions which must be met prior tovestingService, or service andperformance conditions.
These can be tailored to theindividual award.

1. Included in Deferred and discretionary share plans in Section (b)(i) below.

All of the awards made under these plans are equity-settled except for a small number of cash-settled awards for thedeferred and discretionary share plans (see Section (d)(ii) below).
The fair value of awards granted under the Group’s incentive schemes is determined using a relevant valuation technique,such as the Black Scholes option pricing model. The fair value of awards is recharged to employing entities over the life of
the awards.
The awards made under the deferred and discretionary share plans include awards for deferred bonuses of the prior year.
With the exception of the Executive Incentive Plan (EIP) awards, the deferred bonus awards have service conditions of one,
two and three years after the date of the award and no outstanding performance conditions. The awards for deferredbonus for executive Directors in 2020 were made under the conditions of the EIP including a performance underpin.
The awards made include the awards for executive Directors under the Executive LTIP plan and certain awards under thedeferred and discretionary share plans to senior management with specific performance conditions.
Further details of the EIP and the Executive LTIP are set out in the Directors’ remuneration report.
The deferred and discretionary share plans also made a number of deferred fund awards in the year end 31 December
2023 (see Section (d)(i) below).

252

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Annual report 2023

Options and conditional awards are all at nil cost with the exception of Sharesave where eligible employees in the UK and
Ireland save a monthly amount from their salaries, over either a three or five year period, which can be used to purchaseshares in the Company at a predetermined price.
The share incentive plan allows employees the opportunity to buy up to £1,800 of shares from their salary each year with
the Group matching up to £600 per year. The matching shares awarded are granted each month but are restricted forthree years (two years for Ireland).
In addition, the Group operates the following plans for which there are outstanding awards but for which no awards weremade during the year ended 31 December 2023:
Options

Conditional
awardsRestricted
sharesTypical vesting
period (years)

Contractual life
for options

Aberdeen AssetManagement
Deferred SharePlan 20091

Yes

No

No

1-3 (3-5 for
Up to 10
Executives andexecutive
years from senior
management) date of grant management

Service only. There are no
outstanding performance
conditions at date of grant.

Aberdeen AssetManagement
USA Deferred
Share Award
Plan

No

Yes

No

1-3 (3-5 for
Not
executive
applicablemanagement)

Service only. There are no
outstanding performance
conditions at date of grant.

Recipients

US based
executives andseniormanagement

Conditions which must be met prior tovesting

1. Included in Annual bonus deferred share options Section (b)(i) below.

The Group also operated the following plans for which no awards were made during the year ended 31 December 2023
and for which all outstanding awards were exercised by 31 December 2022:
Plan

Options

Conditional
awardsRestricted
sharesTypical vesting
period (years)

Contractual life
for options

Standard Life
Restricted stockplan (RSP)

Yes

No

No

1-3

Up to six
Executives (othermonths after than executive
vesting
Directors) andseniormanagement(a)Recipients

Conditions which must be met prior tovestingService, or service andperformance conditions.
These are tailored to theindividual award.

Employee share-based payments and deferred fund awards expense

The amounts recognised as an expense for equity-settled share-based payment transactions and deferred fund awards
with employees are as follows:
2023
£m

2022
£m

Share options and share awards granted under deferred and discretionary share plans1
Share options granted under Sharesave
Matching shares granted under share incentive plans

22
1
1

22
1
1

Equity-settled share-based payments
Cash-settled deferred fund awards2

24
7

24
2

Total expense

31

26

1. Includes expense for annual bonus deferred share options and conditional awards.
2. The expense for cash-settled deferred fund awards includes £3m (2022: £2m) for awards related to funds which are consolidated.

Included in the expense above is £12m (2022: £6m) which is included in Restructuring and corporate transaction expenses
in the consolidated income statement.

Annual report 2023

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253

FINANCIAL INFORMATION

Plan

Group financial statements continued(b)

Options and conditional awards granted(b)(i) Deferred and discretionary share plans

The number and remaining contractual life for options outstanding and the share price at exercise of options exercised
during the year are as follows:
2023

2022

Deferred anddiscretionary shareplans

Annual bonus
deferred shareoptions

Outstanding at 1 January
GrantedForfeited
Exercised
Outstanding at 31 December

61,117,377
7,847,719(15,690,306)(9,904,530)
43,370,260

5,574,422–(58,611)(1,662,020)
3,853,791

37,133,812
45,752,914(3,540,675)(18,228,674)
61,117,377

6,604,504––(1,030,082)
5,574,422

Exercisable at 31 December

Deferred anddiscretionary share Annual bonus deferredplansshare options

6,840,715

3,853,791

3,907,131

5,418,292

Remaining contractual life of options outstanding (years)1

5.96

2.70

6.45

3.56

Options exercised during the year
Share price at time of exercise1

–
198p

–
204p

–
194p

–
189p

1. Weighted average.

The options granted under the deferred and discretionary share plans were made throughout the year ended 31
December 2023 with a main grant date of 11 April 2023 and had a £nil exercise price. The weighted average option term
was 2.52 years. The weighted average share price at grant date was 194p and the weighted average fair value at grant
date was 172p. The options include an entitlement to the receipt of dividends in respect of awards that ultimately vest
between the date of grant and the vesting date.
In addition to nil costs options, 357,888 nil cost conditional awards were also granted under the deferred and discretionary
share plans (2022: 2,464,050) with a weighted average share price at grant date of 194p which was also the weighted
average fair value at grant date.

(b)(ii) Standard Life RSP

As noted above the final RSP options were exercised in 2022.
2022
RSP

3,372

Outstanding at 1 January–

GrantedForfeited–(3,372)

Exercised
Outstanding at 31 December–

Exercisable at 31 December–

Options exercised during the year
Share price at time of exercise1
1. Weighted average.

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Annual report 2023

241p

(b)(iii) Sharesave

The number, exercise price and remaining contractual life for options outstanding and the share price at exercise of
options exercised during the year are as follows:
2023

2022

Sharesave

Weighted average
exercise price for
Sharesave

Outstanding at 1 January
GrantedForfeited
Exercised
ExpiredCancelled
Outstanding at 31 December

9,981,563
1,864,914(501,929)(440,123)(1,045,470)(749,465)
9,109,490

143p
132p
154p
186p
205p
154p
130p

7,862,031
6,997,665(165,551)(46,727)(759,965)(3,905,890)
9,981,563

203p
118p
191p
200p
235p
197p
143p

Exercisable at 31 December

774,894173p

1,390,636

206p

Remaining contractual life of options outstanding (years)1

2.85

3.12

Options exercised during the year
Share price at time of exercise1

201p

223p

1. Weighted average.

The Sharesave options were granted on 10 October 2023 with an exercise price of 132p. The weighted average option
term was 3.50 years. The weighted average share price at grant date was 161p and the weighted average fair value at
grant date was 28p. Sharesave options have no dividend entitlement. In determining the fair value of options granted under
the Sharesave scheme the historic volatility of the share price over a period of up to five years and a risk-free rate
determined by reference to swap rates was also considered.
The following table shows the range of exercise prices of Sharesave options outstanding.
2023
Number of options
outstanding

2022
Number of options
outstanding

117p-188p
189p-199p
200p-327p
328p-345p

7,980,740
742,875
385,875–

6,930,983
2,390,606
587,801
72,173

Outstanding at 31 December

9,109,490

9,981,563(c)Matching shares granted under share incentive plans(d)Deferred fund awards and cash settled share based payments

During the year ended 31 December 2023, 338,001 matching shares were granted under the share incentive plan (2022:
490,814). The weighted average share price at grant date was 192p which was also the weighted average fair value at
grant date. The plans include the entitlement to the receipt of dividends in respect of awards that ultimately vest between
the date of grant and the vesting date.

(d)(i) Deferred fund awards

At 31 December 2023, the liability recognised for cash-settled deferred fund awards was £27m (2022: £44m). There is noliability (2022: £9m) for deferred fund awards relating to funds which are consolidated. The intrinsic value for vested
deferred fund awards related to funds which were consolidated at 31 December 2022 was £6m.

(d)(ii) Cash settled share based payments

At 31 December 2023, the liability recognised for cash-settled share based payments was £nil (2022: £nil).

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255

FINANCIAL INFORMATION

Sharesave

Weighted average
exercise price for
SharesaveGroup financial statements continued

41.
(a)

Related party transactions

Transactions and balances with related parties

In the normal course of business, the Group enters into transactions with related parties that relate to investment
management and insurance businesses. In the year ended 31 December 2023, there have been no changes in the natureof these transactions.
During the year, the Group recognised management fees of £2m (2022: £3m) from the Group’s defined benefit pension
plans. The Group’s defined benefit pension plans have assets of £748m (2022: £847m) invested in investment vehicles
managed by the Group.
During the year, there were no sales to associates accounted for using the equity method in relation to management fees
(2022: £nil) and no purchases in relation to services received (2022: £nil).
During the year ended 31 December 2023, there were sales to joint ventures accounted for using the equity method of£4m (2022: £4m) and no purchases from joint ventures (2022: £nil). During the year ended 31 December 2023, the Group
contributed no capital to a joint venture (2022: £2m). At 31 December 2023, there was no outstanding funding
commitment to this joint venture (2022: £nil).
The Group had no balances due to or from associates accounted for using the equity method as at 31 December 2023
(2022: £nil). The Group had no balances due from joint ventures as at 31 December 2023 (2022: £1m). There were nobalances due to joint ventures (2022: £nil). During the year ended 31 December 2023, the Group contributed capital of £2m
to an associate (2022: £3m). At 31 December 2023, the Group had no commitments to make capital contributions to an
associate (2022: £2m).
In addition to these transactions between the Group and the above related parties during the year, in the normal course ofbusiness the Group made a number of investments into/divestments from investment vehicles managed by the Group
which may be considered to be related parties including investment vehicles which are classified as investments inassociates measured at FVTPL. Group entities paid amounts for the issue of shares or units and received amounts for thecancellation of shares or units. Information in relation to unconsolidated structured entities can be found in Note 35.

(b)Compensation of key management personnel

Key management personnel includes Directors of abrdn plc (since appointment) and the members of the executive
leadership team (since appointment).
The summary of compensation of key management personnel is as follows:
2023
£m

2022
£m

Salaries and other short-term employee benefits
Post-employment benefits
Share-based payments and deferred fund awards
Termination benefits

10
–
7
1

11
–
6
2

Total compensation of key management personnel

18

19

(c)

Transactions with key management personnel and their close family members

Certain members of key management personnel hold investments in investments products which are managed by theGroup. None of the amounts concerned are material in the context of funds managed by the Group. All transactions
between key management and their close family members and investments products which are managed by the Groupduring the year are on terms which are equivalent to those available to all employees of the Group.

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42.
(a)

Capital management

Capital and risk management policies and objectives

Managing capital is the ongoing process of determining and maintaining the quantity and quality of capital appropriate for
the Group and ensuring capital is deployed in a manner consistent with the expectations of our stakeholders. For these
purposes, the Board considers our key stakeholders to be our clients, the providers of capital (our equity holders andholders of our subordinated liabilities) and the Financial Conduct Authority (FCA) as the lead prudential supervisor for theGroup.
There are two primary objectives of capital management within the Group. The first objective is to ensure that capital is,
and will continue to be, adequate to maintain the required level of financial stability of the Group and hence to provide anappropriate degree of security to our stakeholders. The second objective is to create equity holder value by driving profit
attributable to equity holders.

Capital requirements are forecast on a periodic basis and assessed against the forecast available capital resources. In
addition, rates of return achieved on capital invested are assessed against hurdle rates, which are intended to represent
the minimum acceptable return given the risks associated with each investment. Ongoing monitoring of investments isincorporated into the Group’s established performance management process. The capital planning process is the
responsibility of the Chief Financial Officer. Capital plans are ultimately subject to approval by the Board.
The formal procedures for identifying and assessing risks that could affect the capital position of the Group are describedin the Risk management section of the Strategic report. Information on financial instruments risk is also provided in Note 34.

(b)Regulatory capital(b)(i) Regulatory capital framework (unaudited)

The Group is supervised under the Investment Firms Prudential Regime (IFPR). The Group’s regulatory capital position
under IFPR is determined by consolidating the eligible capital and reserves of the Group (subject to a number ofdeductions) to derive regulatory capital resources, and comparing this to the Group’s regulatory capital requirements.
Stress testing is completed to inform the appropriate level of regulatory capital and liquidity that the Group must hold, withresults shared with the FCA at least annually. In addition, the Group monitors a range of capital and liquidity statistics on adaily, monthly or less frequent basis as required. Surplus capital levels are forecast, taking account of projected dividends
and investment requirements, to ensure that appropriate levels of capital resources are maintained.
The Group is required to hold capital resources to cover both the Own Funds Requirement and the Own Funds Threshold
Requirement described below in complying with the Overall Financial Adequacy Rule.
Own Funds Requirement
The Own Funds Requirement focuses on the Group’s permanent minimum capital requirement, its fixed overhead
requirement and its K-factor requirement with the own funds requirement being the highest of the three. At 31 December
2023, the Group’s indicative Own Funds Requirement was £314m.
Own Funds Threshold Requirement
The Own Funds Threshold Requirement supplements the own funds requirement via the Internal Capital Adequacy and
Risk Assessment (ICARA), which is the means by which the Group assesses the level of capital that adequately supports allof the relevant current and future risks in its business, taking into account potential periods of financial stress during the
economic cycle as well as a potential wind-down scenario with the own funds threshold requirement being the highest of
the two, as per the Overall Financial Adequacy Rule. The results of the Group’s ICARA process is subject to periodic review
by the FCA under the Supervisory Review and Evaluation Process (SREP). The first review was conducted in 2023.
Under IFPR the Group fully excludes the value of its holding in significant listed investments from its capital resources. IFPR
also includes constraints on the proportion of the minimum capital requirement that can be met by each tier of capital. As aresult, approximately £275m of Tier 2 capital, whilst continuing to be reported within the Group’s capital resources, is notavailable to meet the minimum capital requirement.

Annual report 2023

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257

FINANCIAL INFORMATION

The treasury and capital management policy, which is subject to review at least annually, forms one element of theGroup’s overall management framework. Most notably, it operates alongside and complements the strategic investment
policy and the Group risk policies. Integrating policies in this way enables the Group to have a capital management
framework that robustly links the process of capital allocation, value creation and risk management.

Group financial statements continued(b)(ii) IFPR (unaudited)

20231
£m

2022
£m

IFRS equity attributable to equity holders of abrdn plc
Deductions for intangibles and defined benefit pension assets, net of related deferred tax liabilities
Deductions for significant investments in financial sector entities
Deductions for non-significant investments in financial sector entities
Other deductions and adjustments, including provision for foreseeable dividend

4,878(2,168)
(780)
(12)
(452)

5,628
(2,319)(1,366)
(229)
(413)

Common Equity Tier 1 capital resources
Additional Tier 1 capital resources

1,466
207

1,301
207

Total Tier 1 capital resources
Tier 2 capital resources

1,673
539

1,508
621

Total regulatory capital resources

2,212

2,129

Total regulatory capital requirement(1,054)(1,054)

CET1 capital requirement2

(590)

(590)

Surplus CET1 regulatory capital

876

711

Own Funds Requirement
CET1 ratio (CET1 as % of Own Funds Requirement)

314

319

467%

408%

1. 2023 draft position on 26 February 2024 following finalisation of the Annual report and accounts.
2. 56% of total regulatory capital requirement.

The Group has complied with all externally imposed capital requirements during the year.

43.

Events after the reporting dateOn 24 January 2024, the Group announced a new transformation programme targeting an annualised cost reduction ofat least £150m by the end of 2025. The bulk of the savings will be in non-staff costs. However, the programme is expected
to result in the reduction of approximately 500 roles. To achieve the desired simplification and cost savings, total
implementation costs are estimated to be around £150m.
On 14 February 2024, the agreed sale of the Group’s interest in Virgin Money UTM to its joint venture partner, Clydesdale
Bank, was announced. The interest in Virgin Money UTM does not form part of the Group’s reportable segments. The sale isexpected to complete in H1 2024. The Group’s interest in Virgin Money UTM was classified as held for sale at 31 December
2023 (refer Note 21). The sale is expected to result in an IFRS profit on disposal of interests in joint ventures of approximately
£11m.

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44.

Related undertakings

The Companies Act 2006 requires disclosure of certain information about the Group’s related undertakings which is set
out in this Note. Related undertakings are subsidiaries, joint ventures, associates and other significant holdings. In thiscontext significant means either a shareholding greater than or equal to 20% of the nominal value of any class of shares,
or a book value greater than 20% of the Group’s assets.
The particulars of the Company’s related undertakings at 31 December 2023 are listed below. For details of the Group’s
consolidation policy refer to (b) Basis of consolidation in the Presentation of consolidated financial statements section.
Under that policy limited partnerships and limited liability companies in which the Group has no interest but whose generalpartner or manager is controlled by the Group are not consolidated. However, such limited partnerships are considered tobe subsidiaries under Companies Act 2006 and therefore are listed below. Where the Group has no interest in a limited
partnership or limited liability company that is considered a related entity, the interest held is disclosed as 0%.

The registered head office of all related undertakings is 1 George Street, Edinburgh, EH2 2LL unless otherwise stated.

