Quilter Full Year Results 2019 - Part 2

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Quilter (QLT)

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	Notes	Year ended 31 December 2019 £m	Year ended 31 December 2018 £m
Revenue
Fee income and other income from service activities		936	954
Investment return		6,866	(2,712)
Other income		22	35
Total revenue		7,824	(1,723)
Expenses
Insurance contract claims and changes in liabilities		(1)	(1)
Change in investment contract liabilities	14(c)	(5,810)	2,499
Fee and commission expenses, and other acquisition costs		(294)	(398)
Change in third party interest in consolidated funds		(917)	369
Other operating and administrative expenses		(740)	(750)
Finance costs1		(17)	(16)
Total expenses		(7,779)	1,703
Profit/(loss) before tax from continuing operations		45	(20)
Tax (expense)/credit attributable to policyholder returns	6(a)	(98)	61
(Loss)/profit before tax attributable to equity holders from continuing operations		(53)	41
Income tax (expense)/credit	6(a)	(66)	86
Less: tax expense/(credit) attributable to policyholder returns		98	(61)
Tax credit attributable to equity holders		32	25
(Loss)/profit after tax from continuing operations		(21)	66
Profit after tax from discontinued operations	3(c)	167	422
Profit after tax		146	488

Attributable to:
Equity holders of Quilter plc		146	488

Earnings per ordinary share on profit attributable to ordinary shareholders of Quilter plc
Basic
From continuing operations (pence)	7(b)	(1.1)	3.5
From discontinued operations (pence)	3(c)	9.1	23.1
Basic earnings per ordinary share (pence)	7(b)	8.0	26.6
Diluted
From continuing operations (pence)	7(b)	(1.1)	3.5
From discontinued operations (pence)	3(c)	8.9	23.0
Diluted earnings per ordinary share (pence)	7(b)	7.8	26.5

	Note	Year ended 31 December 2019 £m	Year ended 31 December 2018 £m
Profit after tax		146	488
Exchange losses on translation of foreign operations		(1)	-
Items that may be reclassified subsequently to income statement		(1)	-

Measurement movements on defined benefit plans		(7)	-
Tax on amounts related to defined benefit pension plans		1	-
Items that will not be reclassified subsequently to income statement		(6)	-
Total other comprehensive expense, net of tax		(7)	-

Total comprehensive income		139	488
Attributable to:
Continuing operations		(28)	66
Discontinued operations	3(d)	167	422
Equity holders of Quilter plc		139	488

		Year ended 31 December 2019			Year ended 31 December 2018
	Notes	Continuing operations £m	Discontinued operations¹ £m	Total £m	Continuing operations £m	Discontinued operations¹ £m	Total £m
Advice and Wealth Management		103	-	103	102	26	128
Wealth Platforms		112	53	165	105	57	162
Head Office		(33)	-	(33)	(31)	-	(31)
Adjusted profit before tax before reallocation		182	53	235	176	83	259
Reallocation of QLA costs2		(26)	26	-	(28)	28	-
Adjusted profit before tax	4(b)(i)	156	79	235	148	111	259
Adjusted for the following:
Goodwill impairment and impact of acquisition accounting	5(a)(i)	(54)	-	(54)	(50)	-	(50)
Profit on business disposals	3(b)	-	103	103	-	290	290
Business transformation costs	5(a)(ii)	(77)	-	(77)	(84)	-	(84)
Managed Separation costs	5(a)(iii)	(6)	-	(6)	(24)	-	(24)
Finance costs	5(a)(iv)	(10)	-	(10)	(13)	-	(13)
Policyholder tax adjustments	5(a)(v)	(62)	(12)	(74)	64	37	101
Voluntary customer remediation provision	5(a)(vi)	-	10	10	-	-	-
Total adjusting items before tax		(209)	101	(108)	(107)	327	220
(Loss)/profit before tax attributable to equity holders		(53)	180	127	41	438	479
Tax attributable to policyholder returns	6(a)	98	76	174	(61)	(97)	(158)
Income tax (expense)/credit	6(a),(b)	(66)	(89)	(155)	86	81	167
(Loss)/profit after tax		(21)	167	146	66	422	488

