Notes to the condensed consolidated financial statements

For the year ended 31 December 2024

General information

Quilter plc (the "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 with a primary listing on the London Stock Exchange and a secondary listing on the Johannesburg Stock Exchange ("JSE").

The Company's registration number is 06404270. The address of the registered office is Senator House, 85 Queen Victoria Street, London, EC4V 4AB.

1: Basis of preparation

The results in this preliminary announcement have been taken from the Group's 2024 Annual report which will be available on the Company's website on 20 March 2025. These condensed consolidated financial statements of Quilter plc for the year ended 31 December 2024 have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

These condensed consolidated financial statements have been prepared on a historical cost basis, except for the revaluation of certain financial instruments which are held at fair value, and are presented in pounds sterling, which is the currency of the primary economic environment in which the Group operates.

Going concern

The Directors have considered the resilience of the Group, its current financial position, the principal risks facing the business and the effectiveness of any mitigating strategies which are or could be applied. This included an assessment of capital and liquidity over a three-year planning period covering 2025 to 2027. 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. The assessment also considered the potential implications of the Skilled Person Review which could include the potential payment of remediation and associated administrative costs (see note 16). As part of the going concern assessment, the Group took into consideration the current position of the UK and global economy. The Group also considered how climate-related risks and opportunities affect operations, investment activities, advice and distribution, and their impact on specific projects and initiatives, estimates and judgements. Based on the assessment, the Directors believe that both the Group and Quilter plc have sufficient financial resources to continue in business for a period of at least 12 months from the date of approval of these financial statements and continue to adopt the going concern basis in preparing the Group and Parent Company financial statements. Further information is contained in the viability statement and going concern section of the Annual Report.

Liquidity analysis of the statement of financial position

The Group's statement of financial position is in order of liquidity. For each asset and liability line item, those amounts expected to be recovered or settled more than 12 months after the reporting date are disclosed separately in the notes to the consolidated financial statements.

Critical accounting estimates and judgements

The preparation of financial statements requires management to exercise judgement in applying the Group's material accounting policies and make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. The Board Audit Committee reviews these areas of judgement and estimates, and the appropriateness of material accounting policies adopted in the preparation of these financial statements.

Critical accounting judgements

The Group's critical accounting judgements are those made when applying its material accounting policies and that have the greatest effect on the net profit and net assets recognised in the Group's financial statements.

Ongoing Advice Review

In the preliminary results announcement on 6 March 2024, the Group committed to undertake a review of historical data and practices across the Appointed Representative firms in the Quilter Financial Planning network in relation to the provision of ongoing advice. Following discussion with the FCA, a Skilled Person was appointed in June 2024 to assess and provide a view to the FCA on whether the delivery of ongoing advice services by Appointed Representative firms in the Quilter Financial Planning network has been compliant with applicable regulatory requirements during the period from 1 January 2017 to 31 December 2023. Although the Skilled Person Review has not yet completed, it is well advanced, and the final report is expected to be submitted to the FCA in the second quarter of 2025. Subject to further discussions with the FCA that will occur following the Skilled Person Review, it is currently expected that some form of customer remediation will likely be required. Based on the results of the Skilled Person Review to date together with other evidence available, including consideration of the announcement made by the FCA on 24 February 2025 titled "Ongoing financial advice services", the Group has recognised a provision for a reasonable estimate of the costs of a potential customer remediation exercise, including both redress and administrative costs, based upon current assumptions as to a plausible customer remediation approach that may be followed. See notes 16 and 17 for further details of the provision and contingent liability (including assumptions made and uncertainties arising). The significant judgements are:

·      the precise period to be included within the scope of a potential remediation exercise; and

·      the proportion of customers, determined by reference to cohorts shown by the Skilled Person's sample to be at the highest likelihood of having not received the expected level of service from their adviser, to be involved within the scope of a potential remediation exercise.

Critical accounting estimates

The Group's critical accounting estimates involve the most complex or subjective assessments and assumptions, which have a significant risk of resulting in material adjustment to the net carrying amounts of assets and liabilities until those amounts are settled. 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 materially from those estimates.

Ongoing Advice Review

As set out above, based on the results to date of the Skilled Person Review together with other evidence available, the Group considers that a customer remediation exercise in relation to ongoing advice will likely be required to consider cases where the customer has been charged for ongoing advice services, and the adviser is unable to satisfactorily evidence the provision of those services. The Group currently expects to finalise the Skilled Person Review and undertake discussions with the FCA during the second quarter of 2025, to consider the form and methodology of this potential customer remediation exercise. Any such remediation exercise is currently expected to involve the population of customers who are at the highest likelihood of having not received the expected level of service from their adviser, based upon the results of the Skilled Person Review. Given that a customer remediation exercise will likely be required, the Group has considered the estimated costs. This includes estimates for refunds of fees previously charged and interest payable and the cost of the remediation exercise. While there are a number of outstanding contingencies and variables the Group has determined that a reasonable estimate can be made based on the information currently available and, as a result has recognised a provision (see notes 16 and 17). Following the initial draft results of the statistically reliable representative cohort of customers undertaken by the Skilled Person, an initial quantification of the potential financial impact of the approach to be followed can be reasonably estimated. In determining this provision, consideration has been given to a wide range of assumptions, drawing on data from the Skilled Person's results to date, previous experience of past business reviews, and the views of external specialists familiar with similar remediation exercises. The significant estimates in the calculation of the provision are:

·      extrapolation of the proportion of the Skilled Person's statistically significant sample where satisfactory evidence of servicing was not found, to the entire population of ongoing advice customers;

·      response rate for customers invited to engage in the potential remediation exercise; and

·      administrative costs to perform a potential remediation exercise, including costs associated with customer engagement and case reviews, which have been determined based upon experience from previous past business reviews performed by the Group, and assumptions on the number of customers who may be subject to the review process.

Measurement of deferred tax

The annual business planning process estimates future taxable profits 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, net client cash flows and 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 deferred tax assets based on estimated taxable profits over a five-year horizon and assesses policyholder deferred tax 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. This approach is considered reasonable based on historical profitability. Future profit projections show the majority of deferred tax assets being utilised over the next three years. Management has reassessed the sensitivity of the recoverability of deferred tax assets based on the latest forecast cash flows.

