Quilter plc Full Year Results 2022 - Part 2

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Quilter (QLT)

UK 100

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Consolidated income statement
For the year ended 31 December 2022
			£m
	Notes	Year ended 31 December 2022	Year ended 31 December 2021
Income
Fee income and other income from service activities		581	666
Investment return		(4,649)	4,002
Other income		28	18
Total income		(4,040)	4,686
Expenses
Change in investment contract liabilities	15	4,318	(3,293)
Fee and commission expenses, and other acquisition costs		(54)	(61)
Change in third-party interests in consolidated funds		438	(599)
Other operating and administrative expenses		(584)	(636)
Finance costs		(13)	(14)
Total expenses		4,105	(4,603)
Profit on sale of subsidiary	4(a)	-	2
Profit before tax from continuing operations		65	85
Tax credit/(expense) attributable to policyholder returns	7(a)	134	(73)
Profit before tax attributable to equity holders from continuing operations		199	12
Income tax credit/(expense)	7(a)	110	(62)
Less: tax (credit)/expense attributable to policyholder returns		(134)	73
Tax (expense)/credit attributable to equity holders		(24)	11
Profit after tax from continuing operations		175	23
Profit after tax from discontinued operations	4(b)	-	131
Profit after tax		175	154

Attributable to:
Equity holders of Quilter plc		175	154

Earnings per Ordinary Share on profit attributable to Ordinary Shareholders of Quilter plc
Basic
From continuing operations (pence)	8(b)	12.2	1.4
From discontinued operations (pence)	4(b)	-	8.0
Basic earnings per Ordinary Share (pence)	8(b)	12.2	9.4
Diluted
From continuing operations (pence)	8(b)	12.0	1.4
From discontinued operations (pence)	4(b)	-	7.8
Diluted earnings per Ordinary Share (pence)	8(b)	12.0	9.2

Consolidated statement of comprehensive income
For the year ended 31 December 2022
			£m
	Note	Year ended 31 December 2022	Year ended 31 December 2021
Profit after tax		175	154
Exchange losses on translation of foreign operations		-	(1)
Items that may be reclassified subsequently to income statement		-	(1)
Total other comprehensive income, net of tax		-	(1)
Total comprehensive income		175	153
Attributable to:
Continuing operations		175	22
Discontinued operations	4(b)	-	131
Equity holders of Quilter plc		175	153

Consolidated statement of changes in equity
For the year ended 31 December 2022

31 December 2022	Notes	Ordinary Share capital £m	Ordinary Share premium reserve £m	B shares £m	Capital redemption reserve £m	Merger reserve £m	Share-based payments reserve £m	Other reserves £m	Retained earnings £m	Total share- holders' equity £m
Balance at 1 January 2022		116	58	-	17	25	42	(1)	1,482	1,739
Profit after tax		-	-	-	-	-	-	-	175	175
Total comprehensive income		-	-	-	-	-	-	-	175	175
Dividends		-	-	-	-	-	-	-	(78)	(78)
Ordinary Shares repurchased in the buyback programme¹	14	(1)	-	-	1	-	-	-	-	-
Issue of B shares²	14(a,c)	-	-	328	-	(25)	-	-	(303)	-
Redemption of B shares²	14(a)	-	-	(328)	328	-	-	-	(328)	(328)
Exchange rate movement (ZAR/GBP)³		-	-	-	-	-	-	-	(4)	(4)
Movement in own shares		-	-	-	-	-	-	-	22	22
Equity share-based payment transactions		-	-	-	-	-	1	-	23	24
Aggregate tax effects of items recognised directly in equity		-	-	-	-	-	(2)	-	-	(2)
Total transactions with the owners of the Company		(1)	-	-	329	(25)	(1)	-	(668)	(366)
Balance at 31 December 2022		115	58	-	346	-	41	(1)	989	1,548