Adjusted earnings per share
		Year ended 31 December 2019			Year ended 31 December 2018
	Notes	Continuing operations £m	Discontinued operations £m	Total £m	Continuing operations £m	Discontinued operations £m	Total £m
Adjusted profit before tax before reallocation		182	53	235	176	83	259
Shareholder tax on adjusted profit before reallocation	6(c)	(22)	(3)	(25)	(13)	2	(11)
Adjusted profit after tax before reallocation	7(b)	160	50	210	163	85	248
Basic weighted average number of ordinary shares (millions)	7(a)			1,835			1,832
Adjusted basic earnings per share (pence)	7(b)	8.7	2.7	11.4	8.9	4.6	13.5
Diluted weighted average number of ordinary shares (millions)	7(a)			1,863			1,839
Adjusted diluted earnings per share (pence)	7(b)	8.6	2.7	11.3	8.9	4.6	13.5

31 December 2019	Note	Share capital £m	Share premium £m	Merger reserve £m	Share-based payments reserve £m	Other reserves £m	Retained earnings £m	Total share- holders' equity £m
Shareholders' equity at beginning of the year		133	58	588	34	1	1,191	2,005
Adjustment on initial application of IFRS 16 (net of tax) ¹		-	-	-	-	-	(5)	(5)
Balance at 1 January 2019		133	58	588	34	1	1,186	2,000
Profit for the year		-	-	-	-	-	146	146
Other comprehensive expense		-	-	-	-	-	(7)	(7)
Total comprehensive income		-	-	-	-	-	139	139
Dividends	8	-	-	-	-	-	(92)	(92)
Release of merger reserve		-	-	(439)	-	-	439	-
Movement in own shares		-	-	-	-	-	(2)	(2)
Equity share-based payment transactions2		-	-	-	11	-	15	26
Total transactions with the owners of the Company		-	-	(439)	11	-	360	(68)
Balance at 31 December 2019		133	58	149	45	1	1,685	2,071

31 December 2018	Note	Share capital £m	Share premium £m	Merger reserve £m	Share-based payments reserve £m	Other reserves £m	Retained earnings £m	Total share- holders' equity £m
Balance at 1 January 2018		130	58	-	38	1	872	1,099
Profit for the year		-	-	-	-	-	488	488
Total comprehensive income		-	-	-	-	-	488	488
Dividends	8	-	-	-	-	-	(221)	(221)
Acquisition of entities due to Managed Separation restructure		-	-	591	-	-	-	591
Issue of share capital		3	-	(3)	-	-	-	-
Movement in own shares		-	-	-	-	-	5	5
Equity share-based payment transactions2		-	-	-	7	-	35	42
Change in participation in subsidiaries		-	-	-	(12)	-	12	-
Aggregate tax effects of items recognised directly in equity		-	-	-	1	-	-	1
Total transactions with the owners of the Company		3	-	588	(4)	-	(169)	418
Balance at 31 December 2018		133	58	588	34	1	1,191	2,005

	Notes	At 31 December 20191 £m	At 31 December 2018 £m
Assets
Goodwill and intangible assets	9	592	550
Property, plant and equipment2		143	17
Investments in associated undertakings		1	2
Deferred acquisition costs		-	11
Contract costs		455	551
Loans and advances		217	222
Financial investments	10	59,345	59,219
Reinsurers' share of policyholder liabilities	14	-	2,162
Deferred tax assets		43	38
Current tax receivable		13	47
Trade, other receivables and other assets3		424	530
Derivative assets		32	46
Cash and cash equivalents	13(a)	2,473	2,395
Total assets		63,738	65,790
Equity and liabilities
Equity
Ordinary Share capital		133	133
Ordinary Share premium reserve		58	58
Merger reserve		149	588
Share-based payments reserve		45	34
Other reserves		1	1
Retained earnings		1,685	1,191
Total equity		2,071	2,005
Liabilities
Insurance contract liabilities	14	-	602
Investment contract liabilities	14	52,455	56,450
Third-party interests in consolidated funds		7,675	5,116
Provisions	15	64	94
Deferred tax liabilities		88	59
Current tax payable		6	5
Borrowings and lease liabilities2		335	197
Trade, other payables and other liabilities		836	999
Contract liabilities and deferred revenue		191	226
Derivative liabilities		17	37
Total liabilities		61,667	63,785
Total equity and liabilities		63,738	65,790