Other principal estimates

The Group's assessment of goodwill and intangible assets for impairment uses the latest cash flow forecasts from the Group's three-year Business Plan. These forecasts include estimates relating to equity market levels and growth in AuMA in future periods, together with levels of new business growth, net client cash flows, revenue margins, and future expenses and discount rates (see note 9). These forecasts take account of climate-‑related risks and other responsible business considerations. Management does not consider that the use of these estimates has a significant risk of causing a material adjustment to the carrying amount of the assets within the next financial year.

2: New standards, amendments to standards, and interpretations adopted by the Group

The amendments to accounting standards in the table below became applicable for the current reporting period, with no material impact on the Group's results, financial position or disclosures or on those of the Parent Company.

Adopted by the Group from	Amendments to standards
1 January 2024	Amendments to IAS 1 Presentation of Financial Statements - classification of liabilities as current and non-current
1 January 2024	Amendments to IAS 1 Presentation of Financial Statements - non-current liabilities with covenants
1 January 2024	Amendments to IFRS 16 Leases - Sale and leaseback transactions
1 January 2024	Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures - Supplier Finance Arrangements

 

3: Significant changes in the year

Ongoing Advice Review

In the preliminary results announcement on 6 March 2024, the Group committed to undertake a review of historical data and practices across the Appointed Representative firms in the Quilter Financial Planning network in relation to the provision of ongoing advice. Following discussion with the FCA, a Skilled Person was appointed in June 2024 to assess and provide a view to the FCA on whether the delivery of ongoing advice services by Appointed Representative firms in the Quilter Financial Planning network has been compliant with applicable regulatory requirements during the period from 1 January 2017 to 31 December 2023. Although the Skilled Person Review has not yet completed, it is relatively well progressed. Subject to further engagement with the FCA that will occur following the Skilled Person Review, it is currently expected that some form of customer remediation will likely be required. Based on the results of the Skilled Person Review to date together with other evidence available, the Group has recognised a provision for a reasonable estimate of the costs of such a customer remediation exercise, including both redress and administrative costs, based upon current assumptions as to a plausible customer remediation approach that may be followed. See notes 16 and 17 for further details of the provision and contingent liability.

Acquisitions

The Group made two acquisitions in the year, 100% of the share capital of NuWealth Limited and 35% of the share capital of Beals Mortgage and Financial Services Limited. Further details are given in note 4.

4: Business combinations, acquisitions and disposals

The Group made two acquisitions during the year. There were no material acquisitions in the prior year.

On 5 September 2024, Quilter acquired 100% of the share capital of NuWealth Limited for a total consideration of £6 million. NuWealth Limited provides a savings and investment app that offers its users savings tools, high-interest accounts and access to stocks, fractional shares and exchange traded funds. An intangible asset of £5 million was recognised on acquisition (see note 9) related to the software acquired.

On 29 October 2024, the Group acquired 35.0% of the share capital of Beals Mortgage and Financial Services Limited, and 9.4% of the share capital of its subsidiary, Clinton Kennard Associates Ltd for the total of £13 million. The Group has carried out an assessment of control and influence and concluded that it has significant influence but not control of each of these entities. It will therefore account for each of these holdings as an investment in associate and account for its share of the profits or losses of these companies using the equity method of accounting. Subject to certain terms being met, the Group intends to acquire the remaining share capital of each company over the next five years.

There have been no material disposals of businesses during 2023 and 2024.

5: Alternative performance measures

5(a): Adjusted profit before tax and reconciliation to (loss)/profit after tax                                                                                              

Basis of preparation of adjusted profit before tax

Adjusted profit before tax is one of the Group's alternative performance measures ("APMs") and represents the Group's IFRS results, adjusted for specific items that management considers to be outside of the Group's normal operations or one-off in nature, as detailed in note 5(b). Adjusted profit before tax does not provide a complete picture of the Group's financial performance, which is disclosed in the statement of comprehensive income, but is instead intended to provide additional comparability and understanding of the financial results.

			£m
	Notes	Year ended 31 December 2024	Year ended 31 December 2023
Affluent		148	124
High Net Worth		48	41
Head Office		-	2
Adjusted profit before tax	6(b)	196	167
Adjusting items:
Impact of acquisition and disposal-related accounting	5(b)(i)	(40)	(39)
Business transformation costs	5(b)(ii)	(26)	(28)
Skilled Person Review	5(b)(iii)	(10)	-
Customer remediation exercise	5(b)(iv)	(76)	-
Other customer remediation	5(b)(v)	3	(6)
Exchange rate movements (ZAR/GBP)	5(b)(vi)	1	(2)
Policyholder tax adjustments	5(b)(vii)	(90)	(62)
Other adjusting items	5(b)(viii)	-	1
Finance costs	5(b)(ix)	(18)	(19)
Total adjusting items before tax		(256)	(155)
(Loss)/profit before tax attributable to shareholder returns		(60)	12
Income tax attributable to policyholder returns	7	95	76
IFRS profit before tax		35	88
Income tax expense	7	(69)	(46)
IFRS (loss)/profit after tax		(34)	42

5(b): Adjusting items

The adjustments made to the Group's IFRS profit before tax to calculate adjusted profit before tax are detailed below.

5(b)(i): Impact of acquisition and disposal-related accounting

The Group excludes any impairment of goodwill from adjusted profit as well as the amortisation and impairment of acquired intangible assets, finance costs related to the discounting of contingent consideration and incidental items relating to past disposals.

The effect of these adjustments to determine adjusted profit are summarised below.

			£m
		Year ended 31 December 2024	Year ended 31 December 2023
Amortisation of acquired intangible assets		38	38
Impairment of acquired intangible assets1		-	1
Amortisation of acquired adviser schemes		2	-
Total impact of acquisition and disposal-related accounting		40	39

¹The impairment of acquired intangible assets in 2023 resulted from the impairment of specific client books held within the Affluent operating segment as the Group could no longer support the carrying value.