31 December 2021	Notes	Ordinary Share capital £m	Ordinary Share premium reserve £m	B shares £m	Capital redemption reserve £m	Merger reserve £m	Share-based payments reserve £m	Other reserves £m	Retained earnings £m	Total share- holders' equity £m
Balance at 1 January 2021		125	58	-	8	149	42	1	1,495	1,878
Profit after tax		-	-	-	-	-	-	-	154	154
Other comprehensive income		-	-	-	-	-	-	(1)	-	(1)
Total comprehensive income		-	-	-	-	-	-	(1)	154	153
Dividends		-	-	-	-	-	-	-	(89)	(89)
Ordinary Shares repurchased in the buyback programme¹	14	(9)	-	-	9	-	-	-	(204)	(204)
Release of merger reserve	14(c)	-	-	-	-	(124)	-	-	124	-
Movement in own shares		-	-	-	-	-	-	-	(20)	(20)
Equity share-based payment transactions		-	-	-	-	-	(1)	-	21	20
Aggregate tax effects of items recognised directly in equity		-	-	-	-	-	1	-	-	1
Total transactions with the owners of the Company		(9)	-	-	9	(124)	-	-	(168)	(292)
Transfer to retained earnings		-	-	-	-	-	-	(1)	1	-
Balance at 31 December 2021		116	58	-	17	25	42	(1)	1,482	1,739

Consolidated statement of financial position
At 31 December 2022

			£m
	Notes	31 December 2022	31 December 2021
Assets
Goodwill and intangible assets	9	413	457
Property, plant and equipment		112	131
Investments in associated undertakings		1	2
Contract costs		10	9
Loans and advances		34	29
Financial investments	10	43,617	47,565
Deferred tax assets		94	88
Current tax receivable		10	-
Trade, other receivables and other assets		303	381
Derivative assets		40	14
Cash and cash equivalents	13	1,782	2,064
Assets held for sale		1	-
Total assets		46,417	50,740

Equity and liabilities
Equity
Ordinary Share capital	14(a)	115	116
Ordinary Share premium reserve	14(a)	58	58
Capital redemption reserve	14(a)	346	17
Merger reserve	14(c)	-	25
Share-based payments reserve		41	42
Other reserves		(1)	(1)
Retained earnings		989	1,482
Total equity		1,548	1,739
Liabilities
Investment contract liabilities	15	38,186	41,071
Third-party interests in consolidated funds		5,843	6,898
Provisions	16	69	93
Deferred tax liabilities		24	139
Current tax payable		1	2
Borrowings and lease liabilities		290	299
Trade, other payables and other liabilities		436	484
Derivative liabilities		20	15
Total liabilities		44,869	49,001
Total equity and liabilities		46,417	50,740

			£m
	Notes	Year ended 31 December 2022	Year ended 31 December 2021
Cash flows from operating activities
Cash flows from operating activities		1,698	3,103
Taxation paid		(22)	(10)
Total net cash flows from operating activities	13(b)	1,676	3,093
Cash flows from investing activities
Net acquisitions of financial investments		(1,494)	(2,839)
Acquisition of property, plant and equipment		(3)	(13)
Acquisition of interests in subsidiaries¹	4(f)	(5)	(7)
Net proceeds from the disposal of interests in subsidiaries		-	218
Total net cash flows from investing activities		(1,502)	(2,641)
Cash flows from financing activities
Dividends paid to equity holders of the Company		(78)	(89)
Finance costs on external borrowings		(9)	(9)
Payment of interest on lease liabilities		(3)	(2)
Payment of principal of lease liabilities		(11)	(10)
Redemption of B shares²		(328)	-
Repurchase and cancellation of Ordinary Shares³		(28)	(197)
Exchange rate movements paid to shareholders⁴		(4)	-
Total net cash flows from financing activities		(461)	(307)
Net (decrease)/increase in cash and cash equivalents		(287)	145
Cash and cash equivalents at the beginning of the year		2,064	1,921
Effect of exchange rate changes on cash and cash equivalents		5	(2)
Cash and cash equivalents at end of the year	13(a)	1,782	2,064

Quilter plc Full Year Results 2022 - Part 2

Statement of Directors' responsibilities

5(b)(ii): Business transformation costs

5(b)(iii): Managed separation costs

5(b)(iv): Finance costs

5(b)(v): Policyholder tax adjustments

5(b)(vi): Voluntary customer repayment

5(b)(vii): Other adjusting items

5(b)(viii): Exchange rate gain (ZAR/GBP)

5(b)(ix): Customer remediation

8: Earnings per share

8(a): Weighted average number of Ordinary Shares

8(b): Basic and diluted EPS (IFRS and adjusted profit)

12: Fair value methodology

12(d): Financial assets and liabilities measured at fair value, classified according to fair value hierarchy

12(e): Level 3 fair value hierarchy disclosure

Tax

Complaints, disputes and regulations

18: Capital and financial risk management

18(a): Capital management

18(a)(i): Regulatory capital (unaudited)

