Half-year Report - Part 2 of 3

Aug 09 2022 08:00 BSTSource: RNS

RNS Number : 3267V

abrdn PLC

09 August 2022

abrdn plc

Half year results 2022

Part 2 of 3

9 August 2022

2. Statement of Directors' responsibilities

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

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

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

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

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

· As per principle N of the UK Corporate Governance Code, the Half year results 2022 taken as a whole, present a fair, balanced and understandable assessment of the Company's position and prospects.

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

Changes to Directors during the period

As announced on 1 March 2022, Martin Pike and Jutta af Rosenborg retired from the Board at the conclusion of the AGM on 18 May, and Pam Kaur and Mike O'Brien were appointed to the Board on 1 June 2022.

By order of the Board

Sir Douglas Flint

Chairman

8 August 2022

Stephanie Bruce

Chief Financial Officer

8 August 2022

3. Independent review report to abrdn plc

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the Half year results for the six months ended 30 June 2022 which comprises the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity, condensed consolidated statement of cash flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half year results for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted for use in the UK and the Disclosure Guidance and Transparency Rules ('the DTR') of the UK's Financial Conduct Authority ('the UK FCA').

Basis for conclusion

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

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

Conclusions relating to going concern

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

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

Directors' responsibilities

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

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

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

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

Our responsibility

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

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

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

Richard Faulkner

for and on behalf of KPMG LLP

Chartered Accountants

Saltire Court

20 Castle Terrace

Edinburgh

EH1 2EG

8 August 2022

4. Financial Information

Condensed consolidated income statement

For the six months ended 30 June 2022

		6 months	6 months	Full Year
		2022	2021¹	2021
	Notes	£m	£m	£m

Revenue from contracts with customers	4.4(a)	731	853	1,685
Cost of sales	4.4(b)	(35)	(76)	(142)
Net operating revenue		696	777	1,543

Restructuring and corporate transaction expenses	4.6	(88)	(113)	(259)
Amortisation and impairment of intangibles acquired in business combinations and through the purchase of customer contracts	4.6	(52)	(51)	(99)
Staff costs and other employee-related costs	4.6	(266)	(305)	(604)
Other administrative expenses	4.6	(300)	(290)	(594)
Total administrative and other expenses		(706)	(759)	(1,556)

Net gains or losses on financial instruments and other income
Fair value movements and dividend income on significant listed investments	4.5	(271)	(37)	(227)
Other net gains or losses on financial instruments and other income	4.5	(27)	28	44
Total net gains or losses on financial instruments and other income		(298)	(9)	(183)
Finance costs		(15)	(15)	(30)
Profit on disposal of subsidiaries and other operations	4.2(b)	-	84	127
Profit on disposal of interests in associates	4.2(b)	6	68	1,236
Loss on impairment of interests in associates	4.12	(9)	-	-
Share of profit or loss from associates and joint ventures	4.12	6	(33)	(22)
(Loss)/profit before tax		(320)	113	1,115
Tax credit/(expense)	4.7	31	(11)	(120)
(Loss)/profit for the period		(289)	102	995
Attributable to:
Equity shareholders of abrdn plc		(296)	102	994
Other equity holders		6	-	-
Non-controlling interests - ordinary shares		1	-	1
		(289)	102	995
Earnings per share
Basic (pence per share)	4.8	(13.9)	4.8	46.8
Diluted (pence per share)	4.8	(13.9)	4.7	46.0

1. The Group made changes to the presentation of the consolidated income statement in the Annual report and accounts for the year ended 31 December 2021. The comparatives for the six months ended 30 June 2021 have been re-presented on the same basis. Refer Section 4.1(a)(ii) of the Basis of preparation for further details.

The Notes on pages 24 to 49 are an integral part of this condensed consolidated financial information.

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2022

		6 months	6 months	Full Year
		2022	2021	2021
	Notes	£m	£m	£m
(Loss)/profit for the period		(289)	102	995
Items that will not be reclassified subsequently to profit or loss:
Remeasurement (losses)/gains on defined benefit pension plans	4.14	(386)	(33)	117
Share of other comprehensive income of associates and joint ventures	4.12	-	12	12
Equity holder tax effect of items that will not be reclassified subsequently to profit or loss	4.7	-	4	3
Total items that will not be reclassified subsequently to profit or loss		(386)	(17)	132

Items that may be reclassified subsequently to profit or loss:
Fair value gains/(losses) on cash flow hedges		61	(2)	19
Exchange differences on translating foreign operations		37	(25)	(2)
Share of other comprehensive income of associates and joint ventures	4.12	(7)	(8)	(4)
Items transferred to the condensed consolidated income statement
Fair value (gains)/losses on cash flow hedges		(68)	3	(10)
Realised foreign exchange losses	4.2(b)	-	1	18
Share of other comprehensive income of associates and joint ventures	4.12	-	(9)	(9)
Equity holder tax effect of items that may be reclassified subsequently to profit or loss	4.7	2	(1)	(3)
Total items that may be reclassified subsequently to profit or loss		25	(41)	9
Other comprehensive income for the period		(361)	(58)	141
Total comprehensive income for the period		(650)	44	1,136

Attributable to:
Equity shareholders of abrdn plc		(657)	44		1,135
Other equity holders		6	-		-
Non-controlling interests - ordinary shares		1	-		1
		(650)	44		1,136

The Notes on pages 24 to 49 are an integral part of this condensed consolidated financial information.

Condensed consolidated statement of financial position

As at 30 June 2022

		6 months	6 months	Full Year
		2022	2021	2021
	Notes	£m	£m	£m
Assets
Intangible assets	4.11	2,116	674	704
Pension and other post-retirement benefit assets	4.14	1,221	1,454	1,607
Investments in associates and joint ventures accounted for using the equity method	4.12	282	381	274
Property, plant and equipment		193	208	187
Deferred tax assets		184	146	168
Financial investments	4.15	2,940	3,152	4,316
Receivables and other financial assets		1,237	1,521	680
Current tax recoverable		2	8	2
Other assets		115	134	105
Cash and cash equivalents		1,433	1,341	1,904
		9,723	9,019	9,947
Assets backing unit linked liabilities	4.15
Financial investments		1,114	1,396	1,430
Receivables and other unit linked assets		17	13	8
Cash and cash equivalents		25	32	33
		1,156	1,441	1,471
Total assets		10,879	10,460	11,418
Liabilities
Third party interest in consolidated funds	4.15	130	101	104
Subordinated liabilities		707	632	644
Pension and other post-retirement benefit provisions	4.14	17	51	38
Deferred income		6	10	5
Deferred tax liabilities		248	83	165
Current tax liabilities		21	22	27
Derivative financial liabilities	4.15	17	15	5
Other financial liabilities		1,507	1,341	1,046
Provisions		52	63	49
Other liabilities		11	8	8
		2,716	2,326	2,091
Unit linked liabilities	4.15
Investment contract liabilities		890	1,034	1,088
Third party interest in consolidated funds		256	399	378
Other unit linked liabilities		10	8	5
		1,156	1,441	1,471
Total liabilities		3,872	3,767	3,562
Equity
Share capital	4.13(a)	305	305	305
Shares held by trusts	4.13(b)	(152)	(173)	(171)
Share premium reserve	4.13(a)	640	640	640
Retained earnings		4,906	4,877	5,775
Other reserves		1,094	1,041	1,094
Equity attributable to equity shareholders of abrdn plc		6,793	6,690	7,643
Other equity		207	-	207
Non-controlling interests - ordinary shares		7	3	6
Total equity		7,007	6,693	7,856
Total equity and liabilities		10,879	10,460	11,418

The Notes on pages 24 to 49 are an integral part of this condensed consolidated financial information.

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2022

		Share capital	Shares held by trusts	Share premium reserve	Retained earnings¹	Other reserves¹	Total equity attributable to equity shareholders of abrdn plc	Other equity	Non-controlling interests - ordinary shares	Total equity
	Notes	£m	£m	£m	£m	£m	£m	£m	£m	£m
1 January 2022		305	(171)	640	5,775	1,094	7,643	207	6	7,856
(Loss)/profit for the period		-	-	-	(296)	-	(296)	6	1	(289)
Other comprehensive income for the period		-	-	-	(393)	32	(361)	-	-	(361)
Total comprehensive income for the period		-	-	-	(689)	32	(657)	6	1	(650)
Issue of share capital	4.13(a)	-	-	-	-	-	-	-	-	-
Dividends paid on ordinary shares	4.10	-	-	-	(154)	-	(154)	-	-	(154)
Interest paid on other equity		-	-	-	-	-	-	(6)	-	(6)
Reserves credit for employee share-based payments		-	-	-	-	11	11	-	-	11
Transfer to retained earnings for vested employee share-based payments		-	-	-	60	(60)	-	-	-	-
Shares acquired by employee trusts		-	(41)	-	-	-	(41)	-	-	(41)
Shares distributed by employee and other trusts and related dividend equivalents		-	60	-	(62)	-	(2)	-	-	(2)
Other movements		-	-	-	(23)	17	(6)	-	-	(6)
Aggregate tax effect of items recognised directly in equity		-	-	-	(1)	-	(1)	-	-	(1)
30 June 2022		305	(152)	640	4,906	1,094	6,793	207	7	7,007

1. Other movements includes the transfer of (£17m) previously recognised in the foreign currency translation reserve (which is part of Other reserves) to Retained earnings. In prior periods we considered that the functional currency of an intermediate subsidiary which holds the Group's investment in HDFC Life was US Dollars. We now consider that the functional currency should have been GBP, resulting in the current period transfer between reserves. Prior periods have not been restated as the impact on prior periods is not considered material. There is no impact on net assets for any period presented.

