Quilter plc Half Year Results 2020 - Part 2

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Quilter (QLT)

UK 100

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Consolidated income statement
For the six month period ended 30 June 2020
				£m
	Notes	Six months 2020	Six months 2019	Full year 2019
Income
Fee income and other income from service activities	6(d)	428	450	936
Investment return		(1,547)	5,043	6,866
Other income		11	21	22
Total income		(1,108)	5,514	7,824
Expenses
Insurance contract claims and changes in liabilities		-	-	(1)
Change in investment contract liabilities	16	1,254	(4,348)	(5,810)
Fee and commission expenses, and other acquisition costs		(203)	(190)	(294)
Change in third party interest in consolidated funds		428	(586)	(917)
Other operating and administrative expenses		(355)	(344)	(740)
Finance costs		(8)	(8)	(17)
Total expenses		1,116	(5,476)	(7,779)
Profit before tax from continuing operations		8	38	45
Tax credit/(expense) attributable to policyholder returns	7(a)	38	(78)	(98)
Profit/(loss) before tax attributable to equity holders from continuing operations		46	(40)	(53)
Income tax credit/(expense)	7(a)	36	(70)	(66)
Less: tax (credit)/expense attributable to policyholder returns		(38)	78	98
Tax (expense)/credit attributable to equity holders		(2)	8	32
Profit/(loss) after tax from continuing operations		44	(32)	(21)
(Loss)/profit after tax from discontinued operations	4(b)	(1)	15	167
Profit/(loss) after tax		43	(17)	146

Attributable to:
Equity holders of Quilter plc		43	(17)	146

Earnings per ordinary share on profit attributable to ordinary shareholders of Quilter plc
Basic
From continuing operations (pence)	8(b)	2.5	(1.7)	(1.1)
From discontinued operations (pence)	4(b)	(0.1)	0.8	9.1
Basic earnings per ordinary share (pence)	8(b)	2.4	(0.9)	8.0
Diluted
From continuing operations (pence)	8(b)	2.4	(1.7)	(1.1)
From discontinued operations (pence)	4(b)	(0.1)	0.8	8.9
Diluted earnings per ordinary share (pence)	8(b)	2.3	(0.9)	7.8

Consolidated statement of comprehensive income
For the six month period ended 30 June 2020

				£m
	Note	Six months 2020	Six months 2019	Full year 2019
Profit/(loss) after tax		43	(17)	146
Exchange gains/(losses) on translation of foreign operations		1	-	(1)
Items that may be reclassified subsequently to income statement		1	-	(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 income/(expense), net of tax		1	-	(7)

Total comprehensive income/(expense)		44	(17)	139
Attributable to:
Continuing operations		45	(32)	(28)
Discontinued operations	4(c)	(1)	15	167
Equity holders of Quilter plc		44	(17)	139

Consolidated statement of changes in equity For the six month period ended 30 June 2020