18: Capital and financial risk management continued

18(a): Capital management continued

18(b): Credit risk

Overall exposure to credit risk

Maximum exposure to credit risk

18(c): Market risk

19: Related party transactions

20: Events after the reporting date

Companies

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Adopted by the Group from	Amendments to standards
1 January 2022	Amendments to IAS 16 Property, Plant and Equipment - Proceeds before Intended Use
1 January 2022	Annual Improvements 2018-2020 Cycle
1 January 2022	Amendments to IFRS 3 References to the Conceptual Framework
1 January 2022	Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract

Profit on sale of operations
		£m
	Year ended 31 December 2022	Year ended 31 December 2021
	Quilter International and Single Strategy business	Quilter International and Single Strategy business¹
Quilter International
Consideration received	-	481
Less: transaction costs	-	(17)
Net proceeds from sale	-	464
Carrying value of net assets disposed of	-	(324)
Goodwill allocated and disposed of	-	(50)
Recycling of foreign currency translation reserve	-	(1)
Profit on sale of Quilter International	-	89
Change in accrued expenses in relation to the Single Strategy business (sold in 2018)	-	1
Profit on sale of operations before tax	-	90
Separation, migration and decommissioning costs	-	(19)
Profit on disposal after separation, migration and decommissioning costs	-	71

		£m
	Year ended 31 December 2022	Year ended 31 December 2021
Profit after tax	-	131
Total comprehensive income from discontinued operations	-	131

		£m
	Year ended 31 December 2022	Year ended 31 December 2021
Opening balance	5	16
Payments	(5)	(7)
Financing interest charge	-	1
Unused amounts reversed and other movements	-	(5)
Closing balance	-	5

					£m
		Year ended 31 December 2022	Year ended 31 December 2021
	Notes	Year ended 31 December 2022	Continuing operations	Discontinued operations¹	Total
Affluent		105	111	50	161
High Net Worth		45	56	-	56
Head Office		(16)	(29)	-	(29)
Adjusted profit before tax		134	138	50	188
Reallocation of Quilter International costs		-	(10)	10	-
Adjusted profit before tax after reallocation	6(b)	134	128	60	188
Adjusting items:
Impact of acquisition and disposal-related accounting	5(b)(i)	(42)	(41)	-	(41)
Profit on business disposals²	4(a)	-	2	90	92
Business transformation costs	5(b)(ii)	(30)	(51)	(19)	(70)
Managed separation costs	5(b)(iii)	-	(2)	-	(2)
Finance costs	5(b)(iv)	(10)	(10)	-	(10)
Policyholder tax adjustments	5(b)(v)	138	(7)	-	(7)
Voluntary customer repayments	5(b)(vi)	(6)	-	-	-
Other adjusting items	5(b)(vii)	(1)	-	-	-
Exchange rate gain (ZAR/GBP)	5(b)(viii)	4	-	-	-
Customer remediation	5(b)(ix)	12	(7)	-	(7)
Total adjusting items before tax		65	(116)	71	(45)
Profit before tax attributable to equity holders		199	12	131	143
Tax attributable to policyholder returns	7(a)	(134)	73	-	73
Income tax credit/(expense)	7(a,b)	110	(62)	-	(62)
Profit after tax³		175	23	131	154

							£m
Year ended 31 December 2022	Net mgmt. fees¹	Other revenue¹	Total net fee revenue¹	Operating expenses¹	Adjusted profit before tax	Consol. of funds²	Consolidated income statement
Income
Fee income and other income from service activities	548	95	643	-	643	(62)	581
Investment return	-	(4,292)	(4,292)	-	(4,292)	(357)	(4,649)
Other income	-	5	5	21	26	2	28
Total income	548	(4,192)	(3,644)	21	(3,623)	(417)	(4,040)
Expenses
Change in investment contract liabilities	-	4,318	4,318	-	4,318	-	4,318
Fee and commission expenses, and other acquisition costs	(46)	1	(45)	-	(45)	(9)	(54)
Change in third-party interests in consolidated funds	-	-	-	-	-	438	438
Other operating and administrative expenses	(15)	-	(15)	(557)	(572)	(12)	(584)
Finance costs	-	-	-	(13)	(13)	-	(13)
Total expenses	(61)	4,319	4,258	(570)	3,688	417	4,105
Tax credit attributable to policyholder returns	134	-	134	-	134	-	134
Profit before tax attributable to equity holders from continuing operations	621	127	748	(549)	199	-	199
Adjusting items:
Impact of acquisition and disposal-related accounting	-	-	-	42	42
Business transformation costs	-	-	-	30	30
Voluntary customer repayments	-	-	-	6	6
Other adjusting items	-	-	-	1	1
Finance costs	-	-	-	10	10
Exchange rate gain (ZAR/GBP)	-	(4)	(4)	-	(4)
Customer remediation	-	-	-	(12)	(12)
Policyholder tax adjustments	(138)	-	(138)	-	(138)
Adjusting items	(138)	(4)	(142)	77	(65)
Adjusted profit before tax - continuing operations	483	123	606	(472)	134

