REG - Quilter PLC - Quilter plc - 2023 Full Year Results Part 2
06/03/2024 07:15
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RNS Number : 7213F Quilter PLC 06 March 2024
Statement of Directors' responsibilities
in respect of the preliminary announcement of the Annual Report and the
financial statements
The Directors confirm to the best of their knowledge:
· The results in this preliminary announcement have been taken from
the Group's 2023 Annual Report, which will be available on the Company's
website on 22 March 2024; and
· The financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Group.
Signed on behalf of the Board
Steven Levin
Mark Satchel
Chief Executive Officer Chief
Financial Officer
6 March 2024
Consolidated statement of comprehensive income
For the year ended 31 December 2023
£m
Notes Year ended Year ended
31 December 31 December
2023 2022
Income
Fee income and other income from service activities 542 581
Investment return 4,075 (4,649)
Other income 9 28
Total income 4,626 (4,040)
Expenses
Change in investment contract liabilities 15 (3,313) 4,318
Fee and commission expenses, and other acquisition costs (49) (54)
Change in third-party interests in consolidated funds (579) 438
Other operating and administrative expenses (575) (584)
Finance costs (22) (13)
Total expenses (4,538) 4,105
Profit before tax 88 65
Tax (expense)/credit attributable to policyholder returns 7(a) (76) 134
Profit before tax attributable to shareholder returns 12 199
Income tax (expense)/credit 7(a) (46) 110
Less: tax expense/(credit) attributable to policyholder returns 76 (134)
Tax credit/(expense) attributable to shareholder returns 30 (24)
Profit after tax attributable to the owners of the Company 42 175
Total comprehensive income 42 175
Earnings per Ordinary Share
Basic earnings per Ordinary Share (pence) 8 3.1 12.2
Diluted earnings per Ordinary Share (pence) 8 3.1 12.0
All income and expenses relate to continuing operations.
Consolidated statement of financial position
At 31 December 2023
£m
Notes 31 December 31 December
2023 2022
Assets
Goodwill and intangible assets 9 372 413
Property, plant and equipment 91 112
Investment property 10 -
Investments in associates 2 1
Contract costs 16 10
Loans and advances 38 34
Financial investments 10 50,329 43,617
Deferred tax assets 91 94
Current tax receivable 33 10
Trade, other receivables and other assets 447 303
Derivative assets 57 40
Cash and cash equivalents 13 1,859 1,782
Assets held for sale - 1
Total assets 53,345 46,417
Equity and liabilities
Equity
Ordinary Share capital 14 115 115
Ordinary Share premium reserve 14 58 58
Capital redemption reserve 346 346
Share-based payments reserve 42 41
Other reserves - (1)
Retained earnings 958 989
Total equity 1,519 1,548
Liabilities
Investment contract liabilities 15 43,396 38,186
Third-party interests in consolidated funds 7,444 5,843
Provisions 16 46 69
Deferred tax liabilities 64 24
Current tax payable 2 1
Borrowings and lease liabilities 279 290
Trade, other payables and other liabilities 570 436
Derivative liabilities 25 20
Total liabilities 51,826 44,869
Total equity and liabilities 53,345 46,417
Approved by the Board of Directors and authorised for issue on 6 March 2024
and signed on its behalf:
Steven Levin Mark Satchel
Chief Executive Officer Chief Financial Officer
Consolidated statement of changes in equity
For the year ended 31 December 2023
£m
Year ended 31 December 2023 Ordinary Ordinary Share B shares Capital redemption reserve Merger Share-based payments reserve Other reserves Retained earnings Total
Share premium reserve reserve share-
capital holders'
equity
Balance at 1 January 2023 115 58 - 346 - 41 (1) 989 1,548
Profit after tax attributable to the owners of the Company - - - - - - - 42 42
Total comprehensive income - - - - - - - 42 42
Dividends - - - - - - - (65) (65)
Acquisition of own shares(1) - - - - - - - (14) (14)
Movement in own shares - - - - - - - (13) (13)
Exchange rate movement (ZAR/GBP)(2) - - - - - - - 2 2
Equity-settled share-based payment transactions - - - - - - - 18 18
Aggregate tax effects of items recognised directly in equity - - - - - 1 - - 1
Total transactions with the owners of the Company - - - - - 1 - (72) (71)
Transfer to retained earnings - - - - - - 1 (1) -
Balance at 31 December 2023 115 58 - 346 - 42 - 958 1,519
£m
Year ended 31 December 2022 Notes Ordinary Ordinary Share B shares Capital redemption reserve Merger Share-based payments reserve Other reserves Retained earnings Total
Share premium reserve reserve share-
capital holders'
equity
Balance at 1 January 2022 116 58 - 17 25 42 (1) 1,482 1,739
Profit after tax attributable to the owners of the Company - - - - - - - 175 175
Total comprehensive income - - - - - - - 175 175
Dividends - - - - - - - (78) (78)
Ordinary Shares repurchased in the buyback programme(3) 14 (1) - - 1 - - - - -
Issue of B shares(4) 14 - - 328 - (25) - - (303) -
Redemption of B shares(4) 14 - - (328) 328 - - - (328) (328)
Exchange rate movement (ZAR/GBP)(2) - - - - - - - (4) (4)
Movement in own shares - - - - - - - 22 22
Equity-settled share-based payment transactions - - - - - 1 - 23 24
Aggregate tax effects of items recognised directly in equity - - - - - (2) - - (2)
Total transactions with the owners of the Company (1) - - 329 (25) (1) - (668) (366)
Balance at 31 December 2022 115 58 - 346 - 41 (1) 989 1,548
(1)In November 2023, as a result of an Odd-lot Offer, Quilter plc purchased
15,798,423 of its own Ordinary Shares for £14 million. Those shares were
gifted to the Employee Benefit Trust and are held as treasury shares.
(2)For shares registered on the Johannesburg Stock Exchange, the amounts of
proposed dividends and share buybacks are set in South African Rand on the
relevant Market Announcement date which is prior to the date of payment. The
impact of exchange rate movements between these dates is recognised directly
in equity. The Group held cash in South African Rand equal to the expected
cash outflows and therefore was economically hedged for these payments.
(3)On 11 March 2020, the Company announced a share buyback programme to
purchase Ordinary Shares up to a maximum value of £375 million, in order to
return the net surplus proceeds arising from the sale of Quilter Life
Assurance to shareholders. During 2022, the Company acquired 17.7 million
shares for a total consideration of £26 million and incurred additional costs
of £1 million. The Company had committed to the buyback of these shares
during 2021 and had recognised an accrual for £26 million as at 31 December
2021. This was the final tranche of the share buyback programme and was
completed in January 2022. The shares, which have a nominal value of £1
million, were subsequently cancelled, giving rise to a capital redemption
reserve of the same value as required by the Companies Act 2006.
(4)On 9 March 2022, the Company announced a capital return of £328 million
from the net surplus proceeds arising from the sale of Quilter International
by way of a B Share Scheme accompanied by a Share Consolidation. Refer to note
14 for further details of the capital return and Share Consolidation.
Following the issue and redemption of the B preference shares as part of the B
Share Scheme, the Company transferred £328 million from retained earnings to
the capital redemption reserve, as required under the provisions of sections
688 and 733 of the Companies Act 2006, being an amount equal to the nominal
value of the B shares redeemed. The increase in the capital redemption reserve
results from the UK company law requirement to maintain the company's capital
when shares are redeemed out of the company's distributable profits.
Consolidated statement of cash flows
For the year ended 31 December 2023
The cash flows presented in this statement cover all the Group's activities
and include flows from both policyholder and shareholder activities. All cash
and cash equivalents are available for general use by the Group for the
purposes of the disclosures required under IAS 7 Statement of Cash Flows
except for cash and cash equivalents in consolidated funds (as shown in note
13).
£m
Notes Year ended Year ended
31 December 31 December
2023 2022
Cash flows from operating activities
Cash flows from operating activities 2,137 1,698
Taxation paid (26) (22)
Total net cash flows from operating activities 13(b) 2,111 1,676
Cash flows from investing activities
Net purchases and sales of financial investments (1,908) (1,494)
Purchase of property, plant and equipment (1) (3)
Proceeds from sale of property, plant and equipment held for sale 1 -
Acquisition of interests in subsidiaries(1) - (5)
Increase in investment in associate (1) -
Total net cash flows from investing activities (1,909) (1,502)
Cash flows from financing activities
Dividends paid to the owners of the Company (65) (78)
Finance costs on borrowings (18) (9)
Payment of interest on lease liabilities (3) (3)
Payment of principal of lease liabilities (9) (11)
Quilter plc shares acquired under the Odd-lot Offer(2) (14) -
Quilter plc shares acquired for use within the Group's employee share scheme (15) -
Redemption of B shares(3) - (328)
Repurchase and cancellation of Ordinary Shares(4) - (28)
Exchange rate movements passed to shareholders(5) 2 (4)
Proceeds from the issue of subordinated debt 199 -
Subordinated debt repaid (200) -
Total net cash flows from financing activities (123) (461)
Net increase/(decrease) in cash and cash equivalents 79 (287)
Cash and cash equivalents at the beginning of the year 1,782 2,064
Effect of exchange rate changes on cash and cash equivalents (2) 5
Cash and cash equivalents at the end of the year 13(a) 1,859 1,782
(1)The acquisition of interests in subsidiaries in 2022 resulted from
contingent consideration payments relating to historical acquisitions.
(2)Further information relating to the Odd-lot Offer is included within the
consolidated statement of changes in equity.
(3)In March 2022, the Company announced a capital return of £328 million from
the net surplus proceeds arising from the sale of Quilter International by way
of a B Share Scheme accompanied by a Share Consolidation. The capital return
was completed in May 2022.
(4)The repurchase and cancellation of Ordinary Shares outflow relates to the
cash movements associated with the share buyback programme. Further details
are included within the consolidated statement of changes in equity.
(5)The exchange rate movements passed to shareholders relate to foreign
exchange gains or losses that have arisen on the capital return and dividend
payments to JSE shareholders. Further details are included within the
consolidated statement of changes in equity.
( )
Notes to the condensed consolidated financial statements
For the year ended 31 December 2023
General information
Quilter plc (the "Company", the "Parent Company"), a public limited company
incorporated in England and Wales and domiciled in the United Kingdom ("UK"),
together with its subsidiaries (collectively, the "Group") offers investment
and wealth management services, long-term savings and financial advice
primarily in the UK. Quilter plc is listed on the London and Johannesburg
Stock Exchanges.
The Company's registration number is 06404270. The address of the registered
office is Senator House, 85 Queen Victoria Street, London, EC4V 4AB.
1: Basis of preparation
The results in this preliminary announcement have been taken from the Group's
2023 Annual report which will be available on the Company's website on 22
March 2024. These condensed consolidated financial statements of Quilter plc
for the year ended 31 December 2023 have been prepared in accordance with
UK-adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
These condensed consolidated financial statements have been prepared on a
historical cost basis, except for the revaluation of certain financial
instruments which are held at fair value, and are presented in pounds
sterling, which is the currency of the primary economic environment in which
the Group operates.
Going concern
The Directors have considered the resilience of the Group, its current
financial position, the principal risks facing the business and the
effectiveness of any mitigating strategies which are or could be applied. This
included an assessment of capital and liquidity over a three-year planning
period covering 2024 to 2026. This assessment incorporated a number of stress
tests covering a broad range of scenarios, including economic and market
shocks of up to 40% falls in equity markets, mass lapse events, new business
growth scenarios and severe business interruption, equivalent to 1‑in‑50
and 1‑in‑200 year events. As part of the going concern assessment, the
Group took into consideration the current position of the UK and global
economy including the impact of inflation and increases in the cost of living.
The Group also considered how climate-related risks and opportunities affect
operations, investment activities and advice and distribution activities and
their impact on specific projects and initiatives, estimates and judgements.
Based on the assessment, the Directors believe that both the Group and Quilter
plc, have sufficient financial resources to continue in business for a period
of at least 12 months from the date of approval of these financial statements
and continue to adopt the going concern basis in preparing the Group and
Parent Company financial statements. Further information is contained in the
viability statement and going concern section of the Annual Report.
Liquidity analysis of the statement of financial position
The Group's statement of financial position is in order of liquidity. For each
asset and liability line item, those amounts expected to be recovered or
settled more than 12 months after the reporting date are disclosed separately
in the notes to the consolidated financial statements.
Critical accounting estimates and judgements
The preparation of financial statements requires management to exercise
judgement in applying the Group's material accounting policies and make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements. The Board Audit Committee
reviews these areas of judgement and estimates, and the appropriateness of
material accounting policies adopted in the preparation of these financial
statements.