									£m
	Notes	Share capital	Share premium	Capital redemption reserve	Merger reserve	Share-based payments reserve	Other reserves	Retained earnings	Total share- holders' equity
Balance at 1 January 2019		133	58	-	588	34	1	1,191	2,005
Adjustment on initial application of IFRS 16 (net of tax)		-	-	-	-	-	-	(5)	(5)
Balance at 1 January 2019 - restated		133	58	-	588	34	1	1,186	2,000
Loss for the period		-	-	-	-	-	-	(17)	(17)
Total comprehensive expense		-	-	-	-	-	-	(17)	(17)
Dividends	9	-	-	-	-	-	-	(61)	(61)
Movement in own shares		-	-	-	-	-	-	(1)	(1)
Equity share-based payment transactions		-	-	-	-	5	-	8	13
Total transactions with the owners of the Company		-	-	-	-	5	-	(54)	(49)
Balance at 30 June 2019		133	58	-	588	39	1	1,115	1,934
Profit for the period		-	-	-	-	-	-	163	163
Other comprehensive expense		-	-	-	-	-	-	(7)	(7)
Total comprehensive income		-	-	-	-	-	-	156	156
Dividends	9	-	-	-	-	-	-	(31)	(31)
Release of merger reserve		-	-	-	(439)	-	-	439	-
Movement in own shares		-	-	-	-	-	-	(1)	(1)
Equity share-based payment transactions		-	-	-	-	6	-	7	13
Total transactions with the owners of the Company		-	-	-	(439)	6	-	414	(19)
Balance at 31 December 2019		133	58	-	149	45	1	1,685	2,071
Profit for the period		-	-	-	-	-	-	43	43
Other comprehensive income		-	-	-	-	-	-	1	1
Total comprehensive income		-	-	-	-	-	-	44	44
Dividends	9	-	-	-	-	-	-	(64)	(64)
Shares repurchased in the buyback programme¹	15	(3)	-	3	-	-	-	(56)	(56)
Movement in own shares		-	-	-	-	-	-	(43)	(43)
Equity share-based payment transactions		-	-	-	-	(3)	-	16	13
Total transactions with the owners of the Company		(3)	-	3	-	(3)	-	(147)	(150)
Balance at 30 June 2020		130	58	3	149	42	1	1,582	1,965

Consolidated statement of financial position
At 30 June 2020

				£m
	Notes	30 June 2020	30 June 2019	31 December 2019
Assets
Goodwill and intangible assets	10	578	587	592
Property, plant and equipment		135	89	143
Investments in associated undertakings		1	2	1
Contract costs		435	477	455
Loans and advances		235	220	217
Financial investments	11	57,872	56,423	59,345
Deferred tax assets		45	32	43
Current tax receivable		40	16	13
Trade, other receivables and other assets ¹		566	1,398	424
Derivative assets		12	24	32
Cash and cash equivalents	14	2,467	1,944	2,473
Assets of operations classified as held for sale		-	12,317	-
Total assets		62,386	73,529	63,738

Equity and liabilities
Equity
Ordinary Share capital		130	133	133
Ordinary Share premium reserve		58	58	58
Capital redemption reserve		3	-	-
Merger reserve		149	588	149
Share-based payments reserve		42	39	45
Other reserves		1	1	1
Retained earnings		1,582	1,115	1,685
Total equity		1,965	1,934	2,071
Liabilities
Investment contract liabilities	16	52,267	50,286	52,455
Third-party interests in consolidated funds		6,582	6,972	7,675
Provisions	17	88	45	64
Deferred tax liabilities		50	91	88
Current tax payable		4	4	6
Borrowings and lease liabilities		330	280	335
Trade, other payables and other liabilities		843	1,720	836
Contract liabilities and deferred revenue		185	192	191
Derivative liabilities		72	24	17
Liabilities of operations classified as held for sale		-	11,981	-
Total liabilities		60,421	71,595	61,667
Total equity and liabilities		62,386	73,529	63,738

				£m
	Notes	Six months 2020	Six months 2019 ¹	Full Year 2019
Cash flows from operating activities
Profit before tax from continuing operations		8	38	45
(Loss)/profit before tax from discontinued operations	4(b)	(1)	76	256
Non-cash movements in profit before tax		1,005	(647)	(2,268)
Net changes in working capital		(34)	(92)	(39)
Taxation paid		(32)	(10)	(37)
Total net cash from/(used in) operating activities		946	(635)	(2,043)
Cash flows from investing activities
Net (acquisitions)/disposals of financial investments		(739)	707	2,260
Acquisition of property, plant and equipment		(17)	(4)	(8)
Acquisition of intangible assets		(3)	(4)	(5)
Acquisition of interests in subsidiaries ¹		(16)	(61)	(87)
Net (payments)/proceeds from the disposal of interests in subsidiaries		(2)	-	78
Total net cash (used in)/from investing activities		(777)	638	2,238
Cash flows from financing activities
Dividends paid to ordinary equity holders of the Company		(64)	(61)	(92)
Finance costs on external borrowings		(5)	(5)	(10)
Payment of interest on lease liabilities		(1)	(1)	(3)
Payment of principal lease liabilities		(7)	(7)	(13)
Repurchase of shares		(41)	-	-
Repurchase and cancellation of shares		(54)	-	-
Total net cash used in financing activities		(172)	(74)	(118)
Net (decrease)/increase in cash and cash equivalents		(3)	(71)	77
Cash and cash equivalents at the beginning of the year		2,473	2,395	2,395
Effects of exchange rate changes on cash and cash equivalents		(3)	1	1
Cash and cash equivalents at end of the year	14	2,467	2,325	2,473

