It's my pleasure to welcome you to our 2023 annual general meeting. Today's meeting is being conducted in hybrid format in order to facilitate ease of access for those who are unable to be here physically, and so increase attendance at this annual meeting. This means that those participating online are present at the meeting and are able to ask questions and vote during the meeting. I'll explain a bit later how this will work. We look forward to this opportunity to engage with you, our shareholders, and to hear what is on your minds. I look forward to hearing from you later during today's meeting, and my colleagues and I will do our best to answer your questions. Before we proceed, can I ask you to ensure that any mobile devices you have are turned off or set to silent, please? Thank you.
The quorum needed to run our shareholder meeting is clearly met. I'll begin today's meeting by introducing you to the members of your board who joined in June last year, so after last year's AGM, I will ask each to stand as I introduce them. First, Pam Kaur. Pam has over 20 years in leadership roles in business, risk, compliance and internal audit. A chartered accountant by training, she has experience working with five of the largest global banks over her career, and currently she serves as the Group Chief Risk and Compliance Officer at HSBC. As a non-executive, she served on the Centrica board for three years, stepping down from there ahead of taking on this role. Second, Michael O'Brien. Mike adds extensive asset management experience to that already on the board.
A qualified actuary, Mike built his experience through executive roles at Barclays Global Investors, BlackRock, and J.P. Morgan Asset Management, from where he retired in 2020 as the co-head of Global Investment Solutions. Finally, I should introduce our new company secretary, Julian Baddeley, who joined us in October last year from Aviva, where he was deputy company secretary. Brian McBride, who steps down from the board today, sends his apologies for not being here for this, his last AGM. He was with us this morning for his final board meeting, other commitments have taken him back to London. His contributions to the board over the last three years have been invaluable, particularly on private market investing, consumer facing businesses on, and on remuneration matters, we shall miss his wise counsel.
Cecilia Reyes advised us in September last year that she would not seek a 2nd term when her first term concluded at the end of that month. Cecilia brought great insight and experience to the board, to the Risk and Capital Committee, and to the Remuneration Committee, and we wish her well in her future endeavors. Before we start proceedings formally, I should also note that this is also Stephanie Bruce's final AGM as she steps down from the conclusion of this meeting. Stephanie's contributions over the last four years include steering the firm's finances through a hugely challenging period, focusing on preserving the firm, the firm's capital strength, improving our productivity, providing clarity to the market and to investors on what they should expect from us, and supporting the board with financial management information needed to make decisions around corporate actions and strategic development.
These have all been critical elements in contributing to the market's growing confidence in our strategic direction. On behalf of the Board and fellow shareholders, thank you, Stephanie, for your dedication and commitment. We wish you well as you pursue the next chapter of your career. Thank you. Let us turn now to the agenda for today's meeting. I'll start proceedings by giving a summary of the key challenges and achievements of the last year and highlight the important strategic developments that have taken place. Stephen Bird will talk in more detail about the progress made against our strategic plans. We will have the opportunity to answer your questions in the form of a moderated question and answer session. That's the agenda for today.
In a few moments, I'll take some time to share in more detail my reflections on the progress that your company has made over the past year. Let me start with some context to last year. 2022 turned out to be a year like no other in recent memory, with a series of unexpected events across the globe. Most significantly, the Russian invasion of Ukraine brought scenes of chaos, destruction, and human suffering on a scale not seen in Europe since the World War II. Already fragile geopolitical tensions intensified, in particular between the United States and China. Energy costs rocketed, impacting all sectors of the economy and requiring fiscal intervention to prevent business collapse and unacceptable hardship for people experiencing exceptionally high bills. Food supplies also faced disruption, contributing to the high levels of cost inflation seen.
As inflation re-emerged from its dormancy, central banks increased policy interest rates across most of the Western economies to temper inflationary expectations. Critical economic cross-border dependencies became apparent, precipitating an exhaustive global examination of supply chain resilience. China unwound its zero COVID policy at the end of last year, which while long encouraged in the West, added to uncertainties as to how its economy, its health systems, and its population would adjust to living with the virus. It was against this backdrop that we adjusted our business model and investment priorities to meet client and customer needs and to make our own business more sustainable and resilient for the future. As we stand back to reflect, we can see that this period provided a real live stress test to economies, financial markets, and indeed to our own business. The learnings from this period have been invaluable.
Perhaps the most important lessons for us were the need for resilience in our business model, and as an investor, the enduring importance of fundamental analysis to deliver long-term value through our investment processes. The unexpected and dramatic events noted above had understandable adverse impacts both on market levels at various points in the year, and on flows, as an unprecedented level of withdrawals was made from equity funds right across the industry. We were not immune from these impacts. What was encouraging was that the impacts were largely seen across public markets in the investments vector with real assets in our other two vectors in Personal and Adviser proving much more resilient, reinforcing the decisions made to direct more of our capital towards these businesses.
The development of the three vector model introduced in 2021 took additional shape during the year, most markedly through the completion of the acquisition of interactive investor, which Stephen will say more about in his report. adjusted operating profit, the measure we believe best reflects the underlying performance of our businesses, came in at GBP 263 million, which was some 19% lower than that achieved in the prior year, with the decline concentrated in the investments vector, primarily for the reasons highlighted above. Stephen will say more about what we're doing to rebuild profitability in this vector. Encouragingly, ii contributed GBP 67 million in its 1st seven months under our ownership, this was ahead of the business case modeled on acquisition.
Together, our Personal and Advisor businesses contributed 60% of adjusted operating profit last year, a contribution that is expected to grow, taking into account the full year contribution from ii from now on. Your company maintains a strong capital position, which is a core philosophy of the board. We augmented capital resources outside of operating activity through further disposals of non-core stakes, realizing around GBP 800 million. We completed share backs amounting to around GBP 300 million, and we invested around GBP 1.4 billion in the acquisition of ii. Our regulatory capital position remains strong, with capital resources in excess of requirements by some GBP 700 million. At this point, I'll turn to the final dividend for 2022, which your board is recommending for your approval at this meeting.
We are recommending a final dividend of GBP 0.073 per share, which makes a total of GBP 0.146 per share for the full year, both amounts the same as delivered last year. This is in line with the guidance we gave with our results, and as it continues to be the board's current intention to maintain the total dividend at this level, with the interim and final dividend at the same amount per share, until it is at least covered at least one and a half times by adjusted capital generation. This is the opportune moment to pass over to Stephen for a more detailed look at the strategic progress we are making across our business and to highlight some of the important opportunities which are ahead of us. Stephen.
Thank you, Douglas. Over the next few minutes, I'm going to talk about the progress that we're making to transform Aberdeen into a sector leader with a sustainable growth trajectory. As Douglas said, 2022 was one of the hardest investing years in living memory. Against this backdrop, we made good progress in creating a stronger business model for Aberdeen as we exit year two of our three-year strategy. As we set out last year, the firm has been shaped into three businesses: Investments, Personal, and Advisor, which are all complementary to one another. Each of these businesses are at different stages of transformation, and all three have clear opportunities to develop and grow. Starting with Personal and Advisor, here we're building direct distribution to over 850,000 clients in the U.K.'s high growth savings and wealth market.
The advisor platform market is projected to grow at double-digit rates for the next five years. We are a leader in that attractive market. The acquisition of interactive investor into the Personal vector has delivered GBP 114 million of high-quality, sticky revenues, operating within an efficient and scalable business that has higher margin. In the Investments vector, there is further to go. There was always going to be this business required the longest cycle of transformation given the structural challenges that are in the active asset management business and the nature of the underlying investment process. We have taken the hard decisions and built the foundations for growth. I'll set out more detail on those actions in a moment. 2022 also showed that we are a disciplined allocator of our capital. We've invested in high-quality businesses that will generate long-term growth.