	Notes	Year ended 31 December 2019¹ £m	Year ended 31 December 2018 £m
Cash flows from operating activities
Profit/(loss) before tax from continuing operations		45	(20)
Profit before tax from discontinued operations	3(c)	256	341
Non-cash movements in profit before tax		(2,268)	584
Net changes in working capital2		(39)	(662)
Taxation paid		(37)	(92)
Total net cash (used in)/from operating activities		(2,043)	151
Cash flows from investing activities
Net disposals/(acquisitions) of financial investments		2,260	(366)
Acquisition of property, plant and equipment		(8)	(7)
Acquisition of intangible assets		(5)	(4)
Net acquisition of interests in subsidiaries2,3		(87)	13
Net proceeds from the disposal of interests in subsidiaries		78	350
Total net cash from/(used in) investing activities		2,238	(14)
Cash flows from financing activities
Dividends paid to ordinary equity holders of the Company		(92)	(221)
Finance costs on external borrowings		(10)	(8)
Payment of interest on lease liabilities		(3)	-
Payment of principal lease liabilities		(13)	-
Proceeds from issue of subordinated and other debt		-	497
Subordinated and other debt repaid		-	(516)
Total net cash used in financing activities		(118)	(248)
Net increase/(decrease) in cash and cash equivalents		77	(111)
Cash and cash equivalents at the beginning of the year		2,395	2,507
Effects of exchange rate changes on cash and cash equivalents		1	(1)
Cash and cash equivalents at end of the year	13(a)	2,473	2,395

Area	Critical accounting judgements	Related notes
Consolidation of investment funds	The Group's interest in investment funds can fluctuate according to the Group's participation in them as clients' underlying investment choices change. The Group exercises judgement in assessing its level of power, exposure to variable returns and its ability to use such power to affect those returns relative to the power of other investors in those funds, when evaluating the need to consolidate those funds. In particular, management uses its judgement when assessing rights held by other parties including substantive removal ("kick-out" rights).	n/a¹
Recognition of provisions and contingent liabilities in respect of Lighthouse complaints	Complaints were received after the reporting date in relation to advice provided by Lighthouse before its acquisition by the Group. Judgement is required to determine whether a provision can be reasonably estimated in relation to the complaints and whether redress is probable, and therefore whether a provision can be recognised. Judgement is also required to determine the treatment for advice where no complaint has been received and there is no present obligation, and these cases have been treated as a contingent liability.	5(a), 15, 16, 19
Discontinued operations	Management judgement was applied in the classification of the QLA business (disposed in December 2019) as a discontinued operation. Management concluded that QLA represented a separate major line of business, being the Group's closed book of legacy business and as such, met the discontinued operations criteria, restating prior year comparatives accordingly. Judgement has also been applied in the reallocation of specific on-going costs to the Group's continuing operations that will remain in the business after the disposal of QLA.	3(c)
Apportionment of goodwill to business disposals	Judgement was applied in the allocation of goodwill in relation to the QLA business, impacting the profit on disposal of that business. The allocation was based on QLA's fair value relative to the other businesses within the Wealth Platforms cash generating unit ("CGU").	9(c)
Recognition of provisions following the disposal of QLA	The Group has exercised significant judgement in determining the accounting treatment for a number of provisions in respect of the disposal of QLA. The disposal of QLA has led to a series of business activities related to the sale of the business resulting in costs to separate the business from the Group, including its separation from a significant number of shared IT systems. Provisions have been established where costs are either contractual within the disposal agreement or represent a constructive liability in respect of ancillary work to separate the businesses. 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 certain provisions.	15


Area	Critical accounting judgements	Related notes
Uncertain tax position	Due to the complexity of tax law, the tax treatment of specific transactions may be uncertain. In assessing uncertain tax positions, the Group considers the likelihood that the tax authority may take a different view to that reached by management. In that regard, the Group has exercised judgement in assessing the accounting tax position in relation to transactions undertaken as part of the demerger from Old Mutual plc in 2018.	n/a²