Critical accounting judgements
The Group's critical accounting judgements are those that management makes
when applying its material accounting policies and that have the greatest
effect on the profit after tax and net assets recognised in the Group's
financial statements.
Recognition of provisions following the sale of Quilter International
Management exercised significant judgement in determining the accounting
treatment for a number of provisions related to business activities to
separate the business from the Group in respect of the sale of Quilter
International. Significant judgement was required to assess whether the costs
were directly attributable and incremental to the sale and whether a legal or
constructive obligation existed in order to recognise the provisions. See note
16 for further details.
Recognition of revenue from the advice business
Given the Group's business model for advice, management is required to
exercise significant judgment in assessing the capacity in which the Group is
contracting for the purposes of recognising revenue from the advice business
under IFRS 15 (Revenue from Contracts with Customers). As a result of the
assessment, management has determined that revenue from the advice business
should be presented net of certain fees and commissions payable to Appointed
Representatives of Quilter companies.
Critical accounting estimates
The Group's critical accounting estimates involve the most complex or
subjective assessments and assumptions, which have a significant risk of
resulting in material adjustment to the net carrying amounts of assets and
liabilities within the next financial year. Management uses its knowledge of
current facts and circumstances and applies estimation and assumption setting
techniques that are aligned with relevant actuarial and accounting standards
and guidance to make predictions about future actions and events. Actual
results may differ from those estimates.
Provision for the cost of defined benefit pension advice
An estimate is determined for unsuitable pension advice related to schemes
other than those concluded as part of the skilled person review, using a
methodology which takes account of recent experience of redress payments
calculated by an independent expert and applying a proportion of transfer
value to determine redress payable as an indicative provision. The
calculations are based upon FCA guidelines and modelling performed, and
factors including redress as a percentage of pension transfer value and opt-in
assumptions. See note 16 for further details.
Measurement of deferred tax
The estimation of future taxable profits is performed as part of the annual
business planning process, and is based on estimated levels of assets under
management and administration ("AuMA"), which are subject to a large number of
factors including global stock market movements, related movements in foreign
exchange rates and net client cash flows, together with estimates of expenses
and other charges. The Business Plan, adjusted for known and estimated tax
adjusting items, is used to determine the extent to which deferred tax assets
are recognised. The Group assesses the recoverability of shareholder assets
based on estimated taxable profits over a five-year horizon and assesses
policyholder assets based on estimated investment growth over the medium term.
To the extent that profit estimates extend beyond the normal three-year
planning cycle, average profits over the final two years of the plan are used.
Based on historic profitability, the Group has taken the approach to assess
the recoverability of deferred tax assets beyond the three-year planning cycle
for the first time in 2023. Future profit projections show the majority of
deferred tax assets being utilised over the next three years. Management has
reassessed the sensitivity of the recoverability of deferred tax assets based
on the latest forecast cash flows.
Other principal estimates
The Group's assessment of goodwill and intangible assets for impairment uses
the latest cash flow forecasts from the Group's three-year Business Plan.
These forecasts include estimates relating to equity market levels and growth
in AuMA in future periods, together with levels of new business growth, net
client cash flows, revenue margins, and future expenses and discount rates
(see note 9). These forecasts take account of climate-‑related risks and
other responsible business considerations. Management does not consider that
the use of these estimates has a significant risk of causing a material
adjustment to the carrying amount of the assets within the next financial
year.
2: New standards, amendments to standards, and interpretations adopted by the
Group
IFRS 17 became effective on 1 January 2023. The Group has assessed all
relevant contracts with policyholders. Based on this assessment, it was
determined that there are no contracts that will be accounted for under IFRS
17.
The amendments to accounting standards in the table below became applicable
for the current reporting year, with no material impact on the Group's
consolidated results, financial position or disclosures.
The Group has applied the narrow scope amendment to IAS 12 Income Taxes in
respect of the OECD Pillar II international tax rules issued in the current
period. In doing so, the Group has applied the exception in IAS 12.4A and
accordingly will not recognise or disclose information about deferred tax
assets and liabilities related to Pillar II income taxes.
Adopted by the Group from Amendments to standards
1 January 2023 Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors - Definition of Accounting Estimates
1 January 2023 Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice
Statement 2 Making Materiality Judgements - Disclosure of Accounting Policies
1 January 2023 Amendments to IAS 12 Income Taxes - Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
1 January 2023 Amendments to IAS 12 Income Taxes - International Tax Reform - Pillar Two
Model Rules
3: Significant changes in the year
Repayment and new issue of Fixed Rate Reset Subordinated Notes
On 18 January 2023, the Company issued £200,000,000 8.625% Fixed Rate Reset
Subordinated Notes (due 18 April 2033) and received net cash proceeds of £199
million. After deducting structuring costs and professional fees, the retained
cash proceeds were £197 million. The Notes are listed and regulated under the
terms of the London Stock Exchange. On 28 February 2023, the Company repaid
the existing £200,000,000 4.478% Fixed Rate Reset Subordinated Notes (due 28
February 2028).
4: Business combinations
4(a): Business disposals
There have been no material disposals of businesses during 2022 and 2023 and
there were no profit or loss impacts relating to past business disposals in
either year.
The Group made the final payment of £4 million during 2023 in respect of the
closure of the warranty relating to the sale of the Single Strategy business.
There were no inflows or outflows of cash relating to discontinued operations
during 2022 or 2023.
4(b): Business acquisitions
There have been no acquisitions of businesses during 2022 and 2023. A final
amount of contingent consideration of £5 million was paid in 2022 in respect
of acquisitions prior to 2022. No payments were required in 2023.
Contingent consideration represented the Group's best estimate of the amount
payable in relation to each acquisition discounted to net present value. The
basis used for each acquisition varied but included payments based on a
percentage of the level of assets under administration, funds under management
and levels of ongoing fee income at future dates.
4(c): Assets held for sale
Assets classified as held for sale in 2022 related to a leasehold interest in
an office property which was vacant and was subsequently sold in April 2023.
5: Alternative performance measures
5(a): Adjusted profit before tax and reconciliation to profit after
tax
Basis of preparation of adjusted profit before tax
Adjusted profit before tax is one of the Group's alternative performance
measures ("APMs") and represents the Group's IFRS profit, adjusted for
specific items that management considers to be outside of the Group's normal
operations or one-off in nature, as detailed in note 5(b). Adjusted profit
before tax does not provide a complete picture of the Group's financial
performance, which is disclosed in the statement of comprehensive income, but
is instead intended to provide additional comparability and understanding of
the financial results.
£m
Notes Year ended Year ended
31 December 31 December
2023 2022
Affluent 124 105
High Net Worth 41 45
Head Office 2 (16)
Adjusted profit before tax 6(b) 167 134
Adjusting items:
Impact of acquisition and disposal-related accounting 5(b)(i) (39) (42)
Business transformation costs 5(b)(ii) (28) (30)
Finance costs 5(b)(iii) (19) (10)
Customer remediation 5(b)(iv) (6) 12
Voluntary customer repayments 5(b)(v) - (6)
Exchange rate movement (ZAR/GBP) 5(b)(vi) (2) 4
Policyholder tax adjustments 5(b)(vii) (62) 138
Other adjusting items 5(b)(viii) 1 (1)
Total adjusting items before tax (155) 65
Profit before tax attributable to shareholder returns 12 199
Tax attributable to policyholder returns 7 76 (134)
Income tax (expense)/credit 7 (46) 110
IFRS profit after tax 42 175
5(b): Adjusting items
In determining adjusted profit before tax, the Group's IFRS profit before tax
is adjusted for specific items that management considers to be outside of the
Group's normal operations or one-off in nature. These are detailed below.
5(b)(i): Impact of acquisition and disposal-related accounting
The Group excludes any impairment of goodwill from adjusted profit as well as
the amortisation and impairment of acquired intangible assets, any acquisition
costs, finance costs related to the discounting of contingent consideration
and incidental items relating to past disposals.
The effect of these adjustments to determine adjusted profit are summarised
below.
£m
Year ended Year ended
31 December 31 December
2023 2022
Amortisation of acquired intangible assets 38 42
Impairment of acquired intangible assets(1) 1 -
Total impact of acquisition and disposal-related accounting 39 42
(1)The impairment of acquired intangible assets results from the impairment of
specific client books held within the Affluent operating segment as the Group
can no longer support the carrying value.
5(b)(ii): Business transformation costs
In 2023, business transformation costs totalled £28 million (2022: £30
million), the principal components of which are described below:
Business Simplification costs - 2023: £25 million, 2022: £17 million
The Business Simplification programme announced in November 2021, set the
target of £45 million of annualised run-rate cost savings by the end of 2024.
This target was achieved one year early. As announced at the half-year results
in 2023, the Group expects to achieve a further £50 million of annualised
run-rate savings by the end of 2025. Approximately £8 million of these
additional savings have been achieved during 2023 on a run-rate basis.
As at 31 December 2023, the Simplification programme delivered £53 million of
annualised run-rate savings. An incremental £30 million of annualised
run-rate savings were achieved during 2023 largely through the continued
rationalisation of the Group's technology and property estates together with a
reduction in support costs as we simplify the Group's structures and
organisation to support the two business segments, Affluent and High Net
Worth. During 2023, the Group spent £25 million (2022: £17 million) on
Simplification initiatives. Further implementation costs to deliver the
remaining annualised run-rate savings are estimated to be £78 million.
Investment in business costs - 2023: £1 million, 2022: £4 million
Investment in business costs of £1 million were incurred in 2023 as the Group
continues to enable and support advisers and clients and improve productivity
through better utilisation of technology.
Business separation costs following the sale of Quilter International - 2023:
£2 million, 2022: £nil
The Group sold Quilter International to Utmost Group in 2021 and entered into
a Transitional Service Agreement with the acquirer. The cost to the Group of
running the Transitional Service Agreement was £2 million in 2023.
Optimisation programme costs - 2023: £nil, 2022: £6 million
The Optimisation programme commenced in 2018 to provide closer business
integration, create central support, rationalise technology and reduce
third-party spend. The programme has now achieved its target of delivering
annualised run-rate cost savings of £65 million with total implementation
costs since inception of £87 million. This programme concluded in 2022 and no
costs were incurred in 2023.
Restructuring costs following the sale of Quilter Life Assurance - 2023:
£nil, 2022: £3 million
The Transitional Service Agreement following the sale of Quilter Life
Assurance in 2019 has now concluded. No restructuring costs relating to this
sale were incurred in 2023.
5(b)(iii): Finance costs
The nature of much of the Group's operations means that, for management's
decision-making and internal performance management, the effects of interest
costs on external borrowings are removed when calculating adjusted profit. For
2023, finance costs were £19 million (2022: £10 million).
5(b)(iv): Customer remediation
Lighthouse pension transfer advice provision - 2023: £6 million cost, 2022:
£12 million net income
The provision for the redress of British Steel Pension Scheme cases and other
defined benefit ("DB") to defined contribution ("DC") pension transfer advice
cases, excluding the impact of payments made, has increased by £2 million in
the year, which has been recognised as an increase in expenses (2022: £4
million credit). This increase reflects the impact of the review for
suitability of additional cases by an independent expert as part of the
Group-led past business review of DB to DC pension transfer advice and the
anticipated number of cases where customer redress is required. During the
year, £4 million of additional legal, consulting, and other costs were
incurred (2022: £4 million). These items have been excluded from adjusted
profit on the basis that the advice activities, to which the charge and
benefit relate, took place prior to the Group's acquisition of the business.
In 2022, insurance proceeds in relation to claims in respect of legal
liabilities arising in connection with Lighthouse's DB to DC pension transfer
advice cases were received, contributing £12 million to the Group's profit
before tax. Further details of the provision are provided in note 16.
5(b)(v): Voluntary customer repayments
In 2023, these costs were £nil (2022: £6 million) and relate to a change in
business policy during H2 2022. The voluntary repayments represent amounts to
be paid to customers relating to revenue previously recognised in respect of
Final Plan Closure receipts.
5(b)(vi): Exchange rate movements (ZAR/GBP)
In 2023, an expense of £2 million was incurred (2022: £4 million income) due
to foreign exchange movements on cash held in South African Rand in
preparation for payments to shareholders. In 2022, these payments related to
the capital return and Final Dividend paid in May 2022. In 2023, these
payments related to the dividends paid in May and September 2023. Cash was
converted to South African Rand upon announcement of the details of the
capital return and dividend payments to provide an economic hedge for the
Group. The foreign exchange movements are fully offset by an equal amount
taken directly to retained earnings.