		Share capital	Shares held by trusts	Share premium reserve	Retained earnings	Other reserves	Total equity attributable to equity shareholders of abrdn plc	Non-controlling interests - ordinary shares	Total equity
	Notes	£m	£m	£m	£m	£m	£m	£m	£m
1 January 2021		306	(170)	640	4,970	1,064	6,810	3	6,813
Profit for the period		-	-	-	102	-	102	-	102
Other comprehensive income for the period		-	-	-	(34)	(24)	(58)	-	(58)
Total comprehensive income for the period		-	-	-	68	(24)	44	-	44
Issue of share capital	4.13(a)	-	-	-	-	-	-	-	-
Dividends paid on ordinary shares	4.10	-	-	-	(154)	-	(154)	-	(154)
Share buyback		(1)	-	-	-	1	-	-	-
Other movements in non-controlling interests in the period		-	-	-	5	-	5	-	5
Reserves credit for employee share-based payments		-	-	-	-	24	24	-	24
Transfer to retained earnings for vested employee share-based payments		-	-	-	24	(24)	-	-	-
Shares acquired by employee trusts		-	(37)	-	-	-	(37)	-	(37)
Shares distributed by employee and other trusts and related dividend equivalents		-	34	-	(37)	-	(3)	-	(3)
Aggregate tax effect of items recognised directly in equity		-	-	-	1	-	1	-	1
30 June 2021		305	(173)	640	4,877	1,041	6,690	3	6,693

		Share capital	Shares held by trusts	Share premium reserve	Retained earnings	Other reserves	Total equity attributable to equity shareholders of abrdn plc	Other equity	Non-controlling interests - ordinary shares	Total equity
	Notes	£m	£m	£m	£m	£m	£m	£m	£m	£m
1 January 2021		306	(170)	640	4,970	1,064	6,810	-	3	6,813
Profit for the year		-	-	-	994	-	994	-	1	995
Other comprehensive income for the year		-	-	-	119	22	141	-	-	141
Total comprehensive income for the year		-	-	-	1,113	22	1,135	-	1	1,136
Issue of share capital	4.13(a)	-	-	-	-	-	-	-	-	-
Issue of other equity		-	-	-	-	-	-	207	-	207
Dividends paid on ordinary shares	4.10	-	-	-	(308)	-	(308)	-	-	(308)
Share buyback		(1)	-	-	-	1	-	-	-	-
Other movements in non-controlling interests in the year		-	-	-	6	-	6	-	2	8
Reserves credit for employee share-based payments		-	-	-	-	43	43	-	-	43
Transfer to retained earnings for vested employee share-based payments		-	-	-	36	(36)	-	-	-	-
Shares acquired by employee trusts		-	(41)	-	-	-	(41)	-	-	(41)
Shares distributed by employee and other trusts and related dividend equivalents		-	40	-	(42)	-	(2)	-	-	(2)
Aggregate tax effect of items recognised directly in equity		-	-	-	-	-	-	-	-	-
31 December 2021		305	(171)	640	5,775	1,094	7,643	207	6	7,856

The Notes on pages 24 to 49 are an integral part of this condensed consolidated financial information.

Condensed consolidated statement of cash flows

For the six months ended 30 June 2022

			6 months		6 months		Full Year
			2022		2021		2021
	Notes		£m		£m		£m
Cash flows from operating activities
(Loss)/profit before tax				(320)		113		1,115
Change in operating assets				581		(184)		214
Change in operating liabilities				(272)		(46)		(209)
Adjustment for non-cash movements in investment income				(7)		5		-
Other non-cash and non-operating items				92		(2)		(1,099)
Dividends received from associates and joint ventures				-		-		15
Taxation paid¹				(18)		(14)		(22)
Net cash flows from operating activities				56		(128)		14

Cash flows from investing activities
Purchase of property, plant and equipment				(12)		(4)		(12)
Proceeds from sale of property, plant and equipment				-		3		-
Acquisition of subsidiaries and unincorporated businesses net of cash acquired				(1,378)		(61)		(145)
Disposal of subsidiaries net of cash disposed of				-		81		112
Acquisition of investments in associates and joint ventures				(2)		(7)		(11)
Proceeds in relation to contingent consideration²				-		54		54
Payments in relation to contingent consideration				(4)		(26)		(28)
Disposal of investments in associates and joint ventures				6		-		304
Taxation paid on disposal of investments in associates and joint ventures¹				-		-		(33)
Purchase of financial investments				(90)		(58)		(368)
Proceeds from sale or redemption of financial investments				1,151		321		938
Prepayment in respect of potential acquisition of customer contracts		4.2(b)(iii)		5		(60)		(56)
Acquisition of intangible assets				(1)		-		-
Net cash flows from investing activities				(325)		243		755
Cash flows from financing activities
Proceeds from issue of perpetual subordinated notes				-		-		208
Payment of lease liabilities - principal				(15)		(12)		(27)
Payment of lease liabilities - interest				(3)		(3)		(6)
Shares acquired by trusts				(41)		(37)		(41)
Interest paid on subordinated liabilities and other equity				(21)		(14)		(28)
Share buyback				-		(40)		(41)
Ordinary dividends paid		4.10		(154)		(154)		(308)
Net cash flows from financing activities				(234)		(260)		(243)
Net increase in cash and cash equivalents				(503)		(145)		526
Cash and cash equivalents at the beginning of the period				1,875		1,358		1,358
Effects of exchange rate changes on cash and cash equivalents				23		(11)		(9)
Cash and cash equivalents at the end of the period³				1,395		1,202		1,875
Supplemental disclosures on cash flows from operating activities
Interest paid				1		1		1
Interest received				16		10		22
Dividends received				61		54		122
Rental income received on investment property				2		2		2

1. Total taxation paid for the six months ended 30 June 2022 was £18m (six months ended 30 June 2021: £14m, 12 months ended 31 December 2021: £55m).

2. Proceeds in relation to contingent consideration for the six months ended 30 June 2021 and 12 months ended 31 December 2021 included £34m in relation to discontinued operations (six months ended 30 June 2022: £nil).

3. Comprises £1,458m (30 June 2021: £1,373m; 31 December 2021: £1,937m) of cash and cash equivalents, including cash and cash equivalents backing unit linked liabilities and (£63m) (30 June 2021: (£171m); 31 December 2021: (£62m)) of overdrafts which are reported in other financial liabilities in the condensed consolidated statement of financial position.

The Notes on pages 24 to 49 are an integral part of this condensed consolidated financial information.

Notes to the condensed consolidated financial statements

4.1 Presentation of the condensed consolidated financial statements

(a) Basis of preparation

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

The accounting policies for recognition, measurement, consolidation and presentation as set out in the Annual report and accounts for the year ended 31 December 2021 have been applied in the preparation of the condensed consolidated half year financial information except as noted below.

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

The Group has adopted the following new International Financial Reporting Standards (IFRSs), interpretations and amendments to existing standards, which are effective for annual periods beginning on or after 1 April 2021 and 1 January 2022.

Amendments to existing standards

· Covid-19-Related Rent Concessions beyond 30 June 2021 - Amendment to IFRS 16.

· Reference to the Conceptual Framework - Amendments to IFRS 3.

· Property, Plant and Equipment: Proceeds before Intended Use - Amendments to IAS 16.

· Onerous Contracts - Costs of Fulfilling a Contract - Amendments to IAS 37.

· Annual Improvements 2018-2020 cycle.

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

(a)(ii) Income statement presentational change

The presentation of the Group's consolidated income statement was revised in the Annual report and accounts for the year ended 31 December 2021 following a review of the financial statements. The reason for the change was to make the financial statements more relevant to users as the revised presentation of the consolidated income statement is now more consistent with asset management peers. The change included a revised presentation of the unit linked business returns which we consider makes the results easier to understand. The comparatives for the six months ended 30 June 2021 have been re-presented on the same basis.