Area	Critical accounting estimates	Related notes
Consolidation of investment funds	Where the Group consolidates investment funds, estimation is required in some circumstances when sourcing the up-to-date financial information, aligned to the Group's reporting date. In instances where financial information is unavailable for the Group's reporting dates, the Group sources the most recently available financial information for those funds, as the best reliable estimate.	n/a¹
Provision for cost of Lighthouse complaints	An estimation of the provision required for the complaints received was determined based upon a sample of cases which was deemed representative of the broader population to form a reasonable estimate. The estimation per case is based upon FCA guidelines and modelling performed based upon factors, including pension transfer value, discount rate, and retail price indexation. The sample was then extrapolated to the entire population of complaint cases.	15
Goodwill and intangible assets	The valuation of goodwill and intangible assets that are recognised as the result of a business combination involves the use of valuation models. During the current year, these assets have arisen on the acquisition of the Charles Derby Group, Lighthouse Group and various smaller adviser businesses. In relation to goodwill impairment, the determination of a CGU's recoverable value is based on the discounted value of the expected future profits of each business. Significant estimates include forecast cash flows, new business growth and discount rates. Estimation was also used in the valuation of goodwill attributable to the disposal of the QLA business.	9
Valuation of investments	Where quoted market prices are not available, valuation techniques are used to measure financial investments. When valuation techniques use significant unobservable inputs they are subject to estimation uncertainty and are categorised as level 3 in the fair value hierarchy. Matching liabilities are similarly categorised as level 3.	12
Insurance contracts measurement and the impact upon profit on disposal of QLA	Measurement of insurance contracts involves significant use of assumptions including mortality, morbidity, persistency, expense valuation and interest rates. This measurement impacted upon the closing net asset value of QLA, and therefore the profit recognised by the Group on the disposal of QLA.	3(b) 14
Measurement of deferred tax	The estimation of future taxable profits is performed as part of the annual business planning process, and is based on estimated levels of assets under management, which are subject to a large number of factors including worldwide stock market movements, related movements in foreign exchange rates and net client cash flow, together with estimates of expenses and other charges. The business plan, adjusted for known and estimated tax sensitivities, is used to determine the extent to which deferred tax assets are recognised. In general the Group assesses recoverability based on estimated taxable profits over a 3 year planning horizon. Where credible longer term profit forecasts are available (e.g. for the life insurance companies) the specific entity may assess recoverability over a longer period, subject to a higher level of sensitivity testing.	n/a²

	Acquiree's carrying amount £m	Fair value £m
Assets
Intangible assets	1	15
Loans and advances	1	1
Cash and cash equivalents	1	1
Trade, other receivables and other assets	2	2
Total assets	5	19
Liabilities
Deferred tax liabilities	-	(2)
Trade, other payables and other liabilities	(9)	(9)
Total liabilities	(9)	(11)
Total net (liabilities)/assets acquired	(4)	8
Total consideration		31
Goodwill recognised		23

	31 December 2019 £m	31 December 2018 £m
Opening balance at 1 January	37	35
Acquisitions during the year	22	7
Payments	(21)	(7)
Financing interest charge	3	2
Other movements	(2)	-
Closing balance at 31 December	39	37

	Year ended 31 December 2019	Year ended 31 December 2018
	Quilter Life Assurance £m	Single Strategy business and Old Mutual Wealth Italy adjustment £m
Consideration received¹	446	546
Less: transaction and separation costs²	(19)	(20)
Plus: release of accrued expenses in relation to OMW Italy S.p.A disposal	-	2
Net proceeds from sale	427	528
Carrying value of net assets disposed	(294)	(155)
Goodwill allocated and disposed	(30)	(83)
Profit on sale of operations before tax	103	290
Tax on disposals	-	4
Profit on sale of operations after tax	103	294

	Notes	Year ended 31 December 2019 £m	Year ended 31 December 2018 £m
Revenue
Gross earned premiums		145	147
Premiums ceded to reinsurers		(86)	(87)
Net earned premiums		59	60
Fee income and other income from service activities¹		164	206
Investment return^1,2		1,386	(770)
Other income		-	2
Total revenue		1,609	(502)
Expenses
Claims and benefits paid		(98)	(86)
Reinsurance recoveries		72	60
Net insurance claims and benefits incurred		(26)	(26)
Change in reinsurance assets and liabilities		121	103
Change in insurance contract liabilities		(134)	(109)
Change in investment contract liabilities²	14(c)	(1,364)	772
Fee and commission expenses, and other acquisition costs		(45)	(84)
Other operating and administrative expenses		(8)	(102)
Finance costs		-	(1)
Total expenses		(1,456)	553
Profit on sale of operations before tax	3(b)	103	290
Profit before tax from discontinued operations		256	341
Tax (expense)/credit attributable to policyholder returns	6(a)	(76)	97
Profit before tax from discontinued operations attributable to equity holders		180	438
Income tax (expense)/credit	6(a)	(89)	81
Less: tax expense/(credit) attributable to policyholder returns		76	(97)
Tax expense attributable to equity holders		(13)	(16)
Profit after tax from discontinued operations		167	422
Attributable to:
Equity holders of Quilter plc		167	422

Earnings per ordinary share on profit attributable to ordinary shareholders of Quilter plc
Basic - from discontinued operations (pence)	7(b)	9.1	23.1
Diluted - from discontinued operations (pence)	7(b)	8.9	23.0

	Year ended 31 December 2019 £m	Year ended 31 December 2018 £m
Total net cash used in operating activities	(3,789)	(2,437)
Total net cash from investing activities	3,765	2,529
Total net cash used in financing activities	(130)	(46)
Net (decrease)/increase in cash and cash equivalents	(154)	46