(a)Direct subsidiaries

Name of related undertaking

Share class1% interest held2

30 STMA 1 Limited
30 STMA 2 Limited3
30 STMA 3 Limited3
30 STMA 4 Limited3
30 STMA 5 Limited3
6 SAS 3 Limited3
Aberdeen Corporate Services Limited
abrdn Charitable Foundation4
abrdn Client Management Limited
abrdn Finance Limited
abrdn Financial Fairness Trustabrdn Financial Planning Limited3
abrdn Holdings Limited4
abrdn Investments (Holdings) Limited
abrdn (Mauritius Holdings) 2006 Limited5
Antler Holdco Limited6
Interactive Investor Limited7
Focus Business Solutions Limited8
Standard Life Aberdeen Trustee Company LimitedStandard Life Savings Limited
The abrdn Company 2006
Threesixty Services LLP9
Threesixty Support LLP9

Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
N/A
Ordinary shares
Ordinary shares
N/A
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
N/A
Limited Liability Partnership
Limited Liability Partnership

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

3

(b)

Other subsidiaries

Name of related undertaking

Share class1% interest held2

6 SAS 1 Limited
6 SAS 2 Limited
Aberdeen ACM Team LP4
Aberdeen ACP LLP4
Aberdeen Asia III Property Fund Of Funds10

Ordinary shares
Ordinary shares
Limited Partnership
Limited Liability Partnership
SIF fund with only Class A1
Units
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership

100%
100%
0%
100%
2%

Aberdeen Asia IV (General Partner) S.a.r.l.11
Aberdeen Asia Pacific Fund, LP 12
Aberdeen Asia Pacific Fund II, LP 12
Aberdeen Asia Pacific II (Offshore), LP 12
Aberdeen Asia Pacific III Ex-Co-Investment (Offshore), LP 12

Annual report 2023

100%
0%
0%
0%
0%

abrdn.com

259

FINANCIAL INFORMATION

The ability of subsidiaries to transfer cash or other assets within the Group for example through payment of cash dividends
is generally restricted only by local laws and regulations, and solvency requirements. Included in equity attributable toequity holders of abrdn plc at 31 December 2023 is £94m (2022: £90m) related to the abrdn Financial Fairness Trust, a
subsidiary undertaking of the Group. The assets of the abrdn Financial Fairness Trust are restricted to be used forcharitable purposes.

Group financial statements continued
Name of related undertaking

Share class1% interest held2

Aberdeen Asia Pacific III Ex-Co-Investment, LP 12
Aberdeen Asia Pacific III, LP12
Aberdeen Asia Partners III, LP13
Aberdeen ASIF Carry LP4
Aberdeen Asset Management (Thailand) Ltd14
Aberdeen Asset Management Denmark A/S15
Aberdeen Asset Management Finland Oy16
Aberdeen Claims Administration, Inc.17
Aberdeen Co-Investment Mandate LP4
Aberdeen Direct Property (Holding) Limited3
Aberdeen Emerging Asia Fund, LP 12
Aberdeen Emerging Asia Pacific II (Offshore), LP12
Aberdeen Emerging Asia Pacific III Ex-Co-Investments, LP12
Aberdeen Energy & Resource Company IV, LLC13

Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Liability
Company
Limited Liability
Company
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Ordinary shares
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Liability
Company
Limited Partnership
Limited Liability
Company
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership

0%
0%
0%
25%
100%
100%
100%
100%
0%
100%
0%
0%
0%
73%

Aberdeen Energy & Resources Company V, LLC13
Aberdeen Energy & Resources Partners II, LP13
Aberdeen Energy & Resources Partners III, LP13
Aberdeen Energy & Resources Partners IV, LP13
Aberdeen Energy & Resources Partners V, LP13
Aberdeen European Infrastructure Carry GP Limited 4
Aberdeen European Infrastructure Carry Limited 4
Aberdeen European Infrastructure Co-Invest II LP3
Aberdeen European Infrastructure GP II Limited3
Aberdeen European Infrastructure GP III Limited3
Aberdeen European Infrastructure GP Limited3
Aberdeen European Infrastructure III A Limited3
Aberdeen European Infrastructure III B Limited3
Aberdeen European Infrastructure IV Ltd3
Aberdeen European Infrastructure Partners Carry LP4
Aberdeen European Infrastructure Partners Carry II LP4
Aberdeen European Infrastructure Partners Carry III LP4
Aberdeen European Infrastructure Partners LP3
Aberdeen European Infrastructure Partners II LP3
Aberdeen European Infrastructure Partners III LP3
Aberdeen European Opportunities Property Fund of Funds LLC18
Aberdeen European Residential Opportunities Fund SCSp10
Aberdeen Fund Distributors LLC17
Aberdeen Fund Management II Oy16
Aberdeen General Partner 1 Limited4
Aberdeen General Partner 2 Limited4
Aberdeen General Partner CAPELP Limited12
Aberdeen General Partner CGPLP Limited12
Aberdeen General Partner CMENAPELP Limited12
Aberdeen General Partner CPELP II Limited12
Aberdeen General Partner CPELP Limited12
Aberdeen Global ex-Japan Property Fund of Funds LP12
Aberdeen Global ex-Japan GP Limited12
Aberdeen Global Infrastructure Carry GP Limited4
Aberdeen Global Infrastructure GP II Limited19
Aberdeen Global Infrastructure GP Limited19
Aberdeen Global Infrastructure Partners II Carry LP4
Aberdeen Global Infrastructure Partners II LP20
Aberdeen Global Infrastructure Partners III Carry LP
Aberdeen Global Infrastructure Partners LP20
260

abrdn.com

Annual report 2023

93%
0%
0%
1%
2%
100%
100%
0%
100%
100%
100%
100%
100%
100%
25%
25%
25%
3%
2%
5%
3%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
5%
100%
100%
100%
100%
25%
0%
25%
0%

Name of related undertaking

Share class1% interest held2

Aberdeen GP 1 LLP4

Limited Liability
Partnership
Limited Liability
Partnership
Limited Liability
PartnershipClass A1, A2 and A3 units
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Limited Partnership
Ordinary shares
Limited Partnership
Ordinary shares
Limited liability company
Limited Liability Company
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Ordinary shares

100%

Aberdeen GP 2 LLP4
Aberdeen GP 3 LLP4

Annual report 2023

100%
1%
100%
100%
100%
25%
0%
0%
100%
1%
100%
100%
100%
100%
100%
100%
100%
23%
0%
100%
0%
0%
100%
0%
40%
40%
25%
100%
0%
5%
25%
1%
40%
100%
25%
0%
5%
0%
100%
25%
100%
12%
100%
80%
79%
1%
0%
25%
0%
40%
0%
100%
100%

abrdn.com

FINANCIAL INFORMATION

Aberdeen Indirect Property Partners II FCP-FIS10
Aberdeen Infrastructure Feeder GP Limited4
Aberdeen Infrastructure Finance GP Limited19
Aberdeen Infrastructure GP II Limited3
Aberdeen Infrastructure Partners II Carry LP 4
Aberdeen Infrastructure Partners II LP3
Aberdeen Infrastructure Partners LP Inc20
Aberdeen Investment Company Limited4
Aberdeen Keva Asia IV Property Partners SCSp11
Aberdeen Pension Trustees Limited4
Aberdeen Pooling II GP AB 21
Aberdeen Property Fund Management Estonia Ou22
Aberdeen Property Investors (General Partner) S.a.r.l.23
Aberdeen Property Investors Estonia Ou22
Aberdeen Property Investors Limited Partner Oy16
Aberdeen Property Investors The Netherlands BV24
Aberdeen Property Secondaries Partners II10
Aberdeen Real Asset Partners, LP13
Aberdeen Real Estate Fund Finland II LP 25
Aberdeen Real Estate Partners II, LP13
Aberdeen Real Estate Partners III, LP13
Aberdeen Secondaries II GP S.a.r.l.10
Aberdeen Sidecar LP Inc20
Aberdeen Standard 2019 European PE A Carry LP
Aberdeen Standard 2019 European PE B Carry LP
Aberdeen Standard Carlsbad Carry LP4
Aberdeen Standard Carlsbad GP Limited19
Aberdeen Standard Carlsbad LP20
Aberdeen Standard Global Infrastructure Partners III LP20
Aberdeen Standard Core Infrastructure III LTP LP
Aberdeen Standard Core Infrastructure III SCSp10
Aberdeen Standard ECF II GP LP
Aberdeen Standard European Infrastructure GP IV Limited 3
Aberdeen Standard European Infrastructure Partners Carry IV LP
Aberdeen Standard European Infrastructure Partners Co-invest IV LP3
Aberdeen Standard European Infrastructure Partners IV LP 3
Aberdeen Standard European Long Income Real Estate Fund SCSp10
Aberdeen Standard Global Infrastructure GP III Ltd19
Aberdeen Standard Global Infrastructure Partners I (2021) Carry LP
Aberdeen Standard Gulf Carry GP Limited4
Aberdeen Standard Gulf Carry LP4
Aberdeen Standard Investments Sweden AB26
Aberdeen Standard Private Real Assets Co-Investment Fund I GP, LLC13
Aberdeen Standard Private Real Assets Co-Investment Fund I, LLC13
Aberdeen Standard Private Real Assets Co-Investment Fund I, LP13
Aberdeen Standard SOF IV Feeder LP
Aberdeen Standard SOF IV GP LP
Aberdeen Standard SOF IV LP
Aberdeen Standard SOF Evergreen GP LP
Aberdeen Standard SOF Evergreen LP
Aberdeen Trust Limited4
Aberdeen UK Infrastructure Carry GP Limited4

100%

261

Group financial statements continued
Name of related undertaking

Aberdeen UK Infrastructure Carry Limited
Aberdeen Unit Trust Managers Limited4
abrdn – Emerging Markets Equity ADR Fund13
abrdn - US SMID Cap Equity Fund13
abrdn III ICAV - abrdn Global Real Estate Active Thematics UCITS ETF27
abrdn Alternative Funds Limited
abrdn Alternative Holdings Limited4
abrdn Alternative Investments Limited3
abrdn APAC PE 4 Executive Co-investment LP
abrdn APAC Private Equity 4 LP12
abrdn Asia Limited28
abrdn Bloomberg Industrial Metals Strategy K-1 Free ETF29
abrdn Brasil Investimentos Ltda30
abrdn Canada Funds - Global Smaller Companies Equity Fund31
abrdn Canada Limited32
abrdn Capital Partners LLP
4

abrdn Colombia SAS33
abrdn Commercial Real Estate Debt LP3
abrdn Commercial Real Estate Debt II LP
abrdn Corporate Secretary Limited
abrdn CP (Holdings) Limited
abrdn (CRED II) GP Limited
abrdn Eclipse HFRI 500 SP12
abrdn ETFs Advisors LLC13
abrdn ETFs Sponsor LLC13
abrdn European Property Growth Fund LP3
abrdn Financial Planning & Advice Limited3
abrdn Founder Co Limited
abrdn Fund Managers Limited3
abrdn (General Partner CRED) Limited3
abrdn (General Partner ELIREF) S.a.r.l.10
abrdn (General Partner EPGF) Limited
abrdn (General Partner PFF 2018) S.a.r.l.10
abrdn (General Partner SCF 1) Limited
abrdn Global Absolute Return Strategies Offshore Feeder Fund Limited12
abrdn Global Absolute Return Strategies Onshore Feeder Fund, LP13
abrdn Global Risk Mitigation Fund34
abrdn Hong Kong Limited35
abrdn (IL Infrastructure Debt) GP Limited3
abrdn Inc.13
abrdn Inflation-Linked Infrastructure Debt LP3
abrdn Infrastructure Fibre Co-Investment SCSp10
abrdn Investment Management Limited
abrdn Investments Beteiligungs GmbH36
abrdn Investments Deutschland AG36
abrdn Investments (General Partner UK Shopping Centre Feeder Fund LP)
Limited3
abrdn Investments Group Limited3
abrdn Investments Holdings Europe Limited3
abrdn Investments Ireland Limited37
abrdn Investments Jersey Limited38
abrdn Investments Limited4
abrdn Investments Luxembourg Corporate Manager S.a.r.l.10
abrdn Investments Luxembourg S.A.10
abrdn Investments Middle East Limited39
262

abrdn.com

Annual report 2023

Share class1% interest held2

Ordinary shares
Ordinary shares
Corporate Fund
Corporate Fund
ICAV
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Ordinary shares
ETF
Limited Liability Company
Private Commingled Fund
Ordinary shares
Limited Liability
Partnership
Ordinary shares
Limited Partnership
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Private Commingled Fund
Limited liability company
Limited liability company
Limited Partnership
Ordinary A shares
Ordinary B shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Unit Trust
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Ordinary shares
Limited Liability
Company
Ordinary shares
Ordinary shares

100%
100%
100%
100%
91%
100%
100%
100%
0%
0%
100%
72%
100%
100%
100%
100%

Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares

100%
100%
100%
100%
100%
100%
100%
100%

100%
0%
0%
100%
100%
100%
36%
100%
100%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
38%
100%
100%
100%
0%
100%
100%
90%
90%
100%

Name of related undertaking

Share class1% interest held2

abrdn Investments Switzerland AG40
abrdn Islamic Malaysia Sdn. Bhd.41
abrdn Japan Limited42
abrdn Jersey Limited43
abrdn Korea Co. Limited.44
abrdn Korea GP 2 Pte. Ltd45
abrdn Korea Separate Account 2 LP45
abrdn Life and Pensions Limited3
abrdn Liquidity Fund (Lux) - Seabury Sterling Liquidity 1 Fund10
abrdn Malaysia Sdn. Bhd.41

Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Ordinary shares
SICAV
Ordinary shares
Irredeemable nonconvertible preference shares
Ordinary shares
Limited Partnership
Ordinary shares
OEIC
OEIC
OEIC
OEIC
OEIC
OEIC
Ordinary shares
Limited Partnership
Limited Partnership
Ordinary shares
Corporate Fund
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
SICAV
SICAV
SICAV
SICAV
SICAV
SICAV
SICAV
SICAV
SICAV
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Ordinary shares
Limited Partnership
Limited Partnership
Ordinary shares
Limited Partnership
Limited liability company
Limited Partnership
Limited Partnership
Ordinary shares

100%
100%
100%
100%
100%
100%
1%
100%
100%
100%

Annual report 2023

100%
3%
100%
47%
46%
72%
32%
100%
84%
100%
0%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
67%
93%
33%
62%
99%
51%
89%
42%
97%
100%
100%
100%
0%
100%
100%
40%
100%
0%
0%
0%
0%
100%

abrdn.com

FINANCIAL INFORMATION

abrdn MSPC General Partner S.a.r.l.10
abrdn Multi-Sector Private Credit Fund SCSp10
abrdn Nominees Services HK Limited35
abrdn OEIC I - abrdn China A Share Equity Fund3
abrdn OEIC III - abrdn MyFolio Sustainable I Fund3
abrdn OEIC III - abrdn MyFolio Sustainable Index I Fund3
abrdn OEIC III - abrdn MyFolio Sustainable Index V Fund3
abrdn OEIC III - abrdn Multi-Sector Credit Fund3
abrdn OEIC V - abrdn Multi-Asset Climate Solutions Fund3
abrdn Oceania Pty Ltd46
Abrdn Pan European Residential Property Feeder S.C.A. SICAV RAIF10
abrdn Phoenix Fund Financing SCSp10
abrdn Poinsettia GP Ltd12
abrdn Portfolio Investments abrdn Asia-China Bond47
abrdn Portfolio Investments Limited
abrdn Portfolio Investments US Inc.13
abrdn Portfolio Solutions Limited3
abrdn Premises Services Limited
abrdn Private Equity (Europe) Limited
abrdn Private Fund Management (Shanghai) Company Limited48
abrdn Property Investors France SAS49
abrdn Real Estate Operations Limited4
abrdn Secure Credit LP
abrdn SICAV I - Asian Credit Sustainable Bond Fund10
abrdn SICAV I - Asian Sustainable Development Equity Fund10
abrdn SICAV I - CCBI Belt & Road Bond Fund10
abrdn SICAV I - China Next Generation Fund10
abrdn SICAV I - Asian High Yield Sustainable Bond Fund10
abrdn SICAV I - Climate Transition Bond Fund10
abrdn SICAV I - Global Climate & Environment Equity Fund10
abrdn SICAV I - Global Mid-Cap Equity Fund10
abrdn SICAV II - Multi Asset Climate Opportunities50
abrdn Si Yuan Private Fund Management (Shanghai) Company Limited48
abrdn (SLSPS) Pension Trustee Company Ltd
abrdn SPT Management Pte. Ltd.51
abrdn Pan European Residential Property Fund SICAV-RAIF10
abrdn UK Shopping Centre Feeder Fund Company Limited52
abrdn UK Shopping Centre Feeder Fund Limited Partnership3
ACM Carry LP4
AEROF (Luxembourg) GP S.a.r.l.10
AERP V-A Master, LP13AIA Series T Holdings LLC18
AIPP Folksam Europe 10
AIPP Folksam Europe II Kommanditbolag21
AIPP Pooling I SA10263

Group financial statements continued
Name of related undertaking

Share class1% interest held2

Airport Industrial GP Limited53
Airport Industrial Limited Partnership54
Airport Industrial Nominees B Limited53
Airport Industrial Nominees Limited53
Aldwych Capital Partners, LP
Alliance Trust Savings Limited
Andean Social Infrastructure (No. 1) Limited3
Andean Social Infrastructure Fund I LP12
Andean Social Infrastructure GP Limited12
aPE NewCo 1 LimitedaPE NewCo 2 Limited
Arden Garden State NJ Fund, LP18
Arden Institutional Advisers, LP18
Arthur House (No.6) Limited3
Artio Global Investors Inc.17
ASI Direct RE GP LLPASI European Private Equity 2019 B LP13
ASI (General Partner 2019 European PE A Carry) Limited
ASI (General Partner 2019 European PE A) S.a.r.l.10
ASI (General Partner 2019 European PE B) Limited
ASI (General Partner 2019 European PE B) LLC13
ASI (General Partner ECF II) Limited
ASI (General Partner PE2) Limited
ASI (General Partner SOF IV) Limited
ASI Han Co-Investment LP
ASI (KFAS) RE GP LLP
ASI Little Mill Carry LP4
ASI Little Mill Co-Invest LP4
ASI Little Mill LP4
ASI Mid-Market 1 LP4
ASI MM Executive Co Investment LP4
ASI (NWPE 2021) Carry LP
ASI PE 1 Carry LP4
ASI (PGPE III) GP LP
ASI Phoenix Global Private Equity III LP
ASI Private Equity 1 LP4
ASI Private Equity 2 GP LP
ASI Private Equity 2 LP
ASI REMM GP LLP4
ASI Shin Co-Investment LP4
ASI Shin Global Investment GP Limited12
ASI (SOF E GP) Limited
ASIF Sidecar Carry LP4
ASPER (Luxembourg) GP S.a.r.l. 10
BOSEMP Feeder LP4
Brain Co-Invest General Partner LLP
Brain Co-Invest LP
Coutts Asian Private Equity Limited Partnership12
Coutts Global Property Limited Partnership12
Coutts Middle East and North Africa Private Equity Limited Partnership12
Coutts Private Equity Limited Partnership12
Coutts Private Equity Limited Partnership II12CPP General Partner Limited Partnership
Edinburgh Fund Managers Group Limited4
Edinburgh Fund Managers Plc
Edinburgh Unit Trust Managers Limited4