The table below sets out the impact of adopting the revised income statement format on the comparatives for the six months ended 30 June 2021:

	H1 2021 as previously presented	Presentation changes	H1 2021 revised format
	£m	£m	£m	Notes
Income
Investment return	71	(71)	-	b

Revenue from contracts with customers	853	-	853
Cost of sales	-	(76)	(76)	a
Net operating revenue			777	a

Insurance contract premium income	-	-	-	b
Profit on disposal of interests in associates	68	(68)	-	e
Other income	92	(92)	-	b
Total income	1,084

Expenses
Insurance contracts claims and change in liabilities	-	-	-	b
Change in non-participating investment contract liabilities	(66)	66	-	b
Administrative and other expenses
Restructuring and corporate transaction expenses	(106)	(7)	(113)	d
Amortisation and impairment of intangibles acquired in business combinations and through the purchase of customer contracts	-	(51)	(51)	c
Staff costs and other employee-related costs	-	(305)	(305)	c
Other administrative expenses	(729)	439	(290)	c
Total administrative and other expenses	(835)		(759)

Net gains or losses on financial instruments and other income
Fair value movements and dividend income on significant listed investments	-	(37)	(37)	b
Other net gains or losses on financial instruments and other income	-	28	28	b
Total net gains or losses on financial instruments and other income	-	(9)	(9)	b
Change in liability for third party interest in consolidated funds	(22)	22	-	b
Finance costs	(15)	-	(15)
Total expenses	(938)

Profit on disposal of subsidiaries and other operations	-	84	84	f
Profit on disposal of interests in associates	-	68	68	e
Share of profit or loss from associates and joint ventures	(33)	-	(33)

Profit before tax	113		113

Note a: A new income statement line Net operating revenue is presented (six months ended 30 June 2021: £777m). Net operating revenue is the net of revenue from contracts with customers and cost of sales. Cost of sales includes commission expenses and other cost of sales which were previously presented within other administrative expenses.

Note b: A new income statement line of Net gains or losses on financial instruments and other income is also presented (six months ended 30 June 2021: (£9m)). This combines a number of line items previously shown separately on the face of the income statement with a more detailed breakdown disclosed in Note 4.5 of the financial statements.

Given the significance of the Fair value movements and dividend income on significant listed investments, these have been disclosed separately from Other net gains or losses on financial instruments and other income on the face of the condensed consolidated income statement.

The table below reconciles Net gains or losses on financial instruments and other income to previous line items:

30 June 2021			£m
Income items previously disclosed on the face of the condensed consolidated income statement
Investment return			71
Insurance contract premium income			-
Other income			92
Total income items previously disclosed on the face of the condensed consolidated income statement			163
Expense items previously disclosed on the face of the condensed consolidated income statement
Insurance contract claims and change in liabilities			-
Change in non-participating investment contract liabilities			(66)
Change in liability for third party interest in consolidated funds			(22)
Total expense items previously disclosed on the face of the condensed consolidated income statement			(88)
Total net gains or losses on financial instruments and other income before reclassifications			75
Less: Other income now separately disclosed as Profit on disposal of subsidiaries and other operations			(84)
Total net gains or losses on financial instruments and other income after reclassifications			(9)
Split as:
Fair value movements and dividend income on significant listed investments			(37)
Net gains or losses on financial instruments and other income - non-unit linked business - excluding significant listed investments			24
Net gains or losses on financial instruments and other income - unit linked business			4
Total other net gains or losses on financial instruments and other income			28
Total net gains or losses on financial instruments and other income			(9)

The expense items included in the table above relate to unit linked business. We consider that offsetting the net gains or losses on unit linked financial assets (included in investment return in the table above) and the net gains or losses on unit linked financial liabilities (included in change in non-participating investment contract liabilities in the table above) on the face of the condensed consolidated income statement reflects the substance of the transactions, as changes in the value of the unit linked assets results in corresponding changes in the value of unit linked liabilities with no net impact on profit after tax.

Profit on disposal of subsidiaries and other operations is now shown separately due to materiality.

Note c: Presentational changes have also been made to Administrative and other expenses. The following table reconciles Other administrative expenses as previously presented at 30 June 2021 to the re-presented 30 June 2021 Other administrative expenses.

30 June 2021			£m
Other administrative expenses as previously presented			729
Less:
Cost of sales now included in net operating revenue (see Note a above)			(76)
Staff costs and other employee-related costs now presented separately in the condensed consolidated income statement			(305)
Amortisation and impairment of intangibles acquired in business combinations and through the purchase of customer contracts now presented separately in the condensed consolidated income statement			(51)
Other administrative expenses reclassified to restructuring and corporate transaction expenses (see Note d below)			(7)
Re-presented other administrative expenses			290

Note d: Restructuring and corporate transaction expenses was already separately presented but, as shown above, we have reclassified £7m of other administrative expenses for the six months ended 30 June 2021 to restructuring and corporate transaction expenses:

30 June 2021			£m
Restructuring and corporate transaction expenses as previously presented			106
Add: Impairment of internally developed software and right-of-use assets as a result of restructuring			7
Re-presented restructuring and corporate transaction expenses			113

This additional element of restructuring costs was disclosed in Note 4.7 of the 30 June 2021 Group condensed consolidated financial statements, but has now been included on the face of the condensed consolidated income statement.

Note e: The Profit on disposal of interests in associates line item (six months ended 30 June 2021: £68m) is unchanged, but is now presented with the Profit on disposal of subsidiaries and other operations and the other income statement items relating to associates and joints ventures, namely Loss on impairment of interests in associates and Share of profit or loss from associates and joint ventures.

Note f: As described in Note b above, Profit on disposal of subsidiaries and other operations (six months ended 30 June 2021: £84m) which was previously included in Other income is now separately disclosed on the face of the condensed consolidated income statement.

(b) Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and financial position, are set out in the Management report and in the Annual report and accounts 2021 Strategic report. This includes details on our liquidity and capital positions and our principal risks, including the impacts of the macroeconomic environment and rising inflation, the Ukraine conflict and COVID-19 on these principal risks.

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

· The Group has cash and liquid resources of £1.7bn at 30 June 2022. In addition the Company has a revolving credit facility of £400m as part of our contingency funding plans which is due to mature in 2025 and remains undrawn.

· The Group's indicative regulatory capital surplus on an IFPR basis was £0.6bn in excess of capital requirements at
30 June 2022. The regulatory capital surplus does not include the value of the Group's significant listed investments HDFC Asset Management, HDFC Life and Phoenix.

· The Group performs regular stress and scenario analysis as described in the Annual report and accounts 2021 Viability statement. The diverse range of management actions available meant the Group was able to withstand these extreme stresses.

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

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

(c) Condensed consolidated half year financial information

This condensed consolidated half year financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Additionally, the comparative figures for the financial year ended 31 December 2021 are not the Company's statutory accounts for that financial year. The statutory accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The condensed consolidated half year financial information has been reviewed, not audited.

4.2 Acquisitions and disposals

(a) Acquisitions

(a)(i) Current period acquisitions of subsidiaries

Interactive Investor (ii)

On 27 May 2022, abrdn plc purchased 100% of the issued share capital of Antler Holdco Limited (Antler), the parent company for the interactive investor group of companies. ii is the no.1 UK subscription-based trading platform and the no.2 UK direct investing platform, by assets under administration. The cash outflow at the completion of the acquisition was £1,496m, which comprised consideration of £1,485m and payments made by abrdn to fund the settlement of ii transaction liabilities as part of the transaction of £11m. The acquisition of ii provides abrdn with direct entry to the high-growth digitally enabled direct investing market, accessing new customer segments and capabilities. This will allow abrdn customers to choose from a wide spectrum of wealth services, spanning self-directed investing through to high-touch financial advice, depending on their specific needs over their financial life.

At the acquisition date the consideration, net assets acquired and resulting goodwill were as follows:

27 May 2022		£m
Cash consideration^1,2		1,485
Fair value of net assets acquired
Intangible assets
Customer relationships		421
Brand		16
Technology and other intangibles		32
Property, plant and equipment		8
Deferred tax assets		5
Receivables and other financial assets³		411
Other assets		7
Cash and cash equivalents		107
Total assets		1,007
Other financial liabilities		(400)
Provisions		(1)
Deferred tax liabilities		(114)
Total liabilities		(515)
Goodwill		993

1. Cash consideration includes £61m paid by abrdn to redeem discount notes issued by Antler as part of the acquisition transaction. Not included in the cash consideration is £11m of payments made by abrdn to fund the settlement of ii transaction liabilities. These liabilities are included within other financial liabilities of ii at the acquisition date. This £11m cash outflow, together with the cash consideration, is included in Acquisition of subsidiaries and unincorporated businesses net of cash acquired in the consolidated statement of cash flows.