At the same time, we've made sure that we have delivered sustainable dividends and buybacks in order to drive shareholder returns. We realized GBP 800 million through divestments and returned GBP 600 million in the form of buybacks and dividends to you, our shareholders, last year. You can expect us to continue this approach as we go through 2023 and beyond. Turning now to our result for the year. The events of 2022 definitely created a very difficult environment in which to operate, and this has been seen in our overall performance. Markets were the biggest headwind for revenue. In Aberdeen, this was principally evident in the investments vector. Our diversification of the group through the advisor and personal businesses has built more resilience into our revenue sources.
With a substantial contribution from seven months of ownership from ii, the decline in net operating revenue in 2022 to GBP 1.456 billion was limited to 4%. Our discipline and cost management continued. We're generating cost savings in less efficient areas and investing in new areas that will drive revenue. The work to further improve the operating margin within investments is ongoing. This contributed to group costs being flat last year at GBP 1.193 billion. The statutory result was a loss before tax of GBP 615 million, principally due to impairments in investments and lower valuations of our listed stakes, as well as restructuring and corporate transaction costs. However, at an operating level, the adjusted operating profit was GBP 263 million.
This is 19% lower than 2021 and comprises a reduction of GBP 139 million in investments, which was partially offset by the increase of GBP 76 million in profits from Adviser and Personal. To illustrate the benefits of the changes we're making to our model, you can see here on this slide that in one of the hardest years for investing in living memory, the contributions from Personal, largely thanks to the acquisition of ii, and from Adviser offset the challenging results within investments. Diversification is helping our margin mix as the platforms have a significantly lower cost than traditional asset managers. Overall, this meant that Personal and Adviser represented 60% of Aberdeen's adjusted operating profits at GBP 158 million. The resilience that Personal and Adviser offer our model is creating space to make critical changes to our investments business.
The themes of simplification, reducing cost, and focusing on products that are right for our clients are the core features of our investments strategy. We have concluded a root-and-branch review of our investments business, and I'm confident that we have areas of strength and scale in higher margin products that will be in demand and are in demand from our clients. It's important to understand how this program of work and the execution in this current year builds on the work that we did in the first two years of our strategy. We've made hard choices to become focused. We've exited non-core geographies, and we've divested of non-core businesses, and you can expect us to continue to do more of this. Overall, we're reducing costs.
Headcount is down. We're accelerating the GBP 75 million that we committed to last year within the Investments business to be delivered in this current year. You can see here that our organization has fundamentally changed. We're often asked what the new Aberdeen looks like for Investments. The answer is two distinct pillars, Public Markets and Alternatives. The specialist areas within these businesses reflects how our clients wants to work with us and how we can be more successful for them. This chosen business mix is supported by the long-term market trends, the growth and development of Asia, the anticipation of peak interest rates and fixed income, and the faster growth of alternative asset classes. Let me now take you through the ongoing opportunities that we see in each of the 3 parts of the business, starting with Investments.
In building a sustainable investments business, we're focused on three key areas. First, our work is to drive efficiency at pace. We reduced cost and headcount last year as our program of simplification moved into its implementation phase. This is continuing now in 2023. We continue to optimize our geographic footprint. In alternatives, we're pursuing divestment of certain non-core assets. Second, while performance is good in areas, we want it to be better. We want it to be more consistent. We are delighted that Peter Branner, formerly CIO of one of Europe's leading pension providers, has recently joined Aberdeen. He brings considerable experience in our key areas of focus. He will have responsibility for the oversight of the investment process and performance.
Thirdly, driving increased revenue yield is of particular importance, and a material contributor to the cost income ratio challenge that we face. We are working closely with our largest client, Phoenix, to simplify existing business processes and expand into new areas of mutual benefit. In our advisor business, against the market backdrop that I outlined earlier, we've delivered another year of growth and have retained our number one position as the largest advice platform by AUA. The key focus in 2022 was in the delivery of the next phase of our Adviser Experience Programme, where new functionality amplifies our market-leading position and crucially enables us and our advisory partners to be more productive, to deliver increased capacity to those businesses.
Using Phase 2 of our Adviser Experience Programme as a catalyst, we now move from a transformation phase into a growth phase, building the proportion of advisory firms who use us as their primary platform, extending penetration of pension SIPP products into the underlying customer base and through attracting new clients based on the improved service capabilities that our technology offers. Turning now to our personal business. Within this business, the acquisition of ii has transformed Aberdeen, positioning us for growth as one of the U.K.'s leading personal wealth businesses in a market with strong long-term structural dynamics. To maximize growth synergies, we realigned our existing personal wealth business, which includes our digital advice and financial planning capabilities, and these now sit under Richard Wilson's leadership.
Alongside strengthening our platform, we are focused on broadening ii services to a wider audience with the advantage of Aberdeen Financial Planning and the product expertise that resides within our group. We see a material opportunity to expand ii's penetration of the SIPP pension market where it has a compelling product and pricing proposition. Despite challenging market conditions, we also expect to benefit from a continued support of regulatory environment with a focus on simplified advice, helping to appeal to a broader audience. During these periods of economic uncertainty and volatility, our strong capital position is very important. It provides us with both resilience and options. We will continue to have a disciplined approach to the generation and allocation of capital. We will continue to look at inorganic bolt-on investments. We expect to allocate capital to support these opportunities.
We will redeploy the proceeds from non-core disposals into the business to support its simplification and its organic growth. When we sell these listed stakes at these listed stakes at the moment have a year-end total value of GBP 1.3 billion. They represent additional capital to our regulatory capital surplus. Our intention is to continue to make returns to you, our shareholders, at similar levels to 2022, comprising both dividends and further share buybacks, recognizing that share buybacks in turn reduce the absolute cost of the dividend. I hope that this gives you an insight into what we're doing to build a stronger business model for Aberdeen. Although the external market remains challenging, diversification of revenue streams is putting the group on a sustainable growth trajectory.
Before I hand back to Douglas, it's worth noting that 2023 has already brought further market disruption with the rapid increases in interest rates over the last few months, leading to stress in some parts of the banking sector, especially in the U.S. Despite these banking sector concerns, persistently high inflation on both sides of the Atlantic has seen some predictions of peak interest rates being pushed out. However, we don't believe that this will last long given the underlying state of the economy, and when rates do peak, there is a prospect of significant moves into fixed income. As I've mentioned, this is an area where Aberdeen has great strength and scale, which gives us a great opportunity when that happens. Similarly, this year has also brought improving fortunes in China, and our deep expertise in that region means that we are well-placed to take advantage.
Building greater resilience is critical as we navigate difficult conditions. They won't last forever. When the cycle does turn, we will have a stronger business model that is even better equipped to reap the rewards. Thank you. I'll now pass back to Douglas.
Thanks, Stephen. Let me turn now to the role we play in ensuring that your company operates in the interests, not only of clients and shareholders, but also in a way that acknowledges the contribution we have responsibility to make to wider society. Notwithstanding the severity and combined impact of the challenges that commanded urgent responses in 2022, all of these crises are, in reality, relatively short-lived in their impact and are manageable within historic experience. This is as opposed to the existential threat that continues to grow relatively unabated from failure to make progress in constraining global warming to the agreed target of one and a half degrees centigrade.