Ordinary shares
Limited Partnership
Ordinary shares
Ordinary shares
Limited Partnership
Ordinary shares
Ordinary shares
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Ordinary shares
Ordinary shares
Limited Liability Partnership
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Liability Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Liability Partnership
Limited Partnership
Ordinary shares
Ordinary shares
Limited Partnership
Ordinary shares
Limited Partnership
Limited Liability Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Deferred shares

60%
0%
60%
60%
0%
100%
100%
5%
100%
100%
100%
0%
0%
100%
100%
100%
0%
100%
100%
100%
0%
100%
100%
100%
93%
100%
0%
0%
0%
0%
0%
0%
40%
40%
0%
0%
40%
0%
100%
100%
100%
100%
25%
100%
0%
100%
0%
0%
0%
0%
0%
0%
20%
100%
100%
100%

264

abrdn.com

Annual report 2023

Share class1% interest held2

Elevate Portfolio Services Limited3
Emerging Markets ex-China Equity Fund, a series of the aICF, LLC13
Emerging Markets Income Equity Fund, a series of the aICF, LLC13
ESF I Executive Co Investment Limited Partnership
ESP 2004 Co Investment Limited Partnership
ESP 2004 Conduit LP
ESP 2004 General Partner Limited Partnership
ESP 2006 Co Investment Limited Partnership
ESP 2006 Conduit LP
ESP 2006 General Partner Limited Partnership
ESP 2008 Conduit LP
ESP 2008 Executive Co Investment Limited Partnership
ESP 2008 General Partner Limited Partnership
ESP CPPIB European Mid Market FundESP General Partner Limited Partnership
ESP Golden Bear Europe FundESP Golden Bear General Partner Limited Partnership
ESP II Co Investment Limited Partnership
ESP II Conduit LP
ESP II General Partner Limited Partnership
ESP Tidal Reach General Partner Limited Partnership
ESP Tidal Reach LP
European Strategic Partners
European Strategic Partners - I LP55
European Strategic Partners 2004 ‘A’
European Strategic Partners 2004 ‘B’
European Strategic Partners 2006 ‘A’
European Strategic Partners 2006 ‘B’European Strategic Partners 2008 ‘A’
European Strategic Partners 2008 ‘B’European Strategic Partners II ‘A’
European Strategic Partners II ‘B’European Strategic Partners II ‘C’European Strategic Partners II ‘D’
European Strategic Partners II ‘E’European Strategic Partners Scottish ‘B’European Strategic Partners Scottish ‘C’Finimize Limited3
Flag Asia Company III, LLC13
Flag Asia Company III, LP13
Flag Energy & Resource Company II, LLC13
Flag Energy & Resource Company III, LLC13
Flag Real Assets Company LLC13
Flag Real Asset Company, LP13
Flag Real Estate Company II, LLC13
Flag Real Estate Company III, LLC13
Flag Squadron Asia Pacific III GP LP12
Fraser Heath Financial Management Limited56
FSA III EA SPV, LP12FSA III Pacific SPV, LP12
Griffin Nominees Limited3
Ignis Asset Management Limited
Ignis Cayman GP2 Limited12
Ignis Cayman GP3 Limited12
Ignis Investment Services Limited
Ignis Private Equity Fund LP12
Ignis Strategic Credit Fund LP12

Ordinary shares
Private Commingled FundPrivate Commingled Fund
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Limited liability company
Limited Partnership
Limited liability company
Limited liability company
Limited liability company
Limited Partnership
Limited liability company
Limited liability company
Limited Partnership
Ordinary shares
Limited Partnership
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership

100%
91%
99%
0%
0%
0%
0%
0%
0%
5%
0%
0%
0%
1%
0%
3%
0%
0%
0%
0%
20%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
100%
0%
0%
0%
0%
0%
0%
0%
100%
100%
0%
0%
100%
100%
100%
100%
100%
0%
0%

Annual report 2023

abrdn.com

FINANCIAL INFORMATIONName of related undertaking

265

Group financial statements continued
Name of related undertaking

Share class1% interest held2

Interactive Investor Services Limited7
Interactive Investor Services Nominees Limited7
Investor Nominees (Dundee) Limited
Investor Nominees Limited7
Investor SIPP Trustees Ltd7KFAS Real Estate Limited Partnership
Local2Local Limited53
Murray Johnstone Limited4
MYS Living Limited
NASP 2006 General Partner Limited Partnership
NASP 2006 Special Limited Partnership
NASP 2008 General Partner Limited Partnership
NASP 2008 Special Limited PartnershipNorth American Strategic Partners 2006 LP17
North American Strategic Partners 2008 LP17
North American Strategic Partners (Feeder) 2006
North American Strategic Partners (Feeder) 2008 Limited PartnershipNorth East Trustees Limited3

Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary A shares
Ordinary B shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Ordinary shares
Limited Partnership
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Liability Company
Ordinary shares
Limited Liability Partnership
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership

100%
100%
100%
100%
100%
0%
60%
100%
75%
62%
0%
0%
0%
0%
0%
0%
0%
100%

Orion Partners CLP Inc.57
Orion Partners Services Inc. 57
Ostara China Real Estate Fund LP57
Ostara Japan Fund 3 LP57
Ostara Korea GP 2 Pte. Ltd45
Ostara Korea Separate Account LP45
Ostara Partners Inc. China57
Ostara Partners Inc. Japan 357
PE1 LP4
PE1A LP4PE2 Carry LP4PE2 LP4
Pearl Private Equity LP
Pearl Strategic Credit LP
Pearson Jones & Company (Trustees) Limited3
Pearson Jones Nominees Limited3
PGB European Buy-out Fund I SCSp10
PGB European Co-Investment Fund I SCSp10
Poinsettia Holdco LP12
PT Aberdeen Standard Investments Indonesia58
Regent Property Partners (Retail Parks) Limited56
SG Commercial LLP53
Share Limited7
Share Nominees Limited7
Shin Global Investment Partners LP12SL Capital 2016 Co-Investment GP LP
SL Capital 2016 Co-Investment LP
SL Capital ECF GP LP
SL Capital ESF I GP LP
SL Capital ESF I LP
SL Capital European Co-Investment B LP
SL Capital European Co-Investment LP
SL Capital Ignis Private Equity Founder LP
SL Capital Ignis Strategic Credit Founder LP
SL Capital Infrastructure Fund II Top-Up Co-Investment Fund SCSp10
SL Capital Infrastructure I GP LP
SL Capital Infrastructure I LP
SL Capital Infrastructure II LTP LP
266

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Annual report 2023

100%
100%
0%
1%
100%
0%
100%
100%
0%
0%
40%
0%
0%
0%
100%
100%
1%
1%
0%
99%
100%
60%
100%
100%
0%
5%
0%
4%
0%
1%
0%
0%
65%
0%
0%
100%
0%
25%

Share class1% interest held2

SL Capital Infrastructure II SCSp10
SL Capital Infrastructure Secondary I GP LP
SL Capital Infrastructure Secondary I LP
SL Capital Infrastructure Secondary II LP
SL Capital NASF I A LP
SL Capital NASF I Carry LP
SL Capital NASF I GP LP
SL Capital NASF I LP13
SL Capital Pearl Private Equity GP LP
SL Capital Pearl Strategic Credit GP LP
SL Capital SOF I Feeder LP
SL Capital SOF II Feeder LP
SL Capital SOF III Feeder LP
SL Capital SOF I GP LP
SL Capital SOF II GP LP
SL Capital SOF III GP LP
SL Capital SOF I LP
SL Capital SOF II LP
SL Capital SOF III LP
SLC EC I Executive Co Investment Limited Partnership
SLCI I Executive Co Investment Limited Partnership
SLCI II Executive Co-Investment LP
SLCI Rail Co-Invest LP
SLCP (Founder Partner Ignis Private Equity) Limited
SLCP (Founder Partner Ignis Strategic Credit) Limited
SLCP (General Partner) Limited
SLCP (General Partner II) Limited
SLCP (General Partner 2016 Co-investment) Limited
SLCP (General Partner CPP) Limited
SLCP (General Partner EC) Limited
SLCP (General Partner ESF I) Limited
SLCP (General Partner ESP 2004) Limited
SLCP (General Partner ESP 2006) Limited
SLCP (General Partner ESP 2008) Limited
SLCP (General Partner ESP CAL) Limited
SLCP (General Partner Infrastructure I) Limited
SLCP (General Partner Infrastructure Secondary I) Limited
SLCP (General Partner NASF I) Limited
SLCP (General Partner NASP 2006) Limited
SLCP (General Partner NASP 2008) Limited
SLCP (General Partner Pearl Private Equity) Limited
SLCP (General Partner Pearl Strategic Credit) Limited
SLCP (General Partner SOF I) Limited
SLCP (General Partner SOF II) Limited
SLCP (General Partner SOF III) Limited
SLCP (General Partner Tidal Reach) Limited
SLCP (General Partner USA) Limited
SLIPC (General Partner Infrastructure II LTP 2017) Limited
SLIPC (General Partner Infrastructure II) S.a.r.l.10
SLIPC (General Partner Infrastructure III) S.a.r.l.10
SLTM Limited
SOF I Executive Co Investment Limited Partnership
SOF II Executive Co Investment Limited Partnership
SOF III Executive Co Investment Limited Partnership
SOF IV Carry LP
SOF IV Executive Co Investment Limited Partnership
Squadron Asia Pacific Fund, LP12

Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership
Limited Partnership

1%
25%
0%
0%
2%
0%
0%
0%
0%
1%
0%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
0%
0%
25%
0%
0%

Annual report 2023

abrdn.com

FINANCIAL INFORMATIONName of related undertaking

267

Group financial statements continued
Name of related undertaking

Share class1% interest held2

Squadron Asia Pacific Fund II, LP12Squadron Capital Asia Pacific GP, LP12Squadron Capital Asia Pacific II GP LP12Squadron Capital Partners Limited12
Squadron GP Participation, LP12Squadron GP Participation II, LP12Standard Life Investments Brent Cross General Partner LimitedStandard Life investments Brent Cross LP
Standard Life Investments European Real Estate Club II LP3
Standard Life Investments European Real Estate Club III LP3
Standard Life Investments (General Partner European Real Estate Club) Limited3
Standard Life Investments (General Partner European Real Estate Club II) Limited3
Standard Life Investments (General Partner European Real Estate Club III) Limited3
Standard Life Investments (General Partner GARS) LimitedStandard Life Investments (General Partner GFS) LimitedStandard Life Investments (General Partner Global Tactical Asset Allocation) LimitedStandard Life Investments (General Partner MAC) Limited
Tenon Nominees Limited4
The Share Centre (Administration Services) Ltd7The Share Centre Limited7
Touchstone Insurance Company Limited59
TPIF (No. 1) GP LLP60

Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Limited Partnership
Limited Partnership
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Limited Liability
Partnership
Limited Partnership
Limited Liability
Partnership
Limited Partnership
Ordinary shares
Limited Liability
Partnership
Limited Partnership
Limited Liability
Partnership
Limited Partnership
Limited Liability
Partnership
Limited Liability
Partnership
Limited Partnership
Limited Liability
Partnership
Ordinary shares
Limited Liability
Partnership
Ordinary shares
Limited Partnership
Limited Partnership
Limited Partnership

0%
100%
100%
100%
0%
0%
100%
0%
1%
2%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
60%

TPIF (No. 1) LP60
TPIF (Portfolio No. 1) GP LLP53
TPIF (Portfolio No. 1) LP54
TPIF (Portfolio No. 1) Nominee Limited53
Tritax abrdn Supply Chain Carry GP LLP 53
Tritax abrdn Supply Chain Carry LP60
Tritax abrdn Supply Chain GP LLP53
Tritax abrdn Supply Chain LP54
Tritax Assets LLP53
Tritax LMR Carry GP LLP60
Tritax LMR Carry Limited Partnership60
Tritax Management LLP3
Tritax PowerBox Limited53
Tritax Securities LLP53
UK PRS Opportunities General Partner Limited3
UK PRS Opportunities LP3VZWL Bestandsimmobilien GmbH & Co geschlossene Investment KG36VZWL Private Equity GmbH & Co geschlossene Investment KG36

268

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Annual report 2023

0%
60%
0%
60%
60%
0%
60%
0%
60%
60%
7%
60%
60%
60%
100%
0%
0%
0%

(c)

Associates and joint ventures

Name of related undertaking

abrdn Investcorp Infrastructure Investments Manager Limited
abrdn SICAV I - Short Dated Enhanced Income Fund10
Archax Holdings Limited62
Criterion Tec Holdings Ltd63
Heng An Standard Life Insurance Company Limited64
PURetail Luxembourg Management Company S.a.r.l.65
Tenet Group Limited66
Virgin Money Unit Trust Managers Limited67

61

Share class1% interest held2

Ordinary shares
SICAV
Ordinary shares
Ordinary shares
Ordinary sharesClass A shares
Ordinary B shares
Ordinary shares

50%
25%
11%
21%
50%
50%
25%
50%

1. OEIC = Open-ended investment company
SICAV = Société d’investissement à capital variable
ETF = Exchange traded fundAnnual report 2023

abrdn.com

269

FINANCIAL INFORMATIONICAV = Irish collective asset-management vehicle
2. Limited Partnerships or limited liability companies in which the Group has no interest but whose general partner or manager is controlled by the Group are
considered subsidiaries under Companies Act 2006. Where the Group has no interest in a limited partnership or limited liability company that is considered a
subsidiary, the interest held is disclosed as 0%.

Group financial statements continued
Registered offices
3. 280 Bishopsgate, London, EC2M 4AG
4. 10 Queens Terrace, Aberdeen, AB10 1XL
5. c/o IQ EQ Fund Services (Mauritius) Ltd, 33 Edith Cavell Street, Port Louis,
11324, Mauritius
6. PO Box 19, Martello Court, Admiral Park, St Peter Port, GY1 3HB,
Guernsey
7. 201 Deansgate, Manchester, M3 3NW
8. Cranford House, Kenilworth Road, Blackdown, Leamington Spa, CV32
6RQ
9. 2nd Floor, The Royals, Altrincham Road, Sharston, Manchester M22 4BJ
10. 35a Avenue John F. Kennedy, L-1855 Luxembourg, Luxembourg
11. 287-289, route d'Arlon, L-1150 Luxembourg, Luxembourg
12. c/o Maples Corporate Services Limited, Ugland House, P.O. Box 309,
Grand Cayman, KY1-1104, Cayman Islands
13. c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, DE,19808, USA
14. Bangkok City Tower, 28th Floor, 179 South Sathorn Road,
Thungmahamek, Sathorn, Bangkok, 10120, Thailand
15. Strandvejen 171,3, 2900 Hellerup, Denmark
16. c/o Aatsto DLA Piper Finland Oy, Fabianinkatu 23, FI-00130 Helsinki,
Finland
17. c/o Corporation Service Company, 2711 Centerville Road, Suite 400,
Wilmington, DE, 19808, USA
18. 1900 Market Street, Suite 200, Philadelphia, PA 19103, USA
19. Western Suite, Ground Floor Mill Court, La Charroterie, St Peter Port,
Guernsey, GY1 1EJ
20. Top Floor, Mill Court, La Charroterie, St Peter Port, Guernsey, GY1 1EJ
21. Box 162 85, 103 25 Stockholm, Sweden
22. Parnu mnt 22, Tallinn, Harju maakond, 10141, Estonia
23. 2 Boulevard de la Foire, L-1528 Luxembourg, Luxembourg
24. WTC, H-Tower, 20th Floor, Zuidplein 166, 1077 XV Amsterdam,
Netherlands
25. One London Wall, London, EC2Y 5AB
26. Johan Fjellstrom, Deloitte AB 113 79, Stockholm, Sweden
27. 70 Sir John Rogerson’s Quay, Dublin 2, D02 R296, Ireland
28. 7 Straits View, #23-04 Marina One East Tower, 018936, Singapore
29. 712 5th Ave, New York, NY 10019, USA
30. Rua Joaquim Floriano, 913 – 7th floor – Cj. 71, Itaim Bibi, São Paulo,04534-013, Brasil
31. 1 First Canadian Place, 100 King Street West, Toronto, Ontario, Canada
32. 4 Chipman Hill, Suite 100, Saint John, New Brunswick, E2L 2A9, Canada
33. AC 82 NO. 10 60 P 5 Bogota DC, Columbia
34. Level 2, 395 Collins Street, Melbourne, Victoria 3000, Australia
35. 6th Floor, Alexandra House, 18 Chater Road, Central, Hong Kong
36. Bockenheimer Landstrasse 25, 60325 Frankfurt am Main, Germany
37. 2-4 Merrion Row, Dublin 2, D02 WP23, Ireland
38. 1st Floor, Sir Walter Raleigh House, Esplanade, St Helier, JE2 3QB, Jersey
39. Office Unit 8, 6th Floor, Al Khatem Tower, Abu Dhabi Global Market
Square, Al Marya Island, PO Box 764605, Abu Dhabi, United ArabEmirates
40. Schweizergasse 14, Zurich, 8001, Switzerland
41. Suite 1005, 10th Floor, Wisma Hamzah-Kwong Hing No.1, Leboh
Ampang 50100 Kuala Lumpur, Malaysia
42. Otemachi Financial City Grand Cube 9F, 1-9-2 Otemachi, Chiyoda-ku,
Tokyo, 100-0004, Japan
43. 44 Esplanade, St Helier, Jersey, JE4 9WG
44. 13th Fl., B Tower (Seocho-dong, Kyobo Tower Building), 465, Gangnamdaero, Seocho-gu, Seoul, Korea
45. 9 Raffles Place, #26-01 Republic Plaza, 048619, Singapore
46. Governor Macquarie Tower, Level 40, 1 Farrer Place, Sydney, NSW,
2000, Australia
47. 21 Church Street, #01-01, Capital Square Two, 049480, Singapore