		Operating segments
Continuing operations	Notes	Advice and Wealth Management £m	Wealth Platforms £m	Head Office £m	Reallocation of QLA costs¹ £m	Consolidation adjustments² £m	Consolidated income statement £m
Revenue
Fee income and other income from service activities		486	438	-	-	12	936
Investment return		10	5,823	3	-	1,030	6,866
Other income		1	160	6	-	(145)	22
Segmental revenue		497	6,421	9	-	897	7,824
Expenses
Insurance contract claims and changes in liabilities		-	(1)	-	-	-	(1)
Change in investment contract liabilities	14(c)	-	(5,810)	-	-	-	(5,810)
Fee and commission expenses, and other acquisition costs		(73)	(110)	-	-	(111)	(294)
Change in third party interest in consolidated funds		-	-	-	-	(917)	(917)
Other operating and administrative expenses		(368)	(409)	(68)	(26)	131	(740)
Finance costs		(4)	(3)	(10)	-	-	(17)
Segmental expenses		(445)	(6,333)	(78)	(26)	(897)	(7,779)
Profit/(loss) before tax from continuing operations		52	88	(69)	(26)	-	45
Tax attributable to policyholder returns		-	(98)	-	-	-	(98)
Profit/(loss) before tax attributable to equity holders from continuing operations		52	(10)	(69)	(26)	-	(53)

Adjusted for non-operating items:
Goodwill impairment and impact of acquisition accounting	5(a)(i)	52	1	1	-	-	54
Business transformation costs	5(a)(ii)	(1)	58	20	-	-	77
Managed Separation costs	5(a)(iii)	-	1	5	-	-	6
Finance costs	5(a)(iv)	-	-	10	-	-	10
Policyholder tax adjustments	5(a)(v)	-	62	-	-	-	62
Adjusting items before tax		51	122	36	-	-	209
Adjusted profit/(loss) before tax - continuing operations		103	112	(33)	(26)	-	156

Adjusted profit before tax - discontinued operations		-	53	-	26	-	79
Total adjusted profit/(loss) before tax		103	165	(33)	-	-	235

	31 December 2019 £m	31 December 2018 £m	Average estimated useful life	Average period remaining
Net carrying value
Distribution channels	22	28	8 years	4 years
Customer relationships	211	199	10 years	6 years
Brand	1	4	5 years	1 year
Total other intangible assets	234	231

	Notes	Advice & Wealth Management £m	Wealth Platforms £m	Head Office £m	Discontinued Operations £m	Consolidation Adjustments¹ £m	Total £m
Assets
Goodwill and intangible assets	9	458	134	-	-	-	592
Property, plant and equipment		30	111	2	-	-	143
Investments in associated undertakings		-	-	1	-	-	1
Contract costs		-	455	-	-	-	455
Loans and advances		31	180	6	-	-	217
Financial investments	10	1	52,249	-	-	7,095	59,345
Deferred tax assets		11	22	10	-	-	43
Current tax receivable		-	-	13	-	-	13
Trade, other receivables and other assets		207	177	3	-	37	424
Derivative assets		-	-	-	-	32	32
Cash and cash equivalents	13(a)	383	725	838	-	527	2,473
Inter-segment funding - assets		-	12	-	-	(12)	-
Total assets		1,121	54,065	873	-	7,679	63,738

Liabilities
Investment contract liabilities	14	-	52,455	-	-	-	52,455
Third-party interests in consolidated funds		-	-	-	-	7,675	7,675
Provisions	15	28	26	10	-	-	64
Deferred tax liabilities		38	50	-	-	-	88
Current tax payable/(receivable)²		1	(7)	12	-	-	6
Borrowings and lease liabilities³		26	108	201	-	-	335
Trade, other payables and other liabilities		322	477	37	-	-	836
Contract liabilities and deferred revenue		1	190	-	-	-	191
Derivative liabilities		-	-	-	-	17	17
Inter-segment funding - liabilities		-	-	12	-	(12)	-
Total liabilities		416	53,299	272	-	7,680	61,667
Total equity							2,071
Total equity and liabilities							63,738