Quilter plc Half Year Results 2020 - Part 2

Statement of Directors' responsibilities in respect of the interim financial statements

Our conclusion

What we have reviewed

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

What a review of interim financial statements involves

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): Customer remediation

8: Earnings per share

8(a): Weighted average number of Ordinary Shares

The table below summarises the calculation of the weighted average number of Ordinary Shares for the purposes of calculating basic and diluted earnings per share for each profit measure (IFRS, adjusted and headline profit):

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

13: Fair value methodology

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

13(e): Level 3 fair value hierarchy disclosure

16: Investment contract liabilities

Tax

Complaints and disputes

19: Related party transactions

20: Events after reporting date

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UK 100

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Area	Critical accounting judgements	Related notes
Recognition of provisions and contingent liabilities in respect of Lighthouse defined benefit pension advice	The FCA has notified the Group of a skilled person report requirement for Lighthouse pension transfer advice. Complaints were received in early 2020 in relation to British Steel defined benefit ("DB") pension transfer advice provided by Lighthouse before its acquisition by the Group in June 2019. Management has applied judgement in order to determine whether a provision can be reasonably estimated in relation to the cases and whether redress is probable, and therefore whether a provision can be recognised for Lighthouse DB pension transfers. A contingent liability is disclosed where amounts cannot be measured reliably.	4(a), 17
Recognition of insurance recovery asset in respect of Lighthouse defined benefit pension advice	For Lighthouse DB pension transfer advice provided, management has applied judgement in order to determine whether an asset can be reasonably estimated, and the measurement of such asset, in relation to an insurance recovery under Lighthouse's professional indemnity policies ("PI Policies"). Under the PI Policies, Lighthouse is entitled to be indemnified for a "Claim" (and defence costs) in respect of legal liabilities arising in connection with Lighthouse's DB pension transfer advice activities, however, at the current time the insurers have not confirmed coverage for legal liabilities.	4(a)
Trigger of potential impairment of goodwill	Management has applied judgement in determining that the COVID-19 pandemic's impact on global markets and, in particular, the impact on the Group's future Assets under Management and Administration ("AuMA") and revenues, represents a potential trigger for impairment of goodwill. As a result, the Group's goodwill and intangible assets have been tested for impairment at 30 June 2020.	10

Area	Critical accounting estimates	Related notes
Provision for cost of Lighthouse defined benefit pension advice	An estimation of the provision required for the British Steel DB pension transfer redress was determined based upon a sample of cases which was considered representative of the broader population to form a reasonable estimate. The estimation per case is based upon FCA guidelines and modelling performed, and factors including pension transfer value, discount rate, and retail price indexation. The sample was then extrapolated to the entire population of British Steel DB cases that were advised on by Lighthouse advisers. The proportion of cases to be upheld and therefore which requires redress payments to be made was estimated based upon a review performed on a sample of Lighthouse DB pension transfers by an independent and suitably qualified regulatory consulting company.	17
Valuation of goodwill and intangible assets	The valuation of goodwill and intangible assets that are recognised as the result of business combinations involves the use of valuation models. As a result of the impact of COVID-19 on global markets and, in particular, on the Group's future levels of AuMA on which the majority of the Group's revenues are based, management have assessed the goodwill and intangible assets for impairment using the latest forecast cash flows. Significant estimates include equity stock market levels and the impact on growth in AuMA in future periods, together with levels of new business growth, net client cash flow, revenue margins, and future expenses and discount rates.	10
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 AuMA, 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. As a result of the impact of COVID-19 on global markets and, in particular, on the Group's expected future levels of AuMA, management have reassessed the sensitivity on the recoverability of deferred tax assets based on the latest forecast cash flows.	3