5(b)(ii): Business transformation costs

In 2024, business transformation costs totalled £26 million (2023: £28 million), the principal components of which are described below:

Business Simplification costs - 2024: £24 million, 2023: £25 million

During 2024, the Group spent £24 million on delivering Simplification initiatives (2023: £25 million). The implementation costs to deliver the remaining £15 million of annualised run-rate savings for the programme are estimated to be £40 million.

Investment in business costs - 2024: £2 million, 2023: £1 million

Investment in business costs of £2 million (2023: £1 million) were incurred as the Group continues to enable and support advisers and clients and improve productivity through better utilisation of technology.

Business separation costs following the sale of Quilter International - 2024: £nil, 2023: £2 million

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, which ended in November 2023, was £nil for 2024 (2023: £2 million).

5(b)(iii): Skilled Person Review

Skilled Person Review costs of £10 million (2023: £nil) include the estimated external cost and direct cost of internal resources to support and perform the Skilled Person Review of historical data and practices across the Quilter Financial Planning network of Appointed Representative firms. This cost is excluded from adjusted profit as management considers it to be outside of the Group's normal operations and one-off in nature.

5(b)(iv): Customer remediation exercise

Customer remediation exercise costs of £76 million (2023: £nil) include the estimated redress payable to customers, comprising a refund of ongoing advice charges and interest payable for customers impacted, and administrative costs, which represent the costs to perform a potential customer remediation exercise across the Quilter Financial Planning network of Appointed Representative firms (see note 16). This cost is excluded from adjusted profit as management considers it to be outside of the Group's normal operations and one-off in nature.

5(b)(v): Other customer remediation

Lighthouse pension transfer advice provision - 2024: £3 million credit, 2023: £6 million cost

For 2023, the customer remediation expense of £6 million reflected £4 million of legal, consulting and other costs and a £2 million provision increase related to non-British Steel Pension Scheme redress payments. This was the result of the Group-managed past business review of defined benefit to defined contribution ("DB to DC") pension transfer advice suitability by an independent expert. For 2024, the provision for redress decreased by £3 million as a result of the redress calculations performed for customers being lower than forecast in 2023 due to the changes in assumptions used to perform the calculations and market movements of the pension scheme values during 2024. Further details of the provision are provided in note 16.

5(b)(vi): Exchange rate movements (ZAR/GBP)

In 2024, income of £1 million was recognised (2023: £2 million expense) due to foreign exchange movements on cash held in South African Rand in preparation for payments of dividends to shareholders. Cash was converted to South African Rand upon announcement of the dividend payments to provide an economic hedge for the Group. The foreign exchange movements are fully offset by an equal amount taken directly to retained earnings.

5(b)(vii): Policyholder tax adjustments

In 2024, the total amount of policyholder tax adjustments to adjusted profit is a credit of £90 million (2023: £62 million credit). 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 to fund the policyholder tax liability (which is included within the Group's income) can vary in timing to the recognition of the corresponding tax expense, creating volatility in the Group's IFRS profit or loss before tax. During 2024, the Group made changes to the Group's unit pricing policy relating to policyholder tax charges which will reduce the value of these timing differences in future periods. These changes, together with current year market movements, have resulted in the unwind of most of the opening timing difference.

5(b)(viii): Other adjusting items

In 2024, there were no other adjusting items. In 2023, £1 million of income was received in relation to the settlement offer for the indemnification asset that was impaired in 2022. 

5(b)(ix): Finance costs

The nature of much of the Group's operations means that, for management's decision-making and internal performance management, the effects of interest costs on external borrowings are removed when calculating adjusted profit. For 2024, finance costs were £18 million (2023: £19 million).

5(c): Reconciliation of IFRS income and expenses to "Total net revenue" and "Operating expenses" within adjusted profit

This reconciliation shows how each line of the Group's IFRS income and expenses are allocated to the Group's APMs: Net management fees, Other revenue, Investment revenue, Total net revenue and Operating expenses which form the Group's adjusted profit before tax. The total column in the table below, down to "Profit before tax attributable to shareholder returns", reconciles to each line of the consolidated statement of comprehensive income. Allocations are determined by management and aim to show the Group's sources of profit (net of relevant directly attributable expenses). These allocations remain consistent from year to year to ensure comparability, unless otherwise stated.

								£m
Year ended 31 December 2024	Net mgmt. fees1	Other revenue1	Investment revenue1	Total net revenue1	Operating expenses1	Adjusted profit before tax	Consol. of funds2	Total
Income
Fee income and other income from service activities	541	87	-	628	-	628	(84)	544
Investment return3	57	4,037	78	4,172	-	4,172	705	4,877
Other income	-	3	-	3	21	24	4	28
Total income	598	4,127	78	4,803	21	4,824	625	5,449
Expenses
Change in investment contract liabilities3	(26)	(4,032)	(7)	(4,065)	-	(4,065)	-	(4,065)
Fee and commission expenses and other acquisition costs	(50)	3	-	(47)	(1)	(48)	(1)	(49)
Change in third-party interests in consolidated funds	-	-	-	-	-	-	(587)	(587)
Other operating and administrative expenses	(15)	-	-	(15)	(639)	(654)	(37)	(691)
Finance costs	-	-	-	-	(21)	(21)	-	(21)
Total expenses	(91)	(4,029)	(7)	(4,127)	(661)	(4,788)	(625)	(5,413)
Impairment of investments in associates	-	-	-	-	(1)	(1)	-	(1)
Profit before tax	507	98	71	676	(641)	35	-	35
Income tax expense attributable to policyholder returns	(95)	-	-	(95)	-	(95)	-	(95)
Loss before tax attributable to shareholder returns	412	98	71	581	(641)	(60)	-	(60)
Adjusting items:
Impact of acquisition and disposal-related accounting	-	-	-	-	40	40
Business transformation costs	-	-	-	-	26	26
Skilled Person Review	-	-	-	-	10	10
Customer remediation exercise	-	-	-	-	76	76
Other customer remediation	-	-	-	-	(3)	(3)
Exchange rate movements (ZAR/GBP)	-	(1)	-	(1)	-	(1)
Policyholder tax adjustments	90	-	-	90	-	90
Finance costs	-	-	-	-	18	18
Adjusting items	90	(1)	-	89	167	256
Adjusted profit before tax	502	97	71	670	(474)	196

 ¹The APMs "Net management fees", "Other revenue", "Investment revenue", "Total net revenue" and "Operating expenses" are commented on within the Financial review.