Policy initiatives hoped for in relation to energy transition policy have stalled on the back of prioritizing energy security, with fiscal budgets focused on pandemic recovery and deferring action and commitments to fund the weakest economies who are unable to fund-finance their own climate change. Getting these initiatives back on track is fundamental to creating confidence that there is a committed global framework that our industry can invest alongside. A year ago, we might have hoped that the high savings pools that were built during the pandemic would be a contributing factor to funding this investment. These savings are also at risk to a longer period of elevated interest rates impacting, for example, mortgage servicing costs and the cost of living burden of stubbornly high inflation. We also need to be realistic about what we can achieve as an industry and be clear in our communication thereof.
We should never overestimate what individually we can achieve, but we should never underestimate what we can achieve collectively, particularly in combination with policymakers and our regulators on side. At Aberdeen, we believe we have three major contributions to make. First, concentrating capital allocation to industry leaders, those who are on a journey to leadership, and those who are creating the science and technology innovation that seeks to find solutions to the most challenging carbon density activities. Second, through engagement with our investee companies to hold them to account for their commitments and the pace of delivery. Finally, educating and consulting with consumers, institutional clients, regulators, and policymakers on what actions are needed to deliver the mitigations that we all seek. Looking towards the remainder of 2023, it's quite a mixed picture.
The rising cost of living will continue to put immense pressure on the poorest households. We're seeing those who historically put excess income into savings products contributing less and, worryingly, people reducing or withdrawing from pension saving. The uncertain geopolitical and economic situation we're facing makes it difficult to predict how the current year will play out, and this contributes to an already very complex investment environment. While heightened levels of market uncertainty are likely to persist, our investment teams are taking the appropriate steps to ensure that we remain focused on what we can control and help our clients navigate through this complex set of circumstances. We have all the necessary talent across our investment teams to service the needs of our clients as these needs continue to evolve.
We are fortunate that our capital strength provides resilience to pursue the future growth that can deliver sustainable value over the long term. Your board remains committed to deploying that human and capital strength to drive the insights, the innovation, and the investment that will underpin our objectives and generate long-term value for you, our shareholders, for whose support we remain, as ever, extremely grateful. We're gonna proceed shortly to the next part of our meeting today, which is our question and answer session. Before we do so, in a slight change to the process that we followed in previous years, we will first open the voting on the resolutions that are proposed here today.
We won't be taking you through each of the resolution in turn this year, but you can read full details of, and explanations of, each of the resolutions in the published AGM guide, and you'll have plenty of time over the course of the Q&A session to consider and submit your votes. Those of you in the room will have been given a copy of our AGM guide when you registered, and those online can access this on the portal. This is in the same form as made available to shareholders on the 28th of March this year. We propose 14 resolutions. Numbers one to nine and 12 are proposed as ordinary resolutions, and resolutions 10, 11, 13, and 14 are proposed as special resolutions.
The 1st five resolutions are the normal business of the AGM to receive the accounts. To approve the final dividend, to reappoint the auditors and authorize the audit committee to agree their fees. Then fifth, to approve the remuneration report. Resolution 6 covers the triennial review of our remuneration policy and seeks your approval of an update policy which has been adjusted to reflect current circumstances. In Resolution 7, we invite you to reappoint the directors who are standing for re-election. Resolutions 8 and 14 are standard resolutions covering political donations and permission to call a general meeting on 14 days' notice. Resolutions 9 through 13 are to do with allowing your board to manage the capital position of your company effectively.
As has been the case for previous meetings, shareholders were given the opportunity to submit their voting instructions ahead of today's meeting, and I'm very grateful to those who've done so. The vast majority of you who did this appointed myself in my position of Chair of the meeting as your proxy when you submitted your voting instructions. I have confirmed to our registrar that these votes should be cast in the way in which you directed. For those who gave me discretion, to cast these votes in favor of the resolutions. I can confirm that if you nominated any other directors present as your proxy, your votes have been cast in the same way. Now, you can, of course, also cast your votes here today at today's meeting. I'll take a few moments now just to run through that process before we open the voting.
A poll will be taken on all the resolutions. For those shareholders joining us online, once I formally open the voting, the list of resolutions will automatically appear on your screen. You should select the option that corresponds with how you wish to vote. Once you've done so, the option will change color, and a confirmation message will appear to indicate that your vote has been cast and has been received. You can vote on all resolutions displayed by selecting the Vote All option at the top of the screen. If you want to change your vote, simply reselect the choice. If you want to cancel your vote, select the Cancel button. You'll be able to do this at any time before voting is closed. For those shareholders joining in person, you will have been given a poll card which has been personalized for you.
If you don't have your poll card, please raise your hand and now, the stewards will find you and assist you. You should mark on the card whether you want to vote for, against, or withhold your vote for each resolution. Please note that if you've already submitted your voting instructions before today, any votes you cast by poll card will override those previous instructions. If you could please drop your completed poll card in the boxes at the back of the room when you leave the meeting or hand them to any of our stewards, we'd be very appreciative. Voting is now open. You may vote at any time during the meeting until the voting is closed. I will give you a prompt to warn that the close of voting is imminent.
For those shareholders joining us in person, if you have any issues, please raise a hand and a steward will come and help you. While you're casting your votes, we'll now proceed to the next part of our meeting today, which is the question and answer session. We'll be taking a mix of questions from the floor and questions that have been submitted online. For those who are joining through the webcast facility, our colleague, Duncan Young, will be collating questions that you submit to us live. We'll do our best to answer as many as possible, consolidating those where it seems appropriate to do so. If you're watching online, please submit your questions via the Q&A tab that you should see on the screen. One thing to remind you before we begin is that we won't be able to help with questions around individual shareholder circumstances.
These matters are not for other shareholders to hear about and are best addressed separately. Please approach myself or any of the other directors after the meeting if you're here in person, or write in if you're attending online. The last request that I would make, which is for those of you joining in person today, if you have a question, please raise your hand. Kindly wait till you are handed a microphone. Then for the record, please state your name before asking your question. Let me get back to my seat, and then we'll begin with a question from the floor. Can we have a first question, please? Number two.
Thank you. Can you hear me here?
Yes. Yes.
My name's Joan Forehand. I'm a shareholder and also a former employee, having worked for 29 years with Standard Life and then Aberdeen . Sorry, Standard Life Aberdeen. Forgive me, this is the 1st time I've spoken at an AGM like this, so. Firstly, just to put my question in context, I was born in 1965. The monthly average carbon dioxide concentration in our atmosphere then was 320 parts per million. That was already above the levels deduced from ice cores, which show that CO2 levels have fluctuated between 160 and 300 parts per million over the last 800,000 years. That's up until the Industrial Revolution. It now stands at 420 parts per million, with the increase still accelerating.
A 100 parts per million increase in my lifetime. None of our thousands of ancestors going back to the dawn of our species have lived through or experienced the consequences of such a change in the composition of our atmosphere. The world's temperature is directly correlated to CO2 levels. The world is heating up fast. Consequently, our climate is rapidly destabilizing. Forgive me. There's not too much more to this. Then I'll get to my question.
Mm-hmm.
In just the last week, we've seen record high temperatures across Southeast Asia, unprecedented early wildfires in Canada, flooding in the Democratic Republic of the Congo, Rwanda, and New Zealand, and ongoing droughts and crop failures across many regions, causing immense suffering to millions of people. The UN's IPCC reports, intrinsically conservative given the process by which they are produced, have become increasingly stark with the warning that we must reduce global greenhouse gas emissions by about 50% of their 2019 levels by 2030 to have a hope of avoiding catastrophic climate breakdown. This requires a rapid transition away from fossil fuels and ceasing the exploration for and development of new coal mines and oil and gas fields.