				£m
	Notes	Six months 2020	Six months 2019 (restated ¹ )	Full year 2019
Income
Gross earned premiums		-	76	145
Premiums ceded to reinsurers		-	(43)	(86)
Net earned premiums		-	33	59
Fee income and other income from service activities ¹		-	95	164
Investment return ¹		-	1,004	1,386
Total income		-	1,132	1,609
Expenses
Claims and benefits paid		-	(46)	(98)
Reinsurance recoveries		-	33	72
Net insurance claims and benefits incurred		-	(13)	(26)
Change in reinsurance assets and liabilities		-	78	121
Change in insurance contract liabilities		-	(91)	(134)
Change in investment contract liabilities		-	(991)	(1,364)
Fee and commission expenses, and other acquisition costs		-	(23)	(45)
Other operating and administrative expenses		-	(16)	(8)
Total expenses		-	(1,056)	(1,456)
(Loss)/profit on sale of operations before tax ²		(1)	-	103
(Loss)/profit before tax from discontinued operations		(1)	76	256
Tax expense attributable to policyholder returns	7(a)	-	(59)	(76)
(Loss)/profit before tax attributable to equity holders from discontinued operations		(1)	17	180
Income tax expense	7(a)	-	(61)	(89)
Less: tax expense attributable to policyholder returns		-	59	76
Tax expense attributable to equity holders		-	(2)	(13)
(Loss)/profit after tax from discontinued operations		(1)	15	167
Attributable to:
Equity holders of Quilter plc		(1)	15	167

Earnings per ordinary share on profit attributable to ordinary shareholders of Quilter plc
Basic - from discontinued operations (pence)	8(b)	(0.1)	0.8	9.1
Diluted - from discontinued operations (pence)	8(b)	(0.1)	0.8	8.9

										£m
		Six months 2020			Six months 2019			Full year 2019
	Notes	Continuing operations	Discontinued operations	Total	Continuing operations	Discontinued operations¹	Total	Continuing operations	Discontinued operations¹	Total
Advice and Wealth Management		41	-	41	50	-	50	103	-	103
Wealth Platforms		47	-	47	56	26	82	112	53	165
Head Office		(17)	-	(17)	(17)	-	(17)	(33)	-	(33)
Adjusted profit before tax		71	-	71	89	26	115	182	53	235
Reallocation of QLA costs		-	-	-	-	-	-	(26)	26	-
Adjusted profit before tax after reallocation	6(b)	71	-	71	89	26	115	156	79	235
Reconciliation to IFRS profit:
Goodwill impairment and impact of acquisition accounting	5(b)(i)	(23)	-	(23)	(26)	-	(26)	(54)	-	(54)
Profit on business disposals	4(b)	-	(1)	(1)	-	-	-	-	103	103
Business transformation costs	5(b)(ii)	(39)	-	(39)	(35)	-	(35)	(77)	-	(77)
Managed Separation costs	5(b)(iii)	-	-	-	(2)	-	(2)	(6)	-	(6)
Finance costs	5(b)(iv)	(5)	-	(5)	(5)	-	(5)	(10)	-	(10)
Policyholder tax adjustments	5(b)(v)	47	-	47	(61)	(15)	(76)	(62)	(12)	(74)
Customer remediation	5(b)(vi)	(5)	-	(5)	-	6	6	-	10	10
Total adjusting items before tax		(25)	(1)	(26)	(129)	(9)	(138)	(209)	101	(108)
Profit/(loss) before tax attributable to equity holders		46	(1)	45	(40)	17	(23)	(53)	180	127
Tax attributable to policyholder returns	7(a)	(38)	-	(38)	78	59	137	98	76	174
Income tax credit/(expense)	7(a),(b)	36	-	36	(70)	(61)	(131)	(66)	(89)	(155)
Profit/(loss) after tax		44	(1)	43	(32)	15	(17)	(21)	167	146