	Notes	Year ended 31 December 2019 £m	Year ended 31 December 2018¹ £m
(Loss)/profit before tax attributable to equity holders - continuing operations		(53)	41
Profit before tax attributable to equity holders - discontinued operations	3(c)	180	438
Adjusted for the following:
Profit on business disposals	3(b)	(103)	(290)
Goodwill impairment and impact of acquisition accounting	5(a)(i)	54	50
Policyholder tax adjustments	5(a)(v)	74	(101)
Voluntary customer remediation provision	5(a)(vi)	(10)	-
Quilter Investors' build out costs	5(a)(ii)	(1)	19
2018 Single Strategy business profit before tax		-	(26)
IFRS profit before tax (excluding amortisation, policyholder tax adjustments and other one-off items)		141	131

Year ended 31 December 2019	Net mgmt fees¹ £m	Other revenue² £m	Total net fee revenue³ £m	Expenses £m	Adjusted profit incl. QLA £m	Consol. of funds⁴ £m	Deduct QLA (incl. interco elims)⁵ £m	IFRS income statement⁶ £m
Revenue
Net earned premiums	-	59	59	-	59	-	(59)	-
Fee income and other income from service activities	871	203	1,074	-	1,074	17	(155)	936
Investment return	-	7,384	7,384	-	7,384	1,031	(1,549)	6,866
Other income	-	1	1	-	1	21	-	22
Total revenue	871	7,647	8,518	-	8,518	1,069	(1,763)	7,824
Expenses
Insurance contract claims and changes in liabilities	-	(40)	(40)	-	(40)	-	39	(1)
Change in investment contract liabilities	-	(7,339)	(7,339)	-	(7,339)	-	1,529	(5,810)
Fee and commission expenses, and other acquisition costs	(108)	(103)	(211)	-	(211)	(117)	34	(294)
Change in third-party interest in consolidated funds	-	-	-	-	-	(917)	-	(917)
Other operating and administrative expenses	(14)	(2)	(16)	(697)	(713)	(35)	8	(740)
Finance costs	-	(4)	(4)	(13)	(17)	-	-	(17)
Total expenses	(122)	(7,488)	(7,610)	(710)	(8,320)	(1,069)	1,610	(7,779)
Tax (expense)/credit attributable to policyholder returns	(174)	-	(174)	-	(174)	-	76	(98)
Total before adjusting items	575	159	734	(710)	24	-	(77)	(53)
Adjusting items:
Goodwill impairment and impact of acquisition accounting	-	-	-	54	54
Business transformation costs	-	-	-	77	77
Managed Separation costs	-	-	-	6	6
Finance costs	-	-	-	10	10
Policyholder tax adjustments	74	-	74	-	74
Voluntary customer remediation provision	-	-	-	(10)	(10)
Adjusting items	74	-	74	137	211
Adjusted profit before tax - continuing operations and QLA	649	159	808	(573)	235

	Source of guidance	Notes	Year ended 31 December 2019 Pence	Year ended 31 December 2018 Pence
Basic earnings per share	IFRS	7(b)	8.0	26.6
Diluted basic earnings per share	IFRS	7(b)	7.8	26.5
Adjusted basic earnings per share	Group policy	7(b)	11.4	13.5
Adjusted diluted earnings per share	Group policy	7(b)	11.3	13.5
Headline basic earnings per share (net of tax)	JSE Listing Requirements	7(c)	2.3	10.6
Headline diluted earnings per share (net of tax)	JSE Listing Requirements	7(c)	2.3	10.5

	Year ended 31 December 2019 Millions	Year ended 31 December 2018 Millions
Weighted average number of Ordinary Shares	1,902	1,902
Own shares including those held in EBTs	(67)	(70)
Basic weighted average number of Ordinary Shares	1,835	1,832
Adjustment for dilutive share awards and options	28	7
Diluted weighted average number of Ordinary Shares	1,863	1,839

		Year ended 31 December 2019			Year ended 31 December 2018
	Post-tax profit measure used	Continuing operations Pence	Discontinued operations Pence	Total Pence	Continuing operations Pence	Discontinued operations Pence	Total Pence
Basic EPS	IFRS profit	(1.1)	9.1	8.0	3.5	23.1	26.6
Diluted EPS	IFRS profit	(1.1)	8.9	7.8	3.5	23.0	26.5
Adjusted basic EPS	Adjusted profit	7.5	3.9	11.4	7.6	5.9	13.5
Adjusted diluted EPS	Adjusted profit	7.5	3.8	11.3	7.6	5.9	13.5
Adjusted basic EPS before reallocation	Adjusted profit before reallocation	8.7	2.7	11.4	8.9	4.6	13.5
Adjusted diluted EPS before reallocation	Adjusted profit before reallocation	8.6	2.7	11.3	8.9	4.6	13.5