²Consolidation of funds shows the grossing up impact to the Group's income and expenses as a result of the consolidation of funds requirements. This grossing up is excluded from the Group's adjusted profit.

³Reported within net management fees, investment return of £57 million represents £36 million interest income on investments held for the benefit of policyholders and £21 million net interest income on client money balances. Change in investment contract liabilities of £26 million represents the amount of interest income paid to policyholders. The net balance of £31 million represents interest income on customer balances retained by the Group for 2024. The £78 million investment return less £7 million change in investment contract liabilities paid to customers on transactional cash balances, as reported within investment revenue, represents £71 million of interest income on shareholder cash and cash equivalents.

 

								£m
Year ended 31 December 2023	Net mgmt. fees1	Other revenue1	Investment revenue1	Total net revenue1	Operating expenses1	Adjusted profit before tax	Consol. of funds2	Total
Income
Fee income and other income from service activities	527	86	-	613	-	613	(71)	542
Investment return3	48	3,285	68	3,401	-	3,401	674	4,075
Other income	-	-	-	-	9	9	-	9
Total income	575	3,371	68	4,014	9	4,023	603	4,626
Expenses
Change in investment contract liabilities3	(25)	(3,282)	(6)	(3,313)	-	(3,313)	-	(3,313)
Fee and commission expenses, and other acquisition costs	(46)	-	-	(46)	-	(46)	(3)	(49)
Change in third-party interests in consolidated funds	-	-	-	-	-	-	(579)	(579)
Other operating and administrative expenses	(13)	(5)	-	(18)	(536)	(554)	(21)	(575)
Finance costs	-	-	-	-	(22)	(22)	-	(22)
Total expenses	(84)	(3,287)	(6)	(3,377)	(558)	(3,935)	(603)	(4,538)
Profit before tax	491	84	62	637	(549)	88	-	88
Tax credit attributable to policyholder returns	(76)	-	-	(76)	-	(76)	-	(76)
Profit before tax attributable to shareholder returns	415	84	62	561	(549)	12	-	12
Adjusting items:
Impact of acquisition and disposal-related accounting	-	-	-	-	39	39
Business transformation costs	-	-	-	-	28	28
Other customer remediation	-	-	-	-	6	6
Exchange rate movements (ZAR/GBP)	-	2	-	2	-	2
Policyholder tax adjustments	62	-	-	62	-	62
Other adjusting items	-	-	-	-	(1)	(1)
Finance costs	-	-	-	-	19	19
Adjusting items	62	2	-	64	91	155
Adjusted profit before tax	477	86	62	625	(458)	167

¹The APMs "Net management fees", "Other revenue", "Investment revenue", "Total net revenue" and "Operating expenses" are commented on within the Financial review.

²Consolidation 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.

³Reported 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 represents interest income on customer balances 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.

6: Segment information

6(a): Segment presentation

The Group has two operating segments: High Net Worth and Affluent. The segments used for reporting purposes are consistent with the structure and management of the Group. Head Office includes certain revenues and central costs that are not allocated to the segments.

Adjusted profit before tax is an APM reported to the Group's management and the Board of Quilter plc. The segment information in this note reflects the adjusted and IFRS profit measures for each operating segment as provided to management and the 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. Income is analysed in further detail for each operating segment in note 6(b).

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.

High Net Worth

This segment comprises Quilter Cheviot and Quilter Cheviot Financial Planning.

Quilter Cheviot provides discretionary investment management, predominantly in the United Kingdom, with bespoke investment portfolios tailored to the individual needs of high‑net‑worth clients, charities, companies and institutions through a network of branches in London and the regions. Investment management services are also provided by operations in the Channel Islands and Ireland.

Quilter Cheviot Financial Planning provides financial advice for protection, mortgages, savings, investments and pensions predominantly to high‑net‑worth clients.

Affluent

This segment comprises Quilter Investment Platform, Quilter Investors, Quilter Financial Planning and NuWealth.

Quilter Investment Platform is a leading investment platform provider of advice-based wealth management products and services in the UK, which serves an affluent client base through advised multi-channel distribution.

Quilter Investors is a leading provider of investment solutions in the UK multi-asset market. It develops and manages investment solutions in the form of funds for the Group and third-party clients. It has several fund ranges which vary in breadth of underlying asset class. The investment management of the Quilter investors fund range has been delegated to Quilter Investment Platform from 1 January 2025.

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.

NuWealth is a developer of a fintech platform through which customers can build investment portfolios. The NuWealth platform provides access to savings and investments and is particularly beneficial for people starting to invest who are looking for additional help and guidance, with the option to work with a financial adviser later in their investment journey.

Head Office

In addition to the Group's two operating segments, Head Office comprises the investment return on centrally held assets, central support function expenses, central core structural borrowings and certain tax balances.

6(b): Adjusted profit statement - segment information

The table below presents the Group's operations split by operating segment, reconciling IFRS profit or loss to adjusted profit before tax. The Total column reconciles to the consolidated statement of comprehensive income.