270

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Annual report 2023

48. West Area, 2F, No.707 Zhangyang Road, China (Shanghai) Pilot Free
Trade Zone
49. 29 Rue De Berri, Paris, 75008, France
50. 2-4, Rue Eugène Ruppert, L-2453 Luxembourg, Luxembourg
51. 1 Marina Boulevard, #28-00, 018989, Singapore
52. Ogier House, Esplanade, St Helier, JE4 9WG, Jersey
53. 72 Broadwick Street, London, W1F 9QZ
54. 3rd Floor, 6 Duke Street St James's, London, SW1Y 6BN
55. c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, DE, 19801, USA
56. 30 Finsbury Square, London, EC2A 1AG
57. Campbells Corporate Services Limited, 4th Floor, Willow House, Cricket
Square, Grand Cayman, KY1-9010, Cayman Islands
58. 16th Floor, Menara DEA Tower 2, 16th Floor, Kawasan Mega Kuningan, Jl
Mega Kuningan Barat Kav. E4.3 No. 1-2, 12950 Jakarta, Indonesia
59. c/o Aon, PO Box 33, Maison Trinity, Trinity Square, St Peter Port,
Guernsey GY1 4AT
60. 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
61. c/o Paget-Brown Trust Company Ltd, Boundary Hall, Cricket Square,
P.O. Box 1111, Grand Cayman, KY1-1102, Cayman Islands
62. 4th Floor, 1 Old Jewry, London, EC2R 8DN
63. 9 - 10 St Andrew Square, Edinburgh, EH2 2AF
64. 18F, Tower II, The Exchange, 189 Nanjing Road, Heping District, Tianjin,
People’s Republic of China, 300051
65. 11, rue Jean Piret, L-2350 Luxembourg, Luxembourg
66. 5 Lister Hill, Horsforth, Leeds LS18 5AZ
67. Jubilee House, Gosforth, Newcastle-Upon-Tyne, NE3 4PL

Company financial statements
Company statement of financial position
As at 31 December 2023

2023
£m

2022
£m

A
B
N
C
C
C
C
C
F
C

4,402
196
150
–
41
574
126
46
47
21

4,482
196
143
110
85
709
211
48
48
27

5,603

6,059

599
1
–
166
–

621
–
1
272
33

766

927

257
(137)
640

280
(145)
640

3,665

3,301

300
(418)

(402)
766

3,547
323

3,665
485

4,630

4,925

207

207

Total equity

4,837

5,132

Total equity and liabilities

5,603

6,059

AssetsInvestments in subsidiaries
Investments in associates and joint ventures
Deferred tax assets
Loans to subsidiaries
Derivative financial assets
Equity securities and interests in pooled investment funds
Debt securities
Receivables and other financial assets
Other assets
Cash and cash equivalents
Total assets
Liabilities
Subordinated liabilities
Current tax liabilities
Derivative financial liabilities
Other financial liabilities
Provisions

L
N
D
L
P

Total liabilities
EquityShare capital
Shares held by trusts
Share premium reserve
Retained earnings
Brought forward retained earnings

G
H
G
I

Profit/(loss) for the year attributable to equity shareholders of abrdn plc1
Other movements in retained earnings
Total retained earnings
Other reserves

J

Equity attributable to equity shareholders of abrdn plc
Other equity

K

1. The Company’s total profit for the year was £311m (2022: loss of £391m) of which a profit of £11m was attributable to other equity holders (2022: profit of£11m).

The financial statements on pages 271 to 285 were approved by the Board and signed on its behalf by the following
Directors:

Sir Douglas Flint
Chairman

Jason Windsor
Chief Financial Officer

26 February 2024

26 February 2024

Company registered number: SC286832
The Notes on pages 274 to 285 are an integral part of these financial statements.

Annual report 2023

abrdn.com

271

FINANCIAL INFORMATION

Notes

Company financial statements continued

Company statement of changes in equity
For the year ended 31 December 2023

Share capital£m

Shares held bytrusts£m

Sharepremium
reserve£m

Retainedearnings
£m

280

(145)

640

3,665

485

–

–

–

300

–

–

–

–

–

K

–
–

–
–

–
–

I
G

–
(23)

–
–

J

–

J

Other equity£m

Total equity
£m

4,925

207

5,132

300

11

311

(9)

(9)

–

(9)

300
–

(9)
–

291
–

11
(11)

302
(11)

–
–

(279)
(302)

–
23

(279)
(302)

–
–

(279)
(302)

–

–

–

24

24

–

24

–

–

–

31

(31)

–

–

–

J

–

–

–

169

(169)

–

–

–

H

–

(27)

–

–

–

(27)

–

(27)

H

–

35

–

(37)

–

(2)

–

(2)

257

(137)

640

3,547

323

4,630

207

4,837

Notes

1 January 2023
Profit for the year
Other comprehensive
income for the year
Total comprehensive income
for the year
Interest paid on other equity
Dividends paid on ordinary
sharesShare buyback
Reserves credit for employee
share-based payment
Transfer to retained earnings
for vested employee sharebased payment
Transfer between reserves
on impairment of subsidiaries
Shares acquired by
employee trusts
Shares distributed by
employee and other trusts
and related dividend
equivalents
31 December 2023

The Notes on pages 274 to 285 are an integral part of these financial statements.

272

abrdn.com

Total equity
attributable toequityOther shareholders
reservesof abrdn plc£m£mAnnual report 2023

Shares heldby trusts£mSharepremium
reserve£m

Retainedearnings£m

Otherreserves
£m

305

(167)

640

3,301

1,856

5,935

207

6,142

–

–

–

(402)

–

(402)

11

(391)

–

–

–

–

5

5

–

5

K

–
–

–
–

–
–

(402)
–

5
–

(397)
–

11
(11)

(386)
(11)

I
G

–
(25)

–
–

–
–

(307)
(302)

–
25

(307)
(302)

–
–

(307)
(302)

J

–

–

–

1,059

(1,059)

–

–

–

J

–

–

–

–

24

24

–

24

J

–

–

–

63

(63)

–

–

–

J

–

–

–

1

(1)

–

–

–

J

–

–

–

302

(302)

–

–

–

H

–

(46)

–

–

–

(46)

–

(46)

H
I

–
–

68
–

–
–

(69)
19

–
–

(1)
19

–
–

(1)
19

280

(145)

640

3,665

485

4,925

207

5,132

abrdn.com

273

Notes

1 January 2022
Loss for the year
Other comprehensive
income for the year
Total comprehensive income
for the year
Interest paid on other equity
Dividends paid on ordinary
sharesShare buyback
Cancellation of the capital
redemption reserve
Reserves credit for employee
share-based payment
Transfer to retained earnings
for vested employee sharebased payment
Transfer between reserves
on disposal of subsidiaries
Transfer between reserves
on impairment of subsidiaries
Shares acquired by
employee trusts
Shares distributed by
employee and other trusts
and related dividend
equivalents
Other movements
31 December 2022

Other equity£m

Total equity£m

The Notes on pages 274 to 285 are an integral part of these financial statements.

Annual report 2023

FINANCIAL INFORMATION

Share capital£m

Total equity
attributable
to equity
shareholders
of abrdn plc£mCompany financial statements continued

Company accounting policies(a)Basis of preparation

These separate financial statements are presented as required by the Companies Act 2006. The Company meets thedefinition of a qualifying entity under Application of Financial Reporting Requirements 100 as issued by the Financial
Reporting Council. Accordingly, the financial statements for period ended 31 December 2023 have been prepared inaccordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) as issued by the Financial
Reporting Council.
The financial statements have been prepared on a going concern basis (see the Basis of preparation section of the Groupfinancial statements for further details) and under the historical cost convention, as modified by the revaluation of financial
assets and financial liabilities (including derivative instruments) at fair value through profit or loss (FVTPL). Climate risks havebeen taken into consideration in the preparation of the financial statements, primarily in relation to fair value calculations
and impairment assessments.
As permitted by FRS 101, the Company has taken advantage of the following disclosure exemptions available under thatstandard:– A cash flow statement and related notes.
– Capital management.
– Effect of IFRSs issued but not effective.
– Related party transactions with wholly owned subsidiaries.
As equivalent disclosures are given in the consolidated financial statements, we have also applied the disclosure
exemptions for share based payments, financial instruments and OECD Pillar Two legislation enacted or substantively
enacted but not yet effective.
The principal accounting policies adopted are the same as those given in the consolidated financial statements, together
with the Company specific policies set out below. These accounting policies have been consistently applied to all financial
reporting periods presented in these financial statements.
The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its own
statement of comprehensive income in these financial statements. The auditors’ remuneration for audit and other services
is disclosed in Note 7 to the consolidated financial statements. The Company has no employees.

(i)

Investment in subsidiaries, associates and joint ventures

The Company has certain subsidiaries which are investment vehicles such as open-ended investment companies, unit
trusts and limited partnerships whose primary function is to generate capital or income growth through holding
investments. This category of subsidiary is held at FVTPL since they are managed on a fair value basis.
Investments in subsidiaries (other than those measured at FVTPL), associates (other than those measured at FVTPL) andjoint ventures are initially recognised at cost and subsequently held at cost less any impairment charge. An impairment
charge is recognised when the carrying amount of the investment exceeds its recoverable amount. Any gain or loss on
disposal of a subsidiary, associate or joint venture is recognised in profit for the year.
Distributions received of non-cash assets, including investments in subsidiaries, are recognised at fair value in the balance
sheet and as dividends in specie in income or other comprehensive income as appropriate in the statement ofcomprehensive income.

274

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Annual report 2023

(ii)Critical accounting estimates and judgements in applying accounting policies

The preparation of financial statements requires management to make estimates and assumptions and exercise
judgements in applying the accounting policies that affect the reported amounts of assets and liabilities at the date of thefinancial statements and the reported amounts of revenues and expenses arising during the year. Estimates andjudgements are continually evaluated and based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
The areas where judgements have the most significant effect on the amounts recognised in the Company financial
statements are as follows:
Critical judgements in applying accounting policies

Investments in subsidiaries held at cost

Given that the net assets attributable toNote A
shareholders of abrdn plc at 31 December
2023 were higher than the market
capitalisation of the Company judgement was
required to determine for which subsidiaries
this was considered an indicator of impairment

Related notes

The areas where assumptions and other sources of estimation uncertainty at the end of the reporting period have asignificant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial
year are as follows:
Financial statement area

Critical accounting estimates and assumptions

Related notes

Investments in subsidiaries held at cost

Determination of the recoverable amount

Note A

Annual report 2023

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275

FINANCIAL INFORMATION

Financial statement area

Company financial statements continued

Notes to the Company financial statements
A.

Investments in subsidiaries
Investments in subsidiaries
measured at cost£m

Investments in subsidiaries
measured at FVTPL
£m

Total
£m

Cost
At 1 January 2022
Acquisition of subsidiaries1
Disposal of subsidiaries
Gains/(losses) on subsidiaries at FVTPL

8,523
1,519
(1,450)–1,328
2(1,159)
(1)

9,851
1,521
(2,609)(1)

At 31 December 2022

8,592

170

8,762

40
-

180
(9)
-

220
(9)
-

At 31 December 2023

8,632

341

8,973

Impairment
At 1 January 2022
Impairment of subsidiaries measured at cost
Disposal of subsidiaries measured at cost

(4,786)
(927)
1,433

–
–
–

(4,786)
(927)
1,433

At 31 December 2022

(4,280)–(4,280)

(304)

-

(304)

13

-

13

At 31 December 2023

(4,571)-(4,571)

Carrying amountAt 1 January 2022
At 31 December 2022
At 31 December 2023

3,737
4,312
4,061

1,328
170
341

5,065
4,482
4,402

Acquisition of subsidiaries
Disposal of subsidiaries
Gains/(losses) on subsidiaries at FVTPL
1

Impairment of subsidiaries measured at cost
Reversal of impairment of subsidiaries measured
at cost

1. Includes investment into existing subsidiaries measured at cost of £40m (2022: £139m).

Details of the Company’s subsidiaries are given in Note 44 of the Group financial statements.

(a)Acquisitions

During 2023, the Company made the following acquisitions of subsidiaries measured at cost:– The Company increased its investment in Aberdeen Corporate Services Limited (ACSL) through the purchase of
26,278 ordinary shares for a cash consideration of £26.3m.
– The Company increased its investment in abrdn Financial Planning Limited (aFPL) through the purchase of 12,150,000
ordinary shares for a cash consideration of £12.2m.
– The Company increased its investment in abrdn Client Management Limited (aCM) through the purchase of 1,500,000
ordinary shares for a cash consideration of £1.5m.
During 2022, the Company made the following acquisitions of subsidiaries measured at cost:– The Company acquired 100% of the issued share capital of Antler Holdco Limited (Antler), the parent company for theinteractive investor (ii) group of companies for a cash consideration of £1,380.2m. Further details are provided in Note1(b)(ii) of the Group financial statements. The Company’s consideration was lower than the £1,485m cash
consideration recognised in the Group financial statements as it did not include funding of £118.8m provided to Antler
to facilitate the acquisition of minority interests in Interactive Investor Limited (IIL) prior to the acquisition of Antler. The
Company’s consideration included transaction costs of £14m which were included in Restructuring and corporatetransaction expenses in the Group Consolidated income statement.
– The Company subsequently increased its investment in Antler by £139.2m through the purchase of 139,163,986
ordinary shares.
– The Company then acquired IIL via a dividend in specie from Antler and recognised IIL at an amount of £1,512m, withthe carrying value of Antler reduced correspondingly to £7m and therefore no impact on investment in subsidiaries in
the Company Statement of financial position. The dividend in specie was recognised at £nil in the Company’s total
comprehensive income for the year due to the reduction in the Antler carrying value.
See Section (d) below for details on investments in subsidiaries at FVTPL.

276

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(b)Disposals(c)Impairment

During 2022, the Company made the following disposals of subsidiaries measured at cost:– Standard Life Oversea Holding (SLOH) was liquidated. Prior to liquidation, the carrying value of the Company’s interest
in SLOH was £18m and the Company received final liquidation proceeds of £20m in the form of a distribution in specieof its intercompany balance due to SLOH. Refer Note J for details of the transfer from the merger reserve to retained
earnings in relation to the disposal of SLOH.

Indicators of impairment were also identified in relation to abrdn Financial Planning Limited (aFPL). The goodwill relating toaFPL had been impaired at the consolidated level at 30 June 2023. Following the performance of the valuation which also
supported the assessment of goodwill above, an impairment of the Company carrying value of £52m has beenrecognised.
No other indicators of impairment were identified on any material investment in subsidiaries including IIL for which
illustrative sensitivities have been provided below.
Indicators of reversal of impairment have also been considered and a reversal of impairment of £13m has beenrecognised in relation to Aberdeen Corporate Services Limited.

aIHL

The Company’s investment in its subsidiary aIHL was impaired during 2023 by £169m (2022: £51m). The impairment
primarily resulted from the payment of dividends from aIHL to the Company following the sale of its interest in HDFC AssetManagement held by its subsidiary, abrdn Investment Management Limited and abrdn Capital Limited (aCL) (refer Note
21 of the Group financial statements) during the year.
The recoverable amount of aIHL which is its FVLCD at 31 December 2023 was £819m. The FVLCD considered a number ofvaluation approaches, with the primary approach based on the net assets of aIHL and its subsidiaries excluding those held
for sale as part of the proposed sale of the European-headquartered Private Equity business. The recoverable amount also
included the valuation of European-headquartered Private Equity business which was based on an estimated price fromthe current sale process (refer Note 21 of the Group financial statements). This is a level 3 measurement as they aremeasured using inputs which are not based on observable market data.
As the year end carrying values are the recoverable amount, any downside sensitivity will lead to a further future
impairment loss. As the primary approach was net assets as set out above, the valuation is not considered sensitive tosignificant change. However, a 20% reduction in the net assets of aIHL and its subsidiaries excluding those held for sale aspart of the proposed sale of the European-headquartered Private Equity business would result in a further impairment of£147m.
The Company’s investment in aIHL was also impaired during 2022 by £51m. The impairment primarily resulted from lower
future revenue projections and further work being required to reduce Investments costs given this level of revenue alongwith the impact of dividends paid to the Company during 2022 and fair value movements relating to the interest in HDFC
Asset Management.
The recoverable amount of aIHL which was its FVLCD at 31 December 2022 was £988m. The FVLCD considered a numberof valuation approaches, with the primary approach being a discounted cash flow approach. The recoverable amount for
aIHL also included the value of its subsidiaries not included in the discounted cash flow valuation. These primarily included
aCL. The valuation of aCL was based on FVLCD and was based on an estimated sale price at 31 December 2022. The
recoverable amount also included the fair value of the interest in HDFC Asset Management at this date.

aHL

The Company’s investment in its subsidiary aHL was impaired during 2023 by £40m (2022: £847m). The impairment
primarily resulted from lower future cash flow projections reflecting the continued headwinds facing active asset
managers noted above.