2. Cash consideration includes £10m paid to Richard Wilson the CEO of ii which is subject to a Reinvestment Agreement. Under the Reinvestment Agreement Mr Wilson was required to invest at least £5m in abrdn shares and at least a further £3m in abrdn shares or funds managed by the abrdn group. The Reinvestment Agreement contains restrictions on the sale of abrdn shares and fund units acquired which fall away in three equal tranches over a three-year period following completion.

3. The estimated contractual cash flow not expected to be collected is not material and therefore the gross contractual amounts receivable is materially in line with the fair value.

The customer relationships intangible asset relates to ii's customer base at the date of acquisition. The key assumptions in measuring the fair value of this intangible asset at acquisition date were as follows:

· Revenue per customer growth - comprises expected growth in account fees, treasury income and trading transactions revenue from ii business plans. Treasury income is the interest earned on cash balances less the interest paid to customers and was assumed to grow in line with assets under administration. Market interest rates were assumed to remain at or above 1%.

· Customer attrition - customer attrition represents the expected rate of existing customers leaving ii. This assumption was primarily based on historical attrition rates and was assumed to remain constant over time.

· Operating margin - this assumption was based on the current operating margins adjusted for marketing costs which are not attributable to the servicing of existing customers. Expected future operating margins are adjusted to take into account that increased treasury income does not result in higher costs.

· Discount rate - this assumption was based on a market participant weighted average cost of capital.

The above assumptions, and in particular the customer attrition assumption, were also used to determine the 15-year useful economic life at the acquisition date. The reducing balance method of amortisation is considered appropriate for this intangible, consistent with the attrition rate being constant over time.

The technology intangible asset relates to ii's internally generated technology which has been valued based on the replacement cost method. The brand intangible asset relates to the interactive investor brand and has been valued based on applying an assumed royalty rate to revenue forecasts.

The goodwill arising on acquisition of ii is mainly attributable to expected future cash flows from new customers, the quality and experience of the ii executive team and employees, and revenue synergies in our Investments and Personal segments. The goodwill is not expected to be deductible for tax purposes.

The revenue from contracts with customers and profit contributed to the Group's condensed consolidated income statement for the six months ended 30 June 2022 from the acquired ii business were £13m and £3m respectively. The profit contributed excludes amortisation of intangible assets acquired through business combinations. If the acquisition had occurred on 1 January 2022, the Group's total revenue from contracts with customers for the period would have increased by £65m to £796m and the loss would have increased by £4m to £293m. This increase in the loss includes increased amortisation of intangible assets acquired through business combinations (net of deferred tax) of £24m.

As part of the transaction, abrdn plc has also agreed the following retention incentive schemes which are not recognised as part of the business combination:

· A retention scheme for senior ii executives. These are awards over abrdn plc shares with a vesting period of up to 3 years and are subject to pre-determined performance metrics. The value of abrdn plc shares subject to these awards was c£25m at date of grant. The awards are accounted for as post completion share based payments and spread over the relevant vesting periods and will be recognised in Restructuring and corporate transaction expenses in the condensed consolidated income statement.

· Cash and share incentive retention awards to the wider ii workforce with vesting periods of up to c3 years. These awards are funded by the proceeds received by the ii employee benefit trust as part of the transaction. These are accounted for as post completion share based payments and remuneration and are spread over the relevant vesting periods and will be recognised in Restructuring and corporate transaction expenses in the condensed consolidated income statement.

Corporate transaction deal costs amounted to £27m of which £13m and £14m were included within Restructuring and corporate transaction expenses in the 6 months ended 30 June 2022 and 12 months ended 31 December 2021 respectively (6 months ended 30 June 2021: £nil).

(a)(ii) Prior period acquisitions of subsidiaries

On 1 April 2021, Aberdeen Asset Management PLC (AAM PLC) purchased 60% of the membership interests in Tritax, a specialist logistics real estate fund manager (the acquisition of Tritax). The initial cash consideration payable at the completion of the acquisition was £64m. Subject to the satisfaction of certain conditions, an additional contingent deferred earn-out is expected to be payable to acquire the remaining 40% of membership interests in Tritax should the selling Tritax partners choose to exercise three put options in each of years ended 31 March 2024, 2025 and 2026. The amount payable is linked to the EBITDA of the Tritax business in the relevant period. The Group will also have the right to purchase any outstanding membership interests at the end of the five-year period through exercising a call option. Based on the transaction terms, Tritax has been fully consolidated from 1 April 2021 and no non-controlling interest is recognised in the Group's total equity in relation to the 40% of the membership interests in Tritax subject to the put and call options. A contingent consideration financial liability is recognised at fair value in relation to the earn-out payments (under the put and call options) and the expected non-discretionary allocation of profit payments to the holders of the 40% membership interests up to the date of the exercise of the options. Refer Note 4.15(b)(iv) for further details on the contingent consideration liability.

In addition, on 29 October 2021, AAM PLC purchased 100% of the issued share capital of the investing insights platform Finimize.

(b) Disposals

(b)(i) Prior period disposal of subsidiaries and other operations

During 2021, the Group made two material disposals of subsidiaries and other operations:

· On 30 June 2021, the Group completed the sale of Parmenion Capital Partners LLP (Parmenion) to Preservation Capital Partners.

· On 30 September 2021, the Group completed the sale of its Bonaccord US private market business (Bonaccord) to P10 Holdings Inc. (P10).

Other disposals included the sale of the Nordics real estate business to DEAS Asset Management A/S on 31 May 2021, and the sale of Hark Capital US private market business to P10 on 30 September 2021.

Profit on disposal of subsidiaries and other operations in prior periods have been summarised below.

	2021 £m
Disposal of Parmenion	73
Other disposals	11
Profit on disposal of subsidiaries and other operations for the six months ended 30 June 2021	84
Disposal of Bonaccord	39
Other disposals	4
Profit on disposal of subsidiaries and other operations for the 12 months ended 31 December 2021	127

On disposal, a loss of £1m was recycled from the translation reserve and was included in determining the profit on disposal of subsidiaries and other operations for the six months ended 30 June 2021 and the 12 months ended 31 December 2021.

(b)(ii) Current period disposal of associates

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

(b)(iii) Prior period disposal and reclassification of associates

Profit on disposal of associates in prior periods have been summarised below.

	2021 £m
Reclassification of Phoenix Group Holdings plc (Phoenix)	68
Profit on disposal of interests in associates for the six months ended 30 June 2021	68
Sale of equity shares in HDFC Asset Management and reclassification	1,168
Profit on disposal of interests in associates for the 12 months ended 31 December 2021	1,236

On disposal and reclassification, a loss of £17m was recycled from the translation reserve and was included in determining the profit on disposal of interests in associates for the 12 months ended 31 December 2021 (six months ended 30 June 2021: £nil). In addition, other comprehensive income gains of £9m were recycled from retained earnings and were included in determining the profit on disposal of interests in associates for the six months ended 30 June 2021 and the 12 months ended 31 December 2021.

Phoenix

On 23 February 2021, the Group announced details of the simplification and extension of the strategic partnership between the Group and Phoenix. Following the changes to the commercial agreements, in particular in relation to the licencing of the 'Standard Life' brand, our judgement was that Phoenix should no longer be accounted for as an associate with effect from 23 February 2021. The Group's shareholding in Phoenix, which remained at 14.4%, was therefore reclassified from an investment in associates accounted for using the equity method to equity securities and interests in pooled investment funds measured at fair value.

As part of the agreement, the Group announced the purchase of certain products in the Phoenix Group's savings business offered through abrdn's Wrap platform, comprising a self-invested pension plan (SIPP) and an onshore bond product; together with the Phoenix Group's trustee investment plan (TIP) business for UK pension scheme clients. The transaction is not expected to complete before 2024 and is subject to regulatory and court approvals. The upfront consideration paid by the Group in February 2021 was £62.5m, which is offset in part by payments from Phoenix to the Group relating to profits of the products prior to completion of the legal transfer. The net amount of consideration paid is included in prepayments in the condensed consolidated statement of financial position with cash movements in relation to the consideration included in prepayment in respect of potential acquisition of customer contracts in the condensed consolidated statement of cash flows.