						£m
		Operating segments
Year ended 31 December 2024	Notes	Affluent	High Net  Worth	Head Office	Consolidation adjustments1	Total
Income
Premium-based fees		70	19	-	-	89
Fund-based fees		343	184	-	(83)	444
Fixed fees		1	-	-	-	1
Other fee and commission income		10	-	-	-	10
Fee income and other income from service activities		424	203	-	(83)	544
Investment return2		4,131	21	31	694	4,877
Other income		98	2	1	(73)	28
Segment income		4,653	226	32	538	5,449
Expenses
Change in investment contract liabilities2		(4,065)	-	-	-	(4,065)
Fee and commission expenses and other acquisition costs		(49)	-	-	-	(49)
Change in third-party interests in consolidated funds		-	-	-	(587)	(587)
Other operating and administrative expenses		(484)	(217)	(29)	39	(691)
Finance costs		(2)	-	(29)	10	(21)
Segment expenses		(4,600)	(217)	(58)	(538)	(5,413)
Impairment of investments in associates		-	-	(1)	-	(1)
Profit/(loss) before tax		53	9	(27)	-	35
Income tax expense attributable to policyholder returns		(95)	-	-	-	(95)
(Loss)/profit before tax attributable to shareholder returns		(42)	9	(27)	-	(60)
Adjusting items:
Impact of acquisition and disposal-related accounting	5(b)(i)	9	31	-	-	40
Business transformation costs	5(b)(ii)	8	8	10	-	26
Skilled Person Review	5(b)(iii)	10	-	-	-	10
Customer remediation exercise	5(b)(iv)	76	-	-	-	76
Other customer remediation	5(b)(v)	(3)	-	-	-	(3)
Exchange rate movements (ZAR/GBP)	5(b)(vi)	-	-	(1)	-	(1)
Policyholder tax adjustments	5(b)(vii)	90	-	-	-	90
Finance costs	5(b)(ix)	-	-	18	-	18
Adjusting items before tax		190	39	27	-	256
Adjusted profit before tax		148	48	-	-	196

¹Consolidation adjustments comprise the elimination of inter-segment transactions and the consolidation of investment funds.

²Investment return and change in investment contract liabilities includes net £31 million of interest income on customer cash and cash equivalents retained by the Group. Investment return total also includes £71 million of interest income on shareholder cash and cash equivalents.

 

						£m
		Operating segments
Year ended 31 December 2023	Notes	Affluent	High          Net Worth	Head Office	Consolidation adjustments1	Total
Income
Premium-based fees		66	20	-	-	86
Fund-based fees		336	172	-	(71)	437
Fixed fees		1	-	-	-	1
Other fee and commission income		18	-	-	-	18
Fee income and other income from service activities		421	192	-	(71)	542
Investment return2		3,361	19	28	667	4,075
Other income		88	1	-	(80)	9
Segment income		3,870	212	28	516	4,626
Expenses
Change in investment contract liabilities2		(3,313)	-	-	-	(3,313)
Fee and commission expenses, and other acquisition costs		(47)	-	-	(2)	(49)
Change in third-party interests in consolidated funds		-	-	-	(579)	(579)
Other operating and administrative expenses		(387)	(205)	(41)	58	(575)
Finance costs		(3)	-	(26)	7	(22)
Segment expenses		(3,750)	(205)	(67)	(516)	(4,538)
Profit/(loss) before tax		120	7	(39)	-	88
Tax credit attributable to policyholder returns		(76)	-	-	-	(76)
Profit/(loss) before tax attributable to shareholder returns		44	7	(39)	-	12
Adjusting items:
Impact of acquisition and disposal-related accounting	5(b)(i)	7	32	-	-	39
Business transformation costs	5(b)(ii)	5	3	20	-	28
Other customer remediation	5(b)(v)	6	-	-	-	6
Exchange rate movements (ZAR/GBP)	5(b)(vi)	-	-	2	-	2
Policyholder tax adjustments	5(b)(vii)	62	-	-	-	62
Other adjusting items	5(b)(viii)	-	(1)	-	-	(1)
Finance costs	5(b)(ix)	-	-	19	-	19
Adjusting items before tax		80	34	41	-	155
Adjusted profit before tax		124	41	2	-	167

¹Consolidation adjustments comprise the elimination of inter-segment transactions and the consolidation of investment funds.

²Investment return and change in investment contract liabilities includes net £23 million of interest income on customer cash and cash equivalents retained by the Group. Investment return total also includes £62 million of interest income on shareholder cash and cash equivalents.

7: Tax

7(a): Tax charged

			£m
		Year ended 31 December 2024	Year ended 31 December 2023
Current tax
United Kingdom		67	2
Overseas tax		1	-
Adjustments to current tax in respect of prior periods		(10)	-
Total current tax charge		58	2
Deferred tax
Origination and reversal of temporary differences		3	52
Effect on deferred tax of changes in tax rates		-	(3)
Adjustments to deferred tax in respect of prior periods		8	(5)
Total deferred tax charge		11	44
Total tax charged		69	46
Attributable to policyholder returns		95	76
Attributable to shareholder returns		(26)	(30)
Total tax charged		69	46

 

Policyholder tax

Certain products are subject to tax on policyholders' investment returns. This "policyholder tax" is an element of total tax expense. To make the tax expense more meaningful, tax attributable to policyholder returns and tax attributable to shareholder returns are shown separately in the consolidated statement of comprehensive income.

The tax attributable to policyholder returns is the amount payable in the year plus the movement of amounts expected to be payable in future years. The remainder of the tax expense is attributed to shareholder returns.

The Group's income tax charge was £69 million in 2024 (2023: £46 million tax charge). The income tax charge 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) has historically been volatile due to timing differences between the recognition of policy deductions and credits and the corresponding policyholder tax expense, resulting in the need for significant adjustments to the adjusted profit to remove these distortions. The Group has made changes to the Group's unit pricing policy during 2024 relating to policyholder tax charges which will reduce future volatility in these timing differences. These changes are expected to reduce the value of adjustments made to future periods adjusted profit, set out in note 5(b)(vii).

Market movements for the year ended 31 December 2024 resulted in investment gains of £342 million on products subject to policyholder tax. The gain is a component of the total "investment return" gain of £4,877 million shown in the consolidated statement of comprehensive income. The tax impact of the £342 million investment return gain is a significant element of the £95 million tax charge attributable to policyholder returns in 2024 (2023: £76 million charge).

First time recognition of deferred tax assets on tax losses

Within the £11 million total deferred tax charge, the Group has recognised £10 million shareholder deferred tax credit in respect of previously unrecognised losses.