Sadly, fossil fuel companies, hiding behind weak policy setting by many governments and tacit support from institutional shareholders, are using the false narrative of energy security as a smokescreen to double down on fossil fuel exploration and development. In some cases, such as BP, water down previously declared emission reduction targets rather than drive the rapid change to their business models that the world really needs. With this backdrop and at a moment of reckoning for the asset management industry to stand up for a livable planet, I come to my two questions. Firstly, I noted with sadness and disappointment that you decided to side with the BP board at its recent AGM by voting against a shareholder resolution that called on BP to strengthen its 2030 target for reducing its Scope 3 emissions.
I should say thank you for having that voting information readily available on your website, which I know not all asset managers do. I would like to understand the process you went through to reach that decision in the context of being a signatory to the FRC's Stewardship Code. My 2nd question, which is related, similar shareholder resolutions are being put to shareholders at the AGMs later this month of Shell, Total, Exxon, and Chevron. These companies lag even further behind BP in their commitments and actions on Scope 3 emission reductions. Will Aberdeen show leadership amongst its fellow Net Zero Asset Managers initiative members and vote for these shareholder resolutions and pre-declare this voting intention? Thank you.
Thank you very much. You make compelling arguments. You make very good points. One thing I think is understated in this debate, you mentioned that you were born in 1965. I was born in 1955. In 1965, the global population was 3.3 billion. It's now 8 billion heading to nine. Effectively, it's almost tripled over. It will have tripled over your lifetime. I think one of the challenges that we've yet to think as carefully as we need to is: How do we accommodate our climate ambition reductions with a growing population, particularly when the growth in that population is taking place predominantly in countries least able to finance the just energy transition that we look for? I also echo the comments that you made that one of the...
As I said, there's three things we can do. One, one of the things that I think is increasingly important is engaging with... I'll come back to companies in a minute, but with policymakers and regulators. One of the challenges that's faced is that the policies needed are not joined together. They're not joined up. They're not holistic. You have lots of bold statements about we want to reduce carbon intense energy production. We want to do more in renewables, and then the planning system doesn't give permission for wind turbines or transmission to connect the turbines to the grid. We need to be more holistic in terms of making sure that the policy framework, the regulatory framework, and indeed the responsibility of all of us as citizens because, you know...
I chair another company which has energy transition as one of its core businesses. One of the challenges is that while we believe that 85% of the U.K.'s energy, electricity production could be done with renewables, and population desperately votes for that, they also vote for never having a wind turbine that they can see from their house. We've got to be a little bit more thoughtful ourselves. I completely agree with you, we've got to do more, but we believe very firmly in a just transition. That means that the wealthier countries of the world have got to step forward more than they are doing and do what they committed to do to help people who are less able to fund that transition.
As a policy, you talk about shareholder resolutions. We've taken a policy thus far that we don't support generic resolutions because we believe in individual engagement with companies. We engage directly with BP, we engage with Shell, we engage with all the oil majors, and we have a direct dialogue with them on what their plans are and why they're changing their plans, if they're changing their plans. In the case of BP, we believe in the management's long-term commitment to decarbonize its operations and understand what they said in relation to why they've taken an adjustment in the current year. We would far rather engage directly rather than sign up to resolutions that are, in some cases, too broad and actually cause as many problems as they...
not as many problems as they cure, but are not as well targeted as we would wish them to do, and we would rather do direct engagement. The other thing that we need to remember is that we are asset managers, and you used to work for us, so you know that. Therefore, one of the challenges that we face is the mandate from our customers. If our customers don't give us mandates that require us, then we can guide them. We do. We talk to them. We talk about the obligations we all have in this industry to work to a lower carbon future. If the mandate that has been given to us doesn't have specific targets and they seek a particular asset allocation, then we have to meet the mandate that we've been given.
Again, that's part of the engagement that government regulators, the asset owners and the asset managers have to do. We are very much on that journey, but we are constrained in some respects against what we would wish to do as asset managers ourselves. As I said in my remarks, I mean, the last two years, the last four years have been extraordinary in terms of pandemic and then the extraordinary and horrendous war in Ukraine, which, as you say, has created a smokescreen for some people to walk back on their commitments and indeed even to use coal-fired power stations again to a degree that we never imagined that we would see. Part of it has been energy security, part of it, as you possibly suggest, is just walking back on commitments, and we need to do more on that.
The fiscal budgets of governments to support the less able in this world and are less full than we might have hoped they would be because of dealing with the war in Ukraine, because of dealing with the pandemic. That's reality. I agree with you. I think the biggest challenge facing the world is climate change. All the other things are, we have the knowledge of how to deal with them. I think I'll give you a personal perspective 'cause I think a lot about this, that the biggest challenges we're gonna see in climate change, long before we see temperatures in Europe come to levels that we find wholly uncomfortable, is migration. The weakest countries in South Asia and Africa are going to see a sustainable living hampered much earlier.
Europe and parts of Asia will see migration patterns that we will find utterly impossible to deal with. When you think of the challenge that this country is trying to deal with at the moment in relation to 50,000, 60,000 people trying to cross the channel. If we end up with climate change impacts and the migration turns into the millions into Europe, it's gonna be a challenge. It's interesting to see that that was a big part of what Ursula von der Leyen was saying and the European Commission was talking about the other day, is that migration is gonna be a challenge if we don't address climate change. We're with you.
I, you know, I think it's a complicated subject, which is why sometimes what appear simple solutions are things that are difficult to take. We have because an active manager, we actively engage with companies. We invest in companies that are leaders. We invest in companies that aspire to be leaders. We disinvest from companies that don't have those ambitions. We support companies that are creating the technology and innovation that will be necessary to support the future that we want to see delivered. You know, I share your concerns. Can we have another question, please? I'll take the gentleman at the front and then the gentleman at the back. Oh, you've gone the other way around. That's okay.
Okay.
Yeah. No, please go ahead.
Danny Wallace, Private Investor Network, Shareholder Associations and Engagement Appeal. Please can we maintain the physical AGM as the anchor point and support with online as hybrid rather than move online only as Archie Norman is pushing for? Secondly, can we have better shareholder engagement in the future and fill these seats up which are empty?
We can do the first. We intend to. We don't believe in remote-only AGMs. I think shareholders should have the ability to look at their directors face-to-face and ask them the questions they want to ask them and grab them in the lobby afterwards and ask a supplementary if they want to. I think that's good. We wish we had more engagement. I mean, one of the challenges we face, we have a very large retail shareholder base. I am afraid that very few of those shareholders vote, and even fewer turn up to these meetings. They're all invited. There are a number of initiatives around our industry to try and get more engagement from retail shareholders.
Indeed many of the platforms and of which we own one of the leading ones, interactive investor, are making it easier for retail shareholders to vote at meetings. I have to say it's still a very small percentage to do so. I know the association you talked about, that you're a member of, and I used to run meetings with them in my old life directly and found them very valuable because by definition, people who are a member of your association are keenly interested in the companies in which they invest and what they think about the future.
we will work to try and get more people to come to the meeting, and we certainly will try and get more people voting as well because we want to represent our shareholders as actively as we can. Thank you. Please.
Thanks, Mr. Chairman. Probably be easier if I stand up, most people can see me and hear me as well. I think the questions and the screen has been notified in advance, I don't need to read out all the details. On the first point, when we're adjusting from the IFRS loss to an alternative performance measurement, which is the adjusted operating profit that we've declared, there is a gap of GBP 868 million, which is mainly reconciled by intangible assets, not cash. My concern is that IFRS are the accounting standards. Following the introduction of IFRS 17, one insurance company, for example, paid PricewaterhouseCoopers GBP 20 million to do the IFRS 17 compliance, the accounts were littered with alternative performance measurements that seemed to undermine the effect of improving the transparency.