5(b)(vii): Policyholder tax adjustments
In 2023, the total amount of policyholder tax adjustments to adjusted profit
is £62 million credit (2022: £138 million charge). Adjustments to
policyholder tax are made to remove distortions arising from market volatility
that can, in turn, lead to volatility in the policyholder tax adjustments
between periods. The recognition of the income received from policyholders
(which is included within the Group's income) to fund the policyholder tax
liability can vary in timing to the recognition of the corresponding tax
expense, creating volatility in the Group's IFRS profit or loss before tax.
Note 7 provides further information on the impact of markets on the
policyholder tax adjustment. Adjustments are also made to remove policyholder
tax distortions from other non-operating adjusting items.
5(b)(viii): Other adjusting items
In 2023, income of £1 million was received (2022: £1 million cost) in
relation to the settlement offer received for the indemnification asset that
was impaired in 2022.
5(c): Reconciliation of IFRS income and expenses to "Total net revenue" and
"Operating expenses" within adjusted profit
This reconciliation shows how each line of the Group's IFRS income and
expenses are allocated to the Group's APMs: Net management fees, Other
revenue, Investment revenue, Total net revenue and Operating expenses which
form the Group's adjusted profit before tax. The total column in the table
below, down to "Profit before tax attributable to shareholder returns",
reconciles to each line of the consolidated statement of comprehensive income.
Allocations are determined by management and aim to show the Group's sources
of profit (net of relevant directly attributable expenses). These allocations
remain consistent from period to period to ensure comparability, unless
otherwise stated.
£m
Year ended 31 December 2023 Net mgmt. fees(1) Other revenue(1) Investment revenue(1) Total net revenue(1) Operating expenses(1) Adjusted profit before tax Consol. of funds(2) Total
Income
Fee income and other income from service activities 527 86 - 613 - 613 (71) 542
Investment return(3) 48 3,285 68 3,401 - 3,401 674 4,075
Other income - - - - 9 9 - 9
Total income 575 3,371 68 4,014 9 4,023 603 4,626
Expenses
Change in investment contract liabilities(3) (25) (3,282) (6) (3,313) - (3,313) - (3,313)
Fee and commission expenses, and other acquisition costs (46) - - (46) - (46) (3) (49)
Change in third-party interests in consolidated funds - - - - - - (579) (579)
Other operating and administrative expenses (13) (5) - (18) (536) (554) (21) (575)
Finance costs - - - - (22) (22) - (22)
Total expenses (84) (3,287) (6) (3,377) (558) (3,935) (603) (4,538)
Tax expense attributable to policyholder returns (76) - - (76) - (76) - (76)
Profit before tax attributable to shareholder returns 415 84 62 561 (549) 12 - 12
Adjusting items:
Impact of acquisition and disposal-related accounting - - - - 39 39
Business transformation costs - - - - 28 28
Finance costs - - - - 19 19
Customer remediation - - - - 6 6
Exchange rate movements (ZAR/GBP) - 2 - 2 - 2
Policyholder tax adjustments 62 - - 62 - 62
Other adjusting items - - - - (1) (1)
Adjusting items 62 2 - 64 91 155
Adjusted profit before tax 477 86 62 625 (458) 167
( 1)The APMs "Net management fees", "Other revenue", "Investment revenue",
"Total net revenue" and "Operating expenses" are commented on within the
Financial review. In the financial statements for 2022, interest income on
shareholder cash and cash equivalents and interest income on customer cash and
cash equivalents was previously presented within "Other revenue". For 2023, in
order to provide additional information to the users of the Group's financial
reporting, interest income on shareholder cash and cash equivalents has been
presented separately as Investment revenue and interest income on customer
cash and cash equivalents has been presented within Net management fees.
Disclosures for the prior year have been re-presented to ensure comparability.
(2)Consolidation of funds shows the grossing up impact to the Group's profit
or loss as a result of the consolidation of funds requirements. This grossing
up is excluded from the Group's adjusted profit.
(3)Reported within net management fees, investment return of £48 million
represents £30 million interest income on investments held for the benefit of
policyholders and £18 million net interest income on client money balances.
Change in investment contract liabilities of £25 million represents the
amount of interest income paid to policyholders. The net balance of £23
million of interest income on customer balances was retained by the Group for
2023. The £68 million investment return less £6 million change in investment
contract liabilities paid to customers on transactional cash balances, as
reported within investment revenue, represents £62 million of net interest
income on shareholder cash and cash equivalents.
£m
Year ended 31 December 2022 Net mgmt. fees(1) Other revenue(1) Investment revenue(1) Total net revenue(1) Operating expenses(1) Adjusted profit before tax Consol. of funds(2) Total
Income
Fee income and other income from service activities 548 95 - 643 - 643 (62) 581
Investment return(3) 12 (4,320) 16 (4,292) - (4,292) (357) (4,649)
Other income - 5 - 5 21 26 2 28
Total income 560 (4,220) 16 (3,644) 21 (3,623) (417) (4,040)
Expenses
Change in investment contract liabilities(3) (5) 4,323 - 4,318 - 4,318 - 4,318
Fee and commission expenses, and other acquisition costs (46) 1 - (45) - (45) (9) (54)
Change in third-party interests in consolidated funds - - - - - - 438 438
Other operating and administrative expenses (15) - - (15) (557) (572) (12) (584)
Finance costs - - - - (13) (13) - (13)
Total expenses (66) 4,324 - 4,258 (570) 3,688 417 4,105
Tax credit attributable to policyholder returns 134 - - 134 - 134 - 134
Profit before tax attributable to shareholder returns 628 104 16 748 (549) 199 - 199
Adjusting items:
Impact of acquisition and disposal-related accounting - - - - 42 42
Business transformation costs - - - - 30 30
Finance costs - - - - 10 10
Customer remediation - - - - (12) (12)
Voluntary customer repayments - - - - 6 6
Exchange rate movements (ZAR/GBP) - (4) - (4) - (4)
Policyholder tax adjustments (138) - - (138) - (138)
Other adjusting items - - - - 1 1
Adjusting items (138) (4) - (142) 77 (65)
Adjusted profit before tax 490 100 16 606 (472) 134
(1)The APMs "Net management fees", "Other revenue", "Investment revenue",
"Total net revenue" and "Operating expenses" are commented on within the
Financial review. In the 2022 financial statements, interest income on
shareholder cash and cash equivalents and interest income on customer cash and
cash equivalents was previously presented within "Other revenue". For 2023, to
provide additional information to the users of the Group's financial
reporting, interest income on shareholder cash and cash equivalents has been
presented separately as Investment revenue and interest income on customer
cash and cash equivalents has been presented within Net management fees.
Disclosures for the prior year have been re-presented to ensure comparability.
(2)Consolidation of funds shows the grossing up impact to the Group's profit
or loss as a result of the consolidation of funds requirements. This grossing
up is excluded from the Group's adjusted profit.
(3)Reported within net management fees, investment return of £12 million
represents £5 million interest income on investments held for the benefit of
policyholders and £7 million net interest income on client money balances.
Change in investment contract liabilities of £5 million represents the amount
of interest income paid to policyholders. The net balance of £7 million of
interest income on customer balances was retained by the Group for 2022. The
£16 million investment return, as reported within investment revenue, relates
to interest income on shareholder cash and cash equivalents.
6: Segment information
6(a): Segment presentation
The Group's operating segments comprise High Net Worth and Affluent, which is
consistent with the manner in which the Group is structured and managed. For
2022 and 2023, these segments have been classified as continuing operations.
Head Office includes certain revenues and central costs that are not allocated
to the segments.
Adjusted profit before tax is an APM reported to the Group's management and
Board. Management and the Board use additional performance indicators to
assess the performance of each of the segments, including net client cash
flows, assets under management and administration, total net revenue and
operating margin.
Consistent with internal reporting, income and expenses that are not directly
attributable to a particular segment are allocated between segments where
appropriate. The Group accounts for inter-segment income and transfers as if
the transactions were with third parties at current market prices.
The segment information in this note reflects the adjusted and IFRS profit
measures for each operating segment as provided to management and the Board.
Income is analysed in further detail for each operating segment in note 6(b).
High Net Worth
This segment comprises Quilter Cheviot and Quilter Cheviot Financial Planning.
Quilter Cheviot provides discretionary investment management predominantly in
the United Kingdom with bespoke investment portfolios tailored to the
individual needs of high net worth clients, charities, companies and
institutions through a network of branches in London and the regions.
Investment management services are also provided by operations in the Channel
Islands and Ireland.
Quilter Cheviot Financial Planning provides financial advice for protection,
mortgages, savings, investments and pensions predominantly to high net worth
clients.
Affluent
This segment is comprised of Quilter Investment Platform, Quilter Investors
and Quilter Financial Planning.
Quilter Investment Platform is a leading investment platform provider of
advice-based wealth management products and services in the UK, which serves a
largely Affluent client base through advised multi-channel distribution.
Quilter Investors is a leading provider of investment solutions in the UK
multi-asset market. It develops and manages investment solutions in the form
of funds for the Group and third-party clients. It has several fund ranges
which vary in breadth of underlying asset class.
Quilter Financial Planning is a restricted and independent financial adviser
network providing mortgage and financial planning advice and financial
solutions for both individuals and businesses through a network of
intermediaries. It operates across all markets, from wealth management and
retirement planning advice through to dealing with property wealth and
personal and business protection needs.
Head Office
In addition to the Group's two operating segments, Head Office comprises the
investment return on centrally held assets, central support function expenses,
central core structural borrowings and certain tax balances.
6(b): Adjusted profit statement - segment information for the year ended 31
December 2023
The table below presents the Group's operations split by operating segment,
reconciling IFRS profit (or loss) to adjusted profit before tax. The Total
column reconciles to the consolidated statement of comprehensive income.
£m
Operating segments
Notes Affluent High Head Office Consolidation adjustments(1) Total
Net
Worth
Income
Premium-based fees 66 20 - - 86
Fund-based fees 336 172 - (71) 437
Fixed fees 1 - - - 1
Other fee and commission income 18 - - - 18
Fee income and other income from service activities 421 192 - (71) 542
Investment return(2) 3,361 19 28 667 4,075
Other income 88 1 - (80) 9
Segment income 3,870 212 28 516 4,626
Expenses
Change in investment contract liabilities(2) (3,313) - - - (3,313)
Fee and commission expenses, and other acquisition costs (47) - - (2) (49)
Change in third-party interests in consolidated funds - - - (579) (579)
Other operating and administrative expenses (387) (205) (41) 58 (575)
Finance costs (3) - (26) 7 (22)
Segment expenses (3,750) (205) (67) (516) (4,538)
Profit/(loss) before tax 120 7 (39) - 88
Tax expense attributable to policyholder returns (76) - - - (76)
Profit/(loss) before tax attributable to shareholder returns 44 7 (39) - 12
Adjusting items:
Impact of acquisition and disposal-related accounting 5(b)(i) 7 32 - - 39
Business transformation costs 5(b)(ii) 5 3 20 - 28
Finance costs 5(b)(iii) - - 19 - 19
Customer remediation 5(b)(iv) 6 - - - 6
Exchange rate movements (ZAR/GBP) 5(b)(vi) - - 2 - 2
Policyholder tax adjustments 5(b)(vii) 62 - - - 62
Other adjusting items 5(b)(viii) - (1) - - (1)
Adjusting items before tax 80 34 41 - 155
Adjusted profit before tax 124 41 2 - 167
(1)Consolidation adjustments comprise the elimination of inter-segment
transactions and the consolidation of investment funds.
(2)Investment return and change in investment contract liabilities includes
net £23 million of interest income on customer cash and cash equivalents
retained by the Group. Investment return total also includes £62 million of
interest income on shareholder cash and cash equivalents.