Annual report 2023

abrdn.com

277

FINANCIAL INFORMATIONThe Company’s net assets attributable to shareholders of abrdn plc at 31 December 2023 of £4.6bn are higher than the
Company’s market capitalisation of £3.3bn. Taking this into account along with the continued headwinds facing active
asset managers, it was assessed that there were indicators of impairments in relation to the Company’s asset
management holding companies, abrdn Investment Holdings Limited (aIHL) and abrdn Holdings Limited (aHL). aIHL had
also paid up significant dividends in 2023 following the sale of abrdn Capital Limited and the sale of its subsidiary’s holding in
HDFC Asset Management. Following the performance of valuation exercises, impairments of aIHL and aHL of £169m and£40m respectively have been recognised.

Company financial statements continued
The recoverable amount of aHL which is its FVLCD at 31 December 2023 was £1,218m. The recoverable amount was
based on FVLCD. The FVLCD considered a number of valuation approaches, applied to the elements of aHL’s business as
appropriate. The primary approach was discounted cash flow with cash flows which were based on the three year
financial budgets approved by management split by region. Revenue in the management forecasts reflects pastexperience and modelling based on assets under management and fee revenue yields by asset class. Assets undermanagement is modelled from future net flow assumptions and market movements. Expenses in the management
forecasts were based on past experience adjusted for planned expense savings and inflation impacts.
Cash flow projections were extrapolated using a 5% revenue growth and 2% increase in expenses in years 4 and 5, andthen a 1.9% terminal rate profit growth based on long-term inflation forecasts. Post tax discount rates of between 13.35%
and 14.60% were used based on the peer companies cost of equity adjusted for forecasting risk and relative size. However,where the net assets of a significant element of aHL’s business were higher, the valuation included the net asset value
rather than the discounted cash flow value. The recoverable amount for aHL also included the value of its subsidiaries,
associates and joint ventures not included in the discounted cash flow valuation. These primarily include Finimize Limited,Archax Holdings Limited and Virgin Money UTM. This is a level 3 measurement as they are measured using inputs which are
not based on observable market data.
As the year end carrying values are the recoverable amount, any downside sensitivity will lead to a further future
impairment loss. As noted above, net assets are not considered sensitive to significant change. However, earnings and thediscount rate are more subject to change and the table below gives sensitivities for the carrying amount of aHL at 31
December 2023 in relation to these assumptions.
£m

Impact on carrying amount at 31 December 2023

25% reduction in forecast post tax adjusted earnings
2% increase in the post-tax discount rate

(170)
(109)

The Company’s investment in its subsidiary aHL was impaired during 2022 by £847m. The impairment in 2022 resulted
from lower future revenue projections and further work being required to reduce Investments cost savings given this levelof revenue.
The recoverable amount of aHL which was its FVLCD at 31 December 2022 was £1,258m. As with aIHL above, the FVLCD
considered a number of valuation approaches, with the primary approach being a discounted cash flow approach. As
above, the recoverable amount for aHL also included the value of its subsidiaries, associates and joint ventures not includedin the discounted cash flow valuation.

aFPL

The Company’s investment in its subsidiary aFPL was impaired during 2023 by £52m (2022: £25m). The impairment
resulted from lower projected revenues as a result of lower markets and macroeconomic conditions and the impact ofbusiness restructuring.
The recoverable amount of aFPL which is its FVLCD at 31 December 2023 was £45m (2022: £85m). The recoverable
amount was determined at 31 December 2023. The FVLCD considered a number of valuation approaches, with theprimary approach being a multiples approach based on price to revenue and price to assets under advice (AUAdv).
Multiples were based on trading multiples for aFPL’s peer companies, adjusted to take into account profitability whereappropriate, and were benchmarked against recent transactions. Revenue was based on actual 2023 and forecast 2024
revenue and AUAdv were based on forecast 2024 AUAdv. The expected cost of disposal was based on past experience ofprevious transactions. This is a level 3 measurement as they are measured using inputs which are not based on observable
market data.
As the year end carrying value is the recoverable amount, any downside sensitivity will lead to a further future impairment
loss. A 20% reduction in recurring revenue and AUAdv would result in a further impairment of £11m. A 20% reduction in
multiples would result in a further impairment of £11m.
The recoverable amount of aFPL at 31 December 2022 of £85m was also based on FVLCD which similarly considered anumber of valuation approaches, with the primary approach also being a multiples approach based on price to revenue
and price to AUAdv.

aCM

The carrying amount of the Company’s investment in aCM is £1.5m (2022: £nil). No impairment of aCM has beenrecognised in 2023. The Company’s investment in its subsidiary aCM was impaired during 2022 by £4m. The impairment
resulted from the payment of a dividend from aCM to the Company.

278

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Annual report 2023

abrdn (Mauritius Holdings) 2006 Limited (aMH06)

The Company’s investment in its subsidiary aMH06 was impaired during 2023 by £43m (2022: £nil). The impairment
resulted from the payment of dividends from aMH06 to the Company in 2023. These dividends primarily related to the saleof aMH06’s final investment in HDFC Life (refer Note 11 of the Group financial statements for further details). Following thepayment of the dividends, the recoverable amount of aMH06 was less than £1m.

IIL

The carrying amount of the Company’s investment in IIL is £1,512m (2022: £1,512m). No impairment was recognised on
the Company’s investment in IIL in 2023 and there were no indicators of impairment at 31 December 2023.
The recoverable amount of IIL was determined at 31 December 2023 based on FVLCD and used the same approach andkey assumptions as used in the impairment review for interactive investor goodwill set out in Note 13 of the Group financial
statements. The basis for sensitivities of key assumptions is also set out in Note 13 of the Group financial statements. The
impact of these illustrative sensitivities on the carrying amount of IIL at 31 December 2023 is as follows:

(106)
(192)

20% reduction in forecast post tax adjusted earnings
25% reduction in market multiple

ACSL

At 31 December 2023, the Company has recognised a reversal of impairment in its investments in subsidiaries of £13m
(2022: £nil). The Company’s investment in ACSL had previously been impaired by £13m in the year ended 31 December
2017. Following the reversal of the impairment, the carrying value of ACSL is £102m (2022: £62m). Refer Section (a) for
details of the capital injections during the year.
On 1 August 2023, the Court of Session confirmed that any residual surplus assets that remain after all plan-related
obligations of the Group’s main defined benefit plan, the abrdn UK Group (SLSPS) plan, are settled or otherwise provided
for would be available to ACSL as sponsoring employer (see Note 31 of the Group financial statements for further details).
Following this confirmation, the Directors of the Company have assessed that it is now appropriate to consider ACSL’s
pension scheme asset in determining the recoverable amount of ACSL. The recoverable amount for ACSL has beenassessed based on the net assets of ACSL at 31 December 2023 which were £733m including a defined benefit asset of£734m. This value of £734m was determined on an IAS 19 basis net of an authorised surplus payments charge of 35%. The
residual surplus assets that ACSL would realise would be significantly lower than this surplus as would be expectedfollowing a buy-out transaction. However, even allowing for a prudent haircut to the net assets for this, the net assets of
ACSL would still be significantly in excess of ACSL’s carrying value before any reversal of impairment of £13m and thereversal of impairment has been recognised. This is a level 3 assessment as it is measured using inputs which are not basedon observable market data.

(d)Investments in subsidiaries at FVTPL

Investments in subsidiaries at FVTPL, valued at £341m (2022: £170m), relate to holdings in funds over which the Company
has control.

Annual report 2023

abrdn.com

279

FINANCIAL INFORMATION£m

Impact on carrying amount at 31 December 2023

Company financial statements continued

B.

Investments in associates and joint ventures
2023
£m

2022
£m

Investment in associates measured at cost
Investment in joint venture measured at cost

–
196

–
196

Investments in associates and joint ventures

196

196

(a)

Investment in associates

The Company has an interest of 25.3% (2022: 25.3%) in Tenet Group Limited (Tenet), a company incorporated in Englandand Wales which is measured at cost less impairment. The carrying amount of the Company’s investment in Tenet is £nil.
(2022: £nil).
There were no capital contributions or impairments in relation to Tenet during the year ended 31 December 2023. During
the year ended 31 December 2022, the Company increased its interest in Tenet by £3.8m. The Company also recognised
an impairment of £14m in its interest during 2022.

(b)

Investment in joint ventures

C.

Financial investments

The Company has a 50% (2022: 50%) interest in Heng An Standard Life Insurance Company Limited (HASL), a company
incorporated in China. Further details on this joint venture are provided in Note 14 of the Group financial statements.

Notes

Investments in subsidiaries
measured at FVTPL
Loan to subsidiaries
Derivative financial assets

A
D

Equity securities and interests
in pooled investment funds
Debt securities
Receivables and otherfinancial assets
Cash and cash equivalents
Total

E

Fair value throughprofit or loss

Derivative financial
instruments used for hedging

Amortised cost

Total

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

341
–
–

170
–
–

–
–
41

–
–
85

–
–
–

–
110
–

341
–
41

170
110
85

574
1

709
1

–
–

–
–

–
125

–
210

574
126

709
211

–
–

–
–

–
–

–
–

46
21

48
27

46
21

48
27

916

880

41

85

192

395

1,149

1,360

The amount of debt securities expected to be recovered or settled after more than 12 months is £1m (2022: £1m). The
amount of loans to subsidiaries expected to be recovered or settled after more than 12 months is £nil (2022: £110m). The
amount of equity securities and interests in pooled investment funds expected to be recovered or settled after more than
12 months is £574m (2022: £25m).
Under IFRS 9 the Company calculates expected credit losses (ECL) on financial assets which are measured at amortised
cost (refer to Note 34 (c) of the Group financial statements), including loans to subsidiaries (which are unrated). At
31 December 2023 the Company does not hold financial assets at amortised cost that it regards as credit-impaired or forwhich it considers the probability of default would result in material expected credit losses. The expected credit losses
recognised were less than £1m (2022: less than £1m). In making this assessment the Company has considered if any
evidence is available to indicate the occurrence of an event which would result in a detrimental impact on the estimatedfuture cash flows of these assets.

280

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Annual report 2023

D.

Derivative financial instruments

The Company uses derivative financial instruments in order to reduce the risk from potential movements in foreignexchange rates.
2022

2023
Contract
amountFair value
assetsFair value
liabilities

Contract
amountFair value
assetsFair value
liabilities

£m

£m

£m

£m

£m

£m

Cash flow hedges
Foreign exchange forwards

588
40

41
–

–
–

623
48

85
–

–
1

Derivative financial instruments

628

41

–

671

85

1

The derivative asset of £41m (2022: derivative asset of £85m) is expected to be settled after more than 12 months.

The maturity profile of the contractual undiscounted cash flows in relation to derivative financial instruments is as follows:
Within1 year

2-5
years

6-10
years

Total

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

Cash inflows
Cash flow hedges
Foreign exchange forwards

25
40

26
47

676
–

106
–

–
–

637
–

701
40

769
47

Total

65

73

676

106

–

637

741

816

Cash outflows
Cash flow hedges
Foreign exchange forwards

(18)
(40)

(18)
(48)

(632)
–

(91)
–

–
–

(578)
–

(650)
(40)

(687)
(48)

Total

(58)

(66)

(632)

(91)

–

(578)

(690)

(735)

7

7

44

15

–

59

51

81

Net derivative financial
instruments cash flows

E.

Receivables and other financial assets
2023
£m

2022
£m

Amounts due from related parties
Other financial assets

43
3

45
3

Total receivables and other financial assets

46

48

The carrying amounts disclosed above reasonably approximate the fair values at the year end.
Receivables and other financial assets of £nil (2022: £nil) are expected to be recovered after more than 12 months.

F.

Other assets

2023
£m

2022
£m

Prepayments
Other

23
24

43
5

Other assets

47

48

The amount of Other assets which are expected to be recovered after more than 12 months is £21m (2022: £20m).
Prepayments of £23m (2022: £43m) relate to the Group’s future purchase of certain products in the Phoenix Group’ssavings business offered through abrdn’s Wrap platform together with the Phoenix Group’s trustee investment planbusiness for UK pension scheme clients (refer Note 39(b) of the Group financial statements). Other includes £24m (2022:£5m) in respect of amounts due from related parties.

Annual report 2023

abrdn.com

281

FINANCIAL INFORMATION

On 18 October 2017, the Company issued subordinated notes with a principal amount of US $750m. In order to manage
the foreign exchange risk relating to the principal and coupons payable on these notes the Company entered intoa cross-currency swap which is designated as a hedge of future cash flows.

Company financial statements continuedG.

Share capital and share premiumH.

Shares held by trusts

I.

Retained earnings

Details of the Company’s share capital and share premium are given in Note 24 of the Group financial statements including
details of the share buyback.
Shares held by trusts relates to shares in abrdn plc that are held by the abrdn Employee Benefit Trust and the abrdn
Employee Trust (formerly named the Standard Life Employee Trust). Further details of these trusts are provided in Note 25of the Group financial statements.
Details of the dividends paid on the ordinary shares by the Company are provided in Note 12 of the Group financial
statements. Note 12 also includes information regarding the final dividend proposed by the Directors for the year ended
31 December 2023.
Refer Note J for details of the transfers from the merger reserve to retained earnings during the year ended 31 December
2023 and from the capital redemption reserve and the merger reserve to retained earnings during the year ended 31
December 2022.
Other movements in retained earnings during 2022 include a movement of £19m relating to the interactive investor
employee benefit trust becoming part of the abrdn employee benefit trust sponsored by the Company.

J.

Movements in other reserves

The following tables show the movements in other reserves during the year:

£m

£m

£m

115

25

23

485

–

–

–

(40)

(40)

–
–

–
–

–
–

–
23

28
–

28
23

–

24

–

–

–

24

–

(31)

–

–

–

(31)

(169)

–

–

–

–

(169)

Special reserve
£m

275

47

–

Fair value losses on cash flow hedges
Realised losses on cash flow hedges
transferred to income statement
Share buyback
Reserves credit for employee share-based
payments
Transfer to retained earnings for vested
employee share-based payments
Transfer between reserves on impairment ofsubsidiaries
Tax effect of items that may be reclassified
subsequently to profit or loss
At 31 December 2023

abrdn.com

Cash flow
hedgesEquity compensation
reserve£m

At 1 January 2023

282

Capitalredemption
reserve

Merger reserve£m

Annual report 2023

Total

–

–

–

–

3

3

106

40

115

48

14

323

Equity compensation
reserve
Merger reserve

At 1 January 2022

At 31 December 2022

Cash flow
hedges

£m

£m

Total
£m

£m

£m

Special reserve
£m

578

86

115

1,059

18

1,856

–

–

–

–

85

85

–
–

–
–

–
–

–
25

(78)
–

(78)
25

–

–

–

(1,059)–(1,059)

–

24

–

–

–

24

–

(63)

–

–

–

(63)

(1)

–

–

–

–

(1)

(302)

–

–

–

–

(302)

–

–

–

–

(2)

(2)

275

47

115

25

23

485

Following the impairment loss recognised in 2023 on the Company’s investment in aIHL, £169m was transferred from themerger reserve to retained earnings. Following the impairment loss recognised in 2022 on the Company’s investments inaHL and aIHL, £302m was transferred from the merger reserve to retained earnings. Refer Note A for details of these
impairments.
During 2023, £23m (2022: £25m) was recognised in the capital redemption reserve for the share buyback (refer Note 24 of
the Group financial statements).
On 1 July 2022, the Company’s capital redemption reserve at this date was cancelled in accordance with section 649 of
the Companies Act 2006 resulting in a transfer of £1,059m to retained earnings.

K.

Other equity

5.25 % Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes

In 2021, the Company issued £210m of 5.25% Fixed Rate Reset Perpetual Subordinated Contingent Convertible Notes (theNotes). The Notes are classified as other equity and were initially recognised at £207m (the proceeds received lessissuance costs of £3m). Refer Note 28 (a) of the Group financial statements for further details.
The profit for the year attributable to other equity was £11m (2022: £11m).

L.

Financial liabilities

Subordinated liabilities
Derivative financial liabilities
Other financial liabilities
Total

Designated as at fair value throughprofit or loss

Amortised cost

Total

Notes

2023
£m

2022
£m

2023
£m

2022
£m

2023
£m

2022
£m

M
D
O

–
–
8

–
1
14

599
–
158

621
258

599
–
166

621
1
272

8

15

757

879

765

894

abrdn.com

283

Annual report 2023

FINANCIAL INFORMATION

Fair value gains on cash flow hedges
Realised gains on cash flow hedges
transferred to income statement
Share buyback
Cancellation of the capital redemption
reserve
Reserves credit for employee share-based
payments
Transfer to retained earnings for vested
employee share-based payments
Transfer between reserves on disposal ofsubsidiaries
Transfer between reserves on impairment ofsubsidiaries
Tax effect of items that may be reclassified
subsequently to profit or loss

Capitalredemption
reserveCompany financial statements continued

M.

Subordinated liabilities
2022

2023
Principal
amountCarrying
value

Principal
amountCarrying
value

$750m

£599m

$750m

£621m

Subordinated notes:
4.25% US Dollar fixed rate due 30 June 2028

£599m

Total subordinated liabilities£621m

The principal amount of the subordinated liabilities is expected to be settled after more than 12 months. The accrued
interest on the subordinated liabilities of £13m (2022: £nil) is expected to be settled within 12 months.
During the year ended 31 December 2022 the Company redeemed its 5.5% Sterling fixed rate notes.
Further information on the subordinated liabilities including the terms and conditions and the redemption is given in Note 30of the Group financial statements.

N.

Taxation(a)Current tax(b)Deferred tax

Current tax liabilities at 31 December 2023 were £1m (2022: £nil) and are expected to be payable in less than 12 months.