							£m
Six months 2020	Net mgmt fees ¹	Other revenue ¹	Total net fee revenue ¹	Expenses	Adjusted profit before tax	Consol. of funds ²	IFRS income statement ³
Income
Fee income and other income from service activities	324	97	421	-	421	7	428
Investment return	-	(1,249)	(1,249)	-	(1,249)	(298)	(1,547)
Other income	-	-	-	9	9	2	11
Total income	324	(1,152)	(828)	9	(819)	(289)	(1,108)
Expenses
Change in investment contract liabilities	-	1,254	1,254	-	1,254	-	1,254
Fee and commission expenses, and other acquisition costs	(35)	(38)	(73)	-	(73)	(130)	(203)
Change in third party interest in consolidated funds	-	-	-	-	-	428	428
Other operating and administrative expenses	(7)	-	(7)	(339)	(346)	(9)	(355)
Finance costs		(2)	(2)	(6)	(8)	-	(8)
Total expenses	(42)	1,214	1,172	(345)	827	289	1,116
Tax credit attributable to policyholder returns	38	-	38	-	38	-	38
Profit/(loss) before tax attributable to equity holders from continuing operations	320	62	382	(336)	46	-	46
Adjusting items:
Goodwill impairment and impact of acquisition accounting	-	-	-	23	23
Business transformation costs	-	-	-	39	39
Finance costs	-	-	-	5	5
Customer remediation	-	-	-	5	5
Policyholder tax adjustments	(47)	-	(47)	-	(47)
Adjusting items	(47)	-	(47)	72	25
Total Group - continuing operations	273	62	335	(264)	71

						£m
		Operating segments
	Notes	Advice and Wealth Management	Wealth Platforms	Head Office	Consolidation adjustments¹	Consolidated income statement
Income
Fee income and other income from service activities		225	199	-	4	428
Investment return		3	(1,254)	1	(297)	(1,547)
Other income		-	63	3	(55)	11
Segmental income		228	(992)	4	(348)	(1,108)
Expenses
Change in investment contract liabilities		-	1,254	-	-	1,254
Fee and commission expenses, and other acquisition costs		(24)	(52)	-	(127)	(203)
Change in third party interest in consolidated funds		-	-	-	428	428
Other operating and administrative expenses		(191)	(173)	(38)	47	(355)
Finance costs		(1)	(2)	(5)	-	(8)
Segmental expenses		(216)	1,027	(43)	348	1,116
Profit/(loss) before tax from continuing operations		12	35	(39)	-	8
Tax attributable to policyholder returns		-	38	-	-	38
Profit/(loss) before tax attributable to equity holders from continuing operations		12	73	(39)	-	46
Adjusted for non-operating items:
Goodwill impairment and impact of acquisition accounting	5(b)(i)	24	-	(1)	-	23
Business transformation costs	5(b)(ii)	-	21	18	-	39
Finance costs	5(b)(iv)	-	-	5	-	5
Policyholder tax adjustments	5(b)(v)	-	(47)	-	-	(47)
Customer remediation	5(b)(vi)	5	-	-	-	5
Adjusting items before tax		29	(26)	22	-	25
Adjusted profit/(loss) before tax - continuing operations		41	47	(17)	-	71