6(c): Adjusted profit statement - segment information for the year ended 31
December 2022
£m
Operating segments
Notes Affluent High Head Office Consolidation adjustments(1) Total
Net Worth
Income
Premium-based fees 75 21 - - 96
Fund-based fees 356 181 - (62) 475
Fixed fees 2 - - - 2
Other fee and commission income 8 - - - 8
Fee income and other income from service activities 441 202 - (62) 581
Investment return(2) (4,307) 9 8 (359) (4,649)
Other income 112 3 5 (92) 28
Segment income (3,754) 214 13 (513) (4,040)
Expenses
Change in investment contract liabilities(2) 4,318 - - - 4,318
Fee and commission expenses, and other acquisition costs (46) - - (8) (54)
Change in third-party interests in consolidated funds - - - 438 438
Other operating and administrative expenses (410) (202) (53) 81 (584)
Finance costs (3) - (12) 2 (13)
Segment expenses 3,859 (202) (65) 513 4,105
Profit/(loss) before tax 105 12 (52) - 65
Tax credit attributable to policyholder returns 134 - - - 134
Profit/(loss) before tax attributable to shareholder returns 239 12 (52) - 199
Adjusting items:
Impact of acquisition and disposal-related accounting 5(b)(i) 10 32 - - 42
Business transformation costs 5(b)(ii) - - 30 - 30
Finance costs 5(b)(iii) - - 10 - 10
Customer remediation 5(b)(iv) (12) - - - (12)
Voluntary customer repayments 5(b)(v) 6 - - - 6
Exchange rate movements (ZAR/GBP) 5(b)(vi) - - (4) - (4)
Policyholder tax adjustments 5(b)(vii) (138) - - - (138)
Other adjusting items 5(b)(viii) - 1 - - 1
Adjusting items before tax (134) 33 36 - (65)
Adjusted profit/(loss) before tax 105 45 (16) - 134
(1)Consolidation adjustments comprise the elimination of inter-segment
transactions and the consolidation of investment funds.
(2)Investment return and change in investment contract liabilities includes
net £7 million interest income on customer cash and cash equivalents retained
by the Group. Investment return total also includes £16 million interest
income on shareholder cash and cash equivalents.
7: Tax
7(a): Tax charged/(credited)
£m
Year ended Year ended
31 December 31 December
2023 2022
Current tax
United Kingdom 2 12
Overseas tax - 1
Total current tax charge 2 13
Deferred tax
Origination and reversal of temporary differences 52 (120)
Effect on deferred tax of changes in tax rates (3) (1)
Adjustments to deferred tax in respect of prior years (5) (2)
Total deferred tax charge/(credit) 44 (123)
Total tax charged/(credited) 46 (110)
Attributable to policyholder returns 76 (134)
Attributable to shareholder returns (30) 24
Total tax charged/(credited) 46 (110)
Policyholder tax
Certain products are subject to tax on policyholders' investment returns. This
"policyholder tax" is an element of total tax expense. To make the tax expense
more meaningful, tax attributable to policyholder returns and tax attributable
to shareholder returns are shown separately in the consolidated statement of
comprehensive income.
The tax attributable to policyholder returns is the amount payable in the year
plus the movement of amounts expected to be payable in future periods. The
remainder of the tax expense is attributed to shareholders returns.
The Group's income tax charge was £46 million in 2023, compared to an income
tax credit of £110 million for 2022. The income tax charge/credit can vary
significantly year-on-year as a result of market volatility and the impact
this has on policyholder tax. The recognition of the income received from
policyholders to fund the policyholder tax liability (which is included within
the Group's income) can vary in timing to the recognition of the corresponding
policyholder tax expense, creating volatility in the Group's IFRS profit
before tax. An adjustment is made to adjusted profit to remove these
distortions, as explained further in note 5(b)(vii).
Market movements during 2023 resulted in investment gains of £298 million on
products subject to policyholder tax. The gain is a component of the total
"investment return" gain of £4,075 million shown in the consolidated
statement of comprehensive income. The tax impact of the £298 million
investment return gain is the primary reason for the £76 million tax charge
attributable to policyholder returns in 2023 (2022: £134 million credit).
UK Corporation Tax rate
The main rate of Corporation Tax increased from 1 April 2023 from 19% to 25%.
The blended rate of 23.5% has been used in calculating current tax for 2023
and any deferred tax assets and liabilities have been recognised at the new
rate of 25%.
First time recognition of deferred tax asset on tax losses
Within the £44 million total deferred tax charge the Group has recognised a
£30 million shareholder deferred tax credit in respect of previously
unrecognised losses.
Pillar II taxes
On 20 June 2023, the Finance (No. 2) Act 2023 was substantively enacted in the
UK, introducing the Pillar II minimum effective tax rate of 15%. The
legislation implements a Multinational Top-up Tax ("MTT") and a Domestic
Top-up Tax ("DTT"), effective for accounting periods starting on or after 31
December 2023. As these rules were not in effect during 2023, there was no
current tax impact for the year. The Group has applied the exception under IAS
12.4A and accordingly will not recognise or disclose information about
deferred tax assets and liabilities related to Pillar II income taxes.
The Group expects to exceed the qualifying multinational group revenue
threshold (€750m) in accounting periods from 1 January 2024 and so expects
to be within the scope of these new rules.
The Group continues to assess the full impact of the introduction of Pillar II
taxes in the countries in which it operates. In assessing the likely impact,
the Group has assessed the potential outcomes based on the latest tax
authority guidance in each of the relevant countries and historical financial
data for entities in the Group. The position in respect of these rules in each
of the Group's main territories is summarised below.
UK
The UK rules are complex and there remain areas of uncertainty in HMRC
guidance, especially with regards the tax treatment of the life business in
Quilter Life & Pensions Limited. Management has assessed the likely UK
impact based on current guidance and historical data. Although the Group may
expect the UK Pillar II ETR to be close to 15% in the near term, there are
scenarios where the rate may fall below the minimum rate. The Group is
therefore currently unable to estimate any future DTT charge on its UK
operations with any reasonable level of certainty.
The scope of the MTT means that a top-up tax charge may also arise in the UK
on profits earned in countries with lower tax rates in which the Group
operates, subject to a local qualifying domestic minimum tax. The Group's main
non-UK operations are in Jersey and Ireland. Ireland has enacted a qualifying
domestic minimum tax (see below), so no additional tax charge is expected to
arise in the UK on Irish operations. Jersey is expected to introduce a
qualifying domestic minimum tax in 2025. The Group's effective tax rate in
Jersey is expected to be around 10% and therefore a MTT liability in the range
of 0-5% of Jersey profits may arise in the UK during 2024. This is not
expected to have a material impact on the Group's tax charge or credit.
Jersey, Guernsey and the Isle of Man
The three Crown Dependencies issued a joint statement in May 2023 stating
their intention to introduce a domestic minimum tax in 2025. The Group does
not therefore expect to pay additional local tax in these countries during
2024. The Group will continue to monitor the developments in these countries.
Until such time as a qualifying domestic minimum tax is introduced, the Group
expects to pay a MTT in the UK in respect of any taxable profits arising in
these countries (see above).
Ireland
Ireland has introduced a qualifying domestic minimum tax. This has been
substantively enacted, effective for accounting periods starting on or after
31 December 2023. The Group's effective tax rate in Ireland is expected to be
around 12.5% and therefore an additional minimum tax charge in the range of
0-2.5% is expected to apply to any taxable profits arising in Ireland in 2024.
This is not expected to have a material impact on the Group's tax charge.
Other
The Group does not expect there to be any material Pillar II tax charge in any
other countries in which it is expected to have a presence during 2024.
7(b): Reconciliation of total income tax expense/(credit)
The income tax credited or charged to profit or loss differs from the amount
that would apply if all of the Group's profits from all the countries in which
the Group operates had been taxed at the UK standard Corporation Tax rate. The
difference in the effective rate is explained below:
£m
Year ended Year ended
31 December 31 December
2023 2022
Profit before tax 88 65
Tax at UK standard rate of 23.5% (2022: 19%) 21 12
Untaxed and low taxed income (1) (6)
Expenses not deductible for tax purposes 2 1
Net movements on unrecognised deferred tax assets(1) (29) (6)
Effect on deferred tax of changes in tax rates (3) (1)
Adjustments to deferred tax in respect of prior periods (5) (2)
Income tax attributable to policyholder returns (net of tax relief) 61 (108)
Total tax charged/(credited) to profit or loss 46 (110)
(1)Includes first time recognition of tax losses as explained in note 7(a).
7(c): Reconciliation of IFRS income tax credit or expense to income tax on
adjusted profit
£m
Note Year ended Year ended
31 December 31 December
2023 2022
Income tax expense/(credit)(1) 46 (110)
Tax on adjusting items
Impact of acquisition and disposal-related accounting 9 8
Business transformation costs 8 5
Finance costs 4 2
Exchange rate movements (ZAR/GBP) 1 (1)
Tax adjusting items
Policyholder tax adjustments 5(b)(vii) (62) 138
Other shareholder tax adjustments(2) 46 (19)
Tax on adjusting items 6 133
Less: tax attributable to policyholder returns within adjusted profit(3) (14) (4)
Tax charged on total adjusted profit 38 19
(1)Includes both tax attributable to policyholder and shareholder returns, in
compliance with IFRS.
(2)Other shareholder tax adjustments comprise the reallocation of adjustments
from policyholder tax as explained in note 5(b)(vii) and shareholder tax
adjustments for one‑off items in line with the Group's adjusted profit
policy, including first time recognition of shareholder deferred tax.
(3)Adjusted profit treats policyholder tax as a pre-tax expense (this includes
policyholder tax under IFRS and the policyholder tax adjustments) and is
therefore removed from the tax charge on adjusted profit.
8: Earnings per share
The Group calculates earnings per share ("EPS") on a number of different
bases. IFRS requires the calculation of basic and diluted EPS. Adjusted EPS
reflects earnings that are consistent with the Group's adjusted profit measure
and Headline earnings per share ("HEPS") is a requirement of the Johannesburg
Stock Exchange.
Pence
Framework Notes Year ended Year ended
31 December 31 December
2023 2022
Basic earnings per share IFRS 8(b) 3.1 12.2
Diluted basic earnings per share IFRS 8(b) 3.1 12.0
Adjusted basic earnings per share Group policy 8(b) 9.6 8.0
Adjusted diluted earnings per share Group policy 8(b) 9.4 7.9
Headline basic earnings per share (net of tax) JSE Listing Requirements 8(c) 3.2 12.6
Headline diluted earnings per share (net of tax) JSE Listing Requirements 8(c) 3.1 12.4
8(a): Weighted average number of Ordinary Shares
The table below summarises the calculation of the weighted average number of Ordinary Shares for the purposes of calculating basic and diluted earnings per share for each profit measure (IFRS, adjusted profit and Headline earnings). Details of the impact on the number of shares from the Quilter plc share buyback scheme are detailed in note 14.
Million
Year ended Year ended
31 December 31 December
2023 2022
Weighted average number of Ordinary Shares 1,404 1,496
Own shares including those held in consolidated funds and employee benefit (54) (58)
trusts
Basic weighted average number of Ordinary Shares 1,350 1,438
Adjustment for dilutive share awards and options(1) 24 26
Diluted weighted average number of Ordinary Shares 1,374 1,464
(1)The adjustment for dilutive share awards and options includes dividend
equivalent shares. Previously these shares were not included in the figures
presented in the 2022 financial statements. Comparatives have been updated and
there was no impact on the earnings per share.
8(b): Basic and diluted EPS (IFRS and adjusted profit)
£m
Notes Year ended Year ended
31 December 2023 31 December 2022
Profit after tax 42 175
Total adjusting items before tax 5(a) 155 (65)
Tax on adjusting items 7(c) (6) (133)
Less: Policyholder tax adjustments 7(c) (62) 138
Adjusted profit after tax 129 115
Pence
Post-tax profit Year ended Year ended
measure used 31 December 2023 31 December 2022
Basic EPS IFRS profit 3.1 12.2
Diluted EPS IFRS profit 3.1 12.0
Adjusted basic EPS Adjusted profit 9.6 8.0
Adjusted diluted EPS Adjusted profit 9.4 7.9
8(c): Headline earnings per share
+ + £m
Year ended Year ended
31 December 2023 31 December 2022
Gross Net of tax Gross(1) Net of tax(1)
Profit 42 175
Adjusted for:
- add back of impairment loss on property, plant and equipment - - 7 6
- add back of impairment loss on intangible assets 1 1 - -
Headline earnings 43 181
Headline basic EPS (pence) 3.2 12.6
Headline diluted EPS (pence) 3.1 12.4
(1)Figures were re-presented to address an issue with the signage of an
adjusting item for 2022 and to clearly present the tax effects of each
adjusting item in the prior year in line with the relevant guidance.
9: Goodwill and intangible assets
9(a): Analysis of goodwill and intangible assets
The table below shows the movements in cost and amortisation of goodwill and
intangible assets.