Deferred tax assets

2023
£m

2022
£m

150

143

The amount of deferred tax assets expected to be recovered or settled after more than 12 months are £150m(2022: £143m).

Recognised deferred tax
2023
£m

2022
£m

Deferred tax assets comprise:
Losses carried forward
Unrealised losses on cash flow hedges

155
–

151
–

Gross deferred tax assets

155

151

Less: Offset against deferred tax liabilities
Deferred tax assets
Deferred tax liabilities comprise:
Unrealised gains on investments
Unrealised gains on cash flow hedges

(5)

(8)

150

143

–
5

–
8

Gross deferred tax liabilities

58

Less: Offset against deferred tax assets

(5)

(8)

Deferred tax liabilities––

Net deferred tax asset at 31 December

150

143

Movements in net deferred tax assets comprise:
At 1 January
Amounts credited to profit or loss
Amounts charged to other comprehensive income

143
4
3

113
32
(2)

At 31 December

150

143

The deferred tax assets and liabilities recognised are in respect of unused tax losses and unrealised gains on cash flow
hedges respectively. The deferred tax assets are recognised to the extent that it is probable that the losses will be capableof being offset against future taxable profits (refer Note 9(c)(i) of the Group financial statements).
There is no unrecognised deferred tax relating to temporary timing differences associated with investments in subsidiaries,
branches and associates and interests in joint arrangements (2022: none).
Due to uncertainty regarding recoverability, deferred tax assets have not been recognised in respect of capital losses
carried forward of £8m (2022: £nil). UK capital losses can be carried forward indefinitely.

284

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Annual report 2023

Movements in deferred tax assets and liabilities
Losses carried forward£m

Unrealised gains on
investments£mUnrealised gains or losses oncash flow hedges£m

Net deferred tax asset
£m

151

–

(8)

143

4
–

–
–

–
3

4
3

155

–

(5)

150

Unrealised gains on Unrealised gains or losses oninvestments
cash flow hedges£m£m

Net deferred tax asset£m

At 1 January 2023
Amounts credited to the income
statement
Tax on cash flow hedge
At 31 December 2023

Losses carried forward
£m

(1)

(6)

113

31
–

1
–

–

32

Tax on cash flow hedge

(2)

(2)

At 31 December 2022

151

–

(8)

143

Amounts credited to the income
statement

O.

Other financial liabilities

2023
£m

2022
£m

Outstanding purchase of investment securities
Amounts due to related parties
Collateral held in respect of derivative contracts
Contingent consideration liability
Other

1
109
39
8
9

–
161
89
14
8

Other financial liabilities

166

272

Other financial liabilities of £5m (2022: £nil) are expected to be settled after more than 12 months.

P.

Provisions

Q.

Contingent liabilities, contingent assets, indemnities and guarantees

The provision of £33m at 31 December 2022 related to separation costs. The remaining provision for separation costs was
released in 2023. Refer Note 33 of the Group financial statements for further information.

(a)Legal proceedings and regulations

The Company, like other financial organisations, is subject to legal proceedings and complaints in the normal course of its
business. All such material matters are periodically reassessed, with the assistance of external professional advisers whereappropriate, to determine the likelihood of the Company incurring a liability. Where it is concluded that it is more likely than
not that a material outflow will be made a provision is established based on management’s best estimate of the amountthat will be payable. At 31 December 2023, there are no identified contingent liabilities expected to lead to a material
exposure.

(b)

Indemnities and guarantees

Under the trust deed in respect of the abrdn UK Group (SLSPS) plan, ACSL, the principal employer, must pay contributions
to the pension plan as the trustees’ actuary may certify necessary. The Company has guaranteed the obligations of ACSL
in relation to this plan. In addition, the Company has guaranteed similar obligations in respect of certain other subsidiaries’
UK and Ireland defined benefit pension plans.
None of the guarantees issued by the Company give rise to any significant liabilities at 31 December 2023 (2022: none).

R.

(a)

Related party transactions

Key management personnel

The Directors and key management personnel of the Company are considered to be the same as for the Group.
See Note 41 of the Group financial statements for further information.

Annual report 2023

abrdn.com

285

FINANCIAL INFORMATION

120

At 1 January 2022

Supplementary information1
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 consolidated income statement,
consolidated statement of financial position and consolidated statement of cash flows, which are presented in the Groupfinancial statements section of this report, and related metrics. Adjusted operating profit excludes certain items which are
likely to be recurring such as restructuring costs, amortisation of certain intangibles, dividends from significant listed
investments and the share of profit or loss from associates and joint ventures.
R

Metric used for executive remuneration in 2024. See page 120 for more information.

Definition

PurposeAdjusted operating profit

APM

R

Adjusted operating profit before tax is the Group’s key APM. Adjusted operating profit
includes the results of the Group’s three businesses: Investments, Adviser and ii2 alongwith Other business and corporate costs.
It excludes the Group’s adjusted net financing costs and investment return.
Adjusted operating profit also excludes the impact of the following items:– Restructuring and corporate transaction expenses. Restructuring includes theimpact 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 inassociates 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 thelong-term operating performance of the Group.

Adjusted operating profit reporting
provides further analysis of theresults reported under IFRS andthe Directors believe it helps togive shareholders a fuller
understanding of theperformance of the business byidentifying and analysing adjusting
items.
Segment reporting used inmanagement information isreported to the level of adjusted
operating profit.

Further details are included in Note 11 of the Group financial statements.
Net operating revenue

APM

Net operating revenue includes revenue we generate from asset management
charges (AMCs), platform charges, treasury income and other transactional charges.
AMCs are earned on products such as mutual funds, and are calculated as apercentage fee based on the assets held. Investment risk on these products rests
principally with the client, with our major indirect exposure to rising or falling markets
coming from higher or lower AMCs. Net operating revenue is shown net of cost of sales,such as commissions and similar charges.
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 inbusiness combinations and through the purchase of customer contracts.
Adjusted profit before tax

Adjusted net financing costs and investment return

1. Supplementary information is unaudited in line with previous years.
2. Personal has been renamed ii and includes Personal Wealth unless otherwise stated.

Annual report 2023

Adjusted profit before tax is a key
input to the adjusted earnings per
share measure.

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 ofsubordinated liabilities.

abrdn.com

Adjusted operating expenses is acomponent of adjusted operating
profit and is used to calculate thecost/income ratio.

APM

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

286

Net operating revenue is acomponent of adjusted operating
profit and provides the basis forreporting of the revenue yieldfinancial ratio. Net operating
revenue is also used to calculate
the cost/income ratio.

Adjusted net financing costs andinvestment return is a componentof adjusted profit before tax.

Definition

PurposeAPM

Cost/income ratio
This is an efficiency measure that is calculated as adjusted operating expenses divided
by net operating revenue in the period.

Net operating revenue yield (bps)

APM

The net operating revenue yield is calculated as annualised net operating revenue(excluding performance fees, ii1 and revenue for which there are no attributableassets) divided by monthly average fee based assets. ii1 is excluded from thecalculation of net operating revenue yield as fees charged for this business areprimarily from subscriptions and trading transactions.

The net operating revenue yield isa measure that illustrates theaverage margin being earned on
the assets that we manage,administer or advise our clients on,
excluding ii1.

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 toassume the conversion of all dilutive potential ordinary shares, such as share options
granted to employees.
Details on the calculation of adjusted diluted earnings per share are set out in Note 10 of
the Group financial statements.

Earnings per share is a commonlyused financial metric which can beused to measure the profitability
and capital efficiency of acompany over time. We also
calculate adjusted diluted
earnings per share to illustrate theimpact of adjusting items on themetric.
This ratio is used by management
to assess performance andreported to the Board andexecutive leadership team.

APM

Adjusted capital generation

Adjusted capital generation is part of the analysis of movements in IFPR regulatory
capital. Adjusted capital generation is calculated as adjusted profit after tax less returns
relating to pension schemes in surplus and interest paid on other equity which do notbenefit regulatory capital. It also includes dividends from associates, joint ventures andsignificant listed investments. At 31 December 2023, Phoenix is the only significant listed
investment.
Net capital generation

These measures aim to show how
adjusted profit contributes toregulatory capital, and therefore
provides insight into our ability togenerate capital that is deployed
to support value for shareholders.

APM

Net capital generation is calculated as adjusted capital generation less restructuring
and corporate transaction expenses (net of tax).
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.
Net diluted capital generation per share

APM

These ratios are measures used toassess performance for dividend
paying capability.

R

Net diluted capital generation per share is calculated as net capital generation divided
by the weighted average number of diluted ordinary shares outstanding.
Cash and liquid resources

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

The purpose of this measure is todemonstrate how much cash andinvested assets we hold and canbe readily accessed.

1. Relates to ii (excluding Personal Wealth).

Annual report 2023

abrdn.com

287

FINANCIAL INFORMATION

Adjusted diluted earnings per share

This ratio is used by management
to assess efficiency and reported
to the Board and executive
leadership team.

Supplementary information continued

1.1

Adjusted operating profit and adjusted profit

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

The components of adjusted operating profit are net operating revenue and adjusted operating expenses. These
components provide a meaningful analysis of our adjusted results. The table below provides a reconciliation of movements
between adjusted operating profit component measures and relevant IFRS terms.
A reconciliation of Adjusted operating expenses to the IFRS item Total administrative and other expenses, and areconciliation of Adjusted net financing costs and investment return to the IFRS item Net gains on financial instruments andother income are provided in Note 2b(ii) of the Group financial statements. A reconciliation of Net operating revenue to the
IFRS item Revenue from contracts with customers is provided in Note 3 of the Group financial statements.
IFRS term
2023

Net operating revenue
Total administrative and otherexpenses
Net gains or losses on financial
instruments and other income
Finance costs
Profit on disposal of subsidiaries
and other operations
Share of profit or loss fromassociates and joint ventures
Reversal of impairment ofinterests in joint ventures

IFRS
£m

Presentationdifferences£m

Adjustingitems£mAdjusted
profit£m

Adjusted profit term

1,398

-

-

1,398

Net operating revenue(1,463)(29)

343(1,149)Adjusted operating expenses1

(65)

(29)

343

249

Adjusted operating profit

2
(25)

6
23

73
2

81
-

Adjusted net financing costs andinvestment return
N/A

79

-

(79)

-

N/A

1

-

(1)

-

N/A
N/A

2

-

(2)

-

Loss before tax

(6)

-

336

330

Adjusted profit before tax

Total tax credit

18

-

(68)

(50)

Tax on adjusted profit

Profit for the year

12

-

268

280

Adjusted profit after tax

1. Adjusted operating expenses includes staff and other related costs of £586m compared with IFRS staff costs and other employee-related costs of £529m.
The difference primarily relates to the inclusion of contractor, temporary agency staff and recruitment and training costs of £20m (IFRS basis: Reported within
other administrative expenses) and gains on funds to hedge deferred bonus awards of £2m (IFRS basis: Reported within other net gains on financial
instruments and other income) within staff and other related costs. IFRS staff costs and other employee-related costs includes the benefit from the netinterest credit relating to the staff pension schemes of £34m and past service costs of £5m (Adjusted profit basis: Reported within adjusted net financing costs
and investment return and other adjusting items respectively).

IFRS2
£m

Presentationdifferences£m

Adjustingitems2£m

Adjusted
profit
£m

1,456

-

-

1,456

(1,919)(35)

761(1,193)

(463)

(35)

761

263

(122)

8

104

(10)

(29)

27

2

-

6

-

(6)

-

5

-

(5)

-

(9)

-

9

-

Loss before tax

(612)

-

865

253

Adjusted profit before tax

Total tax credit

66

-

(88)

(22)

Tax on adjusted profit

Loss for the year

(546)

-

777

231

Adjusted profit after tax

IFRS term
2022

Net operating revenue
Total administrative and otherexpenses
Net gains or losses on financial
instruments and other income
Finance costs
Profit on disposal of interests inassociates
Share of profit or loss fromassociates and joint ventures
Impairment of interests inassociates

Adjusted profit term

Net operating revenue
Adjusted operating expenses
Adjusted operating profit
Adjusted net financing costs andinvestment return
N/A
N/A
N/A
N/A

2. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.

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

288

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Annual report 2023

Analysis of adjusting items

The table below provides detail of the adjusting items made in the calculation of adjusted profit before tax:
20221

£m

£m

Restructuring and corporate transaction expenses

(152)

(214)

Amortisation and impairment of intangible assets acquired in business combinations and through thepurchase of customer contracts
Profit on disposal of subsidiaries and other operations

(189)
79

(494)
-

Profit on disposal of interests in associates
Change in fair value of significant listed investments
Dividends from significant listed investments
Share of profit or loss from associates and joint ventures
Reversal of impairment/(impairment) of interests in associates and joint ventures
Other

(178)
64
1
2
37

6
(187)
68
5
(9)
(40)

Total adjusting items including results of associates and joint ventures

(336)

(865)

1. Comparatives for 2022 have been restated for the implementation of IFRS 17. Refer Basis of preparation in the Group financial statements section.

An explanation for why individual items are excluded from adjusted profit is set out below:- Restructuring and corporate transaction expenses are excluded from adjusted profit. Restructuring includes theimpact of major regulatory change. By highlighting and excluding these costs we aim to give shareholders a fuller
understanding of the performance of the business. Restructuring and corporate transaction expenses include costs
relating to acquisitions and our transformation programmes. Other restructuring costs excluded from adjusted profit
relate to projects which have a significant impact on the way the Group operates. Costs are only excluded fromadjusted profit where they are out-with business as usual activities and the costs would not have been incurred had therestructuring project not taken place. The 2023 expenses mainly comprised of £97m (2022: £66m) headcountreduction related costs and property restructuring expenses, £37m (2022: £51m) of other transformation costs such as
finance and platform transformation and £17m (2022: £43m) in respect of specific costs to effect savings in
Investments, partially offset by a credit of £30m (2022: expense £7m) in respect of Phoenix separation costs following
the £32m release of a related provision. Corporate transaction costs of £31m (2022: £45m) included the sale of our
European-headquartered private equity business and the acquisition of the healthcare fund management capabilities
of Tekla. Total restructuring expenses (excluding corporate transaction costs) are expected to be c.£150m in 2024,
primarily relating to our transformation programme that was announced in January 2024. Restructuring expenses in
2024 are expected to include costs of c.£30m relating to the multi-year Platform transformation which is now expected
to complete in 2025.
– Amortisation and impairment of intangible assets acquired in business combinations and through the purchase ofcustomer contracts is included as an adjusting item. This is consistent with peers and therefore excluding these items
aids comparability. Highlighting this as an adjusting item aims to give a fuller understanding of these accounting
impacts which arise where businesses have been acquired but do not arise where businesses have grown organically.
Further details are provided in Note 13 of the Group financial statements.
– Profit on disposal of subsidiaries and other operations in 2023 mainly relates to the sales of our discretionary fundmanagement business of £58m and our US private equity and venture capital business of £22m. These items are
excluded from adjusted profit as they are non-recurring in nature.
– Profit on disposal of interests in associates of £6m in 2022 related to the sale of our stake in Origo Services Limited in May
2022. These items are excluded from adjusted profit as they are volatile, and the accounting gains are non-recurring in
nature.
– The change in fair value of significant listed investments was negative £178m (2022: negative £187m) and represents
the impact of market movements on our holdings in HDFC Asset Management (£96m reduction in value including
impact of final stake sale in June 2023), Phoenix (£77m reduction in value), and HDFC Life (£5m reduction in value
including impact of final stake sale in May 2023). Excluding fair value movements on significant listed investments for the
purposes of adjusted profit is aligned with our treatment of gains on disposal for these holdings when they wereclassified as an associate, and reflects that the fair value movements are not indicative of the long-term operating
performance of the Group.
– Dividends from significant listed investments relates to our shareholdings in HDFC Life, Phoenix and HDFC AssetManagement. The £64m in 2023 relates to dividends received from Phoenix (£54m) and HDFC Asset Management(£10m). Dividends from significant listed investments are included in adjusting items, as such dividends result in fair value
movements.
– Share of profit or loss from associates and joint ventures was a profit of £1m (2022: profit £5m1). In 2023, this mainlycomprises of the share of profit or loss from our holdings in HASL, Virgin Money UTM and Archax. Associate and joint
venture results are excluded from adjusted profit to help in understanding the performance of our core businessseparately from these holdings.

Annual report 2023

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289

FINANCIAL INFORMATION

2023

Supplementary information continued––

The reversal of impairment of interests in associates and joint ventures in 2023 of £2m relates to our joint venture Virgin
Money UTM. See Note 14 of the Group financial statements. The impairment of interests in associates and joint venturesin 2022 of £9m related to our associate holding in Tenet.
Details on items classified as ‘Other’ in the table above are provided in Note 11 of the Group financial statements. Other
adjusting items in 2023 primarily relates to a £36m insurance liability recovery in relation to the single process execution
event in 2022. 2023 also included a £23m gain for net fair value movements in contingent consideration and a £21m
provision expense for a potential tax liability.