						£m
	Notes	Advice & Wealth Management	Wealth Platforms	Head Office	Consolidation Adjustments ¹	Total
Assets
Goodwill and intangible assets	10	444	134	-	-	578
Property, plant and equipment		27	107	1	-	135
Investments in associated undertakings		-	-	1	-	1
Contract costs		-	435	-	-	435
Loans and advances		32	203	-	-	235
Financial investments	11	-	51,974	-	5,898	57,872
Deferred tax assets		13	21	11	-	45
Current tax receivable		-	33	7	-	40
Trade, other receivables and other assets		258	237	6	65	566
Derivative assets		-	-	-	12	12
Cash and cash equivalents	14	399	721	590	757	2,467
Inter-segment funding - assets		3	12	-	(15)	-
Total assets		1,176	53,877	616	6,717	62,386

Liabilities
Investment contract liabilities	16	-	52,267	-	-	52,267
Third-party interests in consolidated funds		-	-	-	6,582	6,582
Provisions	17	56	22	10	-	88
Deferred tax liabilities		38	12	-	-	50
Current tax payable/(receivable) ²		8	(7)	3	-	4
Borrowings and lease liabilities		24	107	199	-	330
Trade, other payables and other liabilities		300	438	23	82	843
Contract liabilities and deferred revenue		-	185	-	-	185
Derivative liabilities		-	-	-	72	72
Inter-segment funding - liabilities		-	-	15	(15)	-
Total liabilities		426	53,024	250	6,721	60,421
Total equity						1,965
Total equity and liabilities						62,386

						£m	£m
	UK			International			UK
Six months 2020	Advice and Wealth Management	Wealth Platforms	Head Office	Wealth Platforms	Consolidation adjustments	Total continuing operations	Discontinued operations
Premium based fees	56	-	-	35	-	91	-
Fund based fees ¹	169	82	-	47	-	298	-
Retrocessions received, intragroup	-	1	-	2	(3)	-	-
Fixed fees	-	1	-	14	-	15	-
Surrender charges	-	-	-	6	-	6	-
Other fee and commission income	-	11	-	-	7	18	-
Fee income and other income from service activities	225	95	-	104	4	428	-
Investment return	3	(919)	1	(335)	(297)	(1,547)	-
Other income	-	78	3	(1)	(69)	11	-
Total income	228	(746)	4	(232)	(362)	(1,108)	-

	UK			International			UK
Six months 2019 (restated ² )	Advice and Wealth Management	Wealth Platforms	Head Office	Wealth Platforms	Consolidation adjustments	Total continuing operations	Discontinued operations
Gross earned premiums	-	-	-	1	-	1	76
Premiums ceded to reinsurers	-	-	-	(1)	-	(1)	(43)
Net earned premiums	-	-	-	-	-	-	33
Premium based fees	45	-	-	36	-	81	6
Fund based fees ¹	201	86	-	51	-	338	33
Retrocessions received, intragroup	-	1	-	1	(2)	-	5
Fixed fees	-	1	-	14	-	15	1
Surrender charges	-	-	-	8	-	8	-
Other fee and commission income ²	-	-	-	-	8	8	50
Fee income and other income from service activities ²	246	88	-	110	6	450	95
Investment return ²	5	2,748	2	1,625	663	5,043	1,004
Other income	2	82	3	-	(66)	21	-
Total income	253	2,918	5	1,735	603	5,514	1,132

	UK			International			UK
Full year 2019	Advice and Wealth Management	Wealth Platforms	Head Office	Wealth Platforms	Consolidation adjustments	Total continuing operations	Discontinued operations
Gross earned premiums	-	-	-	1	-	1	145
Premiums ceded to reinsurers	-	-	-	(1)	-	(1)	(86)
Net earned premiums	-	-	-	-	-	-	59
Premium based fees	103	-	-	72	-	175	11
Fund based fees ¹	383	175	-	101	-	659	65
Retrocessions received, intragroup	-	2	-	2	(4)	-	10
Fixed fees	-	3	-	28	-	31	2
Surrender charges	-	-	-	16	-	16	1
Other fee and commission income	-	39	-	-	16	55	75
Fee income and other income from service activities	486	219	-	219	12	936	164
Investment return	10	3,825	3	1,998	1,030	6,866	1,386
Other income	1	161	6	(1)	(145)	22	-
Total income	497	4,205	9	2,216	897	7,824	1,609