If the IFRS result is what's required by the Financial Reporting Council, we should stick to that, which means that we had negative earnings per share of GBP 0.268, and we're paying a dividend of GBP 0.145, which is a gap of GBP 0.40. Even on GBP 0.105 adjusted earnings per share, we're still paying GBP 0.145. Since most of what was added back to the adjustments was intangible assets, I'd be interested to know how long we can sustain that unless we're borrowing from future generation of net operating capital. In the adjustments, there was a reserve for this processing error where we've got a compensation payment possibly to make. I'd be interested to have more details about that and confirm that we've got a strategy in place.
The risk management report seems to suggest that we have got a strategy in place. We're not repeating it. I'm not gonna go through all the different costs. If we could stick to those two on the shareholdings. On Page 49 of the accounts, we've put the employment engagement survey in as one item with a large number of other key performance measures, which are financial metrics. We say that we are happy that 50% engagement is now a reasonable engagement. It has in fact gone down from 72% in 2020. It would be interesting to me to know how well the employees are engaged and how any reduction in employee engagement effectiveness has been influenced by working from home, for example, during COVID-19, from which we've not yet recovered. Thank you, Mr. Chairman.
I started life as an accountant, and when I started life as an accountant, the accounting standards book you could actually put in your briefcase and carry. Now I think you would need a roller suitcase and a couple of people behind you, sort of in case you expired. IFRS is complicated and I think that I won't reflect on it really too much, but I do think that most companies now try and get to a level of reporting that gives shareholders an understanding as to what the sustainable level of earnings is that will fund dividends, and that's what we try to do.
As you say, the, one of the biggest element of the adjustment is writing off intangible assets because of the market declines that make it difficult under the way that IFRS says you can measure goodwill, that we can no longer sustain the value of that given the way the markets have fallen and, and revenues within our industry and within our own company have moved. We write it off, but it's already written off in our capital. To punish shareholders for writing off an item that's already been written off their capital, I think would be wrong. We create a measure of adjusted capital generation, which takes the adjusted operating profit and adds in the dividends we receive from our stakes to give the capital flow that we have.
That capital flow over the last two or three years has given us cover of our dividend about 85%-90%. A relatively small GBP 20 million or GBP 30 million, if you like, uncovered against that measure, which we believe is appropriate. We recognize how important dividends are to shareholders, particularly our very large number of retail shareholders. Therefore, at a time when we're also buying back shares because we think we've got more capital than we can deploy, it would seem... The buying back shares doesn't give any cash to shareholders. It obviously gives cash to those who sell. Given our very large body of retail shareholders, paying a dividend seems a very appropriate way to reward them for their loyalty, and because we believe it is sustainable.
At a time when we're buying back shares, i.e., reducing capital, using some of our excess capital to support, as you say, an uncovered dividend against the adjusted capital generation that we have seems appropriate. I believe, you've got a chance later on to vote for the dividend that we're proposing. I think that's an appropriate thing to do, to give to shareholders and the right capital management of our business. You mentioned the 40, 41 million of process execution error. Yes, there was a most unfortunate, regrettable error in the processing of an instruction during 2022 that led to a loss to a client which we reached agreement as to how that would be compensated.
We believe that the vast majority of the cost that you see in our account is covered by insurance, but we won't be able to record that receipt until we get it. That's the way the accounting rules work. We hope we'll have a recovery to show you in the first half of this year. It was regrettable. We have done exhaustive, I think, two exhaustive root cause analysis as to how it happened. It was peculiarly unique circumstances. I think everyone who says things are unique. It's amazing how many things recur. We learn lessons from mistakes. I think we've learned lessons from this, and certainly we've strengthened the controls in the area where this happened. I apologize that it happened.
In a way, it's always good when your controls are tested and are deficient in a way because you learn things that you didn't know before and you make improvements. I'll ask Stephen to augment what I'm gonna say because he takes this personally very seriously. On the engagement survey, my colleagues have heard this before, so they'll get frustrated with me saying it again. I get very frustrated with the engagement survey as a single measure. 80% of our colleagues last year filled in the engagement survey. The amount of engagement we do is huge. And indeed, within the engagement survey, we had over 14,000 individual comments against the questions, all of which we go through. The engagement is huge.
The single score is on a methodology which is kind of accepted by everyone, that you take a number of different questions and you aggregate them and you divide them by whatever it is and you get to a score. We actually think the more detailed, the more granular analysis is much more helpful to us understanding the mood of our employees. I have to say, with 80% of employees engaging, that's powerful. If they're giving us difficult messages, sometimes that's really helpful to us. It's always really helpful to us. Sometimes it's reflective of the conditions in the marketplace. Sometimes it reflects on transition the company's going through. All of it is important to us. Stephen takes...
In fact, many of our board colleagues are joining in an engagement meeting after this AGM. Stephen takes this immensely seriously and does an extraordinary amount of it himself. Stephen.
Thank you, Douglas. Yes, indeed I do. We have a huge number of events, direct, town hall meetings, face-to-face sessions, coffee sessions, which I do and my colleagues do as well. Sitting in the audience, we were a new Chief People Officer who's been with us for a year. Tracy Hahn was hired because our view is that for Aberdeen to thrive, it has to be the best place to work and the best place to invest. We get those things right, it can thrive. Now, just on the scores themselves, we have improved the way in which we survey. Rather than surveying once a year, we've developed a pulse methodology that is much easier to do, much faster to do.
None of us like to fill out very, very long surveys. It's a very easy, simple way to speak up. One of the things that I think is important is that the vast majority of our colleagues voted to say that they believed that their voice was valid and that they could speak up without fear or any concerns. We have created an index for our company that is focused on, do you understand our strategy? Is our purpose clear? Do you feel that the environment is one of integrity and respect? Do you know how to make progress? Those are very important. Admittedly, that's a dashboard, but those are really important things for each of us in terms of how we show up at work. We take it incredibly seriously.
A lot of detailed work underneath it, and I think we're making good progress.
Thanks, Stephen. Have we another question? Number 4.
Thank you. My name's Alice Delamere. I'd like to talk for a minute about your fixed income investments. Aberdeen holds over $600 million in the bonds of coal companies, including over $65 million in Adani Group. For those of you that don't know, Adani is the world's largest private developer of new coal. It's a violator of human rights around the world, and has recently been exposed for widespread fraud, stock manipulation, and for using its investments in its green energy arm as collateral on a credit facility for the Carmichael coal mine in Australia. I would like to ask you, will Aberdeen deny all new debt to Adani Group and publish a coal policy across its entire business as part of its turnaround plan to attract new clients and to improve its financial standing? Thank you.
Thanks very much. Thank you. I mean, we read reports of the report from Hindenburg with some alarm. Let me correct your numbers. We have GBP 15 million of the debt of Adani, split, basically split between its ports business and two of its electricity businesses. So GBP 15 million. None of it's in their core business. It's quite historic. Actually it met all the screens that were applied at the time. We keep it, as you can imagine, and companies like it under close scrutiny. As I said, it's a very, very small amount of money in the context of our investment portfolios, but that's not to diminish in any way the points that you're making.
We're contemplating at the moment having a coal policy. We don't have one at the moment because it's complicated. It's complicated for a number of reasons. One is our industry discovered if you say we're not gonna invest in companies that have any coal activities, the danger is the coal activities get sold to somebody that has no interest in the climate journey because they're privately held, or they are domiciled in a country that doesn't care. Therefore, we believe that where management is on a journey to reduce their coal activities, then it may be acceptable for us to continue to support them as long as that journey is part of a just transition. That just transition is important.
If you say we're no longer going to finance coal around the world, there are certain countries, economies that would collapse, including some of the weakest countries in the world, and I don't think that would be a responsible investment approach to take from Western asset management companies. For right or for wrong, some of the most, some of the poorest countries in the world have a high exposure and dependency in coal that they cannot get rid of. We need to help them do that, but to weaken their economy in the short term would be, I think irresponsible and not part of a just transition. It's complicated.