						£m
		Operating segments
	Notes	Affluent	High Net Worth	Head Office	Consolidation adjustments¹	Consolidated income statement
Income
Fee income and other income from service activities		441	202	-	(62)	581
Investment return		(4,307)	9	8	(359)	(4,649)
Other income		112	3	5	(92)	28
Segmental income		(3,754)	214	13	(513)	(4,040)
Expenses
Change in investment contract liabilities		4,318	-	-	-	4,318
Fee and commission expenses, and other acquisition costs		(46)	-	-	(8)	(54)
Change in third-party interests in consolidated funds		-	-	-	438	438
Other operating and administrative expenses		(410)	(202)	(53)	81	(584)
Finance costs		(3)	-	(12)	2	(13)
Segmental expenses		3,859	(202)	(65)	513	4,105
Profit/(loss) before tax from continuing operations		105	12	(52)	-	65
Tax credit attributable to policyholder returns		134	-	-	-	134
Profit/(loss) before tax attributable to equity holders from continuing operations		239	12	(52)	-	199
Adjusted for non-operating items:
Impact of acquisition and disposal-related accounting	5(b)(i)	10	32	-	-	42
Business transformation costs	5(b)(ii)	-	-	30	-	30
Finance costs	5(b)(iv)	-	-	10	-	10
Policyholder tax adjustments	5(b)(v)	(138)	-	-	-	(138)
Voluntary customer repayments	5(b)(vi)	6	-	-	-	6
Other adjusting items	5(b)(vii)	-	1	-	-	1
Exchange rate gain (ZAR/GBP)	5(b)(viii)	-	-	(4)	-	(4)
Customer remediation	5(b)(ix)	(12)	-	-	-	(12)
Adjusting items before tax		(134)	33	36	-	(65)
Adjusted profit/(loss) before tax - continuing operations		105	45	(16)	-	134

		£m
	Year ended 31 December 2022	Year ended 31 December 2021
Current tax
United Kingdom	12	36
Overseas tax	1	1
Total current tax charge	13	37
Deferred tax
Origination and reversal of temporary differences	(120)	36
Effect on deferred tax of changes in tax rates	(1)	(12)
Adjustments to deferred tax in respect of prior periods	(2)	1
Total deferred tax (credit)/charge	(123)	25
Total tax (credited)/charged to income statement - continuing operations	(110)	62
Total tax (credited)/charged to income statement	(110)	62

Attributable to policyholder returns - continuing operations	(134)	73
Attributable to equity holders - continuing operations	24	(11)
Total tax (credited)/charged to income statement	(110)	62

				Pence
	Framework	Notes	Year ended 31 December 2022	Year ended 31 December 2021
Basic earnings per share	IFRS	8(b)	12.2	9.4
Diluted basic earnings per share	IFRS	8(b)	12.0	9.2
Adjusted basic earnings per share	Group policy	8(b)	8.0	10.7
Adjusted diluted earnings per share	Group policy	8(b)	7.9	10.4
Headline basic earnings per share (net of tax)	JSE Listing Requirements	8(c)	11.7	3.9
Headline diluted earnings per share (net of tax)	JSE Listing Requirements	8(c)	11.5	3.8

		Million
	Year ended 31 December 2022	Year ended 31 December 2021
Weighted average number of Ordinary Shares	1,496	1,721
Own shares including those held in consolidated funds and EBTs	(58)	(77)
Basic weighted average number of Ordinary Shares	1,438	1,644
Adjustment for dilutive share awards and options	20	39
Diluted weighted average number of Ordinary Shares	1,458	1,683

		£m
	31 December 2022	31 December 2021	Average estimated useful life	Average period remaining
Net carrying value
Distribution channels - Quilter Financial Planning	4	9	8 years	2 years
Customer relationships
Quilter Cheviot	59	86	10 years	2 years
Quilter Financial Planning	22	27	8 years	4 years
Quilter Private Client Advisers	14	18	8 years	4 years
Other	2	3	7 years	1 year
Total other intangible assets	101	143