Pillar II taxes

Pillar II legislation has been substantively enacted in the UK, introducing a 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 the Group's financial year beginning 1 January 2024. The Group has applied the exemption under IAS 12.4A and accordingly will not recognise or disclose information about deferred tax assets and liabilities related to Pillar II income taxes.

The assessment of the exposure to Pillar II income taxes has shown that the majority of the Group's profits arise in countries with tax rates above 15%. The position in respect of these rules in each of the Group's main territories is summarised below.

UK

The Group has assessed that its Pillar II UK effective tax rate exceeds the 15% minimum rate and therefore there is no additional liability in relation to the UK.

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), and accordingly no additional tax charge is due 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 10% and therefore a MTT liability of £0.1 million in relation to Jersey profits arises in the UK during 2024. This does not have a material impact on the Group's tax charge.

Jersey, Guernsey and the Isle of Man

The three Crown Dependencies have enacted or are due to enact legislation to introduce a domestic minimum tax with effect from 1 January 2025. The Group does not therefore expect to pay an additional local tax in these countries during 2024. The Group expects to pay a MTT in the UK in respect of any 2024 taxable profits arising in these countries (see above).

Ireland

Ireland has introduced a qualifying domestic minimum tax. This has been substantively enacted, effective for the Group's financial year beginning 1 January 2024. The Group's effective tax rate in Ireland is 19% and therefore no additional tax arises in Ireland in 2024.

Other

The Group has assessed there are no material Pillar II tax charge in any other countries in which it had a presence during 2024.

7(b): Reconciliation of total income tax expense

The income tax credited or charged to profit or loss differs from the amount that would apply if all of the Group's profits from all the countries in which the Group operates had been taxed at the UK standard Corporation Tax rate. The difference in the effective rate is explained below:

			£m
		Year ended 31 December 2024	Year ended 31 December 2023
Profit before tax		35	88
Tax at UK standard rate of 25% (2023: 23.5%)		9	21
Untaxed and low taxed income		(1)	(1)
Expenses not deductible for tax purposes		1	2
Adjustments to current tax in respect of prior years		(10)	-
Net movements on unrecognised deferred tax assets		(10)	(29)
Effect of changes in tax rates on deferred tax		-	(3)
Adjustments to deferred tax in respect of prior periods		8	(5)
Income tax attributable to policyholder returns (net of tax relief)		72	61
Total tax charged to profit or loss		69	46

 

7(c): Reconciliation of IFRS income tax credit or expense to income tax on adjusted profit

			£m
	Note	Year ended 31 December 2024	Year ended 31 December 2023
Income tax expense1		69	46
Tax on adjusting items
Impact of acquisition and disposal-related accounting		10	9
Business transformation costs		7	7
Skilled Person Review		2	-
Customer remediation exercise		19	-
Other customer remediation		(1)	1
Finance costs		4	4
Exchange rate movements (ZAR/GBP)		-	1
Tax adjusting items
Policyholder tax adjustments	5(b)(vii)	(90)	(62)
Other shareholder tax adjustments2		33	46
Tax on adjusting items		(16)	6
Less: tax attributable to policyholder returns within adjusted profit3		(5)	(14)
Tax charged on total adjusted profit		48	38

¹Includes both tax attributable to policyholder and shareholder returns, in compliance with IFRS.

²Other 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.

³Adjusted profit treats policyholder tax as a pre-tax expense (this includes policyholder tax under IFRS and the policyholder tax adjustments) and is therefore removed from the tax charge on adjusted profit.

8: Earnings per share

The Group calculates earnings per share ("EPS") on a number of different bases. IFRS requires the calculation of basic and diluted EPS. Adjusted EPS reflects earnings that are consistent with the Group's adjusted profit measure and Headline earnings per share ("HEPS") is a requirement of the Johannesburg Stock Exchange.

8(a): Weighted average number of Ordinary Shares

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

			Million
		Year ended 31 December 2024	Year ended 31 December 2023
Weighted average number of Ordinary Shares		1,404	1,404
Own shares including those held in consolidated funds and employee benefit trusts		(60)	(54)
Basic weighted average number of Ordinary Shares		1,344	1,350
Adjustment for dilutive share awards and options		48	24
Diluted weighted average number of Ordinary Shares		1,392	1,374

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

			£m
	Notes	Year ended 31 December 2024	Year ended 31 December 2023
(Loss)/profit after tax		(34)	42
Total adjusting items before tax	5(a)	256	155
Tax on adjusting items	7(c)	16	(6)
Less: policyholder tax adjustments	7(c)	(90)	(62)
Adjusted profit after tax		148	129

 

			Pence
	Post-tax profit measure used	Year ended 31 December 2024	Year ended 31 December 2023
Basic EPS	IFRS profit	(2.5)	3.1
Diluted EPS1	IFRS profit	(2.5)	3.1
Adjusted basic EPS	Adjusted profit	11.0	9.6
Adjusted diluted EPS	Adjusted profit	10.6	9.4

¹The adjustment for share awards and options would be antidilutive and as such has not been included in the calculation of diluted EPS in accordance with the requirements of IFRS.

8(c): Headline earnings per share

	+	+		£m
	Year ended 31 December 2024		Year ended 31 December 2023
	Gross	Net of tax	Gross	Net of tax
(Loss)/profit		(34)		42
Adjusted for:
- add back of impairment of investments in associates	1	1	-	-
- add back of impairment loss on intangible assets	-	-	1	1
Headline earnings		(33)		43
Headline basic EPS (pence)		(2.5)		3.2
Headline diluted EPS (pence)1		(2.5)		3.1

¹The adjustment for share awards and options would be antidilutive and as such has not been included in the calculation of diluted HEPS in accordance with the requirements of The South African Institute of Chartered Accountants Circular 1/2023.

9: Goodwill and intangible assets

9(a): Analysis of goodwill and intangible assets

The table below shows the movements in cost and amortisation of goodwill and intangible assets.