					Pence
	Source of guidance	Notes	Six months 2020	Six months 2019	Full year 2019
Basic earnings per share	IFRS	8(b)	2.4	(0.9)	8.0
Diluted earnings per share	IFRS	8(b)	2.3	(0.9)	7.8
Adjusted basic earnings per share	Group policy	8(b)	3.6	5.6	11.4
Adjusted diluted earnings per share	Group policy	8(b)	3.5	5.5	11.3
Headline basic earnings per share (net of tax)	JSE Listing Requirements	8(c)	2.4	(0.9)	2.3
Headline diluted earnings per share (net of tax)	JSE Listing Requirements	8(c)	2.4	(0.9)	2.3

			Millions
	Six months 2020	Six months 2019	Full year 2019
Weighted average number of Ordinary Shares	1,879	1,902	1,902
Treasury shares including those held in EBTs	(78)	(68)	(67)
Basic weighted average number of Ordinary Shares	1,801	1,834	1,835
Adjustment for dilutive share awards and options	36	18	28
Diluted weighted average number of Ordinary Shares	1,837	1,852	1,863

			£m
	30 June 2020	30 June 2019	31 December 2019	Average estimated useful life	Average period remaining
Net carrying value
Distribution channels	19	26	22	8 years	3 years
Customer relationships	192	217	211	9 years	5 years
Brand	-	2	1	n/a	n/a
Total other intangible assets	211	245	234

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.

	30 June 2020		30 June 2019		31 December 2019
	£m	%	£m	%	£m	%
Financial assets measured at fair value
Level 1	45,596	76.8%	55,561	80.2%	46,904	77.3%
Level 2	11,254	19.0%	12,281	17.7%	12,095	19.9%
Level 3	2,462	4.2%	1,421	2.1%	1,717	2.8%
Total	59,312	100.0%	69,263	100.0%	60,716	100.0%
Financial liabilities measured at fair value
Level 1	49,405	83.8%	59,498	87.1%	50,315	83.6%
Level 2	7,054	12.0%	7,403	10.8%	8,115	13.5%
Level 3	2,462	4.2%	1,421	2.1%	1,717	2.9%
Total	58,921	100.0%	68,322	100.0%	60,147	100.0%

				£m
	Payment date	Six months 2020	Six months 2019	Full year 2019
2018 Final dividend paid - 3.3p per ordinary share	20 May 2019	-	61	61
2019 Interim dividend paid - 1.7p per ordinary share	20 September 2019	-	-	31
2019 Final dividend paid - 3.5p per ordinary share	18 May 2020	64	-	-
Dividends paid to ordinary shareholders		64	61	92

				£m
	Goodwill	Software development costs	Other intangible assets	Total
Gross amount
1 January 2019	314	100	380	794
Acquisitions through business combinations	52	-	36	88
Additions	-	4	-	4
Transfer to non-current assets held for sale	(30)	-	-	(30)
30 June 2019	336	104	416	856
Acquisitions through business combinations	16	-	13	29
Additions	-	1	-	1
Disposals	-	(4)	(4)	(8)
Other movements ¹	(2)	-	3	1
31 December 2019	350	101	428	879
Acquisitions through business combinations ²	7	-	-	7
Additions	-	3	-	3
30 June 2020	357	104	428	889

Amortisation and other movements
1 January 2019	-	(95)	(149)	(244)
Amortisation charge for the period	-	(3)	(22)	(25)
30 June 2019	-	(98)	(171)	(269)
Amortisation charge for the period	-	1	(23)	(22)
Disposals	-	4	4	8
Other movements ¹	-	-	(4)	(4)
31 December 2019	-	(93)	(194)	(287)
Amortisation charge for the period	-	(1)	(23)	(24)
30 June 2020	-	(94)	(217)	(311)