£m
Goodwill Software development costs Other intangible assets Total
Gross amount
1 January 2022 306 30 425 761
31 December 2022 306 30 425 761
Disposals(1) - (21) - (21)
31 December 2023 306 9 425 740
Accumulated amortisation and impairment losses
1 January 2022 - (22) (282) (304)
Amortisation charge for the year - (2) (42) (44)
31 December 2022 - (24) (324) (348)
Amortisation charge for the year - (2) (38) (40)
Disposals(1) - 21 - 21
Impairment of other intangibles - - (1) (1)
31 December 2023 - (5) (363) (368)
Carrying amount
31 December 2022 306 6 101 413
31 December 2023 306 4 62 372
(1)Following the completion of a number of strategic projects, the Group
reviewed the fixed asset register. Assets related to software development
costs with a cost of £21 million and an accumulated amortisation of £21
million (net book value: £nil) that were no longer held by the Group or no
longer in use have been disposed during the year.
9(b): Analysis of other intangible assets
31 December 31 December Average Average
2023 2022 estimated useful Period
life remaining
£m £m
Net carrying value
Distribution channels - Quilter Financial Planning 2 4 8 years 1 year
Customer relationships
Quilter Cheviot 32 59 10 years 1 year
Quilter Financial Planning 17 22 8 years 3 years
Quilter Cheviot Financial Planning(1) 10 14 8 years 3 years
Other 1 2 7 years < 1 year
Total other intangible assets 62 101
(1)Formerly known as Quilter Private Client Advisers.
9(c): Allocation of goodwill to cash-generating units ("CGUs") and impairment
testing
Goodwill is monitored by management at the level of the Group's two operating
segments: Affluent and High Net Worth. Both operating segments represent a
group of CGUs.
£m
31 December 31 December
2023 2022
Goodwill (net carrying amount)
Affluent 223 223
High Net Worth 83 83
Total goodwill 306 306
Impairment review
Goodwill in both the Affluent and High Net Worth CGU groups is tested for
impairment annually, or earlier if an indicator of impairment exists, by
comparing the carrying value of the CGU group to which the goodwill relates to
the recoverable value of that CGU group, being the higher of that CGU group's
value-in-use or fair value less costs to sell. If applicable, an impairment
charge is recognised when the recoverable amount is less than the carrying
value. Goodwill impairment indicators include sudden stock market falls, the
absence of positive Net Client Cash Flows ("NCCF"), significant falls in
profits and significant increases in the discount rate.
The goodwill balance has been tested for impairment at 31 December 2023 and
continues to demonstrate a surplus of the recoverable amount over the carrying
value of the CGUs. As a result, no impairment is required.
The following table shows the percentage change required in each key
assumption before the carrying value would exceed the recoverable amount,
assuming all other variables remain the same. This highlights that further
adverse movements in the key assumptions used in the CGU value-in-use
calculation would be required before an impairment would need to be
recognised.
Affluent High Net Worth
Reduction in forecast cash flows 27% 61%
Percentage point increase in the discount rate 9% 25%
Forecast cash flows are impacted by movements in underlying assumptions,
including equity market levels, revenue margins and NCCF. The Group considers
that forecast cash flows are most sensitive to movements in equity markets
because they have a direct impact on the level of the Group's fee income.
The principal sensitivity within equity market level assumptions relates to
the estimated growth in equity market indices included in the three-year cash
flow forecasts. Management forecasts equity market growth for each business
using estimated asset-specific growth rates that are supported by internal
research, historical performance, Bank of England forecasts and other external
estimates.
The Group has considered and assessed reasonably possible changes for other
key assumptions and has not identified any other instances that could cause
the carrying amount of CGUs to exceed its recoverable amount.
Value-in-use methodology
The value-in-use calculations are determined as the sum of net tangible assets
and the expected cash flows from existing and expected future new business
derived from the Business Plan. Future cash flow elements allow for the cost
of capital needed to support the business.
The cash flows that have been used to determine the value in use of the groups
of CGUs are based on the most recent management approved three-year profit
forecasts, which are contained in the Group's Business Plan. These profit
forecasts incorporate anticipated equity market growth on the Group's future
cash flows and take into account climate-related risks and opportunities
affecting operations, investment activities and advice and distribution
activities and their impact on specific projects and initiatives, estimates
and judgements. These cash flows change at different rates because of the
different strategies of the groups of CGUs. Post the three-year forecast
period, the growth rate used to determine the terminal value of the groups of
CGUs in the annual assessment was 2.0% (2022: 2.0%). Market share and market
growth information is also used to inform the expected volumes of future new
business.
Cost savings linked to future restructuring activity are only included in the
value-in-use calculation in cases where an associated restructuring provision
has also been recognised. Consequently, for the purpose of the value-in-use
calculation, a number of planned cost savings and the related implementation
costs, primarily in relation to the Business Simplification programme, have
been removed from the future cash flows.
The Group uses a single cost of capital (post tax) of 10.0% (2022: 11.4%) to
discount expected future cash flows across its two groups of CGUs. The single
cost of capital is based on the Group's consideration of the level of risk
that each CGU represents. Capital is provided to the Group predominantly by
shareholders with a relatively small amount of debt financing. The cost of
capital is the weighted average of the cost of equity (return required by
shareholders) and the cost of debt (return required by bondholders and owners
of properties leased by the Group). When assessing the systematic risk (i.e.
the beta value) within the calculation of the cost of equity, a triangulation
approach is used that combines beta values obtained from historical data, a
forward-looking view on the progression of beta values and the external views
of investors.
10: Financial investments
The table below analyses the investments and securities that the Group invests
in, either on its own proprietary behalf (shareholder funds) or on behalf of
third parties (policyholder funds).
£m
31 December 31 December
2023 2022
Government and government-guaranteed securities 202 225
Other debt securities, preference shares and debentures 2,175 1,609
Equity securities 8,488 6,225
Pooled investments 39,462 35,557
Short-term funds and securities treated as investments 1 1
Other 1 -
Total financial investments 50,329 43,617
Recoverable within 12 months 50,329 43,617
Total financial investments 50,329 43,617
The financial investments recoverability profile is based on the intention
with which the financial assets are held. These assets are held to cover the
liabilities for linked investment contracts, all of which can be withdrawn by
policyholders on demand.
11: Categories of financial instruments
The analysis of financial assets and liabilities into their categories as
defined in IFRS 9 Financial Instruments is set out in the following tables.
Assets and liabilities of a non-financial nature, or financial assets and
liabilities that are specifically excluded from the scope of IFRS 9, are
reflected in the non-financial assets and liabilities category.
For information about the methods and assumptions used in determining fair
value, refer to note 12. The Group's exposure to various risks associated with
financial instruments is discussed in note 18.
31 December 2023
£m
Measurement basis Fair value
Mandatorily at FVTPL Designated at FVTPL Amortised cost Non-financial assets and liabilities Total
Assets
Loans and advances - - 38 - 38
Financial investments 50,329 - - - 50,329
Trade, other receivables and other assets - - 404 43 447
Derivative assets 57 - - - 57
Cash and cash equivalents 1,091 - 768 - 1,859
Total assets that include financial instruments 51,477 - 1,210 43 52,730
Total other non-financial assets - - - 615 615
Total assets 51,477 - 1,210 658 53,345
Liabilities
Investment contract liabilities - 43,396 - - 43,396
Third-party interests in consolidated funds 7,444 - - - 7,444
Borrowings and lease liabilities - - 279 - 279
Trade, other payables and other liabilities 1 - 484 85 570
Derivative liabilities 25 - - - 25
Total liabilities that include financial instruments 7,470 43,396 763 85 51,714
Total other non-financial liabilities - - - 112 112
Total liabilities 7,470 43,396 763 197 51,826
31 December 2022
£m
Measurement basis Fair value
Mandatorily at FVTPL Designated at FVTPL Amortised cost (Restated) Non-financial assets and liabilities (Restated) Total
Assets
Loans and advances - - 34 - 34
Financial investments 43,617 - - - 43,617
Trade, other receivables and other assets - - 261 42 303
Derivative assets 40 - - - 40
Cash and cash equivalents 1,112 - 670 - 1,782
Total assets that include financial instruments 44,769 - 965 42 45,776
Total other non-financial assets(1) - - - 641 641
Total assets 44,769 - 965 683 46,417
Liabilities
Investment contract liabilities - 38,186 - - 38,186
Third-party interests in consolidated funds 5,843 - - - 5,843
Borrowings and lease liabilities - - 290 - 290
Trade, other payables and other liabilities(2) - - 351 85 436
Derivative liabilities 20 - - - 20
Total liabilities that include financial instruments 5,863 38,186 641 85 44,775
Total other non-financial liabilities - - - 94 94
Total liabilities 5,863 38,186 641 179 44,869
(1)Investments in associates shown separately in the Group's 2022 financial
statements have been included in Total other non-financial assets.
(2)The disclosures for 2022 have been restated to reclassify £7 million of
accruals from the amortised cost category to the non-financial assets and
liabilities category. The relevant accruals which were presented in the
amortised cost category in the Group's 2022 financial statements arose in
connection with the Group's statutory and constructive obligations as opposed
to arising in connection with the Group's contractual obligations.
12: Fair value methodology
This section explains the judgements and estimates made in determining the
fair values of financial instruments that are recognised and measured at fair
value in the financial statements. Classifying financial instruments into the
three levels of the fair value hierarchy (see note 12(b)) provides an
indication of the reliability of inputs used in determining fair value.
12(a): Determination of fair value
The fair value of financial instruments that are actively traded in organised
financial markets is determined by reference to quoted market exit prices for
assets and offer prices for liabilities, at the close of business on the
reporting date, without any deduction for transaction costs:
· for units in unit trusts and shares in open-ended investment
companies, fair value is determined by reference to published quoted prices
representing exit values in an active market;
· for equity and debt securities not actively traded in organised
markets and where the price cannot be retrieved, the fair value is determined
by reference to similar instruments for which market observable prices exist;
· for assets that have been suspended from trading on an active
market, the last published price is used. Many suspended assets are still
regularly priced. At the reporting date, all suspended assets are assessed for
impairment; and
· where the assets are private equity investments or within
consolidated investment funds, the valuation is based on the latest available
set of audited financial statements, or if more recent is available, reports
from investment managers or professional valuation experts on the value of the
underlying assets of the private equity investment or fund.
There have been no significant changes in the valuation techniques applied
when valuing financial instruments. Where assets are valued by the Group, the
general principles applied to those instruments measured at fair value are
outlined below:
Financial investments
Financial investments include government and government-guaranteed securities,
listed and unlisted debt securities, preference shares and debentures, listed
and unlisted equity securities, listed and unlisted pooled investments (see
below), short-term funds and securities treated as investments and certain
other securities.
Pooled investments represent the Group's holdings of shares/units in
open-ended investment companies, unit trusts, mutual funds and similar
investment vehicles. Pooled investments are recognised at fair value. The fair
values of pooled investments are based on widely published prices that are
regularly updated.
Other financial investments that are measured at fair value use observable
market prices where available. In the absence of observable market prices,
these investments and securities are fair valued using various approaches
including discounted cash flows, the application of an earnings before
interest, tax, depreciation and amortisation multiple or any other relevant
technique.
Derivatives
The fair value of derivatives is determined with reference to the
exchange-traded prices of the specific instruments. The fair value of
over-the-counter forward foreign exchange contracts is determined by reference
to the relevant exchange rates.
Investment contract liabilities
The fair value of the investment contract liabilities is determined with
reference to the underlying funds that are held by the Group.
Third-party interests in consolidated funds
Third-party interests in consolidated funds are measured at the attributable
net asset value of each fund.
12(b): Fair value hierarchy
Fair values are determined according to the following hierarchy:
Description of hierarchy Types of instruments classified in the respective levels
Level 1 - quoted market prices: financial assets and liabilities with quoted Listed equity securities, government securities and other listed debt
prices for identical instruments in active markets. securities and similar instruments that are actively traded, actively traded
pooled investments, certain quoted derivative assets and liabilities and
investment contract liabilities directly linked to other Level 1 financial
assets.
Level 2 - valuation techniques using observable inputs: financial assets and Unlisted equity and debt securities where the valuation is based on models
liabilities with quoted prices for similar instruments in active markets or involving no significant unobservable data.
quoted prices for identical or similar instruments in inactive markets and
financial assets and liabilities valued using models where all significant Over-the-counter derivatives, certain privately placed debt instruments and
inputs are observable. third-party interests in consolidated funds which meet the definition of Level
2 financial instruments.
Level 3 - valuation techniques using significant unobservable inputs: Unlisted equity and securities with significant unobservable inputs,
financial assets and liabilities valued using valuation techniques where one securities where the market is not considered sufficiently active, including
or more significant inputs are unobservable. certain inactive pooled investments.