				£m
	Goodwill	Other intangible assets	Software	Total
Gross amount
1 January 2023	306	425	30	761
Disposals	-	-	(21)	(21)
31 December 2023	306	425	9	740
Acquisitions through business combinations1	1	-	7	8
31 December 2024	307	425	16	748
Accumulated amortisation and impairment losses
1 January 2023	-	(324)	(24)	(348)
Amortisation charge for the year	-	(38)	(2)	(40)
Disposals	-	-	21	21
Impairment of other intangibles	-	(1)	-	(1)
31 December 2023	-	(363)	(5)	(368)
Acquisitions through business combinations1	-	-	(1)	(1)
Amortisation charge for the year	-	(38)	(2)	(40)
31 December 2024	-	(401)	(8)	(409)
Carrying amount
31 December 2023	306	62	4	372
31 December 2024	307	24	8	339

¹Relates to the acquisition of NuWealth Limited as explained in note 4. Total gross amount includes £1 million goodwill and £7 million software, which consists of £2 million of NuWealth's net assets and £5 million recognised by the Group on acquisition of the business. Total accumulated amortisation of £1 million relates to software in NuWealth's net assets.

9(b): Analysis of other intangible assets and software

	31 December      2024	31 December    2023	Average estimated useful life	Average period remaining
	£m	£m
Net carrying value
Other intangible assets
Distribution channels - Quilter Financial Planning	1	2	8 years	< 1 year
Customer relationships
Quilter Cheviot	4	32	10 years	< 1 year
Quilter Financial Planning	12	17	8 years	2 years
Quilter Cheviot Financial Planning	7	10	8 years	2 years
Other	-	1	7 years	-
	24	62
Software
NuWealth	6	-	5 years	5 years
Quilter Financial Planning	2	4	5 years	1 year
	8	4
Total other intangible assets and software	32	66

 

9(c): Allocation of goodwill to cash-generating units ("CGUs") and consideration of the need for an impairment review

Goodwill is monitored by management at the level of the Group's two operating segments: Affluent and High Net Worth. Both operating segments represent a group of CGUs.

		£m
	31 December 2024	31 December 2023
Goodwill (net carrying amount)
Affluent	224	223
High Net Worth	83	83
Total goodwill	307	306

Consideration of the need for an impairment review

Goodwill in both the Affluent and High Net Worth CGU groups is tested for impairment annually, or earlier if an indicator of impairment exists, by comparing the carrying value of the CGU group to which the goodwill relates to the recoverable value of that CGU group, being the higher of that CGU group's value-in-use or fair value less costs to sell. If applicable, an impairment charge is recognised when the recoverable amount is less than the carrying value. Goodwill impairment indicators include sudden stock market falls, the absence of positive Net Client Cash Flows ("NCCF"), significant falls in profits and significant increases in the discount rate.

The goodwill balance has been tested for impairment at 31 December 2024 and continues to demonstrate a surplus of the recoverable amount over the carrying value of the CGUs. As a result, no impairment is required.

The following table shows the percentage change required in each key assumption before the carrying value would exceed the recoverable amount, assuming all other variables remain the same. This highlights that further adverse movements in the key assumptions used in the CGU value-in-use calculation would be required before an impairment would need to be recognised.

	Affluent	High Net Worth
Reduction in forecast cash flows	65%	81%
Percentage point increase in the discount rate	42%	48%

Forecast cash flows are impacted by movements in underlying assumptions, including equity market levels, revenue margins and NCCF. The Group considers that forecast cash flows are most sensitive to movements in equity markets because they have a direct impact on the level of the Group's fee income.

The principal sensitivity within equity market level assumptions relates to the estimated growth in equity market indices included in the three-year cash flow forecasts. Management forecasts equity market growth for each business using estimated asset-specific growth rates that are supported by internal research, historical performance, Bank of England forecasts and other external estimates.

The Group has considered and assessed reasonably possible changes for other key assumptions and has not identified any other instances that could cause the carrying amount of CGUs to exceed its recoverable amount.

Value-in-use methodology

The cash flows 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, investments, advice and distribution, and their impact on specific projects and initiatives, estimates and judgements. After 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% (31 December 2023: 2.0%).

The Group uses a single cost of capital (post tax) of 9.0% (31 December 2023: 10.0%) 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 group of CGUs represents. Capital is provided to the Group predominantly by shareholders with a relatively small amount of debt financing.

10: Financial investments

The table below analyses the investments and securities that the Group invests in, either on its own proprietary behalf (shareholder funds) or on behalf of third parties (policyholder funds).

		£m
	31 December 2024	31 December 2023
Government and government-guaranteed securities	171	202
Other debt securities, preference shares and debentures	2,644	2,175
Equity securities	11,034	8,488
Pooled investments	45,510	39,462
Short-term funds and securities treated as investments	-	1
Other	1	1
Total financial investments	59,360	50,329

The financial investments are recoverable within 12 months, apart from £6 million (2023: £nil) which is recoverable after 12 months. The financial investments recoverability profile is based on the intention with which the financial assets are held. The assets held on behalf of policyholders cover the liabilities for linked investment contracts, all of which can be withdrawn by policyholders on demand.

11: Categories of financial instruments

The analysis of financial assets and liabilities into categories as defined in IFRS 9 Financial Instruments is set out in the following tables. Assets and liabilities of a non-financial nature, or financial assets and liabilities that are specifically excluded from the scope of IFRS 9, are reflected in the non‑financial assets and liabilities category.

For information about the methods and assumptions used in determining fair value, refer to note 12. The Group's exposure to various risks associated with financial instruments is discussed in note 18.