We are thinking about what we can do as a coal policy that respects both the concerns that you very rightly have, that reflects the fact we don't want to see these assets concentrated in people that are not going to enforce standards of moving to a lower carbon future. Also, we have to respect to some degree those the just transition that says that there are economies that have a dependency that it would be unreasonable to ask them to reduce because it would cause dramatic poverty and inequality in parts of the world. It's complicated, but we understand your concerns very much so. Can we have another question, please? There's a gentleman at the back, number one.
Right. Edward Ferrari. Company with me this quite a time. I retired 14 years ago.
Okay. Have you got a microphone?
I was offered shares in a company called St. James's Place by certain bank. I start with Standard Life, and I had shares in Scottish Widows as well. I'll give you some figures now. Oh, sorry. I'll give you some figures now. Aberdeen, in 15 years, the price today is GBP 204.65, - 25.24% in 15 years. St. James's Place, the price now is GBP 1,124. Sorry, I do apologize. A percentage increase of 1,228.96% in 23 years. Could you explain what's happened in the last few years when. Well, I'm going to perjure myself here, so I'll just...
That's enough. I'll say no more. Can you give me an explanation?
I understand the point. I mean, clearly, we would wish the share price performance had been better. I think it's a wee bit inaccurate or inconsistent to just look at share prices. We've had a very high dividend yield for the company, just looking share price to share price doesn't take into account the distribution of dividends over that period of time. There's been some very major capital returns to shareholders when the Canadian business was sold, for example, and other things. We've returned capital to shareholders in different ways. What I would say, if you go back a year, to this meeting last year, the share price has grown something like 13%, there's been a 7% dividend.
Our low point was the October 7th last year when we were GBP 133. We've come back 50% since then, and that was a terrible point when we fell to 1 33p. I think that the recovery is very much on the basis and the sustainability around the 200p mark since then has been the. I think the marketplace has understood the strategy, has understood the transition to a three vector model, has understood what we're trying to do to make the business more resilient. Recognizing that what used to be at the heart of the institutional asset management business was defined benefit pension schemes which no longer exist. St. James's Place that you referred to doesn't do institutional investing.
It does wealth investing, and that's where we're investing more of our capital because the democratization of savings means more money is being handled by individuals themselves rather than through corporate schemes. The DB schemes, as you have seen in newspaper reports recently, have gone from something like a 40% allocation to equities to 2%, and they're all in runoff because they were all pretty much closed 25 years ago. Our customer base is very different.
We need to get closer to the customer, and as Stephen mentioned, and he may want to add, but, you know, what we've done on our adviser platform business and in our personal business, particularly with ii, is to get closer to the customer and put capital to work in the areas that are faster growing than the institutional business, which for reasons of the way the pension system now works in the U.K., is a much smaller contributor to asset flows. Okay. There was a question in front of you, gentleman.
Thank you, Chairman. Michael Gibson. I am a shareholder. I was gonna ask a question out of the blue then, the gentleman in front of me has already expressed it much more learnedly than I could ever hope to. In your answer to his question, you mentioned these share buybacks, you rightly said that there is no cash coming to shareholders. That cash, which belongs to me, belongs to all the other shareholders, is being used to assist loose shareholders who want to bail out of the company, I'm not quite sure how that can be justified. The cash belongs to us. It doesn't belong to. It shouldn't be used to assist people who just want to leave the company. You hinted that, the dividend was funded by the sale of investments.
Of course that can't go on forever. If you want to distribute cash in that way to shareholders, it seems to me it would make more sense just to raise the dividend and pay it to shareholders who are loyal to the company, who want to stay on in the company. That would make more sense. Of course, that's an absurd proposition that the dividend should be hiked in that way. By your logic, that seems to be the way you want to use this embarrassing amount of capital. That seems to be a problem for the board. We have too much capital. It has to be got rid of. Why not get rid of it into the hands of shareholders who remain with the company, not the ones who leave it?
We're not embarrassed. We're rather relieved with our capital strength, actually. I mean, I understand the point you're making. The benefit to shareholders who don't participate in the share buyback is, of course, that they proportionately own a slightly higher share of the company when cash is returned to those shareholders who want to exit and their shares are retired, and therefore you benefit indirectly modestly by. There should be a, in theory, a slight adjustment to the share price. The reason we do share buybacks is that we're very committed to the institutional shareholders, and indeed to all of you, is that we will deploy capital within the business to grow the business where we can see opportunities to do so.
We're not gonna spend money that where we can't see a, either a good place to invest it or indeed where believe we've got the bandwidth to manage more growth at that time. The reason to buy back shares is, as we reduce the share count, we reduce the ongoing cost of the dividend. To the gentleman's question before, as the share count falls, the dividend costs us less in GBP each year, and that means we can be more confident that we can maintain the dividend. It is in, I think, in the interest of all shareholders that we do that.
We're very keen that as we realize the stakes in the future, while we do intend to give some back by way of share buyback, that we will find opportunities, particularly in the marketplace, where there are opportunities perhaps more attractively priced than they would have been in 2021 when everything was a little bit more buoyant. That we'll find ways to invest in people and technology and businesses and propositions that will enable us to accelerate or support the growth that we are planning. But thank you. Is there...
Do you want that?
Please.
I'd just like to pick up on both questions, actually, 'cause I think they're very good questions. The 1st gentleman, you asked the question about why had St. James's Place produced a very good return. Very simple answer is they're operating in a growth market with higher margin. The company you now own has got two businesses that I just explained, Advisor and Personal. 60% of the earnings last year came from those businesses. Those are the same businesses that operate in the same marketplace as St. James's Place in the U.K. They have higher margin. Both of those businesses, we have higher margins at higher growth rates. That's why we've repositioned the business into those areas for exactly the reason.
When I arrived, I can't speak for the long history of the company, but I've been here since the first of September. I've been responsible, with your approval, I've been responsible for this company since the first of September 2020. If you actually take the share price on that date, which was GBP 2.30, take today's price, which is GBP 2.04 or GBP 2.05, and then take the 7%, 7%, 7% dividends and send, you're up over that period of time. What's happened over that period of time is we had a global pandemic, we had a war, and the alternative to investing, interest rates, went from 0-5%. Very strong headwinds for investing.
Our team has been repositioning this business into much more attractive markets exactly for the point, the question you raised. If you don't take action, that's not a good story. You have to take action. Thank you for raising the question because you illuminated exactly why we have the strategy we have. Thank you.
Number 2.
Thanks. Good afternoon. I'm Joseph Fitzgerald. I'm a private shareholder. Politicians and economists keep banging on about our balance of payments.
Our exports ought to be doing a great deal better. This applies to both our visibles and our invisibles. Obviously, Aberdeen being in the service sector, any foreign earnings would no doubt come under invisibles. Can you say what you're doing to try and help the situation? Any foreign earnings that you get, can I ask you how you actually declare them to Revenue and Customs?
Gosh. We have a business, a long-term business in America. We have a business, big business based in Singapore that covers all of Asia. We, like all of our peers, are seeking to understand how we can safely take a position in the growing trend of outward investment from China. Because as that economy matures and the population seeks to invest for their own retirement on a self-directed basis, which is the ambition, there will be a diversification out of purely domestic stocks. There will be, in due course, given the number of people, it will be a huge flow of money into the global system.