The judgement as to whether a market is active may include, for example,
consideration of factors such as the magnitude and frequency of trading
activity, the availability of prices and the size of bid/offer spreads. In
inactive markets, obtaining assurance that the transaction price provides
evidence of fair value or determining the adjustments to transaction prices
that are necessary to measure the fair value of the asset or liability
requires additional work during the valuation process.
The majority of valuation techniques employ only observable data and so the
reliability of the fair value measurement is high. Certain financial assets
and liabilities are valued on the basis of valuation techniques that feature
one or more significant inputs that are unobservable and, for them, the
derivation of fair value is more judgemental. A financial asset or liability
in its entirety is classified as valued using significant unobservable inputs
if a significant proportion of that asset or liability's carrying amount is
driven by unobservable inputs.
In this context, 'unobservable' means that there is little or no current
market data available from which to determine the price at which an arm's
length transaction would be likely to occur. It generally does not mean that
there is no market data available at all upon which to base a determination of
fair value. Furthermore, in some cases the majority of the fair value derived
from a valuation technique with significant unobservable data may be
attributable to observable inputs.
12(c): Transfer between fair value hierarchies
The Group deems a transfer to have occurred between Level 1 and Level 2 or
Level 3 when an active, traded primary market ceases to exist for that
financial instrument. A transfer between Level 2 and Level 3 occurs when the
majority of the significant inputs used to determine the fair value of the
instrument become unobservable. Transfers from Levels 3 or 2 to Level 1 are
also possible when assets become actively priced.
There were no transfers of financial investments between Level 1 and Level 2
during 2023 (2022: £nil). There were no transfers of financial investments
from Level 2 to Level 1 during the year (2022: £nil).
See note 12(e) for the reconciliation of Level 3 financial instruments.
12(d): Financial assets and liabilities measured at fair value, classified according to the fair value hierarchy
The majority of the Group's financial assets are measured using quoted market
prices for identical instruments in active markets (Level 1) and there have
been no significant changes during the year.
The linked assets are held to cover the liabilities for linked investment
contracts. The difference between linked assets and linked liabilities is
principally due to short-term timing differences between policyholder premiums
being received and invested in advance of policies being issued, and tax
liabilities within funds which are reflected within the Group's tax
liabilities.
Differences between assets and liabilities within the respective levels of the
fair value hierarchy also arise due to the mix of underlying assets and
liabilities within consolidated funds. In addition, third-party interests in
consolidated funds are classified as Level 2.
The tables below analyse the Group's financial assets and liabilities measured
at fair value by the fair value hierarchy described in note 12(b). All items
are recognised mandatorily at fair value through profit or loss, apart from
Investment contract liabilities which are designated at fair value through
profit or loss.
£m
31 December 2023 Level 1 Level 2 Level 3 Total
Financial investments 41,691 8,605 33 50,329
Cash and cash equivalents 1,091 - - 1,091
Derivative assets - 57 - 57
Total financial assets measured at fair value through profit or loss 42,782 8,662 33 51,477
Third-party interests in consolidated funds - 7,444 - 7,444
Other liabilities - 1 - 1
Derivative liabilities - 25 - 25
Investment contract liabilities 43,372 - 24 43,396
Total financial liabilities measured at fair value through profit or loss 43,372 7,470 24 50,866
£m
31 December 2022 Level 1 Level 2 Level 3 Total
Financial investments 37,340 6,248 29 43,617
Cash and cash equivalents 1,112 - - 1,112
Derivative assets - 40 - 40
Total financial assets measured at fair value through profit or loss 38,452 6,288 29 44,769
Third-party interests in consolidated funds - 5,843 - 5,843
Derivative liabilities - 20 - 20
Investment contract liabilities 38,161 - 25 38,186
Total financial liabilities measured at fair value through profit or loss 38,161 5,863 25 44,049
12(e): Level 3 fair value hierarchy disclosure
The majority of the assets classified as Level 3 are held within linked
policyholder funds. Where this is the case, all of the investment risk
associated with these assets is borne by policyholders and the value of these
assets is exactly matched by a corresponding liability due to policyholders.
The Group bears no risk from a change in the market value of these assets
except to the extent that it has an impact on management fees earned.
Level 3 assets also include investments within consolidated funds. The Group
bears no risk from a change in the market value of these assets except to the
extent that it has an impact on management fees earned. Any changes in market
value are matched by a corresponding Level 2 liability within third-party
interests in consolidated funds.
The table below reconciles the opening balance of Level 3 financial assets to
the closing balance at each year end:
£m
31 December 31 December
2023 2022
At beginning of the year 29 27
Fair value losses charged to profit or loss(1) (1) (5)
Sales (1) (2)
Transfers in 27 125
Transfers out (21) (116)
Total Level 3 financial assets at the end of the year 33 29
Unrealised fair value gains/(losses) recognised in profit or loss relating to 2 (9)
assets held at the year end
(1)Included in Investment return.
All of the assets that are classified as Level 3 are suspended funds for 2022
and 2023.
Transfers into Level 3 assets in the current year total £27 million (2022:
£125 million). This is mainly due to suspended funds previously shown within
Level 1. Suspended funds are valued based on external valuation reports
received from fund managers. Transfers out of Level 3 assets in the current
year of £21 million (2022: £116 million) result from a transfer to Level 1
assets relating to assets that are now being actively repriced (that were
previously stale) and where fund suspensions have been lifted.
The table below reconciles the opening balance of Level 3 financial
liabilities to the closing balance at each year end:
£m
31 December 31 December
2023 2022
At beginning of the year 25 24
Fair value losses charged to profit or loss(1) - (2)
Transfers in 20 119
Transfers out (21) (116)
Total Level 3 financial liabilities at the end of the year 24 25
Unrealised fair value losses recognised in profit or loss relating to - (5)
liabilities at the year end
(1)Included in Investment return.
12(f): Effect of changes in significant unobservable assumptions to reasonable
alternatives
Details of the valuation techniques applied to the different categories of
financial instruments can be found in note 12(a) above, including the
valuation techniques applied when significant unobservable assumptions are
used to value Level 3 assets.
For Level 3 assets and liabilities, no reasonable alternative assumptions are
applicable and the Group therefore performs a sensitivity test of an aggregate
10% (2022: 10%), which is a reasonably possible change in the value of the
financial asset or liability. It is therefore considered that the impact of
this sensitivity will be in the range of £3 million (2022: £3 million) to
the reported fair value of Level 3 assets, both favourable and unfavourable.
12(g): Fair value hierarchy for assets and liabilities not measured at fair
value
Certain financial instruments of the Group are not carried at fair value. The
carrying values of these are considered reasonable approximations of their
respective fair values as they are either short term in nature or are repriced
to current market rates at frequent intervals.
13: Cash and cash equivalents
13(a): Analysis of cash and cash equivalents
£m
31 December 31 December
2023 2022
Cash at bank 444 406
Money market funds 1,091 1,112
Cash and cash equivalents in consolidated funds 324 264
Total cash and cash equivalents per statement of cash flows 1,859 1,782
The Group's management does not consider that the cash and cash equivalents
balance arising due to consolidation of funds of £324 million (2022: £264
million) is available for use in the Group's day-to-day operations. The
remainder of the Group's cash and cash equivalents balance of £1,535 million
(2022: £1,518 million) is considered to be available for general use by the
Group for the purposes of the disclosures required under IAS 7 Statement of
Cash Flows. This balance includes policyholder cash as well as cash and cash
equivalents held by regulated subsidiaries to meet their capital and liquidity
requirements.
13(b): Analysis of net cash flows from operating activities:
£m
Notes Year ended Year ended
31 December 31 December
2023 2022
Cash flows from operating activities
Profit before tax 88 65
Adjustments for
Depreciation and impairment of property, plant and equipment 12 22
Movement on contract costs (6) (1)
Amortisation and impairment of intangibles 41 44
Fair value and other movements in financial assets (3,200) 4,410
Fair value movements in investment contract liabilities 15 2,528 (4,878)
Other changes in investment contract liabilities 2,682 1,993
Other movements 47 32
2,104 1,622
Net changes in working capital
Increase in derivatives position (12) (21)
Increase in loans and advances (4) (5)
Decrease in provisions 16 (23) (24)
Movement in other assets/liabilities (16) 61
(55) 11
Taxation paid (26) (22)
Net cash flows from operating activities 2,111 1,676
14: Ordinary Share capital
At 31 December 2023, the Company's equity capital comprises 1,404,105,498
Ordinary Shares of 8 1/6 pence each with an aggregated nominal value of
£114,668,616 (2022: 1,404,105,498 Ordinary Shares of 8 1/6 pence each with an
aggregated nominal value of £114,668,616). All Ordinary Shares have been
called up and fully paid.
This note gives details of the movements in Ordinary Share capital during the
year 2023 and 2022.
£m £m
Number of Ordinary Shares Nominal value of Ordinary Shares Ordinary Share premium
At 1 January 2022 1,655,827,217 116 58
Shares cancelled through share buyback programme (17,704,132) (1) -
Share Consolidation (including shares cancelled) (234,017,587) - -
At 31 December 2022 1,404,105,498 115 58
At 31 December 2023 1,404,105,498 115 58
In 2020, the Company announced a share buyback programme to purchase shares up
to a maximum value of £375 million, in order to return the net surplus
proceeds to shareholders arising from the sale of Quilter Life Assurance which
had the impact of reducing the share capital of the Company. The programme
completed in January 2022.
On 9 March 2022, the Company announced a capital return of £328 million,
equivalent to 20 pence per share, from the net surplus proceeds arising from
the sale of Quilter International by way of a B Share Scheme. Following the
return of capital, a share consolidation was completed so that comparability
between the market price for Quilter plc's Ordinary Shares before and after
the implementation of the B Share Scheme was maintained.
In 2022, new Ordinary Shares were issued for existing Ordinary Shares in a
ratio of six new shares of 8 1/6 pence each for seven existing shares of 7
pence each resulting in a reduction in the number of shares by 234,017,587.
All Ordinary Shares issued carry equal voting rights. The holders of the
Company's Ordinary Shares are entitled to receive dividends as declared and
are entitled to one vote per share at shareholder meetings of the Company.
15: Investment contract liabilities
The following table provides a summary of the Group's investment contract
liabilities:
£m
2023 2022
Carrying amount at 1 January 38,186 41,071
Fair value movements 2,528 (4,878)
Investment income 785 560
Movements arising from investment return 3,313 (4,318)
Contributions received 5,358 4,408
Withdrawals and surrenders (3,212) (2,759)
Claims and benefits (245) (219)
Other movements (4) 3
Change in liability 5,210 (2,885)
Investment contract liabilities at end of the year 43,396 38,186
For unit-linked investment contracts, movements in asset values are offset by
corresponding changes in liabilities, limiting the net impact on profit.
The benefits offered under the unit-linked investment contracts are based on
the risk appetite of policyholders and the return on their selected
investments and collective fund investments, whose underlying investments
include equities, debt securities, property and derivatives. This investment
mix is unique to individual policyholders.
For unit-linked business, the unit liabilities are determined as the value of
units credited to policyholders. Since these liabilities are determined on a
retrospective basis, no assumptions for future experience are required.
Assumptions for future experience are required for unit-linked business in
assessing whether the total of the contract costs asset and contract liability
is greater than the present value of future profits expected to arise on the
relevant blocks of business (the "recoverability test"). If this is the case,
then the contract costs asset is restricted to the recoverable amount. For
linked contracts, the assumptions are on a best estimate basis.
16: Provisions
£m
Year ended 31 December 2023 Compensation Sale of subsidiaries provision Property provisions Clawback and other provisions Total
provisions
Balance at beginning of the year 23 15 12 19 69
Charge to profit or loss 17 - - 6 23
Used during the year (14) (12) (2) (8) (36)
Unused amounts reversed (9) - - (1) (10)
Balance at 31 December 2023 17 3 10 16 46
£m
31 December 2022 Compensation Sale of subsidiaries provision Property provisions Clawback and other provisions Total
provisions
Balance at beginning of the year 41 22 9 21 93
Charge to profit or loss 22 - 4 3 29
Used during the year (28) (7) (1) (2) (38)
Unused amounts reversed (12) - - (4) (16)
Reclassification within the statement of financial position(1) - - - 1 1
Balance at 31 December 2022 23 15 12 19 69
(1)Clawback and other provisions included the balancing premium payable for
the bulk annuity purchased for the Quilter Cheviot Limited Retirement Benefits
scheme which was reclassified during the year to 31 December 2022 from
accruals reflecting the uncertainty of the amounts to be settled.