		Year ended 31 December 2019		Year ended 31 December 2018
	Gross £m	Net of tax £m	Gross £m	Net of tax £m
Profit attributable to ordinary equity holders		146		488
Adjusting items:
Less: profit on business disposals	(103)	(103)	(290)	(294)
Headline earnings	(103)	43	(290)	194
Headline basic EPS (pence)		2.3		10.6
Headline diluted EPS (pence)		2.3		10.5

	Payment date	Year ended 31 December 2019 £m	Year ended 31 December 2018 £m
2018 Special interim dividend paid - 12.0p per ordinary share	21 September 2018	-	221
2018 Final dividend paid - 3.3p per ordinary share	20 May 2019	61	-
2019 Interim dividend paid - 1.7p per ordinary share	20 September 2019	31	-
Dividends paid to ordinary shareholders		92	221

	Goodwill £m	Software development costs £m	Other intangible assets £m	Total £m
Gross amount
1 January 2018	306	97	371	774
Acquisitions through business combinations	5	-	9	14
Additions	-	4	-	4
Transfer to non-current assets held for sale	(1)	-	-	(1)
Other movements¹	4	(1)	-	3
31 December 2018	314	100	380	794
Acquisitions through business combinations	68	-	49	117
Additions	-	5	-	5
Disposals	(30)	(4)	(4)	(38)
Other movements²	(2)	-	3	1
31 December 2019	350	101	428	879

Amortisation and impairment losses
1 January 2018	-	(92)	(108)	(200)
Amortisation charge for the year	-	(4)	(41)	(45)
Impairment of other acquired intangibles	-	-	(1)	(1)
Other movements	-	1	1	2
31 December 2018	-	(95)	(149)	(244)
Amortisation charge for the year	-	(2)	(45)	(47)
Disposals	-	4	4	8
Other movements²	-	-	(4)	(4)
31 December 2019	-	(93)	(194)	(287)

Carrying amount
31 December 2018	314	5	231	550
31 December 2019	350	8	234	592

	31 December 2019 £m	31 December 2018 £m
Goodwill (net carrying amount)
Advice and Wealth Management	219	153
Wealth Platforms	131	161
Total goodwill	350	314

Quilter Full Year Results 2019 - Part 2

Statement of Directors' responsibilities

Companies

UK 100

Latest directors dealings

31 December 2019 - Measurement basis		Fair value	Amortised cost £m	Non-financial assets and liabilities £m	Total £m
31 December 2019 - Measurement basis	Mandatorily at FVTPL m	Designated at FVTPL £m	Amortised cost £m	Non-financial assets and liabilities £m	Total £m
Assets
Investments in associated undertakings¹	-	-	-	1	1
Loans and advances	180	-	37	-	217
Financial investments	59,343	2	-	-	59,345
Trade, other receivables and other assets	-	-	373	51	424
Derivative assets	32	-	-	-	32
Cash and cash equivalents	1,159	-	1,314	-	2,473
Total assets that include financial instruments	60,714	2	1,724	52	62,492
Total other non-financial assets	-	-	-	1,246	1,246
Total assets	60,714	2	1,724	1,298	63,738

Liabilities
Investment contract liabilities	52,455	-	-	-	52,455
Third-party interests in consolidation of funds	7,675	-	-	-	7,675
Borrowings and lease liabilities²	-	-	335	-	335
Trade, other payables and other liabilities	-	-	730	106	836
Derivative liabilities	17	-	-	-	17
Total liabilities that include financial instruments	60,147	-	1,065	106	61,318
Total other non-financial liabilities	-	-	-	349	349
Total liabilities	60,147	-	1,065	455	61,667

31 December 2018 - Measurement basis		Fair value	Amortised cost £m	Non-financial assets and liabilities £m	Total £m
31 December 2018 - Measurement basis	Mandatorily at FVTPL £m	Designated at FVTPL £m	Amortised cost £m	Non-financial assets and liabilities £m	Total £m
Assets
Investments in associated undertakings¹	-	-	-	2	2
Loans and advances	189	-	33	-	222
Financial investments	59,052	167	-	-	59,219
Reinsurers' share of policyholder liabilities	1,671	-	-	491	2,162
Trade, other receivables and other assets²	-	-	486	44	530
Derivative assets	46	-	-	-	46
Cash and cash equivalents	1,361	-	1,034	-	2,395
Total assets that include financial instruments	62,319	167	1,553	537	64,576
Total other non-financial assets	-	-	-	1,214	1,214
Total assets	62,319	167	1,553	1,751	65,790