HDFC Asset Management

On 29 September 2021, the Group completed a sale of equity shares in HDFC Asset Management on the National Stock Exchange of India Limited and BSE Limited. The gain on sale and the gain on reclassification from an associate to an equity investment can be summarised as follows:

		2021 £m
Gain on sale of 10,650,000 equity shares in HDFC Asset Management sold through a Bulk Sale on 29 September 2021		271
Gain on reclassification of remaining 34,578,305 equity shares in HDFC Asset Management from an associate to equity investment on 29 September 2021		897
Gains on disposal and reclassification of HDFC Asset Management for the 12 months ended 31 December 2021		1,168

Following the sale, the Group's shareholding in HDFC Asset Management was 34,578,305 equity shares or 16.22% and HDFC Asset Management was therefore no longer considered to be an associate of the Group. The Group's investment in HDFC Asset Management was reclassified from an investment in associates accounted for using the equity method to equity securities and interests in pooled investment funds measured at fair value.

The Group's shareholdings in Phoenix and HDFC Asset Management are now considered, along with HDFC Life, as significant listed investments for the purpose of determining the Group's adjusted profit. Refer Note 4.9(a) for changes in the Group's significant listed investments in the period ended 30 June 2022.

4.3 Segmental analysis

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

(a) Basis of segmentation

(a)(i) Current reportable segments

Investments

Our global asset management business which provides investment solutions for Institutional, Wholesale and Insurance clients. The Investment segment includes the Tritax and Finimize businesses following their acquisitions during 2021.

Adviser

Our market-leading UK financial adviser business which provides services through the Wrap and Elevate platforms to wealth managers and advisers.

Personal

Our Personal business comprises Personal Wealth (which combines our financial planning business abrdn Financial Planning, our digital direct-to-consumer services and discretionary fund management services provided by abrdn Capital) and interactive investor following the completion of the acquisition in the six months ended 30 June 2022. Refer Note 4.2(a)(i) for further details.

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

Corporate/strategic

Corporate/strategic mainly comprises certain corporate costs. The comparative periods also include a business held for sale (Parmenion, the sale of which completed on 30 June 2021).

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

(b) Reportable segments - adjusted profit and revenue information

(b)(i) Analysis of adjusted profit

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

		Investments	Adviser	Personal	Corporate/ strategic	Total
6 months 2022	Notes	£m	£m	£m	£m	£m
Fee based revenue		546	92	58	-	696
Adjusted operating expenses		(470)	(54)	(51)	(6)	(581)
Adjusted operating profit		76	38	7	(6)	115
Adjusted net financing costs and investment return						(16)
Adjusted profit before tax						99
Tax on adjusted profit						(13)
Adjusted profit after tax						86
Adjusted for the following items
Restructuring and corporate transaction expenses	4.6					(88)
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts						(52)
Profit on disposal of interests in associates	4.2(b)					6
Change in fair value of significant listed investments						(313)
Dividends from significant listed investments						42
Share of profit or loss from associates and joint ventures¹						6
Impairment of interests in associates						(9)
Other	4.9					(11)
Total adjusting items including results of associates and joint ventures						(419)
Tax on adjusting items						44
Profit attributable to other equity holders						(6)
Profit attributable to non-controlling interests - ordinary shares						(1)
Loss for the period attributable to equity shareholders of abrdn plc						(296)
Profit attributable to other equity holders						6
Profit attributable to non-controlling interests - ordinary shares						1
Loss for the period						(289)

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

Fee based revenue is reported as the measure of revenue in the analysis of adjusted operating profit and relates to revenues generated from external customers.

		Investments	Adviser	Personal	Corporate/ strategic	Total
6 months 2021	Notes	£m	£m	£m	£m	£m
Fee based revenue		613	87	41	14	755
Adjusted operating expenses		(487)	(50)	(37)	(21)	(595)
Adjusted operating profit		126	37	4	(7)	160
Adjusted net financing costs and investment return						3
Adjusted profit before tax						163
Tax on adjusted profit						(13)
Adjusted profit after tax						150
Adjusted for the following items
Restructuring and corporate transaction expenses	4.6					(113)
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts						(51)
Profit on disposal of subsidiaries and other operations	4.2(b)					84
Profit on disposal of interests in associates	4.2(b)					68
Change in fair value of significant listed investments						(72)
Dividends from significant listed investments						35
Share of profit or loss from associates and joint ventures¹						(33)
Other	4.9					32
Total adjusting items including results of associates and joint ventures						(50)
Tax on adjusting items						2
Profit for the period						102

1. Share of associates' and joint ventures' profit or loss primarily comprises the Group's share of results of HASL, Virgin Money Unit Trust Managers (Virgin Money UTM), HDFC Asset Management and Phoenix (until 22 February 2021).

		Investments	Adviser	Personal	Corporate/ strategic	Total
Full Year 2021	Notes	£m	£m	£m	£m	£m
Fee based revenue		1,231	178	92	14	1,515
Adjusted operating expenses		(978)	(104)	(84)	(26)	(1,192)
Adjusted operating profit		253	74	8	(12)	323
Adjusted net financing costs and investment return						-
Adjusted profit before tax						323
Tax on adjusted profit						(26)
Adjusted profit after tax						297
Adjusted for the following items
Restructuring and corporate transaction expenses	4.6					(259)
Amortisation and impairment of intangible assets acquired in business combinations and through the purchase of customer contracts						(99)
Profit on disposal of subsidiaries and other operations	4.2(b)					127
Profit on disposal of interests in associates	4.2(b)					1,236
Change in fair value of significant listed investments						(298)
Dividends from significant listed investments						71
Share of profit or loss from associates and joint ventures¹						(22)
Other	4.9					36
Total adjusting items including results of associates and joint ventures						792
Tax on adjusting items						(94)
Profit attributable to non-controlling interests - ordinary shares						(1)
Profit for the year attributable to equity shareholders of abrdn plc						994
Profit attributable to non-controlling interests - ordinary shares						1
Profit for the year						995

1. Share of associates' and joint ventures' profit or loss primarily comprises the Group's share of results of HASL, Virgin Money Unit Trust Managers (Virgin Money UTM), Phoenix (until 22 February 2021) and HDFC Asset Management (until 29 September 2021).

4.4 Net operating revenue

(a) Revenue from contracts with customers

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

	6 months 2022	6 months 2021	Full Year 2021
	£m	£m	£m
Investments
Management fee income - Institutional and Wholesale¹	463	525	1,043
Management fee income - Insurance¹	89	97	200
Performance fees and carried interest	12	51	99
Other revenue from contracts with customers	16	34	54
Revenue from contracts with customers for the investments segment	580	707	1,396
Adviser	93	88	180
Personal	58	41	92
Corporate/strategic - Parmenion fund platform fee income	-	17	17
Total revenue from contracts with customers	731	853	1,685

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

(b) Cost of sales

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

	6 months 2022	6 months 2021	Full Year 2021
	£m	£m	£m
Cost of sales
Commission expenses	32	46	87
Other cost of sales	3	30	55
Total cost of sales	35	76	142

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

(c) Reconciliation of revenue from contracts with customers to fee based revenue

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

	Investments			Adviser			Personal				Corporate/strategic			Total
	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022		30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m		£m	£m	£m	£m	£m
Revenue from contracts with customers	580	707	1,396	93	88	180	58	41	92	-		17	17	731	853	1,685
Cost of sales	(34)	(72)	(137)	(1)	(1)	(2)	-	-	-	-		(3)	(3)	(35)	(76)	(142)
Net operating revenue	546	635	1,259	92	87	178	58	41	92	-		14	14	696	777	1,543
Other differences	-	(22)	(28)	-	-	-	-	-	-	-		-	-	-	(22)	(28)
Fee based revenue	546	613	1,231	92	87	178	58	41	92	-		14	14	696	755	1,515

Other differences primarily relate to amounts presented in a different line item of the condensed consolidated income statement and items classified as adjusting items. There were no other differences for the six months ended 30 June 2022. For the six months ended 30 June 2021 and 12 months ended 31 December 2021, these primarily relate to the net release of deferred income of £25m following the transfer of workplace pensions marketing staff to Phoenix in May 2021.

4.5 Net gains or losses on financial instruments and other income

	6 months 2022	6 months 2021¹	Full Year 2021
	£m	£m	£m
Fair value movements and dividend income on significant listed investments
Fair value movements on significant listed investments (other than dividend income)	(313)	(72)	(298)
Dividend income from significant listed investments	42	35	71
Total fair value movements and dividend income on significant listed investments	(271)	(37)	(227)

Non-unit linked business - excluding significant listed investments
Net gains or losses on financial instruments at fair value through profit or loss	(54)	13	20
Interest and similar income from financial instruments at amortised cost	8	5	10
Foreign exchange losses on financial instruments at amortised cost	10	(2)	(1)
Other income	6	8	8
Net gains or losses on financial instruments and other income - non-unit linked business - excluding significant listed investments	(30)	24	37
Unit linked business
Net gains or losses on financial instruments at fair value through profit or loss
Net gains or losses on financial assets at fair value through profit or loss	(156)	92	174
Change in non-participating investment contract financial liabilities	129	(66)	(124)
Change in liability for third party interests in consolidated funds	30	(22)	(43)
Total net gains or losses on financial instruments at fair value through profit or loss	3	4	7
Net gains or losses on financial instruments and other income - unit linked business²	3	4	7
Total other net gains or losses on financial instruments and other income	(27)	28	44

Total net gains or losses on financial instruments and other income	(298)	(9)	(183)

2. In addition to the Net gains or losses on financial instruments and other income - unit linked business of £3m (six months ended 30 June 2021: £4m, 12 months ended 31 December 2021: £7m), there are administrative expenses and policyholder tax of £1m (six months ended 30 June 2021: £2m, 12 months ended 31 December 2021: £3m) and £2m (six months ended 30 June 2021: £2m, 12 months ended 31 December 2021: £4m) respectively. The result attributable to unit linked business for the year is therefore £nil (six months ended 30 June 2021: £nil, 12 months ended 31 December 2021: £nil).