Compensation provisions
Compensation provisions total £17 million (2022: £23 million). The net
reduction of £6 million during the year consists of additional charges to
profit or loss of £17 million, compensation payments made during the year of
£14 million and £9 million release of unused amounts during 2023 following
further review work completed during the year. Compensation provisions are
comprised of the following:
Lighthouse pension transfer advice provision of £6 million (2022: £5
million)
Lighthouse pension transfer advice provided to British Steel Pension Scheme
members of £nil (2022: £4 million)
A total provision of £nil (2022: £4 million) remains for the redress of
British Steel Pension Scheme cases. This is comprised of two parts:
(a) Customer redress provision of £nil (2022: £3 million). During the
year, payments of £1 million have been made to customers. The redress
provision has been recalculated for the final suitability assessments and
redress calculations performed by the independent expert, and the remaining
provision of £2 million released to profit or loss.
(b) Anticipated costs associated with redress activity of £nil (2022: £1
million). This provision was recognised in respect of the anticipated costs of
legal and professional fees related to the cases and redress process, which
included the expected costs to review advice. Legal and professional fees of
£3 million have been paid during the year.
During the year to 31 December 2022, the skilled person completed their review
of all British Steel Pension Scheme cases within the scope of the skilled
person's review, reflecting the outcome of the review of the suitability of
the DB to DC pension transfer advice for each case, and all remaining offers
were made to customers who received unsuitable DB to DC pension transfer
advice which caused them to sustain a loss.
Certain customers who were included in the skilled person review have referred
their case to the Financial Ombudsman Service, relating to cases where: (i)
relevant DB to DC pension transfer advice was found to be suitable by the
skilled person; or (ii) where relevant DB to DC pension transfer advice was
found to be unsuitable by the skilled person, but the customer disagreed with
the way in which their redress offer has been calculated by the skilled
person. The Financial Ombudsman Service has upheld some challenges and the
redress payments in relation to such cases are included within the amounts
stated above in this note. It is possible further challenges may be upheld.
In November 2022, the FCA published a policy statement containing the final
rules for a redress scheme for former members of the British Steel Pension
Scheme who received unsuitable advice (the "BSPS Redress Scheme"). The BSPS
Redress Scheme covers those persons who received advice between 26 May 2016
and 29 March 2018 to transfer out of the British Steel Pension Scheme. The
rules for the BSPS Redress Scheme set out how advisers must determine whether
they gave unsuitable advice and whether they must pay redress. The Group may
therefore face further costs of redress as a result of the BSPS Redress
Scheme. The BSPS Redress Scheme does not cover individuals that have accepted
redress for the advice provided, referred the matter to the Financial
Ombudsman Service or received a final outcome following a suitability
assessment of their case conducted through a skilled person review. Therefore,
based on the rules of the BSPS Redress Scheme, this process does not include
Lighthouse cases that have already been reviewed by the skilled person where
the customer received a final outcome.
Based on the rules for the BSPS Redress Scheme, there were approximately 30
Lighthouse cases relating to British Steel Pension Scheme members that fall
within the scope of the BSPS Redress Scheme. These customers were written to
during 2023, and where applicable sent a redress determination letter, in line
with the timeline prescribed within the BSPS Redress Scheme. The redress
payments in relation to such cases are included within the amounts stated
above in this note. At 31 December 2023, the review of cases is complete, and
there are no further redress amounts to be paid under the BSPS Redress Scheme.
Lighthouse pension transfer advice provided to members of other schemes of £6
million (2022: £1 million)
The skilled person review of Lighthouse DB to DC pension transfer advice cases
identified unsuitable DB to DC pension transfer advice provided by Lighthouse
advisers for pension schemes other than the British Steel Pension Scheme. The
initial scope of the review concluded in 2022, with £3 million paid to
customers and the remaining provision released to profit or loss. The skilled
person review concluded in December 2022.
The skilled person recommended a review of a further sample of Lighthouse DB
to DC pension transfer advice cases not relating to the British Steel Pension
Scheme. In December 2022, the FCA confirmed to the Group that it agreed with
the skilled person's recommendation. The FCA also confirmed that, given the
cooperation of the Group in relation to the skilled person review and
established past business review methodology and consistent with the
recommendation made by the skilled person, this further sample should be
reviewed under a Group-managed past business review process. The FCA also
agreed with the skilled person that the further sample should be selected on a
risk-based approach and set out to the Group the key risk factors to be used
in determining the sample. The review of this sample has identified some
additional cases where customer redress is required. Until the review of the
relevant sample has been completed, uncertainty exists as to the number of
cases where this will be required and the value of total redress which may be
payable. A provision for redress relating to the review of this further sample
of cases of £1 million was established at 31 December 2022 and has been
increased by £4 million at 31 December 2023, based upon the suitability
review of cases to date, and the anticipated number of cases required to be
reviewed. Payments of £1 million have been made to customers during 2023.
Additionally, anticipated costs associated with the redress activity of £2
million (2022: £nil) have been included within the provision at 31 December
2023. Any further redress payable is expected to be paid during 2024.
The Group estimates a reasonably possible change of +/- £3 million from the
£6 million balance, based upon an increase or decrease of five percentage
points in redress as a percentage of transfer value.
Compensation provisions (other) of £11 million (2022: £18 million)
Other compensation provisions of £11 million include amounts relating to the
cost of correcting deficiencies in policy administration systems, including
restatements, any associated litigation costs and the related costs to
compensate previous or existing policyholders and customers. This provision
represents management's best estimate of expected outcomes based upon previous
experience, and a review of the details of each case. Due to the nature of the
provision, the timing of the expected cash outflows is uncertain. The best
estimate of the timing of outflows is that the majority of the balance is
expected to be settled within 12 months.
A provision of £3 million, included within the balance, has been recognised
at 31 December 2023 (2022: £7 million) relating to potentially unsuitable DB
to DC pension transfer advice provided by adviser businesses other than
Lighthouse. Of this balance, £nil (2022: £2 million) has been recognised for
potentially unsuitable DB to DC pension transfer advice provided to British
Steel Pension Scheme members by Quilter Financial Planning firms other than
Lighthouse. This provision was recognised following the receipt of a "Dear
CEO" letter from the FCA in 2021, and subsequent establishment of the BSPS
Redress Scheme in 2022. During 2023, all relevant British Steel Pension Scheme
cases have been reviewed for suitability by an independent expert, and redress
calculations performed where applicable. There were no redress payments made
related to the BSPS Redress Scheme and the provision balance of £2 million at
31 December 2022 was released to profit or loss during the year. The estimate
of the provision unrelated to the BSPS Redress Scheme has been updated for the
current status of the past business reviews and redress estimated based upon
the Group's experience of the Lighthouse skilled person and past business
reviews. Customer redress is expected to be calculated and paid to relevant
customers during 2024.
A provision of £4 million, included within the balance at 31 December 2022,
related to Final Plan Closure ("FPC") receipts previously recognised as
revenue since 2013 for distributions the Group received from investments for
customers who had previously closed their accounts. FPC receipts represent
distributions, including tax gross ups where relevant, and rebates received
after a customer has left the Quilter platform, which the terms and conditions
of the pension and insured bonds legally entitled the Group to retain. A
review in 2022 led to a change in business policy, and Quilter made the
decision to voluntarily return these amounts to those impacted customers
backdated to inception, with an appropriate rate of interest applied to each
balance. A provision of £6 million was initially recognised in 2022, and
payments of £2 million were made to customers during 2022. The remaining
provision outstanding at 31 December 2022 of £4 million has been paid to
customers during the current year.
The Group estimates a reasonably possible change of +/- £3 million from the
£11 million balance, based upon a review of the cases and the range of
potential outcomes for the customer redress payments.
Sale of subsidiaries provision
Sale of subsidiaries provisions total £3 million at 31 December 2023 (2022:
£15 million), and include the following:
Provisions arising on the sale of Quilter International of £2 million (2022:
£11 million)
Quilter International was sold on 30 November 2021, resulting in provisions
totalling £17 million being established in respect of costs related to the
disposal including the costs of business separation and data migration
activities.
The costs of business separation arise from the process required to separate
Quilter International's infrastructure, which is complex and covers a wide
range of areas including people, IT systems, data, contracts and facilities. A
programme team was established to ensure the transition of these areas to the
acquirer. These provisions were based on external quotations and estimates,
together with estimates of the incremental time and resource costs required to
achieve the separation, which was expected to occur over a two-to-three-year
period from the date of the sale.
The most significant element of the provision is the cost of migration of IT
systems and data to the acquirer. Calculation of the provision was based on
management's best estimate of the work required, the time it is expected to
take, the number and skills of the staff required and their cost, and the cost
of related external IT services to support the work. In reaching these
judgements and estimates, management has made use of its past experience of
previous IT migrations following business disposals.
During the year, £9 million (2022: £6 million) of the provision has been
used. The Group estimates a provision sensitivity of +/-25% (£1 million),
based upon a review of the range of time periods expected to complete the work
required. The remaining balance of £2 million related to decommissioning
works is forecast to be paid within one year.
Sale of Single Strategy business provision of £nil (2022: £4 million)
The provision in the prior year related to sale-related future commitments
made to the buyer (now known as Jupiter Investment Management ("Jupiter")) of
the Single Strategy business, which was initially recognised in 2018, in
relation to the level of revenues for Jupiter in future years arising from
funds invested by customers of Quilter.
In the year to 31 December 2023, £4 million was agreed and settled relating
to the 2022 measurement year, which is the final measurement year according to
the sale agreement. This was the final amount payable under this arrangement
with Jupiter.
Property provisions
Property provisions total £10 million (2022: £12 million). Property
provisions represent the discounted value of expected future costs of
reinstating leased property to its original condition at the end of the lease
term, and any onerous commitments which may arise in cases where a leased
property is no longer fully used by the Group. The estimate is based upon
property location, size of property and an estimate of the charge per square
foot. Property provisions are used or released when the reinstatement
obligations have been fulfilled. The associated asset for the property
provisions relating to the cost of reinstating property is included within
Property, plant and equipment.
Of the £10 million provision outstanding, £3 million (2022: £3 million) is
estimated to be payable within one year. The majority of the balance relates
to leased properties which have a lease term maturity of more than five years.
Clawback and other provisions
Clawback and other provisions total £16 million (2022: £19 million) and
include amounts for the resolution of legal uncertainties and the settlement
of other claims raised by contracting parties and indemnity commission
provisions. Where material, provisions are discounted at discount rates
specific to the risks inherent in the liability. The timing and final amounts
of payments, particularly those in respect of litigation claims and similar
actions against the Group, are uncertain and could result in adjustments to
the amounts recorded.
Included within the balance at 31 December 2023 is £12 million (2022: £14
million) of clawback provisions in respect of potential refunds due to product
providers on indemnity commission within the Quilter Financial Planning
business. This provision, which is estimated and charged as a reduction of
revenue at the point of sale of each policy, is based upon assumptions
determined from historical experience of the proportion of policyholders
cancelling their policies, which requires Quilter to refund a portion of
commission previously received. Reductions to the provision result from the
payment of cash to product providers as refunds or the recognition of revenue
where a portion is assessed as no longer payable. The provision has been
assessed at the reporting date and adjusted for the latest cancellation
information available. At 31 December 2023, an associated balance of £8
million recoverable from brokers is included within Trade, other receivables
and other assets (2022: £8 million).
The Group estimates a reasonably possible change of +/- £3 million, based
upon the potential range of outcomes for the proportion of cancelled policies
within the clawback provision, and a detailed review of the other provisions.
Of the total £16 million provision outstanding, £7 million is estimated to
be payable within one year (2022: £8 million).
17: Contingent liabilities
The Group, in the ordinary course of business, enters into transactions that
expose it to tax, legal, regulatory and business risks. The Group recognises a
provision when it has a present obligation as a result of past events, it is
probable that a transfer of economic benefits will be required to settle the
obligation and a reliable estimate of the amount can be made (see note 16).
Possible obligations and known liabilities where no reliable estimate can be
made or it is considered improbable that an outflow would result are reported
as contingent liabilities.
The Group routinely monitors and assesses contingent liabilities arising from
matters such as business reviews, litigation, warranties and indemnities
relating to past acquisitions and disposals.
Contingent liabilities - DB to DC pension transfer advice redress
As set out in note 16, the Lighthouse skilled person review concluded in
December 2022. A further sample of Lighthouse DB to DC pension transfer advice
cases not relating to the British Steel Pension Scheme is being reviewed under
a Group-managed past business review process. Until the review has finalised,
uncertainty exists as to the number of cases where further review will be
required and the value of total redress that will be payable.
