Quilter plc - 2023 Full Year Results Part 2

About this update from Quilter Plc

[{"type":"text","content":"\n \n Statement of Directors' responsibilities \n in respect of the preliminary announcement of the Annual Report and the financial statements \n The Directors confirm to the best of their knowledge: \n ·      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 \n ·      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. \n   \n Signed on behalf of the Board \n   \n   \n   \n Steven Levin                                           Mark Satchel Chief Executive Officer                             ​ Chief Financial Officer \n 6 March 2024 \n   \n   \n   \n   \n   \n   \n   \n \n \n \n \n \n Consolidated statement of comprehensive income \n \n \n \n \n For the year ended 31 December 2023 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n   \n \n \n Notes \n \n \n Year ended \n 31 December \n 2023 \n \n \n Year ended \n 31 December \n 2022 \n \n \n \n \n Income \n \n \n \n \n \n \n \n \n \n \n \n \n \n Fee income and other income from service activities \n \n \n \n \n \n 542 \n \n \n 581 \n \n \n \n \n Investment return \n \n \n \n \n \n 4,075 \n \n \n (4,649) \n \n \n \n \n Other income \n \n \n \n \n \n 9 \n \n \n 28 \n \n \n \n \n Total income \n \n \n \n \n \n 4,626 \n \n \n (4,040) \n \n \n \n \n Expenses \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Change in investment contract liabilities \n \n \n 15 \n \n \n (3,313) \n \n \n 4,318 \n \n \n \n \n Fee and commission expenses, and other acquisition costs \n \n \n \n \n \n (49) \n \n \n (54) \n \n \n \n \n Change in third-party interests in consolidated funds \n \n \n \n \n \n (579) \n \n \n 438 \n \n \n \n \n Other operating and administrative expenses \n \n \n \n \n \n (575) \n \n \n (584) \n \n \n \n \n Finance costs \n \n \n \n \n \n (22) \n \n \n (13) \n \n \n \n \n Total expenses \n \n \n \n \n \n (4,538) \n \n \n 4,105 \n \n \n \n \n Profit before tax \n \n \n \n \n \n 88 \n \n \n 65 \n \n \n \n \n Tax (expense)/credit attributable to policyholder returns \n \n \n 7(a) \n \n \n (76) \n \n \n 134 \n \n \n \n \n Profit before tax attributable to shareholder returns \n \n \n \n \n \n 12 \n \n \n 199 \n \n \n \n \n   Income tax (expense)/credit \n \n \n 7(a) \n \n \n (46) \n \n \n 110 \n \n \n \n \n   Less: tax expense/(credit) attributable to policyholder returns \n \n \n \n \n \n 76 \n \n \n (134) \n \n \n \n \n Tax credit/(expense) attributable to shareholder returns \n \n \n \n \n \n 30 \n \n \n (24) \n \n \n \n \n Profit after tax attributable to the owners of the Company \n \n \n \n \n \n 42 \n \n \n 175 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Total comprehensive income \n \n \n \n \n \n 42 \n \n \n 175 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Earnings per Ordinary Share \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Basic earnings per Ordinary Share (pence) \n \n \n 8 \n \n \n 3.1 \n \n \n 12.2 \n \n \n \n \n Diluted earnings per Ordinary Share (pence) \n \n \n 8 \n \n \n 3.1 \n \n \n 12.0 \n \n \n \n \n   \n All income and expenses relate to continuing operations. \n \n \n \n \n \n \n   \n   \n   \n   \n \n \n \n \n Consolidated statement of financial position \n \n \n \n \n At 31 December 2023 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n £m \n \n \n \n \n \n \n \n Notes \n \n \n 31 December \n 2023 \n \n \n 31 December \n 2022 \n \n \n \n \n Assets \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Goodwill and intangible assets \n \n \n 9 \n \n \n 372 \n \n \n 413 \n \n \n \n \n Property, plant and equipment \n \n \n \n \n \n 91 \n \n \n 112 \n \n \n \n \n Investment property \n \n \n \n \n \n 10 \n \n \n - \n \n \n \n \n Investments in associates \n \n \n \n \n \n 2 \n \n \n 1 \n \n \n \n \n Contract costs \n \n \n \n \n \n 16 \n \n \n 10 \n \n \n \n \n Loans and advances \n \n \n \n \n \n 38 \n \n \n 34 \n \n \n \n \n Financial investments \n \n \n 10 \n \n \n 50,329 \n \n \n 43,617 \n \n \n \n \n Deferred tax assets \n \n \n \n \n \n 91 \n \n \n 94 \n \n \n \n \n Current tax receivable \n \n \n \n \n \n 33 \n \n \n 10 \n \n \n \n \n Trade, other receivables and other assets \n \n \n \n \n \n 447 \n \n \n 303 \n \n \n \n \n Derivative assets \n \n \n \n \n \n 57 \n \n \n 40 \n \n \n \n \n Cash and cash equivalents \n \n \n 13 \n \n \n 1,859 \n \n \n 1,782 \n \n \n \n \n Assets held for sale \n \n \n \n \n \n - \n \n \n 1 \n \n \n \n \n Total assets \n \n \n   \n \n \n 53,345 \n \n \n 46,417 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Equity and liabilities \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Equity \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Ordinary Share capital \n \n \n 14 \n \n \n 115 \n \n \n 115 \n \n \n \n \n Ordinary Share premium reserve \n \n \n 14 \n \n \n 58 \n \n \n 58 \n \n \n \n \n Capital redemption reserve \n \n \n \n \n \n 346 \n \n \n 346 \n \n \n \n \n Share-based payments reserve \n \n \n \n \n \n 42 \n \n \n 41 \n \n \n \n \n Other reserves \n \n \n   \n \n \n - \n \n \n (1) \n \n \n \n \n Retained earnings \n \n \n   \n \n \n 958 \n \n \n 989 \n \n \n \n \n Total equity \n \n \n   \n \n \n 1,519 \n \n \n 1,548 \n \n \n \n \n Liabilities \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Investment contract liabilities \n \n \n 15 \n \n \n 43,396 \n \n \n 38,186 \n \n \n \n \n Third-party interests in consolidated funds \n \n \n \n \n \n 7,444 \n \n \n 5,843 \n \n \n \n \n Provisions \n \n \n 16 \n \n \n 46 \n \n \n 69 \n \n \n \n \n Deferred tax liabilities \n \n \n \n \n \n 64 \n \n \n 24 \n \n \n \n \n Current tax payable \n \n \n \n \n \n 2 \n \n \n 1 \n \n \n \n \n Borrowings and lease liabilities \n \n \n \n \n \n 279 \n \n \n 290 \n \n \n \n \n Trade, other payables and other liabilities \n \n \n \n \n \n 570 \n \n \n 436 \n \n \n \n \n Derivative liabilities \n \n \n \n \n \n 25 \n \n \n 20 \n \n \n \n \n Total liabilities \n \n \n   \n \n \n 51,826 \n \n \n 44,869 \n \n \n \n \n Total equity and liabilities \n \n \n   \n \n \n 53,345 \n \n \n 46,417 \n \n \n \n \n Approved by the Board of Directors and authorised for issue on 6 March 2024 and signed on its behalf: \n   \n   \n   \n Steven Levin                        Mark Satchel \n Chief Executive Officer         Chief Financial Officer \n   \n   \n   \n \n \n \n \n Consolidated statement of changes in equity \n \n \n \n \n For the year ended 31 December 2023 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n Year ended 31 December 2023 \n \n \n \n \n \n Ordinary \n Share \n capital \n   \n \n \n Ordinary Share \n premium reserve \n \n \n B shares \n \n \n Capital redemption reserve \n \n \n Merger \n reserve \n \n \n Share-based payments reserve \n \n \n Other reserves \n \n \n Retained earnings \n \n \n Total \n share- \n holders' \n equity \n \n \n \n \n Balance at 1 January 2023 \n \n \n   \n \n \n 115 \n \n \n 58 \n \n \n - \n \n \n 346 \n \n \n - \n \n \n 41 \n \n \n (1) \n \n \n 989 \n \n \n 1,548 \n \n \n \n \n Profit after tax attributable to the owners of the Company \n \n \n   \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 42 \n \n \n 42 \n \n \n \n \n Total comprehensive income \n \n \n   \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 42 \n \n \n 42 \n \n \n \n \n Dividends \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (65) \n \n \n (65) \n \n \n \n \n Acquisition of own shares 1 \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (14) \n \n \n (14) \n \n \n \n \n Movement in own shares \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (13) \n \n \n (13) \n \n \n \n \n Exchange rate movement (ZAR/GBP) 2 \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 2 \n \n \n 2 \n \n \n \n \n Equity-settled share-based payment transactions \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 18 \n \n \n 18 \n \n \n \n \n Aggregate tax effects of items recognised directly in equity \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 1 \n \n \n - \n \n \n - \n \n \n 1 \n \n \n \n \n Total transactions with the owners of the Company \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 1 \n \n \n - \n \n \n (72) \n \n \n (71) \n \n \n \n \n Transfer to retained earnings \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 1 \n \n \n (1) \n \n \n - \n \n \n \n \n Balance at 31 December 2023 \n \n \n   \n \n \n 115 \n \n \n 58 \n \n \n - \n \n \n 346 \n \n \n - \n \n \n 42 \n \n \n - \n \n \n 958 \n \n \n 1,519 \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n Year ended 31 December 2022 \n \n \n Notes \n \n \n Ordinary \n Share \n capital \n \n \n Ordinary Share \n premium reserve \n \n \n B shares \n \n \n Capital redemption reserve \n \n \n Merger \n reserve \n \n \n Share-based payments reserve \n \n \n Other reserves \n \n \n Retained earnings \n \n \n Total \n share- \n holders' \n equity \n \n \n \n \n Balance at 1 January 2022 \n \n \n \n \n \n 116 \n \n \n 58 \n \n \n - \n \n \n 17 \n \n \n 25 \n \n \n 42 \n \n \n (1) \n \n \n 1,482 \n \n \n 1,739 \n \n \n \n \n Profit after tax attributable to the owners of the Company \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 175 \n \n \n 175 \n \n \n \n \n Total comprehensive income \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 175 \n \n \n 175 \n \n \n \n \n Dividends \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (78) \n \n \n (78) \n \n \n \n \n Ordinary Shares repurchased in the buyback programme 3 \n \n \n 14 \n \n \n (1) \n \n \n - \n \n \n - \n \n \n 1 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Issue of B shares 4 \n \n \n 14 \n \n \n - \n \n \n - \n \n \n 328 \n \n \n - \n \n \n (25) \n \n \n - \n \n \n - \n \n \n (303) \n \n \n - \n \n \n \n \n Redemption of B shares 4 \n \n \n 14 \n \n \n - \n \n \n - \n \n \n (328) \n \n \n 328 \n \n \n - \n \n \n - \n \n \n - \n \n \n (328) \n \n \n (328) \n \n \n \n \n Exchange rate movement (ZAR/GBP) 2 \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (4) \n \n \n (4) \n \n \n \n \n Movement in own shares \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 22 \n \n \n 22 \n \n \n \n \n Equity-settled share-based payment transactions \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 1 \n \n \n - \n \n \n 23 \n \n \n 24 \n \n \n \n \n Aggregate tax effects of items recognised directly in equity \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (2) \n \n \n - \n \n \n - \n \n \n (2) \n \n \n \n \n Total transactions with the owners of the Company \n \n \n (1) \n \n \n - \n \n \n - \n \n \n 329 \n \n \n (25) \n \n \n (1) \n \n \n - \n \n \n (668) \n \n \n (366) \n \n \n \n \n Balance at 31 December 2022 \n \n \n \n \n \n 115 \n \n \n 58 \n \n \n - \n \n \n 346 \n \n \n - \n \n \n 41 \n \n \n (1) \n \n \n 989 \n \n \n 1,548 \n \n \n \n \n 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. \n 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. \n 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. \n 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. \n   \n   \n   \n Consolidated statement of cash flows \n For the year ended 31 December 2023 \n 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). \n \n \n \n \n \n \n \n   \n \n \n \n \n \n £m \n \n \n \n \n \n \n \n Notes \n \n \n Year ended \n 31 December \n 2023 \n \n \n Year ended \n 31 December \n 2022 \n \n \n \n \n Cash flows from operating activities \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Cash flows from operating activities \n \n \n \n \n \n 2,137 \n \n \n 1,698 \n \n \n \n \n Taxation paid \n \n \n \n \n \n (26) \n \n \n (22) \n \n \n \n \n Total net cash flows from operating activities \n \n \n 13(b) \n \n \n 2,111 \n \n \n 1,676 \n \n \n \n \n Cash flows from investing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Net purchases and sales of financial investments \n \n \n \n \n \n (1,908) \n \n \n (1,494) \n \n \n \n \n Purchase of property, plant and equipment \n \n \n \n \n \n (1) \n \n \n (3) \n \n \n \n \n Proceeds from sale of property, plant and equipment held for sale \n \n \n \n \n \n 1 \n \n \n - \n \n \n \n \n Acquisition of interests in subsidiaries 1 \n \n \n \n \n \n - \n \n \n (5) \n \n \n \n \n Increase in investment in associate \n \n \n \n \n \n (1) \n \n \n - \n \n \n \n \n Total net cash flows from investing activities \n \n \n \n \n \n (1,909) \n \n \n (1,502) \n \n \n \n \n Cash flows from financing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Dividends paid to the owners of the Company \n \n \n \n \n \n (65) \n \n \n (78) \n \n \n \n \n Finance costs on borrowings \n \n \n \n \n \n (18) \n \n \n (9) \n \n \n \n \n Payment of interest on lease liabilities \n \n \n \n \n \n (3) \n \n \n (3) \n \n \n \n \n Payment of principal of lease liabilities \n \n \n \n \n \n (9) \n \n \n (11) \n \n \n \n \n Quilter plc shares acquired under the Odd-lot Offer 2 \n \n \n \n \n \n (14) \n \n \n - \n \n \n \n \n Quilter plc shares acquired for use within the Group's employee share scheme \n \n \n \n \n \n (15) \n \n \n - \n \n \n \n \n Redemption of B shares 3 \n \n \n \n \n \n - \n \n \n (328) \n \n \n \n \n Repurchase and cancellation of Ordinary Shares 4 \n \n \n \n \n \n - \n \n \n (28) \n \n \n \n \n Exchange rate movements passed to shareholders 5 \n \n \n \n \n \n 2 \n \n \n (4) \n \n \n \n \n Proceeds from the issue of subordinated debt \n \n \n \n \n \n 199 \n \n \n - \n \n \n \n \n Subordinated debt repaid \n \n \n \n \n \n (200) \n \n \n - \n \n \n \n \n Total net cash flows from financing activities \n \n \n \n \n \n (123) \n \n \n (461) \n \n \n \n \n Net increase/(decrease) in cash and cash equivalents \n \n \n \n \n \n 79 \n \n \n (287) \n \n \n \n \n Cash and cash equivalents at the beginning of the year \n \n \n \n \n \n 1,782 \n \n \n 2,064 \n \n \n \n \n Effect of exchange rate changes on cash and cash equivalents \n \n \n \n \n \n (2) \n \n \n 5 \n \n \n \n \n Cash and cash equivalents at the end of the year \n \n \n 13(a) \n \n \n 1,859 \n \n \n 1,782 \n \n \n \n \n 1 The acquisition of interests in subsidiaries in 2022 resulted from contingent consideration payments relating to historical acquisitions. \n 2 Further information relating to the Odd-lot Offer is included within the consolidated statement of changes in equity. \n 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. \n 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. \n 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. \n   \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Notes to the condensed consolidated financial statements \n For the year ended 31 December 2023 \n General information \n 