4.6 Administrative and other expenses

	6 months 2022	6 months 2021¹	Full Year 2021
	£m	£m	£m
Restructuring and corporate transaction expenses²	88	113	259
Amortisation and impairment of intangibles acquired in business combinations and through the purchase of customer contracts
Amortisation of intangibles acquired in business combinations	47	44	87
Amortisation of intangibles acquired through the purchase of customer contracts	5	7	12
Total amortisation and impairment of intangibles acquired in business combinations and through the purchase of customer contracts	52	51	99
Staff costs and other employee-related costs	266	305	604
Other administrative expenses²	300	290	594
Total administrative and other expenses³	706	759	1,556

2. For the period ended 30 June 2021, £7m of expenses previously presented in other administrative expenses have been reclassified as restructuring and corporate transaction expenses. Refer Section 4.1(a)(ii) of the Basis of preparation for further details.

3. Total administrative and other expenses includes £1m (six months ended 30 June 2021: £2m, 12 months ended 31 December 2021: £3m) relating to unit linked business.

The restructuring and corporate transaction expenses for the six months ended 30 June 2022 mainly relate to ongoing transformation costs including severance, platform transformation and business integration. Expenses for the six months ended 30 June 2022 also includes £13m of ii corporate transaction deal costs.

4.7 Tax expense

	6 months 2022	6 months 2021	Full Year 2021
	£m	£m	£m
Current tax:
UK	2	3	5
Overseas	11	13	60
Adjustment to tax expense in respect of prior years	(3)	6	11
Total current tax	10	22	76
Deferred tax:
Deferred tax expense/(credit) arising from the current period	(42)	(13)	36
Adjustment to deferred tax in respect of prior years	1	2	8
Total deferred tax	(41)	(11)	44
Total tax (credit)/expense¹	(31)	11	120

1. The tax credit of £31m (six months ended 30 June 2021: tax expense of £11m, 12 months ended 31 December 2021: tax expense £120m) includes a tax expense of £2m (six months ended 30 June 2021: £2m, 12 months ended 31 December 2021: £4m) relating to unit linked business.

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

	6 months 2022	6 months 2021	Full Year 2021
	£m	£m	£m
Tax relating to defined benefit pension plan deficits	-	(4)	(3)
Equity holder tax effect relating to items that will not be reclassified subsequently to profit or loss	-	(4)	(3)
Tax relating to fair value gains and losses recognised on cash flow hedges	15	-	6
Tax relating to cash flow hedge gains and losses transferred to condensed consolidated income statement	(17)	1	(3)
Equity holder tax effect relating to items that may be reclassified subsequently to profit or loss	(2)	1	3
Tax relating to other comprehensive income	(2)	(3)	-

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

4.8 Earnings per share

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

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

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

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

	6 months 2022	6 months 2021	Full Year 2021
	£m	£m	£m
Adjusted profit before tax	99	163	323
Tax on adjusted profit	(13)	(13)	(26)
Adjusted profit after tax	86	150	297
Attributable to:
Other equity holders	(6)	-	-
Non-controlling interests - ordinary shares	(1)	-	(1)
Adjusted profit after tax attributable to equity shareholders of abrdn plc	79	150	296
Total adjusting items including results of associates and joint ventures	(419)	(50)	792
Tax on adjusting items	44	2	(94)
(Loss)/profit attributable to equity shareholders of abrdn plc	(296)	102	994

	6 months 2022	6 months 2021	Full Year 2021
	Millions	Millions	Millions
Weighted average number of ordinary shares outstanding	2,130	2,115	2,123
Dilutive effect of share options and awards	17	41	36
Weighted average number of diluted ordinary shares outstanding	2,147	2,156	2,159

In accordance with IAS 33, no share options and awards have been treated as dilutive for the six months ended 30 June 2022 due to the loss attributable to equity holders of abrdn plc in that period. This resulted in the adjusted diluted earnings per share being calculated using a weighted average number of ordinary shares of 2,130 million.

	6 months 2022	6 months 2021	Full Year 2021
	Pence	Pence	Pence
Basic earnings per share	(13.9)	4.8	46.8
Diluted earnings per share	(13.9)	4.7	46.0
Adjusted earnings per share	3.7	7.1	13.9
Adjusted diluted earnings per share	3.7	7.0	13.7

4.9 Adjusted profit and adjusting items

Adjusted profit excludes the impact of the following items:

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

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

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

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

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

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

· Fair value movements in contingent consideration.

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

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

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

(a) Significant listed investments

During 2021, the Group's investments in Phoenix and HDFC Asset Management were reclassified from associates to equity securities. Refer Note 4.2(b)(iii) for further details. The Group's investment in HDFC Life was similarly reclassified in 2020 and all three are now considered significant listed investments of the Group. Fair value movements on these investments are included as adjusting items, which is aligned with our treatment of gains on disposal for these holdings when they were classified as associates. Dividends from significant listed investments are also included as adjusting items, as these result in fair value movements.

During the six months ended 30 June 2022, the Group's holding in Phoenix was reduced by 4% to 10.4% following the sale of 39,981,442 ordinary shares on 28 January 2022. The total consideration net of taxes and expenses was £263 million.

(b) Other

Other adjusting items for the six months ended 30 June 2022 includes a gain of £6m (six months ended 30 June 2021: £nil, 12 months ended 31 December 2021: loss of £3m) for net fair value movements in contingent consideration. Other adjusting items for the six months ended 30 June 2022 also includes a loss of £12m (six months ended 30 June 2021: profit of £5m, 12 months ended 31 December 2021: profit of £10m) in relation to market losses on the investments held by the abrdn Financial Fairness Trust which is consolidated by the Group. The assets of the abrdn Financial Fairness Trust are restricted to be used for charitable purposes.

Other adjusting items for the six months ended 30 June 2021 and 12 months ended 31 December 2021 also included a net release of deferred income of £25m (30 June 2022: £nil) following the transfer of workplace pensions marketing staff to Phoenix in May 2021 and £5m and £8m respectively for initial gains on derecognition of right-of-use assets relating to subleases classified as finance leases.

4.10 Dividends on ordinary shares

	6 months 2022		6 months 2021		Full Year 2021
	Pence per share	£m¹	Pence per share	£m	Pence per share	£m
Dividends paid in reporting period
Current year interim dividend	-	-	-	-	7.30	154
Final dividend for prior year	7.30	154	7.30	154	7.30	154
Total dividends paid in reporting period		154		154		308

Dividends relating to reporting period
Interim dividend	7.30	153	7.30	154	7.30	154
Final dividend	-	-	-	-	7.30	154
Total dividends relating to reporting period		153		154		308

1. Estimated for the current period interim recommended dividend.

Subsequent to 30 June 2022, the Board has declared an interim dividend for 2022 of 7.30 pence per ordinary share (interim 2021: 7.30 pence), an estimated £153m in total (interim 2021: £154m). The dividend is expected to be paid on 27 September 2022 and will be recorded as an appropriation of retained earnings in the financial statements for the year ended 31 December 2022.

4.11 Intangible assets

	30 Jun 2022	30 Jun 2021	31 Dec 2021
	£m	£m	£m
Acquired through business combinations
Goodwill	1,324	249	331
Brand	18	20	12
Customer relationships and investment management contracts	701	346	314
Technology and other	36	-	5
Internally developed software	3	15	4
Purchased software and other	1	1	1
Cost of obtaining customer contracts	33	43	37
Total intangible assets	2,116	674	704

Goodwill at 30 June 2022 comprises a gross carrying value of £4,714m (30 June 2021: £3,639m; 31 December 2021: £3,721m) and accumulated impairment of £3,390m (30 June 2021: £3,390m; 31 December 2021: £3,390m). During the period to 30 June 2022, there were additions to goodwill of £993m and no other movements in the carrying value (six months ended 30 June 2021: £164m additions, 12 months ended 31 December 2021: £246m additions). The additions in intangible assets acquired through business combinations in the six months ended 30 June 2022 predominately relate to the acquisition of interactive investor. Refer Note 4.2(a)(i) for further details.