1.2

Cost/income ratio

Adjusted operating expenses (£m)
Net operating revenue (£m)
Cost/income ratio (%)

1.3

2023

2022

(1,149)1,398(1,193)
1,456

82

82

Net operating revenue yield (bps)Net operating revenue (£m) 2

Average AUMA (£bn)

Institutional and Retail Wealth1
Insurance Partners1
Investments
Adviser3
Personal Wealth3
Eliminations
Net operating revenue yield

Net operating revenue yield (bps)

2023

2022

2023

2022

2023

2022

220.0
147.7

236.2
169.5

716
148

851
179

32.6
10.0

36.1
10.5

367.7
70.8
9.7
(11.4)

405.7
70.8
13.5
(11.8)

864
224
57
N/A

1,030
185
87
N/A

23.5
30.6
58.8
N/A

25.4
26.1
59.2
N/A

436.8

478.2

1,145

1,302

26.0

27.1

230
14
9

114
30
10

1,398

1,456

ii (excluding Personal Wealth)Performance fees
Other2

4

Net operating revenue

Analysis of Institutional and Retail Wealth by asset class1
Net operating revenue (£m) 2

Average AUM (£bn)

Net operating revenue yield (bps)

2023

2022

2023

2022

2023

2022

Equities
Fixed income5
Multi-asset
Private equity
Real assets

49.1
35.2
26.5
10.7
39.5

57.3
38.6
31.5
12.4
42.0

298
89
61
48
171

357
109
93
52
187

60.7
25.1
23.1
44.7
43.4

62.5
28.3
29.4
42.2
44.4

Alternative investment solutions including
private credit5
Quantitative
Liquidity

23.8
15.9
19.3

24.7
9.7
20.0

31
5
13

35
5
13

13.1
3.1
6.9

14.0
5.0
6.7

Institutional and Retail Wealth

220.0

236.2

716

851

32.6

36.1

1. Wholesale has been renamed Retail Wealth, Insurance has been renamed Insurance Partners.
2. Net operating revenue for Finimize and our digital innovation group moved from Investments to Other from January 2023. Comparatives have been
restated. Refer Note 2 of the Group financial statements for further details.
3. Adviser net operating revenue yield excludes revenue of £7m (2022: £nil) and Personal Wealth net operating revenue yield excludes revenue of £nil (2022:£7m) for which there are no attributable assets.
4. ii (excluding Personal Wealth) is excluded from the calculation of net operating revenue yield as fees charged for this business are primarily fromsubscriptions and trading transactions.
5. Alternative investment solutions includes £1.9bn (2022: £2.6bn) average AUMA and £4m (2022: £6m) net operating revenue relating to private credit assets
previously classified as fixed income.

290

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Annual report 2023

1.4

Additional ii1 information

The results for ii1 are included in the Group’s results following the completion of the acquisition on 27 May 2022. The
adjusted operating profit for ii1 for the 12 months to 31 December 2023 of £127m is included in our overall 2023 adjusted
operating profit of £249m.
The tables below provide detail of the performance of ii1 for the 12 months ended 31 December 2023 and 31 December
2022 to provide a fuller understanding of the performance of this business.
2022
12 months£m2022
7 months£m

Net operating revenue
Adjusted operating expenses

230
(103)

176
(82)

114
(47)

Adjusted operating profit

127

94

67

2023
12 months£m2022
12 months£m2022
7 months£m

Trading transactions
Subscription/account fees
Treasury income
Less: Cost of sales

48
54
134
(6)

55
56
71
(6)

27
32
58
(3)

Net operating revenue

230

176

114

Analysis of ii1 net operating revenue

1. Relates to ii (excluding Personal Wealth).

1.5

Net capital generation

The table below provides a reconciliation of movements between adjusted profit after tax and net capital generation. A
reconciliation of adjusted profit after tax to IFRS profit for the year is included earlier in this section.
2023
£m

2022
£m

Adjusted profit after tax

280

231

Less net interest credit relating to the staff pension schemes

(34)

(29)

Less interest paid on other equity

(11)

(11)

Add dividends received from associates, joint ventures and significant listed investments

64

68

Adjusted capital generation

299

259

Less restructuring and corporate transaction expenses (net of tax)

(121)

(178)

Net capital generation

178

81

Net interest credit relating to the staff pension schemes

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

Dividends received from associates, joint ventures and significant listed investments
An analysis is provided below:

Phoenix

2023
£m

2022
£m

54

52

-

1

HDFC Asset Management

10

15

Dividends received from associates, joint ventures and significant listed investments

64

68

HDFC Life

The table below provides detail of dividend coverage on an adjusted capital generation basis.
Adjusted capital generation (£m)

2023

2022

299

259

Full year dividend (£m)

267

295

Dividend cover on an adjusted capital generation basis (times)

1.12

0.88

abrdn.com

291

Annual report 2023

FINANCIAL INFORMATION

2023
12 months£m

Analysis of ii1 profit

Supplementary information continued

1.6

Net diluted capital generation per share

A reconciliation of net capital generation to adjusted profit after tax is included in 1.5 above.
2023

2022

Adjusted capital generation (£m)

299

259

Net capital generation (£m)

178

81

Weighted average number of diluted ordinary shares outstanding (millions)

1,930

2,094

Adjusted diluted capital generation per share (pence)

15.5

12.4

Net diluted capital generation per share (pence)

9.2

3.9

1

1. In accordance with IAS 33, no share options and awards have been treated as dilutive for the 12 months ended 31 December 2022 due to the loss attributable
to equity holders of abrdn plc in the period. Refer Note 10 of the Group financial statements for further details.

1.7

Cash and liquid resources

The table below provides a reconciliation between IFRS cash and cash equivalents and cash and liquid resources. Seedcapital and co-investments are excluded.
2023
£bn

2022
£bn

Cash and cash equivalents per the consolidated statement of financial position

1.2

1.1

Debt securities excluding third party interests2 – Note 34 (c)(i) of the Group financial statements

0.7

0.7

Corporate funds held in absolute return funds – Note 34 (b)(i)(i) of the Group financial statements-

0.1

Other3

(0.1)

(0.2)

Cash and liquid resources

1.8

1.7

2. Excludes £86m (2022: £76m) relating to seeding.
3. Cash collateral, cash held for charitable funds and cash held in employee benefit trusts are excluded from cash and liquid resources.

2.

Investment performance

Definition

PurposeInvestment performance
Investment performance has been aggregated using a money weighted average of
our assets under management which are outperforming their respective benchmark.
The calculation of investment performance uses a closing AUM weighting basis.
Calculations for investment performance are made gross of fees with the exceptionof those for which the stated comparator is net of fees. Benchmarks differ by fund andare defined in the relevant investment management agreement or prospectus, as
appropriate. The investment performance calculation covers all funds that aim tooutperform 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 agiven index.

1 yearAs an asset managing business thismeasure demonstrates our ability togenerate investment returns for ourclients.

3 years

5 years% of AUM ahead of benchmark

2023

2022

2023

2022

2023

2022

Equities
Fixed income
Multi-asset
Real assets
Alternatives
Quantitative
Liquidity

27
81
12
30
100
100
100

30
65
13
57
88
17
84

17
75
15
56
100
100
95

63
72
50
63
100
27
97

48
84
22
45
100
37
97

65
79
22
52
100
29
97

Total

44

41

42

65

52

58

292

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Annual report 2023

3.

Assets under management and administration and flows

Definition

PurposeAUMA
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 underadvice (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.

The amount of funds that wemanage, administer oradvise directly impacts thelevel of net operating
revenue that we receive.

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.

3.1

The level of net flows that we
generate directly impacts
the level of net operating
revenue that we receive.

Analysis of AUMA
Opening
AUMA at
1 Jan 2023
£bn

Gross inflows£bn

Redemptions£bn

Net flows£bnMarketand other
movements£bn

Corporateactions4£bn

Closing
AUMA at
31 Dec 2023
£bn

161.9
69.3
144.9

15.8
12.3
22.2

(27.7)(18.3)(23.3)(11.9)
(6.0)
(1.1)

(2.0)
1.0
11.7

(4.1)
3.0
-

143.9
67.3
155.5

Investments
Adviser3ii (excluding Personal Wealth)
Personal Wealth

376.1
68.5
54.0
13.1

50.3
5.8
9.5
0.7

(69.3)
(7.9)
(6.2)
(1.1)

(19.0)
(2.1)
3.3
(0.4)

10.7
4.6
3.9
0.2

(1.1)
2.5
0.5
(8.6)

366.7
73.5
61.7
4.3

ii1
Eliminations5

67.1(11.7)

10.2
(2.2)

(7.3)
2.8

2.9
0.6

4.1
-

(8.1)
(0.2)

66.0
(11.3)

Total AUMA

500.0

64.1

(81.7)(17.6)

19.4

(6.9)

494.9

Opening
AUMA at
1 Jan 2022£bn

Gross inflows£bn

Redemptions£bn

Net flows£bnMarketand other
movements£bn

Corporateactions6£bn

Closing
AUMA at
31 Dec 2022
£bn

174.0
79.1
210.5

20.1
16.4
22.8

(27.3)(20.8)(52.2)(7.2)(4.4)(29.4)(12.4)(5.4)(28.7)

7.5
(7.5)

161.9
69.3
144.9

Investments
Adviser3ii (excluding Personal Wealth)
Personal Wealth

463.6
76.2
14.4

59.3
6.6
4.1
1.5

(100.3)
(5.0)
(2.5)
(1.2)

(41.0)
1.6
1.6
0.3(46.5)
(9.3)
(3.0)
(1.6)

55.4
-

376.1
68.5
54.0
13.1

ii1
Eliminations5

14.4(12.1)

5.6
(2.5)

(3.7)
2.1

1.9
(0.4)

(4.6)
1.7

55.4
(0.9)

67.1
(11.7)

Total AUMA

542.1

69.0

(106.9)(37.9)(58.7)

54.5

500.0

12 months ended 31 December 2023

Institutional
Retail Wealth1
Insurance Partners1,2

12 months ended 31 December 2022

Institutional
Retail Wealth1
Insurance Partners1,2

1. Wholesale has been renamed Retail Wealth, Insurance has been renamed Insurance Partners and Personal has been renamed ii and includes Personal

Wealth unless otherwise stated.

2. Insurance Partners AUM at 31 December 2023 includes £154.4bn (2022: £143.7bn) relating to Phoenix and £1.1bn (2022: £1.2bn) of other AUM.
3. Includes Platform AUA at 31 December 2023 of £70.9bn (2022: £68.5bn).
4. Corporate actions in 2023 relate to the acquisition of Macquarie closed-end funds in March and July 2023 (£0.5bn and £0.2bn) and Tekla healthcare fundmanagement capabilities (£2.3bn) in October 2023, and the disposals of our discretionary fund management business (£6.1bn) in September 2023 and US
private equity business (£4.1bn) in October 2023. Corporate actions also include the transfer of the MPS business from Personal Wealth to Adviser in May 2023
of £2.5bn, and investment share plan and ISA customers who moved on to the ii platform in December 2023 (£0.5bn), and resulting impact on eliminations.

5. Eliminations remove the double count reflected in Investments, Adviser and ii.
6. Corporate actions in 2022 relate to the acquisition of ii on 27 May 2022 and also reflect the transfer of retained LBG AUM of c£7.5bn from Insurance Partners

into Institutional (quantitatives), to better reflect how the relationship is being managed. The eliminations are to remove the double count for the assets thatare reflected in both ii and Investments.

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293

FINANCIAL INFORMATIONNet flows
Net flows represent gross inflows less gross outflows or redemptions. Gross inflows are newfunds from clients. Redemptions is the money withdrawn by clients during the period. Cashdividends which are retained on the ii platform are included in net flows for the ii business only.
Cash dividends are included in market movements for other parts of the Group including theInvestments and Adviser platform businesses. We consider that this different approach isappropriate for the ii business as cash dividend payments which are retained result in additional
income for ii but are largely revenue neutral for the rest of the Group.

Supplementary information continued

3.2

Quarterly net flows

3 months to
31 Dec 23£bn

3 months to
30 Sep 23£bn

3 months to
30 Jun 23£bn

3 months to
31 Mar 23£bn

3 months to
31 Dec 22
£bn

(3.4)
(2.4)
0.3

(3.6)
(1.8)
(1.6)

(0.7)
(0.8)
1.7

(4.2)
(1.0)
(1.5)

2.2
(2.0)
(6.3)

Investments
Adviserii (excluding Personal Wealth)
Personal Wealth

(5.5)
(1.0)
0.6
(0.1)

(7.0)
(0.5)
0.8
(0.2)

0.2
(0.5)
1.0
0.1

(6.7)
(0.1)
0.9
(0.2)

(6.1)
0.6
0.2

ii1
Eliminations

0.5
0.3

0.6
0.2

1.1
0.2

0.7
(0.1)

0.8
(0.1)

Total net flows

(5.7)

(6.7)

1.0

(6.2)

(5.4)

15 months ended 31 December 2023

Institutional
Retail Wealth
Insurance Partners

1. Personal has been renamed ii and includes Personal Wealth unless otherwise stated.

4.

Public markets and Alternatives investment capability

We have simplified and focused our investment capabilities on areas where we have both the skill and the scale tocapitalise on the key themes shaping the market, through either public markets or alternative asset classes. This analysis
includes Institutional, Retail Wealth and Insurance Partners.

Analysis of AUM and net operating revenue
Net operating revenue (£m)3

AUM (£bn)
2023

2022

2023

2022

Equities
Fixed income (including Liquidity)1,2
Multi-asset2
Quantitative

67.8
122.4
32.3
67.8

78.1

415

129.8
27.5
53.6

341
156
81
18

Public markets
Real assets
Private credit
Alternative investment solutions
Private equity
Alternatives

290.3
42.8
8.8
17.1
7.7
76.4

289.0
47.7
7.9
18.6
12.9
87.1

596
188
15
28
51
282

736
223
14
33
54
324

Total Investments

366.7

376.1

878

1,060

186
117
18

1. Total liquidity AUM at 31 December 2023 was £35.3bn (2022: £38.3bn). Total liquidity net operating revenue was £23m (2022: £24m).
2. Fixed income at 31 December 2023 includes £9.6bn of Liability aware funds AUM previously managed as a multi-asset capability (2022: £9.7bn).
3. Net operating revenue for Finimize and our digital Innovation group moved from Investments to Other from January 2023. Comparatives have been restated.
Refer Note 2 of the Group financial statements for further details.

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5.

Institutional and Retail Wealth1 AUM

Detailed asset class split

Gross inflows£bn

Redemptions£bn

Net flows£bnMarketand other
movements£bn

Corporateactions3£bnClosing
AUM at31 Dec 2023£bn

Developed markets equities
Emerging markets equities
Asia Pacific equities
Global equities

11.1
12.5
20.5
8.2

1.1
0.7
2.1
1.3

(3.5)
(2.2)
(4.7)
(2.0)

(2.4)
(1.5)
(2.6)
(0.7)

0.8
0.1
(1.6)
0.6

2.3
0.4

11.8
11.1
16.3
8.5

Total equities

52.3

5.2

(12.4)

(7.2)

(0.1)

2.7

47.7

Developed markets credit
Developed markets rates
Emerging markets fixed income

22.5
2.0
11.3

3.1
1.1
1.4

(5.7)
(0.8)
(3.1)

(2.6)
0.3
(1.7)

1.4
0.8
0.2

0.1
0.2
-

21.4
3.3
9.8

Total fixed income2

35.8

5.6

(9.6)

(4.0)

2.4

0.3

34.5

Absolute return
Diversified growth/income
MyFolio
Other multi-asset

5.7
0.3
15.6
6.7

0.1
0.1
1.8
0.8

(1.6)
(0.3)
(2.7)
(1.4)

(1.5)
(0.2)
(0.9)
(0.6)

(0.8)
0.1
1.5
(0.8)

-

3.4
0.2
16.2
5.3

Total multi-asset

28.3

2.8

(6.0)

(3.2)

-

-

25.1

Total private equity

12.3

0.1

(0.5)

(0.4)

(0.6)

(4.1)

7.2

UK real estate
European real estate
Global real estate
Real estate multi-manager
Infrastructure equity

19.3
14.3
1.6
1.4
6.1

0.2
0.3
0.3
0.2
0.4

(1.0)
(0.6)
(0.1)

(0.8)
0.3
(0.3)
0.2
0.3

(2.6)
(1.0)
(0.1)
(0.1)
(0.3)

-

15.9
13.6
1.2
1.5
6.1

Total real assets

42.7

1.4

(1.7)

(0.3)

(4.1)

-

38.3

Total alternative investment solutions(including private credit)2

24.0

1.3

(1.5)

(0.2)

0.2

-

24.0

Total quantitative

15.0

3.1

(2.0)

1.1

1.0

-

17.1

Total liquidity

20.8

8.6

(12.3)

(3.7)

0.2

-

17.3

Total

231.2

28.1

(46.0)(17.9)

(1.0)

(1.1)

211.2

12 months ended 31 December 2023

1. Wholesale has been renamed Retail Wealth.
2. Alternative investment solutions include opening AUM of £1.8bn, net inflows of £0.2bn and closing AUM of £1.9bn relating to private credit assets previouslyclassified as fixed income.
3. Corporate actions in 2023 relate to the acquisition of Macquarie closed-end funds in March and July 2023 (£0.5bn and £0.2bn) and Tekla healthcare fundmanagement capabilities (£2.3bn) in October 2023 and the disposal of US private equity and venture capital business (£4.1bn) in October 2023.