Liabilities
Insurance contract liabilities	-	-	-	602	602
Investment contract liabilities	56,450	-	-	-	56,450
Third-party interests in consolidation of funds	5,116	-	-	-	5,116
Borrowings	-	-	197	-	197
Trade, other payables and other liabilities	-	-	840	159	999
Derivative liabilities	37	-	-	-	37
Total liabilities that include financial instruments	61,603	-	1,037	761	63,401
Total other non-financial liabilities	-	-	-	384	384
Total liabilities	61,603	-	1,037	1,145	63,785

Description of hierarchy		Types of instruments classified in the respective levels
Level 1 - quoted market prices: financial assets and liabilities with quoted prices for identical instruments in active markets.		Listed equity securities, government securities and other listed debt securities and similar instruments that are actively traded, actively traded pooled investments, certain quoted derivative assets and liabilities, reinsurers' share of investment contract liabilities and investment contract liabilities directly linked to other Level 1 financial assets.
Level 2 - valuation techniques using observable inputs: financial assets and liabilities with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial assets and liabilities valued using models where all significant inputs are observable.		Unlisted equity and debt securities where the valuation is based on models involving no significant unobservable data. Over the counter ("OTC") derivatives, certain privately placed debt instruments and third-party interests in consolidated funds.
Level 3 - valuation techniques using significant unobservable inputs: financial assets and liabilities valued using valuation techniques where one or more significant inputs are unobservable.		Unlisted equity and securities with significant unobservable inputs, securities where the market is not considered sufficiently active, including certain inactive pooled investments.

		31 December 2019		31 December 2018
	£m	%	£m	%
Financial assets measured at fair value
Level 1	46,904	77.3%	52,060	83.4%
Level 2	12,095	19.9%	9,272	14.8%
Level 3	1,717	2.8%	1,154	1.8%
Total	60,716	100.0%	62,486	100.0%
Financial liabilities measured at fair value
Level 1	50,315	83.6%	54,944	89.2%
Level 2	8,115	13.5%	5,508	8.9%
Level 3	1,717	2.9%	1,151	1.9%
Total	60,147	100.0%	61,603	100.0%

31 December 2019	Level 1 £m	Level 2 £m	Level 3 £m	Total £m
Financial assets measured at fair value
Mandatorily (fair value through profit or loss)	46,902	12,095	1,717	60,714
Loans and advances	180	-	-	180
Financial investments	45,563	12,063	1,717	59,343
Cash and cash equivalents	1,159	-	-	1,159
Derivative assets	-	32	-	32
Designated (fair value through profit or loss)	2	-	-	2
Financial investments	2	-	-	2

Total assets measured at fair value	46,904	12,095	1,717	60,716
Financial liabilities measured at fair value
Mandatorily (fair value through profit or loss)	50,315	8,115	1,717	60,147
Investment contract liabilities	50,315	423	1,717	52,455
Third-party interests in consolidated funds	-	7,675	-	7,675
Derivative liabilities	-	17	-	17

Total liabilities measured at fair value	50,315	8,115	1,717	60,147

	Year ended 31 December 2019 £m	Year ended 31 December 2018 £m
At beginning of the year	1,154	1,169
Total net fair value gains recognised in:
- profit or loss	(20)	54
Purchases	314	38
Sales	(24)	(25)
Transfers in	369	69
Transfers out	(71)	(151)
Foreign exchange and other	(5)	-
Total Level 3 financial assets	1,717	1,154
Unrealised fair value gains/(losses) relating to assets held at the year end recognised in:
- profit or loss	(20)	54

	31 December 2019 £m	31 December 2018 £m
Pooled investments	361	86
Unlisted and stale price pooled investments	133	82
Suspended funds	228	4
Private equity investments	1,356	1,068
Total Level 3 financial assets	1,717	1,154

Trade, other receivables, and other assets	Level 3
Trade, other payables, and other liabilities	Level 3

	31 December 2019 £m	31 December 2018 £m
Cash at bank	787	550
Money market funds	1,159	1,361
Cash and cash equivalents in consolidated funds	527	484
Total cash and cash equivalents	2,473	2,395

Class of business	Mortality/morbidity		Interest rates
Class of business	2019	2018	2019	2018
Non-linked protection business (pre 1 January 2013)¹ excluding stand-alone critical illness policies	Based on relevant CMI tables		0.993%	1.378%
Non-linked protection business (post 31 December 2012)¹ and all stand-alone critical illness policies	Based on relevant CMI tables		1.242%	1.724%
Pension annuity payment	100% PA92 (C2030) ult. projected using the long-term cohort basis²		1.050%	1.420%