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. \n The Company's registration number is 06404270. The address of the registered office is Senator House, 85 Queen Victoria Street, London, EC4V 4AB. \n 1: Basis of preparation \n 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. \n 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. \n Going concern \n 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. \n Liquidity analysis of the statement of financial position \n 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. \n Critical accounting estimates and judgements \n 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. \n Critical accounting judgements \n 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. \n Recognition of provisions following the sale of Quilter International \n 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. \n Recognition of revenue from the advice business \n 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. \n Critical accounting estimates \n 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. \n Provision for the cost of defined benefit pension advice \n 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. \n Measurement of deferred tax \n 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. \n Other principal estimates \n 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. \n 2: New standards, amendments to standards, and interpretations adopted by the Group \n 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. \n 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. \n 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. \n \n \n \n \n Adopted by the Group from \n \n \n Amendments to standards \n \n \n \n \n 1 January 2023 \n \n \n Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors - Definition of Accounting Estimates \n \n \n \n \n 1 January 2023 \n \n \n Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements - Disclosure of Accounting Policies \n \n \n \n \n 1 January 2023 \n \n \n Amendments to IAS 12 Income Taxes - Deferred Tax related to Assets and Liabilities arising from a Single Transaction \n \n \n \n \n 1 January 2023 \n \n \n Amendments to IAS 12 Income Taxes - International Tax Reform - Pillar Two Model Rules \n \n \n \n \n   \n 3: Significant changes in the year \n Repayment and new issue of Fixed Rate Reset Subordinated Notes \n 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). \n 4: Business combinations \n 4( a): Business disposals \n 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. \n 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. \n 4 (b): Business acquisitions \n 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. \n 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. \n 4(c): Assets held for sale \n 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. \n 5: Alternative performance measures \n 5(a): Adjusted profit before tax and reconciliation to profit after tax                                                                                          \n Basis of preparation of adjusted profit before tax \n 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. \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n £m \n \n \n \n \n \n \n \n Notes \n \n \n Year ended \n 31 December \n 2023 \n \n \n Year ended \n 31 December \n 2022 \n \n \n \n \n Affluent \n \n \n \n \n \n 124 \n \n \n 105 \n \n \n \n \n High Net Worth \n \n \n \n \n \n 41 \n \n \n 45 \n \n \n \n \n Head Office \n \n \n \n \n \n 2 \n \n \n (16) \n \n \n \n \n Adjusted profit before tax \n \n \n 6(b) \n \n \n 167 \n \n \n 134 \n \n \n \n \n Adjusting items: \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Impact of acquisition and disposal-related accounting \n \n \n 5(b)(i) \n \n \n (39) \n \n \n (42) \n \n \n \n \n Business transformation costs \n \n \n 5(b)(ii) \n \n \n (28) \n \n \n (30) \n \n \n \n \n Finance costs \n \n \n 5(b)(iii) \n \n \n (19) \n \n \n (10) \n \n \n \n \n Customer remediation \n \n \n 5(b)(iv) \n \n \n (6) \n \n \n 12 \n \n \n \n \n Voluntary customer repayments \n \n \n 5(b)(v) \n \n \n - \n \n \n (6) \n \n \n \n \n Exchange rate movement (ZAR/GBP) \n \n \n 5(b)(vi) \n \n \n (2) \n \n \n 4 \n \n \n \n \n Policyholder tax adjustments \n \n \n 5(b)(vii) \n \n \n (62) \n \n \n 138 \n \n \n \n \n Other adjusting items \n \n \n 5(b)(viii) \n \n \n 1 \n \n \n (1) \n \n \n \n \n Total adjusting items before tax \n \n \n \n \n \n (155) \n \n \n 65 \n \n \n \n \n Profit before tax attributable to shareholder returns \n \n \n   \n \n \n 12 \n \n \n 199 \n \n \n \n \n Tax attributable to policyholder returns \n \n \n 7 \n \n \n 76 \n \n \n (134) \n \n \n \n \n Income tax (expense)/credit \n \n \n 7 \n \n \n (46) \n \n \n 110 \n \n \n \n \n IFRS profit after tax \n \n \n   \n \n \n 42 \n \n \n 175 \n \n \n \n \n 5(b): Adjusting items \n 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. \n 5(b)(i): Impact of acquisition and disposal-related accounting \n 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. \n The effect of these adjustments to determine adjusted profit are summarised below. \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n £m \n \n \n \n \n   \n \n \n \n \n \n Year ended \n 31 December \n 2023 \n \n \n Year ended \n 31 December \n 2022 \n \n \n \n \n Amortisation of acquired intangible assets \n \n \n \n \n \n 38 \n \n \n 42 \n \n \n \n \n Impairment of acquired intangible assets 1 \n \n \n \n \n \n 1 \n \n \n - \n \n \n \n \n Total impact of acquisition and disposal-related accounting \n \n \n 39 \n \n \n 42 \n \n \n \n \n 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. \n 5(b)(ii): Business transformation costs \n In 2023, business transformation costs totalled £28 million (2022: £30 million), the principal components of which are described below: \n Business Simplification costs - 2023: £25 million, 2022: £17 million \n 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. \n 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. \n Investment in business costs - 2023: £1 million, 2022: £4 million \n 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. \n Business separation costs following the sale of Quilter International - 2023: £2 million, 2022: £nil \n 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. \n Optimisation programme costs - 2023: £nil, 2022: £6 million \n 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. \n Restructuring costs following the sale of Quilter Life Assurance - 2023: £nil, 2022: £3 million \n 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. \n 5(b)(iii): Finance costs \n 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). \n 5(b)(iv): Customer remediation \n Lighthouse pension transfer advice provision - 2023: £6 million cost, 2022: £12 million net income \n 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. \n 5(b)(v): Voluntary customer repayments \n 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. \n 5(b)(vi): Exchange rate movements (ZAR/GBP) \n 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. \n 5(b)(vii): Policyholder tax adjustments \n 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. \n 5(b)(viii): Other adjusting items \n 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.  \n 5(c): Reconciliation of IFRS income and expenses to \"Total net revenue\" and \"Operating expenses\" within adjusted profit \n 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. \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n Year ended 31 December 2023 \n \n \n Net mgmt. fees 1 \n \n \n Other revenue 1 \n \n \n Investment revenue 1 \n \n \n Total net revenue 1 \n \n \n Operating expenses 1 \n \n \n Adjusted profit before tax \n \n \n Consol. of funds 2 \n \n \n Total \n \n \n \n \n Income \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Fee income and other income from service activities \n \n \n 527 \n \n \n 86 \n \n \n - \n \n \n 613 \n \n \n - \n \n \n 613 \n \n \n (71) \n \n \n 542 \n \n \n \n \n Investment return 3 \n \n \n 48 \n \n \n 3,285 \n \n \n 68 \n \n \n 3,401 \n \n \n - \n \n \n 3,401 \n \n \n 674 \n \n \n 4,075 \n \n \n \n \n Other income \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 9 \n \n \n 9 \n \n \n - \n \n \n 9 \n \n \n \n \n Total income \n \n \n 575 \n \n \n 3,371 \n \n \n 68 \n \n \n 4,014 \n \n \n 9 \n \n \n 4,023 \n \n \n 603 \n \n \n 4,626 \n \n \n \n \n Expenses \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Change in investment contract liabilities 3 \n \n \n (25) \n \n \n (3,282) \n \n \n (6) \n \n \n (3,313) \n \n \n - \n \n \n (3,313) \n \n \n - \n \n \n (3,313) \n \n \n \n \n Fee and commission expenses, and other acquisition costs \n \n \n (46) \n \n \n - \n \n \n - \n \n \n (46) \n \n \n - \n \n \n (46) \n \n \n (3) \n \n \n (49) \n \n \n \n \n Change in third-party interests in consolidated funds \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (579) \n \n \n (579) \n \n \n \n \n Other operating and administrative expenses \n \n \n (13) \n \n \n (5) \n \n \n - \n \n \n (18) \n \n \n (536) \n \n \n (554) \n \n \n (21) \n \n \n (575) \n \n \n \n \n Finance costs \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (22) \n \n \n (22) \n \n \n - \n \n \n (22) \n \n \n \n \n Total expenses \n \n \n (84) \n \n \n (3,287) \n \n \n (6) \n \n \n (3,377) \n \n \n (558) \n \n \n (3,935) \n \n \n (603) \n \n \n (4,538) \n \n \n \n \n Tax expense attributable to policyholder returns \n \n \n (76) \n \n \n - \n \n \n - \n \n \n (76) \n \n \n - \n \n \n (76) \n \n \n - \n \n \n (76) \n \n \n \n \n Profit before tax attributable to shareholder returns \n \n \n 415 \n \n \n 84 \n \n \n 62 \n \n \n 561 \n \n \n (549) \n \n \n 12 \n \n \n - \n \n \n 12 \n \n \n \n \n Adjusting items: \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Impact of acquisition and disposal-related accounting \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 39 \n \n \n 39 \n \n \n   \n \n \n   \n \n \n \n \n Business transformation costs \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 28 \n \n \n 28 \n \n \n   \n \n \n   \n \n \n \n \n Finance costs \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 19 \n \n \n 19 \n \n \n   \n \n \n   \n \n \n \n \n Customer remediation \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 6 \n \n \n 6 \n \n \n   \n \n \n   \n \n \n \n \n Exchange rate movements (ZAR/GBP) \n \n \n - \n \n \n 2 \n \n \n - \n \n \n 2 \n \n \n - \n \n \n 2 \n \n \n   \n \n \n   \n \n \n \n \n Policyholder tax adjustments \n \n \n 62 \n \n \n - \n \n \n - \n \n \n 62 \n \n \n - \n \n \n 62 \n \n \n   \n \n \n   \n \n \n \n \n Other adjusting items \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (1) \n \n \n (1) \n \n \n   \n \n \n   \n \n \n \n \n Adjusting items \n \n \n 62 \n \n \n 2 \n \n \n - \n \n \n 64 \n \n \n 91 \n \n \n 155 \n \n \n   \n \n \n   \n \n \n \n \n Adjusted profit before tax \n \n \n 477 \n \n \n 86 \n \n \n 62 \n \n \n 625 \n \n \n (458) \n \n \n 167 \n \n \n   \n \n \n   \n \n \n \n \n  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. \n 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. \n 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. \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n Year ended 31 December 2022 \n \n \n Net mgmt. fees 1 \n \n \n Other revenue 1 \n \n \n Investment revenue 1 \n \n \n Total net revenue 1 \n \n \n Operating expenses 1 \n \n \n Adjusted profit before tax \n \n \n Consol. of funds 2 \n \n \n Total \n \n \n \n \n Income \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Fee income and other income from service activities \n \n \n 548 \n \n \n 95 \n \n \n - \n \n \n 643 \n \n \n - \n \n \n 643 \n \n \n (62) \n \n \n 581 \n \n \n \n \n Investment return 3 \n \n \n 12 \n \n \n (4,320) \n \n \n 16 \n \n \n (4,292) \n \n \n - \n \n \n (4,292) \n \n \n (357) \n \n \n (4,649) \n \n \n \n \n Other income \n \n \n - \n \n \n 5 \n \n \n - \n \n \n 5 \n \n \n 21 \n \n \n 26 \n \n \n 2 \n \n \n 28 \n \n \n \n \n Total income \n \n \n 560 \n \n \n (4,220) \n \n \n 16 \n \n \n (3,644) \n \n \n 21 \n \n \n (3,623) \n \n \n (417) \n \n \n (4,040) \n \n \n \n \n Expenses \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Change in investment contract liabilities 3 \n \n \n (5) \n \n \n 4,323 \n \n \n - \n \n \n 4,318 \n \n \n - \n \n \n 4,318 \n \n \n - \n \n \n 4,318 \n \n \n \n \n Fee and commission expenses, and other acquisition costs \n \n \n (46) \n \n \n 1 \n \n \n - \n \n \n (45) \n \n \n - \n \n \n (45) \n \n \n (9) \n \n \n (54) \n \n \n \n \n Change in third-party interests in consolidated funds \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 438 \n \n \n 438 \n \n \n \n \n Other operating and administrative expenses \n \n \n (15) \n \n \n - \n \n \n - \n \n \n (15) \n \n \n (557) \n \n \n (572) \n \n \n (12) \n \n \n (584) \n \n \n \n \n Finance costs \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (13) \n \n \n (13) \n \n \n - \n \n \n (13) \n \n \n \n \n Total expenses \n \n \n (66) \n \n \n 4,324 \n \n \n - \n \n \n 4,258 \n \n \n (570) \n \n \n 3,688 \n \n \n 417 \n \n \n 4,105 \n \n \n \n \n Tax credit attributable to policyholder returns \n \n \n 134 \n \n \n - \n \n \n - \n \n \n 134 \n \n \n - \n \n \n 134 \n \n \n - \n \n \n 134 \n \n \n \n \n Profit before tax attributable to shareholder returns \n \n \n 628 \n \n \n 104 \n \n \n 16 \n \n \n 748 \n \n \n (549) \n \n \n 199 \n \n \n - \n \n \n 199 \n \n \n \n \n Adjusting items: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Impact of acquisition and disposal-related accounting \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 42 \n \n \n 42 \n \n \n \n \n \n \n \n \n \n \n Business transformation costs \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 30 \n \n \n 30 \n \n \n \n \n \n \n \n \n \n \n Finance costs \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 10 \n \n \n 10 \n \n \n \n \n \n \n \n \n \n \n Customer remediation \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (12) \n \n \n (12) \n \n \n \n \n \n \n \n \n \n \n Voluntary customer repayments \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 6 \n \n \n 6 \n \n \n \n \n \n \n \n \n \n \n Exchange rate movements (ZAR/GBP) \n \n \n - \n \n \n (4) \n \n \n - \n \n \n (4) \n \n \n - \n \n \n (4) \n \n \n \n \n \n \n \n \n \n \n Policyholder tax adjustments \n \n \n (138) \n \n \n - \n \n \n - \n \n \n (138) \n \n \n - \n \n \n (138) \n \n \n \n \n \n \n \n \n \n \n Other adjusting items \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 1 \n \n \n 1 \n \n \n \n \n \n \n \n \n \n \n Adjusting items \n \n \n (138) \n \n \n (4) \n \n \n - \n \n \n (142) \n \n \n 77 \n \n \n (65) \n \n \n \n \n \n \n \n \n \n \n Adjusted profit before tax \n \n \n 490 \n \n \n 100 \n \n \n 16 \n \n \n 606 \n \n \n (472) \n \n \n 134 \n \n \n \n \n \n \n \n \n \n \n 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. \n 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. \n 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. \n 6: Segment information \n 6(a): Segment presentation \n 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. \n 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. \n 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. \n 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) . \n High Net Worth \n This segment comprises Quilter Cheviot and Quilter Cheviot Financial Planning. \n 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. \n Quilter Cheviot Financial Planning provides financial advice for protection, mortgages, savings, investments and pensions predominantly to high net worth clients. \n Affluent \n This segment is comprised of Quilter Investment Platform, Quilter Investors and Quilter Financial Planning. \n 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. \n 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. \n 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. \n Head Office \n 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. \n 6(b): Adjusted profit statement - segment information for the year ended 31 December 2023 \n 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. \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n £m \n \n \n \n \n   \n \n \n   \n \n \n Operating segments \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n   \n \n \n Notes \n \n \n Affluent \n \n \n High \n Net \n Worth \n \n \n Head Office \n \n \n Consolidation adjustments 1 \n \n \n Total \n \n \n \n \n Income \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Premium-based fees \n \n \n \n \n \n 66 \n \n \n 20 \n \n \n - \n \n \n - \n \n \n 86 \n \n \n \n \n Fund-based fees \n \n \n \n \n \n 336 \n \n \n 172 \n \n \n - \n \n \n (71) \n \n \n 437 \n \n \n \n \n Fixed fees \n \n \n \n \n \n 1 \n \n \n - \n \n \n - \n \n \n - \n \n \n 1 \n \n \n \n \n Other fee and commission income \n \n \n \n \n \n 18 \n \n \n - \n \n \n - \n \n \n - \n \n \n 18 \n \n \n \n \n Fee income and other income from service activities \n \n \n \n \n \n 421 \n \n \n 192 \n \n \n - \n \n \n (71) \n \n \n 542 \n \n \n \n \n Investment return 2 \n \n \n \n \n \n 3,361 \n \n \n 19 \n \n \n 28 \n \n \n 667 \n \n \n 4,075 \n \n \n \n \n Other income \n \n \n \n \n \n 88 \n \n \n 1 \n \n \n - \n \n \n (80) \n \n \n 9 \n \n \n \n \n Segment income \n \n \n   \n \n \n 3,870 \n \n \n 212 \n \n \n 28 \n \n \n 516 \n \n \n 4,626 \n \n \n \n \n Expenses \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Change in investment contract liabilities 2 \n \n \n \n \n \n (3,313) \n \n \n - \n \n \n - \n \n \n - \n \n \n (3,313) \n \n \n \n \n Fee and commission expenses, and other acquisition costs \n \n \n \n \n \n (47) \n \n \n - \n \n \n - \n \n \n (2) \n \n \n (49) \n \n \n \n \n Change in third-party interests in consolidated funds \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n (579) \n \n \n (579) \n \n \n \n \n Other operating and administrative expenses \n \n \n \n \n \n (387) \n \n \n (205) \n \n \n (41) \n \n \n 58 \n \n \n (575) \n \n \n \n \n Finance costs \n \n \n \n \n \n (3) \n \n \n - \n \n \n (26) \n \n \n 7 \n \n \n (22) \n \n \n \n \n Segment expenses \n \n \n   \n \n \n (3,750) \n \n \n (205) \n \n \n (67) \n \n \n (516) \n \n \n (4,538) \n \n \n \n \n Profit/(loss) before tax \n \n \n   \n \n \n 120 \n \n \n 7 \n \n \n (39) \n \n \n - \n \n \n 88 \n \n \n \n \n Tax expense attributable to policyholder returns \n \n \n \n \n \n (76) \n \n \n - \n \n \n - \n \n \n - \n \n \n (76) \n \n \n \n \n Profit/(loss) before tax attributable to shareholder returns \n \n \n \n \n \n 44 \n \n \n 7 \n \n \n (39) \n \n \n - \n \n \n 12 \n \n \n \n \n Adjusting items: \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Impact of acquisition and disposal-related accounting \n \n \n 5(b)(i) \n \n \n 7 \n \n \n 32 \n \n \n - \n \n \n - \n \n \n 39 \n \n \n \n \n Business transformation costs \n \n \n 5(b)(ii) \n \n \n 5 \n \n \n 3 \n \n \n 20 \n \n \n - \n \n \n 28 \n \n \n \n \n Finance costs \n \n \n 5(b)(iii) \n \n \n - \n \n \n - \n \n \n 19 \n \n \n - \n \n \n 19 \n \n \n \n \n Customer remediation \n \n \n 5(b)(iv) \n \n \n 6 \n \n \n - \n \n \n - \n \n \n - \n \n \n 6 \n \n \n \n \n Exchange rate movements (ZAR/GBP) \n \n \n 5(b)(vi) \n \n \n - \n \n \n - \n \n \n 2 \n \n \n - \n \n \n 2 \n \n \n \n \n Policyholder tax adjustments \n \n \n 5(b)(vii) \n \n \n 62 \n \n \n - \n \n \n - \n \n \n - \n \n \n 62 \n \n \n \n \n Other adjusting items \n \n \n 5(b)(viii) \n \n \n - \n \n \n (1) \n \n \n - \n \n \n - \n \n \n (1) \n \n \n \n \n Adjusting items before tax \n \n \n \n \n \n 80 \n \n \n 34 \n \n \n 41 \n \n \n - \n \n \n 155 \n \n \n \n \n Adjusted profit before tax \n \n \n   \n \n \n 124 \n \n \n 41 \n \n \n 2 \n \n \n - \n \n \n 167 \n \n \n \n \n 1 Consolidation adjustments comprise the elimination of inter-segment transactions and the consolidation of investment funds. \n 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. I nvestment return total also includes £62 million of interest income on shareholder cash and cash equivalents. \n 6(c): Adjusted profit statement - segment information for the year ended 31 December 2022 \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n   \n \n \n   \n \n \n Operating segments \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n Notes \n \n \n Affluent \n \n \n High \n          Net Worth \n \n \n Head Office \n \n \n Consolidation adjustments 1 \n \n \n Total \n \n \n \n \n Income \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Premium-based fees \n \n \n \n \n \n 75 \n \n \n 21 \n \n \n - \n \n \n - \n \n \n 96 \n \n \n \n \n Fund-based fees \n \n \n \n \n \n 356 \n \n \n 181 \n \n \n - \n \n \n (62) \n \n \n 475 \n \n \n \n \n Fixed fees \n \n \n \n \n \n 2 \n \n \n - \n \n \n - \n \n \n - \n \n \n 2 \n \n \n \n \n Other fee and commission income \n \n \n \n \n \n 8 \n \n \n - \n \n \n - \n \n \n - \n \n \n 8 \n \n \n \n \n Fee income and other income from service activities \n \n \n \n \n \n 441 \n \n \n 202 \n \n \n - \n \n \n (62) \n \n \n 581 \n \n \n \n \n Investment return 2 \n \n \n \n \n \n (4,307) \n \n \n 9 \n \n \n 8 \n \n \n (359) \n \n \n (4,649) \n \n \n \n \n Other income \n \n \n \n \n \n 112 \n \n \n 3 \n \n \n 5 \n \n \n (92) \n \n \n 28 \n \n \n \n \n Segment income \n \n \n   \n \n \n (3,754) \n \n \n 214 \n \n \n 13 \n \n \n (513) \n \n \n (4,040) \n \n \n \n \n Expenses \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Change in investment contract liabilities 2 \n \n \n \n \n \n 4,318 \n \n \n - \n \n \n - \n \n \n - \n \n \n 4,318 \n \n \n \n \n Fee and commission expenses, and other acquisition costs \n \n \n \n \n \n (46) \n \n \n - \n \n \n - \n \n \n (8) \n \n \n (54) \n \n \n \n \n Change in third-party interests in consolidated funds \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n 438 \n \n \n 438 \n \n \n \n \n Other operating and administrative expenses \n \n \n \n \n \n (410) \n \n \n (202) \n \n \n (53) \n \n \n 81 \n \n \n (584) \n \n \n \n \n Finance costs \n \n \n \n \n \n (3) \n \n \n - \n \n \n (12) \n \n \n 2 \n \n \n (13) \n \n \n \n \n Segment expenses \n \n \n   \n \n \n 3,859 \n \n \n (202) \n \n \n (65) \n \n \n 513 \n \n \n 4,105 \n \n \n \n \n Profit/(loss) before tax \n \n \n \n \n \n 105 \n \n \n 12 \n \n \n (52) \n \n \n - \n \n \n 65 \n \n \n \n \n Tax credit attributable to policyholder returns \n \n \n \n \n \n 134 \n \n \n - \n \n \n - \n \n \n - \n \n \n 134 \n \n \n \n \n Profit/(loss) before tax attributable to shareholder returns \n \n \n \n \n \n 239 \n \n \n 12 \n \n \n (52) \n \n \n - \n \n \n 199 \n \n \n \n \n Adjusting items: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Impact of acquisition and disposal-related accounting \n \n \n 5(b)(i) \n \n \n 10 \n \n \n 32 \n \n \n - \n \n \n - \n \n \n 42 \n \n \n \n \n Business transformation costs \n \n \n 5(b)(ii) \n \n \n - \n \n \n - \n \n \n 30 \n \n \n - \n \n \n 30 \n \n \n \n \n Finance costs \n \n \n 5(b)(iii) \n \n \n - \n \n \n - \n \n \n 10 \n \n \n - \n \n \n 10 \n \n \n \n \n Customer remediation \n \n \n 5(b)(iv) \n \n \n (12) \n \n \n - \n \n \n - \n \n \n - \n \n \n (12) \n \n \n \n \n Voluntary customer repayments \n \n \n 5(b)(v) \n \n \n 6 \n \n \n - \n \n \n - \n \n \n - \n \n \n 6 \n \n \n \n \n Exchange rate movements (ZAR/GBP) \n \n \n 5(b)(vi) \n \n \n - \n \n \n - \n \n \n (4) \n \n \n - \n \n \n (4) \n \n \n \n \n Policyholder tax adjustments \n \n \n 5(b)(vii) \n \n \n (138) \n \n \n - \n \n \n - \n \n \n - \n \n \n (138) \n \n \n \n \n Other adjusting items \n \n \n 5(b)(viii) \n \n \n - \n \n \n 1 \n \n \n - \n \n \n - \n \n \n 1 \n \n \n \n \n Adjusting items before tax \n \n \n \n \n \n (134) \n \n \n 33 \n \n \n 36 \n \n \n - \n \n \n (65) \n \n \n \n \n Adjusted profit/(loss) before tax \n \n \n   \n \n \n 105 \n \n \n 45 \n \n \n (16) \n \n \n - \n \n \n 134 \n \n \n \n \n 1 Consolidation adjustments comprise the elimination of inter-segment transactions and the consolidation of investment funds. \n 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. I nvestment return total also includes £16 million interest income on shareholder cash and cash equivalents. \n 7: Tax \n 7(a): Tax charged/(credited) \n \n \n \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n   \n \n \n \n \n \n Year ended \n 31 December \n 2023 \n \n \n Year ended \n 31 December \n 2022 \n \n \n \n \n Current tax \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n United Kingdom \n \n \n \n \n \n 2 \n \n \n 12 \n \n \n \n \n Overseas tax \n \n \n \n \n \n - \n \n \n 1 \n \n \n \n \n Total current tax charge \n \n \n   \n \n \n 2 \n \n \n 13 \n \n \n \n \n Deferred tax \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Origination and reversal of temporary differences \n \n \n \n \n \n 52 \n \n \n (120) \n \n \n \n \n Effect on deferred tax of changes in tax rates \n \n \n \n \n \n (3) \n \n \n (1) \n \n \n \n \n Adjustments to deferred tax in respect of prior years \n \n \n \n \n \n (5) \n \n \n (2) \n \n \n \n \n Total deferred tax charge/(credit) \n \n \n   \n \n \n 44 \n \n \n (123) \n \n \n \n \n Total tax charged/(credited) \n \n \n   \n \n \n 46 \n \n \n (110) \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Attributable to policyholder returns \n \n \n \n \n \n 76 \n \n \n (134) \n \n \n \n \n Attributable to shareholder returns \n \n \n \n \n \n (30) \n \n \n 24 \n \n \n \n \n Total tax charged/(credited) \n \n \n \n \n \n 46 \n \n \n (110) \n \n \n \n \n Policyholder tax \n 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. \n 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. \n 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). \n 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). \n UK Corporation Tax rate \n 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%. \n First time recognition of deferred tax asset on tax losses \n 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. \n Pillar II taxes \n 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. \n 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.   \n 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. \n UK \n 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. \n 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. \n Jersey, Guernsey and the Isle of Man \n 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). \n Ireland \n 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. \n Other \n 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. \n 7(b): Reconciliation of total income tax expense/(credit) \n 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 : \n \n \n \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n   \n \n \n \n \n \n Year ended \n 31 December \n 2023 \n \n \n Year ended \n 31 December \n 2022 \n \n \n \n \n Profit before tax \n \n \n   \n \n \n 88 \n \n \n 65 \n \n \n \n \n Tax at UK standard rate of 23.5% (2022: 19%) \n \n \n \n \n \n 21 \n \n \n 12 \n \n \n \n \n Untaxed and low taxed income \n \n \n \n \n \n (1) \n \n \n (6) \n \n \n \n \n Expenses not deductible for tax purposes \n \n \n \n \n \n 2 \n \n \n 1 \n \n \n \n \n Net movements on unrecognised deferred tax assets 1 \n \n \n \n \n \n (29) \n \n \n (6) \n \n \n \n \n Effect on deferred tax of changes in tax rates \n \n \n \n \n \n (3) \n \n \n (1) \n \n \n \n \n Adjustments to deferred tax in respect of prior periods \n \n \n \n \n \n (5) \n \n \n (2) \n \n \n \n \n Income tax attributable to policyholder returns (net of tax relief) \n \n \n \n \n \n 61 \n \n \n (108) \n \n \n \n \n Total tax charged/(credited) to profit or loss \n \n \n   \n \n \n 46 \n \n \n (110) \n \n \n \n \n 1 Includes first time recognition of tax losses as explained in note 7(a). \n 7(c): Reconciliation of IFRS income tax credit or expense to income tax on adjusted profit \n \n \n \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n   \n \n \n Note \n \n \n Year ended \n 31 December \n 2023 \n \n \n Year ended \n 31 December \n 2022 \n \n \n \n \n Income tax expense/(credit) 1 \n \n \n   \n \n \n 46 \n \n \n (110) \n \n \n \n \n Tax on adjusting items \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Impact of acquisition and disposal-related accounting \n \n \n \n \n \n 9 \n \n \n 8 \n \n \n \n \n Business transformation costs \n \n \n \n \n \n 8 \n \n \n 5 \n \n \n \n \n Finance costs \n \n \n \n \n \n 4 \n \n \n 2 \n \n \n \n \n Exchange rate movements (ZAR/GBP) \n \n \n \n \n \n 1 \n \n \n (1) \n \n \n \n \n Tax adjusting items \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Policyholder tax adjustments \n \n \n 5(b)(vii) \n \n \n (62) \n \n \n 138 \n \n \n \n \n Other shareholder tax adjustments 2 \n \n \n \n \n \n 46 \n \n \n (19) \n \n \n \n \n Tax on adjusting items \n \n \n   \n \n \n 6 \n \n \n 133 \n \n \n \n \n Less: tax attributable to policyholder returns within adjusted profit 3 \n \n \n \n \n \n (14) \n \n \n (4) \n \n \n \n \n Tax charged on total adjusted profit \n \n \n   \n \n \n 38 \n \n \n 19 \n \n \n \n \n 1 Includes both tax attributable to policyholder and shareholder returns, in compliance with IFRS. \n 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. \n 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. \n 8: Earnings