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

	30 Jun 2022	30 Jun 2021	31 Dec 2021
	£m	£m	£m
Associates
HDFC Asset Management Company Limited (HDFC Asset Management)	-	127	-
Other	-	10	10
Joint ventures
Heng An Standard Life Insurance Company Limited (HASL)	275	237	258
Other	7	7	6
Total investments in associates and joint ventures accounted for using the equity method	282	381	274

During the period to 30 June 2022, the Group recognised an impairment of £9m in relation to its interest in Tenet Group Limited which is included in other associates accounted for using the equity method.

The Group's interest in HDFC Asset Management was reclassified from investments in associates accounted for using the equity method to equity securities measured at fair value on 29 September 2021. Refer Note 4.2(b)(iii) for further details.

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

(a) Issued share capital and share premium

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

	6 months 2022				6 months 2021				Full Year 2021
	Ordinary share capital			Share premium	Ordinary share capital		Share premium		Ordinary share capital			Share premium
Issued shares fully paid	13 61/63p each	£m		£m	13 61/63p each	£m	£m		13 61/63p each	£m	£m
At start of period	2,180,724,786	305	640		2,194,115,616	306		640	2,194,115,616	306	640
Shares issued in respect of share incentive plans	1,174	-	-		960	-		-	2,032	-	-
Shares bought back on-market and cancelled	-	-	-		(13,392,862)	(1)		-	(13,392,862)	(1)	-
At end of period	2,180,725,960	305	640		2,180,723,714	305		640	2,180,724,786	305	640

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

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

(b) Shares held by trusts

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

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

The number of shares held by trusts was as follows:

	6 months 2022	6 months 2021	Full Year 2021
Number of shares held by trusts
abrdn Employee Benefit Trust	36,702,940	39,279,020	39,630,532
Standard Life Employee Trust	22,635,206	23,083,609	22,688,815
Aberdeen Asset Management Employee Benefit Trust 2003	2,316,847	3,294,476	2,647,359

4.14 Pension and other post-retirement benefit provisions

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

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

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

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

	6 months 2022	6 months 2021	Full Year 2021
	£m	£m	£m
Current service cost	26	28	53
Net interest income	(16)	(10)	(21)
Administrative expenses	2	2	4
Expense recognised in the condensed consolidated income statement	12	20	36

In addition, for the six months ended 30 June 2022, losses of £386m (six months ended 30 June 2021: losses of £33m; 12 months ended 31 December 2021: gains of £117m) have been recognised in other comprehensive income in the condensed consolidated statement of comprehensive income in relation to remeasurement of the defined benefit plans.

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

Pension and other post-retirement benefit assets at 30 June 2022 of £1,221m (30 June 2021: £1,454m; 31 December 2021: £1,607m) includes the following amounts in relation to the principal plan:

	6 months 2022	6 months 2021	Full Year 2021
	£m	£m	£m
Present value of funded obligation	(1,932)	(2,775)	(2,899)
Fair value of plan assets	3,763	4,987	5,337
Effect of limit on plan surplus	(641)	(774)	(853)
Net asset	1,190	1,438	1,585

(c) Principal assumptions

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

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

	30 Jun 2022	30 Jun 2021	31 Dec 2021
	%	%	%
Discount rate	4.00	2.00	2.05
Rates of inflation
Consumer Price Index (CPI)	2.60	2.65	2.85
Retail Price Index (RPI)	3.00	3.15	3.25

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

4.15 Fair value of assets and liabilities

(a) Fair value hierarchy

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

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

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

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

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

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

1. Investments in associates at FVTPL are valued in the same manner as the Group's equity securities and interests in pooled investment funds.

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

3. Non-performance risk arising from the credit risk of each counterparty is also considered on a net exposure basis in line with the Group's risk management policies. At 30 June 2022, 30 June 2021 and 31 December 2021, the residual credit risk is considered immaterial and no credit risk adjustment has been made.

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

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

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

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

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

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

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

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

The table below presents the Group's non-unit linked assets measured at fair value by level of the fair value hierarchy (refer Section 4.15(c) for fair value analysis in relation to assets backing unit linked liabilities).

				Fair value hierarchy
	Total			Level 1			Level 2			Level 3
	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Derivative financial assets	70	6	14	2	-	-	68	6	14	-	-	-
Equity securities and interests in pooled investment vehicles¹	2,513	2,259	3,115	2,057	1,749	2,600	340	414	409	116	96	106
Debt securities²	218	626	961	1	2	1	216	623	959	1	1	1
Financial investments	2,801	2,891	4,090	2,060	1,751	2,601	624	1,043	1,382	117	97	107
Owner occupied property³	1	1	1	-	-	-	-	-	-	1	1	1
Contingent consideration asset⁴	35	21	31	-	-	-	-	-	-	35	21	31
Total assets at fair value	2,837	2,913	4,122	2,060	1,751	2,601	624	1,043	1,382	153	119	139

1. Includes £615m (30 June 2021: £975m, 31 December 2021: £941m), £646m (30 June 2021: £nil, 31 December 2021: £840m) and £451m (30 June 2021: £526m, 31 December 2021: £508m) for the Group's listed equity investments in Phoenix, HDFC Asset Management and HDFC Life respectively, which are classified as significant listed investments (refer Note 4.9(a)).

2. Excludes debt securities measured at amortised cost of £139m (30 June 2021: £261m, 31 December 2021: £226m) - refer Note 4.15(d).

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

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

There were no significant transfers between level 1 to level 2 during the period ended 30 June 2022 (30 June 2021: £nil, 31 December 2021: £nil). Transfers are deemed to have occurred at the end of the calendar quarter in which they arose.

Refer Section 4.15(b)(iii) below for details of movements in level 3.

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

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

				Fair value hierarchy
	Total			Level 1			Level 2			Level 3
	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Liabilities in respect of third party interest in consolidated funds	130	101	104	-	-	-	130	101	104	-	-	-
Derivative financial liabilities	17	15	5	-	-	3	17	15	2	-	-	-
Contingent consideration liabilities¹	163	164	165	-	-	-	-	-	-	163	164	165
Total liabilities at fair value	310	280	274	-	-	3	147	116	106	163	164	165

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

There were no significant transfers between levels 1 and 2 during the year (30 June 2021: £nil, 31 December 2021: £nil). Refer Section 4.15(b)(iii) below for details of movements in level 3.

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

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

	Owner occupied property			Equity securities and interests in pooled investment funds			Debt securities
	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021
	£m	£m	£m	£m	£m	£m	£m	£m	£m
At start of period	1	1	1	106	101	101	1	1	1
Total gains recognised in the condensed consolidated income statement	-	-	-	4	5	8	-	-	-
Purchases	-	-	-	17	5	24	-	-	-
Sales and other adjustments	-	-	-	(16)	(11)	(27)	-	-	-
Foreign exchange adjustment	-	-	-	5	(4)	-	-	-	-
Transfers in to level 3¹	-	-	-	-	-	-	-	-	-
At end of period	1	1	1	116	96	106	1	1	1

1. Transfers are deemed to have occurred at the end of the calendar quarter in which they arose.

	Contingent consideration asset			Contingent consideration liabilities
	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021
	£m	£m	£m	£m	£m	£m
At start of period	31	28	28	(165)	(6)	(6)
Total amounts recognised in the income statement	2	-	-	4	-	(3)
Additions	1	21	31	(6)	(155)	(155)
Settlements	-	(34)	(34)	4	6	8
Other movements	1	(3)	(3)	-	-	-
Transfer to contingent consideration liability	-	9	9	-	(9)	(9)
At end of period	35	21	31	(163)	(164)	(165)

For the six months ended 30 June 2022, gains of £10m (30 June 2021: gains of £5m; 31 December 2021: gains of £5m) were recognised in the condensed consolidated income statement in respect of non-unit linked assets and liabilities held at fair value classified as level 3 at the period end, excluding assets and liabilities held for sale. All gains were recognised in net gains or losses on financial instruments and other income.

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

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

The table below identifies the significant unobservable inputs in relation to equity securities and interests in pooled investment funds categorised as level 3 instruments at 30 June 2022 with a fair value of £116m (30 June 2021: £96m, 31 December 2021: £106m).