Customers have the legal right to challenge the outcome of the skilled person
review and the BSPS Redress Scheme in respect of their case via a complaint to
the Financial Ombudsman Service. The skilled person was independent from the
Group and ran a robust process, which was overseen by the FCA. The Financial
Ombudsman Service may uphold further challenges, which may lead to further
redress payable by the Group.
At the conclusion of its enforcement investigation, the FCA issued a Final
Notice to Lighthouse in May 2023. The FCA found that Lighthouse had provided
unsuitable DB to DC pension transfer advice but imposed no financial penalty.
The FCA acknowledged in its decision that Lighthouse provided very high levels
of co-operation in relation to the FCA's investigation and that the Group, on
its own initiative, promptly paid redress to customers who received unsuitable
DB to DC pension transfer advice from Lighthouse and sustained losses as a
result of that advice.
It is possible that further material costs of redress may be incurred in
relation to past business reviews. Further customer redress costs may also be
incurred for other potential unsuitable DB to DC pension transfer advice
provided across the Group.
Any further redress costs, and any differences between the provision and the
final payment to be made for any unsuitable DB to DC pension transfer cases,
will be recognised as an expense or credit in profit or loss.
Tax
The Group is committed to conducting its tax affairs in accordance with the
tax legislation of the countries in which it operates and this includes
compliance with legislation related to levies, sales taxes and payroll
deductions.
The tax authorities in the countries in which the Group operates routinely
review historical transactions undertaken and tax law interpretations made by
the Group. All interpretations made by the Group are made with reference to
the specific facts and circumstances of the transaction and the relevant
legislation.
There are occasions where the Group's interpretation of tax law may be
challenged by the tax authorities. The consolidated financial statements
include provisions that reflect the Group's assessment of liabilities which
might reasonably be expected to materialise as part of their review. The Group
is satisfied that adequate provisions have been made to allow for the
resolution of tax uncertainties and that the resources available to fund such
potential settlements are sufficient.
Due to the level of estimation required in determining tax provisions, amounts
eventually payable may differ from the provision recognised.
Complaints, disputes and regulations
The Group is committed to treating customers fairly and remains focussed on
delivering good outcomes for customers to support them in meeting their
lifetime goals. During the normal course of business, from time to time, the
Group receives complaints and claims from customers including, but not limited
to, complaints to the Financial Ombudsman Service and legal proceedings
related thereto, enters into commercial disputes with service providers and
other parties, and is subject to discussions and reviews with regulators. The
costs, including legal costs, of these issues as they arise can be significant
and, where appropriate, provisions have been established.
Subsequent to the year-end date, on 15 February 2024, the FCA wrote to around
20 advice firms, including Quilter, requesting information regarding ongoing
servicing to assess what, if any, further regulatory work the FCA may
undertake in this area. The Group is commencing a review of historical data
and practices across the Group's network to determine what, if any, further
action may be required. This may lead to remedial costs but it is too early to
quantify. Until the Group has further clarity of its position on this matter,
there remains uncertainty as to the potential financial and non-financial
implications that may arise.
Where the Group's regular adviser oversight controls have determined that a
customer may not have received the servicing that they have paid for, or where
the Group has received complaints from customers regarding ongoing servicing,
this has been investigated, and, where appropriate, remediation has been
undertaken and recognised as a normal business as usual expense.
18: Capital and financial risk management
18(a): Capital management
The Group manages its capital with a focus on capital efficiency and effective
risk management. The capital management objectives are to maintain the Group's
ability to continue as a going concern while supporting the optimisation of
return relative to the risks. The Group ensures that it can meet its expected
capital and financing needs at all times having regard to the Group's Business
Plans, forecasts, strategic initiatives and the regulatory requirements
applicable to Group entities.
The Group's overall capital risk appetite is set with reference to the
requirements of the relevant stakeholders and seeks to:
· maintain sufficient, but not excessive, financial strength to
support stakeholder requirements;
· optimise debt to equity structure to enhance shareholder returns;
and
· retain financial flexibility by maintaining liquidity including
unutilised committed credit lines.
The primary sources of capital used by the Group are equity shareholders'
funds of £1,519 million (2022: £1,548 million) and subordinated debt which
was issued at £200 million in January 2023. Alternative resources are
utilised where appropriate. Risk appetite has been defined for the level of
capital, liquidity and debt within the Group. The risk appetite includes
long-term targets, early warning thresholds and risk appetite limits. The
dividend policy sets out the target dividend level in relation to profits.
The regulatory capital for the Group is assessed under Solvency II
requirements.
18(a)(i): Regulatory capital (unaudited)
The Group is subject to Solvency II group supervision by the Prudential
Regulation Authority. The Group is required to measure and monitor its capital
resources under the Solvency II regulatory regime.
The Group's UK life insurance undertaking is included in the Group solvency
calculation on a Solvency II basis. Other regulated entities are included in
the Group solvency calculation according to the relevant sectoral rules. The
Group's Solvency II surplus is the amount by which the Group's capital on a
Solvency II basis (own funds) exceeds the Solvency II capital requirement
(solvency capital requirement or "SCR").
The Group's Solvency II surplus is £972 million at 31 December 2023 (2022:
£820 million), representing a Solvency II ratio of 271% (2022: 230%)
calculated under the standard formula. The Solvency II regulatory position at
31 December 2023 allows for the impact of the recommended Final Dividend
payment of £50 million (2022: £45 million).
The Solvency II position as at 31 December 2023 (unaudited estimate) and 31
December 2022 is presented below:
£m
31 December 2023(1) 31 December 2022(2)
Own funds 1,540 1,451
Solvency capital requirement 568 631
Solvency II surplus 972 820
Solvency II coverage ratio 271% 230%
(1)Filing of annual regulatory reporting forms due by 17 May 2024.
(2)As reported in the Group Solvency and Financial Condition Report for the
year ended 31 December 2022.
The Group's own funds include the Quilter plc issued subordinated debt
security which qualifies as capital under Solvency II. The composition of own
funds by tier is presented in the table below.
£m
Group own funds 31 December 2023 31 December 2022
Tier 1(1) 1,336 1,249
Tier 2(2) 204 202
Total Group Solvency II own funds 1,540 1,451
(1)All Tier 1 capital is unrestricted for tiering purposes.
(2)Comprises a Solvency II compliant subordinated debt security in the form of
a Tier 2 bond, which was issued at £200 million in January 2023.
The Group's UK life insurance undertaking is also subject to Solvency II at
entity level. Other regulated entities in the Group are subject to the locally
applicable entity-level capital requirements in the countries in which they
operate. In addition, the Group's asset management and advice businesses are
subject to group supervision by the FCA under the UK Investment Firms
Prudential Regime ("IFPR").
During 2023, the capital requirements for the Group and its regulated
subsidiaries were reported and monitored through regular Capital Management
Forum meetings. Throughout 2023, the Group has complied with the regulatory
requirements that apply at a consolidated level and Quilter's insurance
undertakings and investment firms have complied with the regulatory capital
requirements that apply at entity level.
18(a)(ii): Loan covenants
Under the terms of the revolving credit facility agreement, the Group is
required to comply with the following financial covenant: the ratio of total
net borrowings to consolidated equity shareholders' funds shall not exceed
0.5.
£m
31 December 2023 31 December 2022
Total external borrowings of the Company 198 200
Less: cash and cash equivalents of the Company (110) (126)
Total net external borrowings of the Company 88 74
Total shareholders' equity of the Group 1,519 1,548
Tier 2 bond 198 200
Total Group equity (including Tier 2 bond) 1,717 1,748
Ratio of Company net external borrowings to Group equity 0.051 0.042
The Group has complied with the covenant since the facility was created in
2018.
18(a)(iii): Own Risk and Solvency Assessment ("ORSA") and Internal Capital
Adequacy and Risk Assessment ("ICARA")
The Group ORSA process is an ongoing cycle of risk and capital management
processes which provides an overall assessment of the current and future risk
profile of the Group and demonstrates the relationship between business
strategy, risk appetite, risk profile and solvency needs. These assessments
support strategic planning and risk-based decision making.
The underlying ORSA processes cover the Group and consider how risks and
solvency needs may evolve over the planning period. The ORSA includes stress
and scenario tests, which are performed to assess the financial and
operational resilience of the Group.
The Group ORSA report is produced annually. This summarises the analysis,
insights and conclusions from the underlying risk and capital management
processes in respect of the Group. The ORSA report is submitted to the PRA as
part of the normal supervisory process and may be supplemented by ad hoc
assessments where there is a material change in the risk profile of the Group
outside the usual reporting cycle.
In addition to the Group ORSA process, an entity-level ORSA process is
performed for Quilter Life & Pensions Limited.
The Group ICARA process is an ongoing cycle of risk and capital management
processes, similar to the ORSA process. The Group ICARA process is performed
for the prudential consolidation of Quilter's investment and advice firms
under IFPR requirements. The ICARA process is also performed at an entity
level for Quilter's UK investment firms, which are Quilter Investment Platform
Limited, Quilter Investors Limited and Quilter Cheviot Limited.
The Group ICARA report is produced annually. This summarises the analysis,
insights and conclusions from the underlying risk and capital management
processes in respect of Quilter's IFPR prudential consolidation group.
The conclusions of the ORSA and ICARA processes are reviewed by management and
the Board throughout the year.
18(b): Credit risk
Overall exposure to credit risk
Credit risk is the risk of adverse movements in credit spreads (relative to
the reference yield curve), credit ratings or default rates leading to a
deterioration in the level or volatility of assets, liabilities or financial
instruments resulting in loss of earnings or reduced solvency. This includes
counterparty default risk, counterparty concentration risk and spread risk.
The Group has established a Credit Risk Framework that includes a Credit Risk
Policy and Credit Risk Appetite Statement. This framework applies to all
activities where the Group is exposed to credit risk, either directly or
indirectly, ensuring appropriate identification, measurement, management,
monitoring and reporting of the Group's credit risk exposures.
The credit risk arising from all exposures is mitigated by ensuring that the
Group only enters into relationships with appropriately robust counterparties,
adhering to the Group Credit Risk Policy. For each asset, consideration is
given as to:
· the credit rating of the counterparty, which is used to derive
the probability of default;
· the loss given default;
· the potential recovery which may be made in the event of default;
· the extent of any collateral that the Group has in respect of the
exposures; and
· any second order risks that may arise where the Group has
collateral against the credit risk exposure.
The credit risk exposures of the Group are monitored regularly to ensure that
counterparties remain creditworthy, that there is appropriate diversification
of counterparties and that exposures are within approved limits. At the end of
2023, the Group's material credit exposures were to financial institutions
(primarily through the investment of shareholder funds), corporate entities
(including external fund managers) and individuals (primarily through fund
management trade settlement activities).
There is no direct exposure to non-UK sovereign debt within the shareholder
investments. The Group has no significant concentrations of credit risk
exposure.
Other credit risks
The Group is exposed to financial adviser counterparty risk through a number
of loans that it makes to its advisers and the payment of upfront commission
on the sale of certain types of business. The risk of default by financial
advisers is managed through monthly monitoring of loan and commission debt
balances.
The Group is also exposed to the risk of default by fund management groups in
respect of settlements and rebates of fund management charges on collective
investments held for the benefit of policyholders. This risk is managed
through the due diligence process which is completed before entering into any
relationship with a fund group. Amounts due to and from fund groups are
monitored for prompt settlement and appropriate action is taken where
settlement is not timely.
Legal contracts are maintained where the Group enters into credit transactions
with a counterparty.
Impact of credit risk on fair value
Due to the limited exposure that the Group has to credit risk, credit risk
does not have a material impact on the fair value movement of financial
instruments for the year under review. The fair value movements on these
instruments are mainly due to changes in market conditions.
Maximum exposure to credit risk
The Group's maximum exposure to credit risk does not differ from the carrying
value disclosed in the relevant notes to the consolidated financial
statements.
Loans and advances subject to 12-month expected credit losses are £38 million
(2022: £34 million) and other receivables subject to lifetime expected credit
losses are £297 million (2022: £204 million). Those balances represent the
pool of counterparties that do not require a rating. These counterparties
individually generate no material credit exposure and this pool is highly
diversified, monitored and subject to limits.
Exposure arising from financial instruments not recognised on the statement of
financial position is measured as the maximum amount that the Group would have
to pay, which may be significantly greater than the amount that would be
recognised as a liability. The Group does not have any significant exposure
arising from items not recognised on the statement of financial position.
The table below represents the Group's exposure to credit risk from cash and
cash equivalents.
£m
Credit rating relating to cash and cash equivalents
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