Carrying amount
30 June 2019	336	6	245	587
31 December 2019	350	8	234	592
30 June 2020	357	10	211	578

	Advice and Wealth Management	Wealth Platforms
Reduction in forecast cash flows	31%	54%
Increase in discount rate ¹	105%	234%

30 June 2020
					£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	203	-	32	-	235
Financial investments	57,870	2	-	-	57,872
Trade, other receivables and other assets	-	-	508	58	566
Derivative assets	12	-	-	-	12
Cash and cash equivalents	1,225	-	1,242	-	2,467
Total assets that include financial instruments	59,310	2	1,782	59	61,153
Total other non-financial assets	-	-	-	1,233	1,233
Total assets	59,310	2	1,782	1,292	62,386

Liabilities
Investment contract liabilities	52,267	-	-	-	52,267
Third-party interests in consolidation of funds	6,582	-	-	-	6,582
Borrowings and lease liabilities	-	-	330	-	330
Trade, other payables and other liabilities	-	-	738	105	843
Derivative liabilities	72	-	-	-	72
Total liabilities that include financial instruments	58,921	-	1,068	105	60,094
Total other non-financial liabilities	-	-	-	327	327
Total liabilities	58,921	-	1,068	432	60,421

		£m	£m
	Number of shares	Nominal value	Share premium
At 1 January 2019	1,902,251,098	133	58
At 31 December 2019	1,902,251,098	133	58
Shares cancelled through share buyback programme ¹	(45,986,864)	(3)	-
At 30 June 2020	1,856,264,234	130	58

					£m
30 June 2020	Compensation provisions	Sale of QLA	Sale of Single Strategy business	Other	Total
Balance at beginning of the year	31	6	10	17	64
Additions from business combinations	12	-	-	-	12
Charge to income statement	8	-	-	-	8
Utilised during the period	(3)	(2)	(1)	-	(6)
Unused amounts reversed	(1)	-	(1)	-	(2)
Reclassification within Statement of Financial Position ¹	-	-	-	12	12
Balance at 30 June 2020	47	4	8	29	88

					£m
30 June 2019	Compensation provisions	Sale of QLA	Sale of Single Strategy business	Other	Total
Balance at beginning of the period	54	-	20	20	94
Adjustment on initial application of IFRS 16	-	-	-	(5)	(5)
Additions from business combinations	1	-	-	1	2
Charge to income statement ²	1	-	-	-	1
Utilised during the period	(15)	-	(5)	(1)	(21)
Unused amounts reversed	(6)	-	-	-	(6)
Transfer to liabilities held for sale	(19)	-	-	(1)	(20)
Balance at 30 June 2019	16	-	15	14	45

					£m
31 December 2019	Compensation provisions	Sale of QLA	Sale of Single Strategy business	Other	Total
Balance at beginning of the year	54	-	20	20	94
Adjustment on initial application of IFRS 16	-	-	-	(5)	(5)
Additions from business combinations	14	-	-	1	15
Charge to income statement ²	9	6	1	7	23
Utilised during the year	(19)	-	(11)	(1)	(31)
Unused amounts reversed	(13)	-	-	(4)	(17)
Disposals	(11)	-	-	(1)	(12)
Reclassification within Statement of Financial Position	(3)	-	-	-	(3)
Balance at 31 December 2019	31	6	10	17	64

				£m
	Notes	31 December 2019	Change in H1 2020	30 June 2020
Client redress provision		9	17	26
Anticipated costs		3	-	3
Total Lighthouse pension transfer advice complaints provision		12	17	29

Recognised within fair value of acquired net assets	4(a)	12	12	24
Recognised within expenses	5(b)(vi)	-	5	5

		£m
		30 June 2020
	Increase	Decrease
Change in discount rate of 0.25%	(4)	6
Change in market levels of 5%	(3)	5
Change in number of cases upheld of 10%	3	(3)