	Affluent	High Net Worth
Reduction in forecast cash flows	17%	47%
Percentage point increase in the discount rate	5%	20%

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 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 which meet the definition of Level 2 financial instruments.
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 2022		31 December 2021
	£m	%	£m	%
Financial assets measured at fair value
Level 1	38,452	85.9%	41,996	86.0%
Level 2	6,288	14.0%	6,771	13.9%
Level 3	29	0.1%	27	0.1%
Total	44,769	100.0%	48,794	100.0%
Financial liabilities measured at fair value
Level 1	38,161	86.6%	41,047	85.5%
Level 2	5,863	13.3%	6,913	14.4%
Level 3	25	0.1%	24	0.1%
Total	44,049	100.0%	47,984	100.0%

		Year ended 31 December 2022			Year ended 31 December 2021
	Post-tax profit measure used	Continuing operations	Discontinued operations	Total	Continuing operations	Discontinued operations	Total
	Post-tax profit measure used	Pence	Pence	Pence	Pence	Pence	Pence
Basic EPS	IFRS profit	12.2	-	12.2	1.4	8.0	9.4
Diluted EPS	IFRS profit	12.0	-	12.0	1.4	7.8	9.2
Adjusted basic EPS	Adjusted profit	8.0	-	8.0	7.6	3.1	10.7
Adjusted diluted EPS	Adjusted profit	7.9	-	7.9	7.4	3.0	10.4

				£m
	Goodwill	Software development costs	Other intangible assets	Total
Gross amount
1 January 2021¹	356	95	429	880
Disposal of interests in subsidiaries	(50)	-	(4)	(54)
Disposals²	-	(65)	-	(65)
31 December 2021¹	306	30	425	761
31 December 2022	306	30	425	761

Amortisation and impairment losses
1 January 2021¹	-	(85)	(239)	(324)
Amortisation charge for the year	-	(2)	(45)	(47)
Disposal of interests in subsidiaries	-	-	2	2
Disposals²	-	65	-	65
31 December 2021¹	-	(22)	(282)	(304)
Amortisation charge for the year	-	(2)	(42)	(44)
31 December 2022	-	(24)	(324)	(348)

Carrying amount
31 December 2021	306	8	143	457
31 December 2022	306	6	101	413

		£m
	31 December 2022	31 December 2021¹
Goodwill (net carrying amount)
Affluent	223	223
High Net Worth	83	83
Total goodwill	306	306

		£m
	31 December 2022	31 December 2021
Government and government-guaranteed securities	225	649
Other debt securities, preference shares and debentures	1,609	1,662
Equity securities	6,225	7,251
Pooled investments	35,557	38,002
Short-term funds and securities treated as investments	1	1
Total financial investments	43,617	47,565

Recoverable within 12 months	43,617	47,565
Total financial investments	43,617	47,565

31 December 2022
					£m
Measurement basis	Fair value
	Mandatorily at FVTPL	Designated at FVTPL	Amortised cost	Non-financial assets and liabilities	Total
Assets
Investments in associated undertakings ¹	-	-	-	1	1
Loans and advances	-	-	34	-	34
Financial investments	43,617	-	-	-	43,617
Trade, other receivables and other assets	-	-	261	42	303
Derivative assets	40	-	-	-	40
Cash and cash equivalents	1,112	-	670	-	1,782
Total assets that include financial instruments	44,769	-	965	43	45,777
Total other non-financial assets	-	-	-	640	640
Total assets	44,769	-	965	683	46,417

Liabilities
Investment contract liabilities	-	38,186	-	-	38,186
Third-party interests in consolidated funds	5,843	-	-	-	5,843
Borrowings and lease liabilities	-	-	290	-	290
Trade, other payables and other liabilities	-	-	358	78	436
Derivative liabilities	20	-	-	-	20
Total liabilities that include financial instruments	5,863	38,186	648	78	44,775
Total other non-financial liabilities	-	-	-	94	94
Total liabilities	5,863	38,186	648	172	44,869

		£m
	2022	2021
At beginning of the year	27	1,822
Fair value losses charged to the income statement	(5)	(3)
Purchases	-	-
Sales	(2)	-
Transfers in	125	8
Transfers out	(116)	(393)
Disposal of subsidiaries¹	-	(1,406)
Foreign exchange and other movements	-	(1)
Total Level 3 financial assets at the end of the year	29	27
Unrealised fair value losses charged to the income statement relating to assets held at the year end	(9)	(4)