per share \n 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. \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Pence \n \n \n \n \n   \n \n \n Framework \n \n \n Notes \n \n \n Year ended \n 31 December \n 2023 \n \n \n Year ended \n 31 December \n 2022 \n \n \n \n \n Basic earnings per share \n \n \n IFRS \n \n \n 8(b) \n \n \n 3.1 \n \n \n 12.2 \n \n \n \n \n Diluted basic earnings per share \n \n \n IFRS \n \n \n 8(b) \n \n \n 3.1 \n \n \n 12.0 \n \n \n \n \n Adjusted basic earnings per share \n \n \n Group policy \n \n \n 8(b) \n \n \n 9.6 \n \n \n 8.0 \n \n \n \n \n Adjusted diluted earnings per share \n \n \n Group policy \n \n \n 8(b) \n \n \n 9.4 \n \n \n 7.9 \n \n \n \n \n Headline basic earnings per share (net of tax) \n \n \n JSE Listing Requirements \n \n \n 8(c) \n \n \n 3.2 \n \n \n 12.6 \n \n \n \n \n Headline diluted earnings per share (net of tax) \n \n \n JSE Listing Requirements \n \n \n 8(c) \n \n \n 3.1 \n \n \n 12.4 \n \n \n \n \n 8(a): Weighted average number of Ordinary Shares \n 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. \n \n \n \n \n \n \n \n \n \n \n \n \n \n Million \n \n \n \n \n   \n \n \n \n \n \n Year ended \n 31 December \n 2023 \n \n \n Year ended \n 31 December \n 2022 \n \n \n \n \n Weighted average number of Ordinary Shares \n \n \n   \n \n \n 1,404 \n \n \n 1,496 \n \n \n \n \n Own shares including those held in consolidated funds and employee benefit trusts \n \n \n   \n \n \n (54) \n \n \n (58) \n \n \n \n \n Basic weighted average number of Ordinary Shares \n \n \n \n \n \n 1,350 \n \n \n 1,438 \n \n \n \n \n Adjustment for dilutive share awards and options 1 \n \n \n   \n \n \n 24 \n \n \n 26 \n \n \n \n \n Diluted weighted average number of Ordinary Shares \n \n \n   \n \n \n 1,374 \n \n \n 1,464 \n \n \n \n \n 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. \n 8(b): Basic and diluted EPS (IFRS and adjusted profit) \n \n \n \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n   \n \n \n Notes \n \n \n Year ended \n 31 December 2023 \n \n \n Year ended \n 31 December 2022 \n \n \n \n \n Profit after tax \n \n \n   \n \n \n 42 \n \n \n 175 \n \n \n \n \n Total adjusting items before tax \n \n \n 5(a) \n \n \n 155 \n \n \n (65) \n \n \n \n \n Tax on adjusting items \n \n \n 7(c) \n \n \n (6) \n \n \n (133) \n \n \n \n \n Less: Policyholder tax adjustments \n \n \n 7(c) \n \n \n (62) \n \n \n 138 \n \n \n \n \n Adjusted profit after tax \n \n \n   \n \n \n 129 \n \n \n 115 \n \n \n \n \n   \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n Pence \n \n \n \n \n   \n \n \n Post-tax profit \n measure used \n \n \n Year ended \n 31 December 2023 \n \n \n Year ended \n 31 December 2022 \n \n \n \n \n Basic EPS \n \n \n IFRS profit \n \n \n 3.1 \n \n \n 12.2 \n \n \n \n \n Diluted EPS \n \n \n IFRS profit \n \n \n 3.1 \n \n \n 12.0 \n \n \n \n \n Adjusted basic EPS \n \n \n Adjusted profit \n \n \n 9.6 \n \n \n 8.0 \n \n \n \n \n Adjusted diluted EPS \n \n \n Adjusted profit \n \n \n 9.4 \n \n \n 7.9 \n \n \n \n \n 8(c): Headline earnings per share \n \n \n \n \n   \n \n \n + \n \n \n + \n \n \n   \n \n \n £m \n \n \n \n \n   \n \n \n Year ended \n 31 December 2023 \n \n \n Year ended \n 31 December 2022 \n \n \n \n \n   \n \n \n Gross \n \n \n Net of tax \n \n \n Gross 1 \n \n \n Net of tax 1 \n \n \n \n \n Profit \n \n \n   \n \n \n 42 \n \n \n \n \n \n 175 \n \n \n \n \n Adjusted for: \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   - add back of impairment loss on property, plant and equipment \n \n \n - \n \n \n - \n \n \n 7 \n \n \n 6 \n \n \n \n \n   - add back of impairment loss on intangible assets \n \n \n 1 \n \n \n 1 \n \n \n - \n \n \n - \n \n \n \n \n Headline earnings \n \n \n   \n \n \n 43 \n \n \n \n \n \n 181 \n \n \n \n \n Headline basic EPS (pence) \n \n \n   \n \n \n 3.2 \n \n \n \n \n \n 12.6 \n \n \n \n \n Headline diluted EPS (pence) \n \n \n   \n \n \n 3.1 \n \n \n \n \n \n 12.4 \n \n \n \n \n 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. \n 9: Goodwill and intangible assets \n 9(a): Analysis of goodwill and intangible assets \n The table below shows the movements in cost and amortisation of goodwill and intangible assets. \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n £m \n \n \n \n \n \n \n \n Goodwill \n \n \n Software development costs \n \n \n Other intangible assets \n \n \n Total \n \n \n \n \n Gross amount \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n 1 January 2022 \n \n \n 306 \n \n \n 30 \n \n \n 425 \n \n \n 761 \n \n \n \n \n 31 December 2022 \n \n \n 306 \n \n \n 30 \n \n \n 425 \n \n \n 761 \n \n \n \n \n Disposals 1 \n \n \n - \n \n \n (21) \n \n \n - \n \n \n (21) \n \n \n \n \n 31 December 2023 \n \n \n 306 \n \n \n 9 \n \n \n 425 \n \n \n 740 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Accumulated amortisation and impairment losses \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 1 January 2022 \n \n \n - \n \n \n (22) \n \n \n (282) \n \n \n (304) \n \n \n \n \n Amortisation charge for the year \n \n \n - \n \n \n (2) \n \n \n (42) \n \n \n (44) \n \n \n \n \n 31 December 2022 \n \n \n - \n \n \n (24) \n \n \n (324) \n \n \n (348) \n \n \n \n \n Amortisation charge for the year \n \n \n - \n \n \n (2) \n \n \n (38) \n \n \n (40) \n \n \n \n \n Disposals 1 \n \n \n - \n \n \n 21 \n \n \n - \n \n \n 21 \n \n \n \n \n Impairment of other intangibles \n \n \n - \n \n \n - \n \n \n (1) \n \n \n (1) \n \n \n \n \n 31 December 2023 \n \n \n - \n \n \n (5) \n \n \n (363) \n \n \n (368) \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Carrying amount \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 31 December 2022 \n \n \n 306 \n \n \n 6 \n \n \n 101 \n \n \n 413 \n \n \n \n \n 31 December 2023 \n \n \n 306 \n \n \n 4 \n \n \n 62 \n \n \n 372 \n \n \n \n \n 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. \n 9(b): Analysis of other intangible assets \n \n \n \n \n   \n \n \n 31 December \n 2023 \n \n \n 31 December \n 2022 \n \n \n Average \n estimated useful \n life \n \n \n Average \n Period \n remaining \n \n \n \n \n   \n \n \n £m \n \n \n £m \n \n \n \n \n \n \n \n \n \n \n Net carrying value \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Distribution channels - Quilter Financial Planning \n \n \n 2 \n \n \n 4 \n \n \n 8 years \n \n \n 1 year \n \n \n \n \n Customer relationships \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Quilter Cheviot \n \n \n 32 \n \n \n 59 \n \n \n 10 years \n \n \n 1 year \n \n \n \n \n Quilter Financial Planning \n \n \n 17 \n \n \n 22 \n \n \n 8 years \n \n \n 3 years \n \n \n \n \n Quilter Cheviot Financial Planning 1 \n \n \n 10 \n \n \n 14 \n \n \n 8 years \n \n \n 3 years \n \n \n \n \n Other \n \n \n 1 \n \n \n 2 \n \n \n 7 years \n \n \n < 1 year \n \n \n \n \n Total other intangible assets \n \n \n 62 \n \n \n 101 \n \n \n \n \n \n \n \n \n \n \n 1 Formerly known as Quilter Private Client Advisers. \n 9(c): Allocation of goodwill to cash-generating units (\"CGUs\") and impairment testing \n 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. \n \n \n \n \n \n \n \n   \n \n \n £m \n \n \n \n \n   \n \n \n 31 December \n 2023 \n \n \n 31 December \n 2022 \n \n \n \n \n Goodwill (net carrying amount) \n \n \n   \n \n \n \n \n \n \n \n Affluent \n \n \n 223 \n \n \n 223 \n \n \n \n \n High Net Worth \n \n \n 83 \n \n \n 83 \n \n \n \n \n Total goodwill \n \n \n 306 \n \n \n 306 \n \n \n \n \n Impairment review \n 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. \n 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. \n 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. \n \n \n \n \n   \n \n \n Affluent \n \n \n High Net Worth \n \n \n \n \n Reduction in forecast cash flows \n \n \n 27% \n \n \n 61% \n \n \n \n \n Percentage point increase in the discount rate \n \n \n 9% \n \n \n 25% \n \n \n \n \n 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. \n 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. \n 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. \n Value-in-use methodology \n 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. \n 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. \n 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. \n 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. \n 10: Financial investments \n 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). \n \n \n \n \n \n \n \n \n \n \n £m \n \n \n \n \n   \n \n \n 31 December \n 2023 \n \n \n 31 December \n 2022 \n \n \n \n \n Government and government-guaranteed securities \n \n \n 202 \n \n \n 225 \n \n \n \n \n Other debt securities, preference shares and debentures \n \n \n 2,175 \n \n \n 1,609 \n \n \n \n \n Equity securities \n \n \n 8,488 \n \n \n 6,225 \n \n \n \n \n Pooled investments \n \n \n 39,462 \n \n \n 35,557 \n \n \n \n \n Short-term funds and securities treated as investments \n \n \n 1 \n \n \n 1 \n \n \n \n \n Other \n \n \n 1 \n \n \n - \n \n \n \n \n Total financial investments \n \n \n 50,329 \n \n \n 43,617 \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Recoverable within 12 months \n \n \n 50,329 \n \n \n 43,617 \n \n \n \n \n Total financial investments \n \n \n 50,329 \n \n \n 43,617 \n \n \n \n \n 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. \n 11: Categories of financial instruments \n 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. \n 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. \n \n \n \n \n 31 December 2023 \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n £m \n \n \n \n \n Measurement basis \n \n \n Fair value \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n   \n \n \n Mandatorily at FVTPL \n \n \n Designated at FVTPL \n \n \n Amortised cost \n \n \n Non-financial assets and liabilities \n \n \n Total \n \n \n \n \n Assets \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Loans and advances \n \n \n - \n \n \n - \n \n \n 38 \n \n \n - \n \n \n 38 \n \n \n \n \n Financial investments \n \n \n 50,329 \n \n \n - \n \n \n - \n \n \n - \n \n \n 50,329 \n \n \n \n \n Trade, other receivables and other assets \n \n \n - \n \n \n - \n \n \n 404 \n \n \n 43 \n \n \n 447 \n \n \n \n \n Derivative assets \n \n \n 57 \n \n \n - \n \n \n - \n \n \n - \n \n \n 57 \n \n \n \n \n Cash and cash equivalents \n \n \n 1,091 \n \n \n - \n \n \n 768 \n \n \n - \n \n \n 1,859 \n \n \n \n \n Total assets that include financial instruments \n \n \n 51,477 \n \n \n - \n \n \n 1,210 \n \n \n 43 \n \n \n 52,730 \n \n \n \n \n Total other non-financial assets \n \n \n - \n \n \n - \n \n \n - \n \n \n 615 \n \n \n 615 \n \n \n \n \n Total assets \n \n \n 51,477 \n \n \n - \n \n \n 1,210 \n \n \n 658 \n \n \n 53,345 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Liabilities \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Investment contract liabilities \n \n \n - \n \n \n 43,396 \n \n \n - \n \n \n - \n \n \n 43,396 \n \n \n \n \n Third-party interests in consolidated funds \n \n \n 7,444 \n \n \n - \n \n \n - \n \n \n - \n \n \n 7,444 \n \n \n \n \n Borrowings and lease liabilities \n \n \n - \n \n \n - \n \n \n 279 \n \n \n - \n \n \n 279 \n \n \n \n \n Trade, other payables and other liabilities \n \n \n 1 \n \n \n - \n \n \n 484 \n \n \n 85 \n \n \n 570 \n \n \n \n \n Derivative liabilities \n \n \n 25 \n \n \n - \n \n \n - \n \n \n - \n \n \n 25 \n \n \n \n \n Total liabilities that include financial instruments \n \n \n 7,470 \n \n \n 43,396 \n \n \n 763 \n \n \n 85 \n \n \n 51,714 \n \n \n \n \n Total other non-financial liabilities \n \n \n - \n \n \n - \n \n \n - \n \n \n 112 \n \n \n 112 \n \n \n \n \n Total liabilities \n \n \n 7,470 \n \n \n 43,396 \n \n \n 763 \n \n \n 197 \n \n \n 51,826 \n \n \n \n \n   \n \n \n \n \n 31 December 2022 \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n £m \n \n \n \n \n Measurement basis \n \n \n Fair value \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n Mandatorily at FVTPL \n \n \n Designated at FVTPL \n \n \n Amortised cost (Restated) \n \n \n Non-financial assets and liabilities (Restated) \n \n \n Total \n \n \n \n \n Assets \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Loans and advances \n \n \n - \n \n \n - \n \n \n 34 \n \n \n - \n \n \n 34 \n \n \n \n \n Financial investments \n \n \n 43,617 \n \n \n - \n \n \n - \n \n \n - \n \n \n 43,617 \n \n \n \n \n Trade, other receivables and other assets \n \n \n - \n \n \n - \n \n \n 261 \n \n \n 42 \n \n \n 303 \n \n \n \n \n Derivative assets \n \n \n 40 \n \n \n - \n \n \n - \n \n \n - \n \n \n 40 \n \n \n \n \n Cash and cash equivalents \n \n \n 1,112 \n \n \n - \n \n \n 670 \n \n \n - \n \n \n 1,782 \n \n \n \n \n Total assets that include financial instruments \n \n \n 44,769 \n \n \n - \n \n \n 965 \n \n \n 42 \n \n \n 45,776 \n \n \n \n \n Total other non-financial assets 1 \n \n \n - \n \n \n - \n \n \n - \n \n \n 641 \n \n \n 641 \n \n \n \n \n Total assets \n \n \n 44,769 \n \n \n - \n \n \n 965 \n \n \n 683 \n \n \n 46,417 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Investment contract liabilities \n \n \n - \n \n \n 38,186 \n \n \n - \n \n \n - \n \n \n 38,186 \n \n \n \n \n Third-party interests in consolidated funds \n \n \n 5,843 \n \n \n - \n \n \n - \n \n \n - \n \n \n 5,843 \n \n \n \n \n Borrowings and lease liabilities \n \n \n - \n \n \n - \n \n \n 290 \n \n \n - \n \n \n 290 \n \n \n \n \n Trade, other payables and other liabilities 2 \n \n \n - \n \n \n - \n \n \n 351 \n \n \n 85 \n \n \n 436 \n \n \n \n \n Derivative liabilities \n \n \n 20 \n \n \n - \n \n \n - \n \n \n - \n \n \n 20 \n \n \n \n \n Total liabilities that include financial instruments \n \n \n 5,863 \n \n \n 38,186 \n \n \n 641 \n \n \n 85 \n \n \n 44,775 \n \n \n \n \n Total other non-financial liabilities \n \n \n - \n \n \n - \n \n \n - \n \n \n 94 \n \n \n 94 \n \n \n \n \n Total liabilities \n \n \n 5,863 \n \n \n 38,186 \n \n \n 641 \n \n \n 179 \n \n \n 44,869 \n \n \n \n \n 1 Investments in associates shown separately in the Group's 2022 financial statements have been included in Total other non-financial assets. \n 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. \n 12: Fair value methodology \n 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. \n 12(a): Determination of fair value \n 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: \n ·      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; \n ·      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; \n ·      for assets that have been suspended from trading on an active mar...

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