We have a long tradition of being in Asia, and we believe we can safely, with good governance, capture some of that flow for the benefit. We book the revenues that we get in Singapore, in America, whatever. The companies that are there pay dividends to the U.K.. I'm not sure it's a customs and excise point. We remit the money to the U.K. in dividends, and we pay whatever subject, any withholding taxes on the way and any additional tax when it gets here. There's usually not very much of that. It's not a customs and excise point. Unless Stephanie wants to come in in her last meeting and give a much more elegant answer than I was able to do.
No, no. I was just going to add to that. If it's helpful, once a year we publish a tax report on our website, which will set out in more detail how and where we pay tax, and particularly by country. Again, you can very much see the different movements because as Douglas says, it's very much tax-led by jurisdiction and by entity. you are able to see each of the countries in that annual tax report.
Fred, you need to get a microphone.
Sorry? Yes. Yes. Thank you very much. How do you convey these figures to the stats office so they're getting the accurate figures in respect of your invisibles coming in? Obviously, it includes banking, insurance, shipping.
We-
Even tourism.
We-
All the money coming into Edinburgh, for example, from tourists.
Happily we don't have to report all the tourist money. We fill in. I can't believe how many government forms we fill in. What they do with it, I guess that's what produces the statistics, which are then almost always adjusted a quarter later. We all businesses produce government returns in relations, in relation to their revenue flows, their profits, and the jurisdictions from which they come, so we do that. I'm being reminded I have yet to take a question from the online shareholders. If Duncan Young could give me some help, that would be great.
Thank you, Chairman. We've had a handful of questions coming in through the online system. I'll start with two, if I may. The first one is from Jane Perry, who asks, "Please could you alternate AGMs between London and Edinburgh, as was the practice for Standard Life?" The 2nd question is from a Klaus Riedlinger who asks, "Do you plan to invest in crypto in the future?
We've had the last three AGMs in person in Edinburgh, then we had two years we didn't do them in person because of COVID. We're a Scottish company. We're registered in Edinburgh, it seems appropriate to have our meeting here. It's also, given that you should all be interested in this, it's a great deal cheaper to have the meeting in Edinburgh than to have it in London, 'cause it's really expensive to hold these meetings in London. We'll reflect, but I think we're quite comfortable having the meetings in Edinburgh, particularly as shareholders can now join online. It's not as if they don't have the opportunity to participate. The 2nd question was?
Crypto.
Oh, crypto. Gosh. Well, this is where the chief executive needs to... I mean, I hate the word crypto. We do... 'Cause most people think of it as crypto coin, which we are not fans of. If you think of it as terms of the technology that will, in many ways transform investing, we are interested in how that could lower the cost of investing and could give investors the opportunity to invest in different asset classes than they have today in a safe way. Stephen, you are the expert.
Thank you, Douglas. It's a great question because it's very important for businesses to understand technology and how they can apply it to providing faster, better, cheaper services to the customers, because if they don't, someone else will. We have invested in Archax. Archax, we're the largest external shareholder of Archax, which effectively is a digital securities exchange. It's a regulated digital securities exchange, which is very important because we are in the trust and confidence business. You don't want to be dealing with people that are not regulated, such as FTX, that everyone has seen reported. We believe very much in tokenization
Think about rather than crypto, the rails is distributed ledger technology, which is fast self-reconciling digital ledger technology that allows investments of all types, whether they be equities or fixed income or whether they be real assets, to be tokenized and bought and sold between counterparties and the system is always self-reconciled. It's an immutable transaction. It's faster, better, cheaper. We believe that it's important to understand those things, to test them, test them carefully. We have pilot programs currently underway within the company, such that as we work with our regulators, the FCA, and we operate within what's called a sandbox, which allows you to test and learn, that we can be part of this modern future of investing that uses these technologies that give customers better service. Yep.
Thanks, Stephen. I think we got two more questions online, and then I'll. If there's one final question in the room, I'll take that. Duncan.
Thank you, Chairman. The first question of the two is from Roger Edwin Higginson, who asks, "Was there any particular reason that the company name was changed from Aberdeen, a well-known Scottish town, to Aberdeen? Which in my opinion," he says, "is a somewhat unimaginative gimmick that doesn't do anything positive for the company." The 2nd question is from an Alan Marion Williams, who asks, "Could the board provide an overview of Aberdeen's latest position regarding ethnicity pay gap reporting in the U.K., particularly now the government guidelines have been introduced? Furthermore," he adds, "would the board be willing to meet with ShareAction and the Good Work Investor Coalition to discuss this issue further?
This is, it's really quite a simple question in terms of Aberdeen. We love the name Aberdeen. You can't protect the intellectual property of the name of a city. It belongs to Aberdeen the city. If you type Aberdeen into a search engine, you get directed to the football club. We're different from the football club. Hopefully more successful. So we couldn't protect it. We had to have a name that we could protect and actually many of our funds had the names A-B-E-R-D-E-E-N on it.
It's fascinating in a way that for a while we got a certain amount of jokes about the name that I was responding to them by saying, "So you've heard about the brand change then?" The number of people who recognize we've changed the name and who we are, they may not particularly like it or whatever, but now they've grown to very much like it. All the analysis we do in terms of brands, this has been one of the most successful in terms of recognition, in terms of people understanding what it stands for, this has been one of the most dramatically successful brand launches, renames that's ever been done. You've all, you know, we've all seen it, and you can see the branding behind you. It's been successful.
We started off, we couldn't use the name Aberdeen because we couldn't protect it. In relation to ethnicity pay gap, we're working on it. We do gender pay gap at the moment. One of the challenges with ethnicity pay gap is that you need to have the data. We can't force people to declare their ethnicity, we want to expand the number of people who are prepared to share that data, then we will collect the data relative to pay, we will publish it. As we all know, the pay gap more reflects the position of people in the company in terms of whether they're in lower paid jobs or higher paid jobs. It does not reflect that people are paid differently for doing the same job.
That is illegal, and we don't do it. What is encouraging is that the proportion of those who would be regarded under the definitions as ethnic as graduate entries are now a higher proportion than they've ever been. That will do two things. One, it will hopefully improve things in the future as they progress through the system, but it will also mean that there'll be more people at the bottom because they're just graduates coming into the business as opposed to those who've been in it. Some of our most senior fund managers are defined as ethnic, even though they've been with us for a long period of time and so on. Will we meet with ShareAction? Of course, we will. Yes. Delighted. Is there a final question in the. There are two final questions.
I always do this, and I always regret doing, "Is there a final question?" 'cause it's always the one that you're going, "I don't really want to." Anyway, there's a gentleman at the front, and then there's a gentleman in the middle. Let's see if I've done what I usually do.
Thank you. My name's Terry Maxwell. A couple of questions on things that are said in the annual report and accounts. First one that puzzles me a little bit was on Page 270 in the context of the acquisition of ii, where it starts by saying, "The company acquired 100% of the issue share capital of Antler Holding Company Limited," which then goes on to define as Antler. Goes on to state, "The company subsequently increased its investment in Antler by GBP 139.2 million through the purchase of 139,163,986 ordinary shares." I'm just a little bit confused. Having already bought 100%, how can you increase above 100%?
Why are you paying another GBP 139.2 million when you already own 100%? My 2nd question relates to comments on Page 123 of the annual report and accounts in the context of remuneration policy, where it states, "The circumstances in which malus or clawback would apply include," and a number of bullet points, one of which is, "A material downturn in the financial performance of the company, the company's group or any member or business units of the company for which the relevant participant works or has responsibility or accountability." In the context of a profit after tax on a IFRS basis of GBP 995 million in 2021 being turned into a loss of GBP 549 million in 2022.