	Fair value
	30 Jun 2022 £m	30 Jun 2021 £m	31 Dec 2021 £m	Valuation technique	Unobservable input	Range (weighted average)
Private equity, real estate and infrastructure funds	104	80	91	Net asset value	Net asset value statements provided for six significant funds (fair value >£5m) and a large number of smaller funds	A range of unobservable inputs is not applicable as we have determined that the reported NAV represents fair value at the end of the reporting period
Other unlisted equity securities	12	16	15	Indicative share price	Recent off market capital raising transactions	A range of unobservable inputs is not applicable as we have determined that the indicative share price from off market transactions represents fair value at the end of the reporting period

The table below identifies the significant unobservable inputs in relation to contingent consideration assets and liabilities categorised as level 3 instruments at 30 June 2022 with a fair value of (£128m) (30 June 2021: (£143m), 31 December 2021: (£134m)).

Fair value

30 Jun 2022

£m

30 Jun 2021

£m

31 Dec 2021

£m

Valuation technique

Unobservable input

Range (weighted average)

Contingent consideration assets and liabilities

(128)

(143)

(134)

Probability weighted cash flow and where applicable discount rates

Unobservable inputs relate to probability weighted cash flows and, where relevant, discount rates.

The most significant unobservable inputs relate to assumptions used to value the contingent consideration related to the acquisition of Tritax. For Tritax a number of scenarios were prepared, around a base case, with probabilities assigned to each scenario (based on an assessment of the likelihood of each scenario). The value of the contingent consideration was determined for each scenario, and these were then probability weighted, with this probability weighted valuation then discounted from the payment date to the balance sheet date. It was assumed that the timing of the exercise of the earn out put options between 2024, 2025 and 2026 would be that which is most beneficial to the holders of the put options.

The base scenario for Tritax contingent consideration used a revenue compound annual growth rate (CAGR) from 2021 to 2026 of 21%, with other scenarios using a range of revenue growth rates around this base. The base scenario used a cost/income ratio of c50% with other scenarios using a range of cost/income ratios around this base.

The risk adjusted contingent consideration cash flows have been discounted using a primary discount rate of 3.1%. (30 June 2021 and 31 December 2021: 1.9%)

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

At 30 June 2022, the shareholder is directly exposed to movements in the value of all non-unit linked level 3 instruments. No level 3 instruments are held in in consolidated structured entities. See Section 4.15(c) for unit linked level 3 instruments.

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

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

As noted above, of the level 3 equity securities and interests in pooled investment funds, £104m relates to private equity, real estate and infrastructure funds (30 June 2021: £80m, 31 December 2021: £91m) which are valued using net asset value statements. A 10% increase or decrease in the net asset value of these investments would increase or decrease the fair value of the investments by £10m (30 June 2021: £8m, 31 December 2021: £9m).

(b)(v)(ii) Contingent consideration assets and liabilities

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

Assumption		Change in assumption		Consequential increase/(decrease) in contingent consideration liability
			30 Jun 2022		30 Jun 2021	31 Dec 2021
			£m		£m	£m
Revenue compound annual growth rate (CAGR) from 2021 to 2026	Decreased by 5%		(24)		(25)	(26)
	Increased by 5%		17		18	19
Cost/income ratio	Decreased by 5%		9		9	10
	Increased by 5%		(11)		(12)	(12)
Discount rate	Decreased by 1%		5		7	6
	Increased by 1%		(5)		(7)	(6)

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

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

	Total			Fair value hierarchy
	Total			Level 1			Level 2			Level 3
	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Financial investments	1,114	1,396	1,430	844	908	974	269	488	455	1	-	1
Total assets at fair value backing unit linked liabilities	1,114	1,396	1,430	844	908	974	269	488	455	1	-	1
Investment contract liabilities	890	1,034	1,088	-	-	-	889	1,034	1,087	1	-	1
Third party interest in consolidated funds	256	399	378	-	-	-	256	399	378	-	-	-
Other unit linked liabilities¹	5	7	3	-	2	1	5	5	2	-	-	-
Total unit linked liabilities at fair value	1,151	1,440	1,469	-	2	1	1,150	1,438	1,467	1	-	1

1. Excludes other unit linked liabilities not measured at fair value of £5m (30 June 2021: £1m; 31 December 2021: £2m).

The financial investments backing unit linked liabilities comprise equity securities and interests in pooled investment funds of £977m (30 June 2021: £1,240m; 31 December 2021: £1,232m), debt securities of £135m (30 June 2021: £152m; 31 December 2021: £191m) and derivative financial assets of £2m (30 June 2021: £4m; 31 December 2021: £7m).

There were no significant transfers between levels 1 to level 2 during the six months ended 30 June 2022 (30 June 2021: £nil; 31 December 2021: £nil).

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

	Equity securities and interests in pooled investment funds				Investment contract liabilities
	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022		30 Jun 2021	31 Dec 2021
	£m	£m	£m	£m		£m	£m
At start of period	1	18	18	(1)		(18)	(18)
Total gains/(losses) recognised in the condensed consolidated income statement	-	-	-	-		-	-
Purchases	-	-	1	-		-	(1)
Sales	-	(18)	(18)	-		18	18
Transfers in to level 3¹	-	-	-	-		-	-
At end of period	1	-	1	(1)		-	(1)

1. Transfers are deemed to have occurred at the end of the calendar quarter in which they arose.

Unit linked level 3 assets relate to holdings in real estate funds. No individual unobservable input is considered significant. Changing unobservable inputs in the measurement of the fair value of these unit linked level 3 financial assets and liabilities to reasonably possible alternative assumptions would have no impact on profit attributable to equity holders or on total assets.

Transfers of unit linked assets and liabilities to level 3 generally arise when external pricing providers stop providing prices for the underlying assets and liabilities in the funds or where the price provided is considered stale.

(d) Assets and liabilities not carried at fair value

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

	As recognised in condensed consolidated statement of financial position line item			Fair value
	30 Jun 2022	30 Jun 2021	31 Dec 2021	30 Jun 2022	30 Jun 2021	31 Dec 2021
	£m	£m	£m	£m	£m	£m
Assets
Debt securities	139	261	226	140	267	230
Liabilities
Subordinated liabilities	707	632	644	671	683	683

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

4.16 Contingent liabilities and contingent assets

Legal proceedings, complaints and regulations

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

The Group, like other financial organisations, is subject to legal proceedings, complaints and regulatory discussions, reviews and challenges in the normal course of its business. All such material matters are periodically reassessed, with the assistance of external professional advisers where appropriate, to determine the likelihood of the Group incurring a liability. Where it is concluded that it is more likely than not that a material outflow will be made a provision is established based on management's best estimate of the amount that will be payable. At 30 June 2022, there are no identified contingent liabilities expected to lead to a material exposure.

4.17 Commitments

(a) Unrecognised financial instruments

As at 30 June 2022, the Group has committed to investing an additional £112m (30 June 2021: £50m, 31 December 2021: £105m) into funds in which it holds a co-investment interest.

(b) Capital and other commitments

As at 30 June 2022, the Group has no capital commitments other than in relation to financial instruments (30 June 2021: £6m, 31 December 2021: £2m). In addition, commitments relating to future acquisitions are disclosed in Note 4.2(b)(iii).

4.18 Related party transactions

In the normal course of business, the Group enters into transactions with related parties that relate to investment management and insurance businesses. There have been no changes in the nature of these transactions during the period to those reported in the Annual report and accounts for the year ended 31 December 2021.

In the six months ended 30 June 2022, there were no sales to associates accounted for using the equity method (six months ended 30 June 2021: £36m, 12 months ended 31 December 2021: £36m) and no purchases in relation to services received (six months ended 30 June 2021: £2m, 12 months ended 31 December 2021: £2m). Purchases and sales in 2021 related to Phoenix prior to its reclassification (refer Note 4.2(b)(iii) for further details). Management fees were included in sales where the selection of the Group as the asset manager had been made by the underlying policyholder.

There were sales to joint ventures accounted for using the equity method of £2m, (six months ended 30 June 2021: £2m, 12 months ended 31 December 2021: £4m). There were no purchases from joint ventures (six months ended 30 June 2021: £nil, 12 months ended 31 December 2021: £nil). During the six months ended 30 June 2022, the Group contributed capital of £2m (six months ended 30 June 2021: £7m, 12 months ended 31 December 2021: £11m) to a joint venture. At 30 June 2022, there was no outstanding funding commitment to this joint venture (30 June 2021: £6m, 31 December 2021: £2m).

4.19 Events after the reporting period

On 1 July 2022, the Company's capital redemption reserve was cancelled in accordance with section 649 of the Companies Act 2006 resulting in a transfer of £1,059m to retained earnings.

On 6 July 2022 the Company announced that it would commence a £300m return to shareholders. The Company announced a first phase share buyback of up to £150m through on market purchases commencing on 6 July 2022 and ending no later than 30 December 2022. As at 5 August 2022, the Company had repurchased 19,494,168 shares for a consideration of £31m.

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