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FINANCIAL INFORMATION

Opening
AUM at1 Jan 2023
£bnSupplementary information continued
Opening
AUM at1 Jan 2022
£bn

Net flows£bnMarketand other
movements£bn

Corporateactions2£bn

Closing
AUM at31 Dec 2022£bn

Gross inflows£bn

Redemptions£bn

Developed markets equities
Emerging markets equities
Asia Pacific equities
Global equities

17.0
16.4
25.3
10.3

2.1
1.9
2.5
1.2

(3.4)
(2.9)
(4.8)
(1.6)

(1.3)
(1.0)
(2.3)
(0.4)

(4.6)
(2.9)
(2.5)
(1.7)

-

11.1
12.5
20.5
8.2

Total equities

69.0

Developed markets credit
Developed markets rates
Emerging markets fixed income

28.3
2.9
12.2

7.7

(12.7)(5.0)(11.7)

-

52.3

3.8
0.3
2.4

(5.8)
(0.6)
(2.4)

(2.0)
(0.3)
-

(3.8)
(0.6)
(0.9)

-

22.5
2.0
11.3

Total fixed income1
Absolute return
Diversified growth/income
MyFolio
Other multi-asset

43.4

6.5

(8.8)

(2.3)

(5.3)

-

35.8

10.0
0.5
17.7
7.8

0.4
0.1
1.7
1.7

(1.9)
(0.2)
(2.0)
(1.1)

(1.5)
(0.1)
(0.3)
0.6

(2.8)
(0.1)
(1.8)
(1.7)

-

5.7
0.3
15.6
6.7

Total multi-asset

36.0

3.9

(5.2)

(1.3)

(6.4)

-

28.3

Total private equity

12.3

0.5

(1.1)

(0.6)

0.6

-

12.3

UK real estate
European real estate
Global real estate
Real estate multi-manager
Infrastructure equity

19.9
10.3
1.8
1.2
6.2

0.4
0.8
0.3
0.2
0.4

(1.7)
(0.4)
(0.3)
(0.2)
(0.9)

(1.3)
0.4
(0.5)

0.7
3.6
(0.2)
0.2
0.4

-

19.3
14.3
1.6
1.4
6.1

Total real assets

39.4

2.1

(3.5)

(1.4)

4.7

-

42.7

Total alternative investment solutions(including private credit) 1

23.2

2.4

(1.7)

0.7

0.1

-

24.0
15.0

12 months ended 31 December 2022

Total quantitative

5.5

3.2

(1.7)

1.5

0.5

7.5

Total liquidity

24.3

10.2

(13.4)

(3.2)

(0.3)

-

20.8

Total

253.1

36.5

(48.1)(11.6)(17.8)

7.5

231.2

1. Alternative investment solutions include opening AUM of £2.4bn, net inflows of £0.1bn and closing AUM of £1.8bn relating to private credit assets previouslyclassified as fixed income.
2. Corporate actions include the transfer of retained LBG AUM of c£7.5bn from Insurance Partners into Institutional (quantitatives), to better reflect how the
relationship is being managed.

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6.

Investments AUM by geography
31 Dec 2023
Institutional andRetail Wealth£bnInsurance
Partners£bnUK
Europe, Middle East and Africa (EMEA)
Asia Pacific (APAC)
Americas

102.0
51.9
15.7
41.6

Total AUM

211.2

31 Dec 2022
Total
£bn

Institutional andRetail Wealth£bnInsurance
Partners
£bn

Total
£bn

155.5
-

257.5
51.9
15.7
41.6

111.2
57.5
16.4
46.1

144.9
-

256.1
57.5
16.4
46.1

155.5

366.7

231.2

144.9

376.1

FINANCIAL INFORMATION

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Other information

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Contents

Glossary

Shareholder information
Forward-looking statements
Contact us

300
303
304
IBC

OTHER INFORMATION

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299

Glossary

Adjusted capital generation

Adjusted capital generation is part of the analysis of
movements in IFPR regulatory capital. Adjusted capital
generation is calculated as adjusted profit after tax lessreturns relating to pension schemes in surplus and interest
paid on other equity which do not benefit regulatory
capital. It also includes dividends from associates, joint
ventures and significant listed investments.

Adjusted net financing costs and investment
returnAdjusted net financing costs and investment return is acomponent of adjusted profit and relates to the returnfrom the net assets of the shareholder business, net ofcosts of financing. This includes the net assets in defined
benefit staff pension plans and net assets relating to thefinancing of subordinated liabilities.

Adjusted operating expenses

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

Adjusted operating profit

Adjusted operating profit before tax is the Group’s key
APM. Adjusted operating profit includes the results of theGroup’s three businesses: Investments, Adviser and ii1,
along with Other business and corporate costs.
It excludes the Group’s adjusted net financing costs andinvestment return.
Adjusted operating profit also excludes the impact of thefollowing items:– Restructuring and corporate transaction expenses.
Restructuring includes the impact of major regulatorychange.
– Amortisation and impairment of intangible assets
acquired in business combinations and through thepurchase 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 underadministration (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 forclients through our Platforms.
AUAdv is a measure of the total assets we advise ourclients 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 theportfolio or loan book with that company’s carbon-torevenue intensity. Carbon-to-revenue intensity is
calculated by dividing the sum of all apportioned
emissions, with the sum of all apportioned revenues acrossan investment portfolio or loan book. This metric gives anindication of how efficient companies in a portfolio or loan
book are at generating revenues per tonne of carbon
emitted.

Carbon offsetting

Carbon offsetting is an internationally recognised way totake 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 theatmosphere than there would otherwise have been. To
offset emissions we purchase the equivalent volume ofcarbon credits (independently verified emissions
reductions) to compensate for our operational carbon
emissions. We have been reviewing our use of offsetting,and although we continue to use offsets as a means ofaddressing our residual emissions, our prime objective isalways to reduce our environmental impact before
compensating for it.

Chief Operating Decision Maker
The executive leadership team.

Company
abrdn plc.

Cost/income ratio

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

Director

A director of the Company.
1. Personal has been renamed ii and includes Personal Wealth unless otherwise stated.

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

Effective tax rate

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

Executive leadership team (ELT)Our ELT leads across our businesses and supporting
functions globally and is responsible for executing andmonitoring progress on the delivery of our business plans.
The ELT also ensures we meet our obligations to ourclients, people, shareholders, regulators and partners.

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

FCA

Financial Conduct Authority of the United Kingdom.

Greenhouse gases

Greenhouse gases are the atmospheric gases responsible
for causing global warming (i.e. the greenhouse effect)and climate change. These gases, both natural andanthropogenic in origin include carbon dioxide, methaneand nitrous oxide. Other greenhouse gases which are lessprevalent but with a greater Global Warming Potential
include hydrofluorocarbons (HFCs), perfluorocarbons(PFCs) and sulphur hexafluoride (SF6).

Group or abrdn

Relates to the Company and its subsidiaries.

Internal Capital Adequacy and Risk
Assessment (ICARA)The ICARA is the means by which the Group assesses thelevels of capital and liquidity that adequately support all of
the relevant current and future risks in its business.

International Financial Reporting Standards(IFRS)

Investment performance has been aggregated using amoney weighted average of our assets undermanagement which are outperforming their respective
benchmark. The calculation of investment performance
uses a closing AUM weighting basis. Calculations forinvestment 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 therelevant investment management agreement orprospectus, as appropriate. The investment performance
calculation covers all funds that aim to outperform abenchmark, with certain assets excluded where thismeasure of performance is not appropriate or expected,
such as private markets and execution only mandates, aswell as replication tracker funds which aim to perform inline 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 toterminate investment management arrangements underwhich assets were managed by members of the Groupfor LBG entities. In its decision of March 2019, the arbitral
tribunal found that LBG was not entitled to terminate theseinvestment 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 tranchesfrom 24 July 2019. The Group continued to be
remunerated for its services in relation to the transferring
AUM until the final tranche withdrawal was completed in
H1 2022.

Market DisclosureThis IFPR disclosure complements the Own funds
requirement and Own funds threshold requirement withthe aim of improving market discipline by requiring
companies to publish certain details of their risks, capitaland risk management. Relevant disclosures are made in
the abrdn plc consolidated annual report and accounts
and in the accounts of the Group’s individual IFPRregulated entities, all of which can be found on the abrdn
plc Group’s website.

Net capital generation

Net capital generation is calculated as adjusted capital
generation less restructuring and corporate transaction
expenses (net of tax).

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

Investment Firms Prudential Regime (IFPR)The Investment Firms Prudential Regime is the FCA’s newprudential regime for MiFID investment firms. The regime
came into force on 1 January 2022.

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301

OTHER INFORMATION

Fair value through profit or loss (FVTPL)

Investment performanceGlossary continued

Net flows

Net flows represent gross inflows less gross outflows orredemptions. Gross inflows are new funds from clients.
Redemptions is the money withdrawn by clients during theperiod. Cash dividends which are retained on the ii
platform are included in net flows for the ii business only.
Cash dividends are included in market movements forother parts of the group including the Investments andAdviser platform businesses. We consider that thisdifferent approach is appropriate for the ii business as
cash dividend payments which are retained result in
additional income for ii, but are largely revenue neutral forthe rest of the group.

Net operating revenue

Net operating revenue is a component of adjusted
operating profit and includes revenue we generate fromasset 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 theclient, with our major indirect exposure to rising or fallingmarkets coming from higher or lower AMCs. Treasury
income is the interest earned on cash balances less theinterest paid to customers. Net operating revenue is shown
net of fees, cost of sales, commissions and similar charges.
Cost of sales include revenue from fund platforms which ispassed to the product provider.

Net operating revenue yield (bps)The net operating revenue yield is a measure that
illustrates the average margin being earned on the assetsthat we manage, administer or advise our clients on
excluding interactive investor. It is calculated as annualised
net operating revenue (excluding performance fees, ii1
and revenue for which there are no attributable assets)
divided by monthly average fee based assets. ii1 is
excluded from the calculation of net operating revenue
yield as fees charged for this business are primarily fromsubscriptions and trading transactions.

Net zero

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

Net Zero Directed Investing

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

Operational emissions

Operational emissions are the greenhouse gas emissions
related to the operations of our business. They are
categorised into three groups or ‘scopes’ in alignment with
the Greenhouse Gas Protocol. Corporate Accounting and
1. Relates to ii (excluding Personal Wealth).

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Reporting Standard. Scope 1 covers direct emissions from
owned or controlled sources. Scope 2 covers indirectemissions from the generation of purchased electricity,
steam, heating and cooling consumed by the reporting
company. Scope 3 includes all other indirect emissions that
occur in a company’s value chain. At abrdn we report on
Scope 1 and Scope 2 emissions, and a selection of Scope 3
categories, where deemed material, which includes ourworking from home emissions.

Own Funds Requirement

Under IFPR, the Own Funds Requirement is the higher ofthe permanent minimum capital requirement, the fixed
overhead requirements, and the K-factor requirement.
The K-factor requirement is the sum of: Risk-to-Client,
Risk-to-Market, and Risk-to-Firm K-factors.

Own Funds Threshold Requirement

Under IFPR, the Own Funds Threshold Requirement is thehigher of Own funds required on an ongoing basis and
Own funds required on a wind-down basis. The firm
identifies and measures risks of harm and determines thedegree to which systems and controls alone mitigate
those risks of harm (or risks of disorderly wind-down). Any
additional own funds needed, over and above the Own
funds requirement, to cover this identified residual risk isheld under the Own Funds Threshold Requirement.

Paris alignment‘Paris alignment’ refers to the alignment of public andprivate 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 inthis way will help to scale up the financial flows needed tostrengthen the global response to the threat of climatechange.

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 anddividend income relating to these investments are treatedas adjusting items for the purpose of determining theGroup’s adjusted profit. Our remaining stakes in HDFC
Asset Management and HDFC Life were sold during H1
2023. At 31 December 2023, Phoenix is the only significant
listed investment.

Subordinated liabilities

Subordinated liabilities are debts of a company which, inthe 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 theCompany in December 2021 are classified as other equity
as no contractual obligation to deliver cash exists.

Shareholder information
Registered office
1 George Street
Edinburgh
EH2 2LL
Scotlandunsure if it is from us, you can send it toemailscams@abrdn.com and we’ll let you know.

Secretary: Julian Baddeley

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

Registrar: Equiniti

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

Auditors: KPMG LLP

www.iosco.org/investor_protection/?subsection=investor_
alerts_portal

Company registration number: SC286832

Solicitors: Slaughter and May
Brokers: JP Morgan Cazenove, Goldman Sachs

Shareholder services* Calls are monitored/recorded to meet regulatory obligations and fortraining and quality purposes. Call charges will vary.

A Dividend Reinvestment Plan (DRIP) is provided by Equiniti
Financial Services Limited. The DRIP enables theCompany’s shareholders to elect to have their cash
dividend payments used to purchase the Company’s
shares. More information can be found atwww.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 guideare available on our website.
– Voting instructions for the Annual General Meeting will
be sent to you electronically.

Set up a share portal accountHaving 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 mailBy law, the Company has to make certain details from its
share register publicly available. As a result it is possible thatsome registered shareholders could receive unsolicitedmail, emails or phone calls. You could also be targeted byfraudulent ‘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 thecompany. If you get a social or email message and you’re

If you are a certificated shareholder, your name andaddress may appear on a public register. Using a nomineecompany to hold your shares can help protect yourprivacy. You can transfer your shares into the Companysponsored nominee – the abrdn Share Account – bycontacting Equiniti, or you could get in touch with yourbroker to find out about their nominee services. If you wantto limit the amount of unsolicited mail you receive
generally, please visit www.mpsonline.org.uk

Financial calendar
Full year results 2023

27 February

Ex-dividend date for 2023 final dividend

14 March

Record date for 2023 final dividend

15 March

Last date for DRIP elections for 2023 final dividend

10 April

Annual General Meeting – Edinburgh

24 April

Dividend payment date for 2023 final dividend

30 AprilHalf year results 2024

6 August

Ex-dividend date for 2024 interim dividend

15 AugustRecord date for 2024 interim dividend

16 AugustLast date for DRIP elections for 2024
interim dividend

4 September

Dividend payment date for 2024 interim dividend 24 September

Analysis of registered shareholdings at
31 December 2023
Range of shares

Number ofholders% of total
holders

Number of shares% of total
shares1-1,000
1,001-5,000
5,001-10,000
10,001-100,000#
100,001+

56,092
24,547
2,692
1,484
369

65.85
28.82
3.16
1.74
0.43

22,351,080
51,574,473
18,227,034
34,854,883
1,713,732,894

1.22
2.80
0.99
1.89
93.10

Total

85,184100.001,840,740,364

100.00# These figures include the Company-sponsored nominee – the abrdn
Share Account – which had 872,299 participants holding 629,199,041
shares.

Annual report 2023

abrdn.com

303

OTHER INFORMATION

We offer a wide range of shareholder services. For more
information, please:– Contact our registrar, Equiniti, who manage this service
for us. Their full details can be found on the inside backcover.
– For shareholder services call: +44 (0)371 384 2464*– Visit our share portal at www.abrdnshares.com

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

Forward-looking statements

This document may contain certain ‘forward-looking statements’ with respect to the financial condition, performance,
results, strategies, targets (including ESG targets), objectives, plans, goals and expectations of the Company and its
affiliates. These forward-looking statements can be identified by the fact that they do not relate only to historical or current
facts.
Forward-looking statements are prospective in nature and are not based on historical or current facts, but rather oncurrent 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 fromthe 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’, andwords of similar meaning (including the negative of these terms), may be forward-looking. These statements are based onassumptions and assessments made by the Company in light of its experience and its perception of historical trends,
current conditions, future developments and other factors it believes appropriate.
By their nature, all forward-looking statements involve risk and uncertainty because they are based on information
available at the time they are made, including current expectations and assumptions, and relate to future events and/or
depend on circumstances which may be or are beyond the Group’s control, including, among other things: UK domestic
and global political, economic and business conditions (such as the UK’s exit from the EU, the ongoing conflict between
Russia and Ukraine and the ongoing conflicts in the Middle East); market related risks such as fluctuations in interest rates
and exchange rates, and the performance of financial markets generally; the impact of inflation and deflation; the impact
of competition; the timing, impact and other uncertainties associated with future acquisitions, disposals or combinations
undertaken by the Company or its affiliates and/or within relevant industries; experience in particular with regard to
mortality and morbidity trends, lapse rates and policy renewal rates; the value of and earnings from the Group’s strategic
investments and ongoing commercial relationships; default by counterparties; information technology or data security
breaches (including the Group being subject to cyberattacks); operational information technology risks, including theGroup’s operations being highly dependent on its information technology systems (both internal and outsourced); natural
or man-made catastrophic events; the impact of pandemics; climate change and a transition to a low-carbon economy(including the risk that the Group may not achieve its relevant ESG targets); exposure to third-party risks including as aresult of outsourcing; the failure to attract or retain necessary key personnel; the policies and actions of regulatory
authorities and the impact of changes in capital, solvency or accounting standards, ESG disclosure and reporting
requirements, and tax and other legislation and regulations (including changes to the regulatory capital requirements) that
the Group is subject to in the jurisdictions in which the Company and its affiliates operate. As a result, the Group’s actual
future financial condition, performance and results may differ materially from the plans, goals, objectives and expectations
set forth in the forward-looking statements.
Neither the Company, nor any of its associates, directors, officers or advisers, provides any representation, assurance orguarantee 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 forwardlooking 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 particularstatement. 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 resultof 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.

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Contact us
Got a shareholder question? Contact our shareholder services team.
UK and overseas (excluding Germany and Austria)
phone
email
visit
mail

+44 (0)371 384 2464*
questions@abrdnshares.com
www.abrdnshares.com
abrdn Shareholder Services
Aspect House
Spencer Road
Lancing, West Sussex
BN99 6DA, United Kingdom

Germany and Austria
phone
email
visit
mail

+44 (0)371 384 2493*
fragen@abrdnshares.com
www.abrdnshares.com
abrdn Shareholder Services
Aspect House
Spencer Road
Lancing, West Sussex
BN99 6DA, United Kingdom* Calls are monitored/recorded to meet regulatory obligations and for training and quality purposes. Call charges will vary. s. Call charges will vary.

Extensive information, including many answers to frequently asked questions, can also be found online at www.abrdnshares.com

Designed by Black Sun Global (Strategic report) and abrdn plc(rest of Annual report and accounts)
Published by Adare SEC (Nottingham) Limited
Please remember that the value of shares can go down as well as up
and you may not get back the full amount invested or any income
from it. All figures and share price information have been calculated
as at 31 December 2023 (unless otherwise indicated).
This document has been published by abrdn plc for information
only. It is based on our understanding as at February 2024 and does
not provide financial or legal advice.
abrdn plc is registered in Scotland (SC286832) at 1 George Street,
Edinburgh EH2 2LL.
www.abrdn.com © 2024 abrdn, images reproduced under licence.
All rights reserved.
UKARA23 0224

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