The graph on Page 113 of the annual report and accounts that shows how far the company's share price has underperformed the FTSE 100 Index over the last two years. My question is basically, how bad does it have to get before the Remuneration Committee would recognize a material downturn in financial performance of the company, and so apply malus and/or clawback? Given that the board is collectively responsible for all the big decisions, i.e., the reserve matters, does this make the Remuneration Committee reluctant to acknowledge a material downturn in financial performance of the company?
On the 1st thing on Antler, I'm not gonna guess, but I think it was to do with the reorganization of the way that the interactive, its holding of interactive, which was held in a number of places, was reorganized. For us to buy all the shares, it was done in two. I'm getting nodding from my left. It was a reorganization. We only paid once, but the shares were held in different buckets within what was a private equity group. We acquired more from them. They put more stuff in it or something. We'll give you. We'll send you a note that sets that out if it's important. It was to do with the reorganization.
On malus and clawback, I will defer to our chair of our Remuneration Committee. Do you wish?
Go on. Be my guest.
Oh, well, he'll correct me in a minute. Basically, it's to avoid reward for failure. It's there to say if the formula has resulted in somebody being paid out, and yet the performance is completely different from what was expected, possibly because of something that was within the control of management, and they didn't control it well, but the way the scheme was designed, it still pays out, that's when you use malus and clawback, where the trigger is around the performance of the company. If the performance of the company is weaker because of externalities, I think we attempted to.
in my remarks and Stephen's remarks, to say that a lot of the problems and a lot of the issues that we faced in 2022, most notably market levels because of what was happening in Ukraine, were not the fault of management. What management did last year was, I think, extraordinarily important to the future of the company. The scorecard for the executive directors only vested something like 30% because the financial targets were not met. There was no need to apply malus. Jonathan, do you want to add anything?
Okay. As so often, Douglas, you need little support from your other board members.
All the support I can get.
We do specifically target, in relation to looking at material downturn, the position on adjusted operating profit. That's the 1st thing. We don't go up and down with the IFRS figures because they are so volatile, and the movement in intangibles can be driven by many things other than the performance of the executives. The second thing in relation to the performance against the FTSE, you will, if you look across the asset management industry, find similar declines in performance against the FTSE. We're talking about a cyclical sector change rather than one that particularly singles out Aberdeen. Indeed, as Stephen pointed out in his earlier remarks, actually over the last 12 months, we haven't performed too badly compared to even Schroders or similar organizations. The 3rd point I think bears thinking about as well. You're absolutely right.
The section in the policy says the circumstances in which malus or clawback would apply include. You have to remember the previous paragraph. The previous paragraph says, under the malus and clawback provisions, the Remuneration Committee has the ability to reduce rewards. It has not the requirement. Our job as a Remuneration Committee each year is to consider whether events that have taken place during the year, things that have changed during the year, justify, because of some element of perceived culpability, or poor behavior, justify, taking back, rewards which have already been committed in previous years. We do that. We actually go through, and it's, it's set out in the remuneration report.
We go through a process of looking in the round, at the remuneration outcomes and saying, do these, are these, in our view, fair and reasonable, or do they merit some adjustment? In practical terms, although in theory you could adjust them up as well as down, we are really only talking about negative adjustments in the modern world.
The other thing to say is I think it's often-forgotten is that we require our executive directors to own. They get paid a large portion of their compensation in shares, and they're required to own and hold a large portion of shares. In terms of share price movements, they bear exactly the same experience as any other shareholder. We'll take the last question, the gentleman, number three.
Thanks, Chairman. My name is Duncan Thompson. I'd just like to pick up a couple of figures that are in the report and accounts. Board and executive management gender representation, this seems extraordinarily low. Women, only 14%.
Sorry.
... your cost income ratio, for the investment arm, at 89%. Even that, the previous year was 79%. That seems extraordinarily high. Finally, the investment performance, which I guess you'd possibly classify mediocre if you're being generous. Over one, three or even five years, you're barely 50% outperforming the benchmarks.
Okay. The first figure surprises me, where were you looking at?
That is on Page 40 of your abbreviated resilience from diversification booklet. Halfway down the page. That's the percentage of executive management positions held by women, 14%.
Yeah.
One, four.
That's something we're absolutely working on. I mean, we actually have, relative to our peers, more senior female fund managers, i.e. the people that actually manage money. But there is a challenge in moving people through the ranks to get that number up. We're doing it. I mean, I don't know whether Stephen wants to comment on it or any of my colleagues. Yes, that's not good enough, and we need to do more. The cost income ratio, Stephen, I don't know if you want to address that. Of course, we agree with you, 79%, 89% is not acceptable, and that is a reflection of a whole bunch of things. Stephen will talk about what we're doing about it.
On the fund performance, you would actually find if you looked across our industry last year, this is not an excuse, it's just a question of fact. I mean, virtually every asset manager had a terrible performance in terms of benchmark. Last year, the best performing stocks were in oil and gas and mining. And given the fact that we were all reducing our exposure to oil and gas and mining, for example, you ended up underperforming the FTSE and so on and so forth because the largest contributors to fund performance last year were sectors that had been downplayed. 79%, 89%, Stephen?
Yeah, I mean, the, as I outlined in my presentation, when we laid out the strategy in March of 2021, it was to invest in businesses that had higher margin. If you allocate capital to businesses with higher margin, as we did with interactive investor, and as you grow your adviser business, you improve the cost income ratio. In our core business, our largest business, our investing business, the business is not efficient, and that is the challenge that we are. That's why we tabled, we have a plan to reduce costs and in the current year of GBP 75 million. We've given a number, and we've given the year that we'll do it in, and you can hold us to account in doing that. That reduces that cost because I don't like the number.
When I arrived here, I considered it an inefficient business, it's a product of multiple years. If you don't have the right product propositions with the right performance, you don't drive your top line. If you don't drive your top line, you end up subscale and your costs are too high as a proportion. That's exactly what it is. We are tackling it, but these are long cycle. I described it as long cycle changes. Nobody would want to make it better more quickly than me. Every action we have taken has been consistent with improving the growth prospects of the firm and the efficiency of the firm. This is a large, complex business with a very heavy weight of technology.
As a consequence, if you're trying to do that during a pandemic and a war, and then the interest rate's going from 0 to 5, you're doing it against headwinds. That doesn't mean that you should wait. You have to do it now, and that's why we're doing it now.
I've just been reminded, which is helpful. The executive management figure you talked about is just on our Executive Committee, which is a small group of people. The percentages, one or two people make a difference. If you go down the page and look at women in senior leadership, you'll see it's 39%. The target is over 40, so we're close. That's why I was a bit taken aback when I looked at that because I couldn't quite reconcile it in my mind. I misspoke. That's just the Executive Committee. Further down the page, women in senior leadership is 39%. We're gonna close the Q&A, and... Whoops, I've got to get off. Can I just say thank you to everyone for the questions.
I think we've covered all the questions in the room in some detail and the majority of the questions that were sent in online. If you did submit a question and we didn't get around to it, please send us an email and we will reply after today's meeting. Grab me and any of my colleagues outside, and we'll do our best. We'll soon bring today's meeting to a close. If you have not already finished voting, please could you do so. Cast your final votes now. For the shareholders joining us in person and voting by poll card, please could you ensure that you sign the poll card. We'll close the voting on today's resolutions in a few minutes.
We'll add the votes that are in the room and have been submitted online to the proxies that have been received in advance of the meeting. We'll publish the final results later this afternoon on our website. On behalf of the board, I'd like to thank you all for joining us today. On the way out, if you could drop your poll cards in the boxes or hand them to any of the stewards, that would be gratefully appreciated. On that note, I'll formally close the business of today's meeting closed and wish you all a very good afternoon. Hope the weather's got better, and thank you very much for joining us today. Thank you very much.