		£m
	31 December 2022	31 December 2021
Cash at bank	406	559
Money market funds	1,112	1,216
Cash and cash equivalents in consolidated funds	264	289
Total cash and cash equivalents per statement of cash flows	1,782	2,064

		£m	£m
	Number of Ordinary Shares	Nominal value of Ordinary Shares	Ordinary Share premium
At 1 January 2021	1,783,969,051	125	58
Shares cancelled through share buyback programme	(128,141,834)	(9)	-
At 31 December 2021	1,655,827,217	116	58
Shares cancelled through share buyback programme	(17,704,132)	(1)	-
Share Consolidation (including shares cancelled)¹	(234,017,587)	-	-
At 31 December 2022	1,404,105,498	115	58

		£m
	2022	2021
Carrying amount at 1 January	41,071	57,407
From continuing operations
Fair value movements	(4,878)	2,821
Investment income	560	472
Movements arising from investment return	(4,318)	3,293
From discontinued operations
Fair value movements	-	1,646
Investment income	-	172
Movements arising from investment return	-	1,818
Contributions received	4,408	6,837
Withdrawals and surrenders ¹	(2,759)	(3,866)
Claims and benefits	(219)	(162)
Other movements	3	1
Change in liability	(2,885)	7,921
Currency translation gain	-	(199)
Disposal of subsidiaries	-	(24,058)
Investment contract liabilities at end of the year	38,186	41,071

					£m
31 December 2022	Compensation provisions	Sale of subsidiaries	Property provisions	Clawback and other provisions	Total
Balance at beginning of the year	41	22	9	21	93
Charge to income statement	22	-	4	3	29
Utilised during the year	(28)	(7)	(1)	(2)	(38)
Unused amounts reversed	(12)	-	-	(4)	(16)
Reclassification within the statement of financial position³	-	-	-	1	1
Balance at 31 December 2022	23	15	12	19	69

					£m
31 December 2021	Compensation provisions	Sale of subsidiaries	Property provisions	Clawback and other provisions	Total
Balance at beginning of the year	42	10	-	25	77
Charge to income statement¹	23	17	7	2	49
Utilised during the year	(12)	(4)	-	(4)	(20)
Unused amounts reversed	(10)	(1)	-	(5)	(16)
Disposals²	(2)	-	-	-	(2)
Reclassification within the statement of financial position⁴	-	-	2	3	5
Balance at 31 December 2021	41	22	9	21	93

		£m
	31 December 2022¹	31 December 2021²
Own funds	1,451	1,617
Solvency capital requirement	631	587
Solvency II surplus	820	1,030
Solvency II coverage ratio	230%	275%

		£m
Group own funds	31 December 2022	31 December 2021
Tier 1¹	1,249	1,412
Tier 2²	202	205
Total Group Solvency II own funds	1,451	1,617

		£m
	31 December 2022	31 December 2021
Total external borrowings of the Company	200	199
Less: cash and cash equivalents of the Company	(126)	(503)
Total net external borrowings of the Company	74	(304)
Total shareholders' equity of the Group	1,548	1,739
Tier 2 bond	200	199
Total Group equity (including Tier 2 bond)	1,748	1,938
Ratio of Company net external borrowings to Group equity	0.042	-0.157

														£m
		Credit rating relating to cash and cash equivalents that are neither past due nor impaired
31 December 2022		AAA		AA		A		B		<BBB		Not rated¹		Carrying value
Cash at amortised cost, subject to 12-month ECL		-		13		388		5		-		264		670
Money market funds at FVTPL		1,112		-		-		-		-		-		1,112
Total cash and cash equivalents		1,112		13		388		5		-		264		1,782

													£m
	Credit rating relating to cash and cash equivalents that are neither past due nor impaired
31 December 2021	AAA		AA		A		B		<BBB		Not rated¹		Carrying value
Cash at amortised cost, subject to 12-month ECL	-		105		451		-		3		289		848
Money market funds at FVTPL	1,216		-		-		-		-		-		1,216
Total cash and cash equivalents	1,216		105		451		-		3		289		2,064

Impairment allowance	£m
Balance at 1 January 2021	(0.8)
Change due to change in counterparty balance	(0.4)
31 December 2021	(1.2)
Change due to change in counterparty balance	0.1
31 December 2022	(1.1)

		£m
Impact on profit after tax and shareholders' equity	31 December 2022	31 December 2021
Impact of 10% increase in equity and property prices	30	34
Impact of 10% decrease in equity and property prices	(30)	(34)