31 December 2024
					£m
Measurement basis	Fair value
	Mandatorily at FVTPL	Designated at FVTPL	Amortised cost	Non-financial assets and liabilities	Total
Assets
Loans and advances	-	-	56	-	56
Financial investments	59,359	1	-	-	59,360
Trade, other receivables and other assets	-	-	370	48	418
Derivative assets	26	-	-	-	26
Cash and cash equivalents	1,215	-	734	-	1,949
Total assets that include financial instruments	60,600	1	1,160	48	61,809
Total other non-financial assets	-	-	-	639	639
Total assets	60,600	1	1,160	687	62,448
Liabilities
Investment contract liabilities	-	51,758	-	-	51,758
Third-party interests in consolidated funds	8,225	-	-	-	8,225
Borrowings and lease liabilities	-	-	275	-	275
Trade, other payables and other liabilities	-	1	399	106	506
Derivative liabilities	53	-	-	-	53
Total liabilities that include financial instruments	8,278	51,759	674	106	60,817
Total other non-financial liabilities	-	-	-	208	208
Total liabilities	8,278	51,759	674	314	61,025

 

31 December 2023
					£m
Measurement basis	Fair value
	Mandatorily at FVTPL	Designated at FVTPL	Amortised cost	Non-financial assets and liabilities	Total
Assets
Loans and advances	-	-	38	-	38
Financial investments	50,329	-	-	-	50,329
Trade, other receivables and other assets	-	-	404	43	447
Derivative assets	57	-	-	-	57
Cash and cash equivalents	1,091	-	768	-	1,859
Total assets that include financial instruments	51,477	-	1,210	43	52,730
Total other non-financial assets	-	-	-	615	615
Total assets	51,477	-	1,210	658	53,345
Liabilities
Investment contract liabilities	-	43,396	-	-	43,396
Third-party interests in consolidated funds	7,444	-	-	-	7,444
Borrowings and lease liabilities	-	-	279	-	279
Trade, other payables and other liabilities	1	-	476	93	570
Derivative liabilities	25	-	-	-	25
Total liabilities that include financial instruments	7,470	43,396	755	93	51,714
Total other non-financial liabilities	-	-	-	112	112
Total liabilities	7,470	43,396	755	205	51,826

12: Fair value methodology

This section explains the judgements and estimates made in determining the fair values of financial instruments that are recognised and measured at fair value in the financial statements. Classifying financial instruments into the three levels of the fair value hierarchy (see note 12(b)) provides an indication of the reliability of inputs used in determining fair value.

12(a): Determination of fair value

The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market exit prices for assets and offer prices for liabilities, at the close of business on the reporting date, without any deduction for transaction costs:

·      for units in unit trusts and shares in open-ended investment companies, fair value is determined by reference to published quoted prices representing exit values in an active market;

·      for equity and debt securities not actively traded in organised markets and where the price cannot be retrieved, the fair value is determined by reference to similar instruments for which market observable prices exist;

·      for assets that have been suspended from trading on an active market, the last published price is used. Many suspended assets are still regularly priced. At the reporting date, all suspended assets are assessed for impairment; and

·      where the assets are private equity investments or within consolidated investment funds, the valuation is based on the latest available set of audited financial statements, or if more recent is available, reports from Investment Managers or professional valuation experts on the value of the underlying assets of the private equity investment or fund.

There have been no significant changes in the valuation techniques applied when valuing financial instruments. Where assets are valued by the Group, the general principles applied to those instruments measured at fair value are outlined below:

Financial investments

Financial investments include government and government-guaranteed securities, listed and unlisted debt securities, preference shares and debentures, listed and unlisted equity securities, listed and unlisted pooled investments (see below), short-term funds and securities treated as investments and certain other securities.

Pooled investments represent the Group's holdings of shares/units in open-ended investment companies, unit trusts, mutual funds and similar investment vehicles. Pooled investments are recognised at fair value. The fair values of pooled investments are based on widely published prices that are regularly updated.

Other financial investments that are measured at fair value use observable market prices where available. In the absence of observable market prices, these investments and securities are fair valued using various approaches including valuations based on discounted cash flows and earnings before interest, tax, depreciation and amortisation multiples.

Derivatives

The fair value of derivatives is determined with reference to the exchange-traded prices of the specific instruments. The fair value of over-the-counter forward foreign exchange contracts is determined by reference to the relevant exchange rates.

Investment contract liabilities

The fair value of the investment contract liabilities is determined with reference to the underlying funds that are held by the Group.

Third-party interests in consolidated funds

Third-party interests in consolidated funds are measured at the attributable net asset value of each fund.

12(b): Fair value hierarchy

Fair values are determined according to the following hierarchy:

Description of hierarchy	Types of instruments classified in the respective levels
Level 1 - quoted market prices: financial assets and liabilities with quoted 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 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 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.

The judgement as to whether a market is active may include, for example, consideration of factors such as the magnitude and frequency of trading activity, the availability of prices and the size of bid/offer spreads. In inactive markets, obtaining assurance that the transaction price provides evidence of fair value or determining the adjustments to transaction prices that are necessary to measure the fair value of the asset or liability requires additional work during the valuation process.

The majority of valuation techniques employ only observable data and so the reliability of the fair value measurement is high. Certain financial assets and liabilities are valued on the basis of valuation techniques that feature one or more significant inputs that are unobservable and, for them, the derivation of fair value is more judgemental. A financial asset or liability in its entirety is classified as valued using significant unobservable inputs if a significant proportion of that asset or liability's carrying amount is driven by unobservable inputs.

In this context, 'unobservable' means that there is little or no current market data available from which to determine the price at which an arm's length transaction would be likely to occur. It generally does not mean that there is no market data available at all upon which to base a determination of fair value. Furthermore, in some cases the majority of the fair value derived from a valuation technique with significant unobservable data may be attributable to observable inputs.

12(c): Transfer between fair value hierarchies

The Group deems a transfer to have occurred between Level 1 and Level 2 or Level 3 when an actively traded primary market ceases to exist for that financial instrument. A transfer between Level 2 and Level 3 occurs when one or more of the significant inputs used to determine the fair value of the instrument become unobservable. Transfers from Levels 3 or 2 to Level 1 are also possible when assets become actively priced.

There were no transfers of financial investments between Level 1 and Level 2 during the year to 31 December 2024 (31 December 2023: £nil).

See note 12(e) for the reconciliation of Level 3 financial instruments.

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

The majority of the Group's financial assets are measured using quoted market prices for identical instruments in active markets (Level 1) and there have been no significant changes during the year.

The linked assets are held to cover the liabilities for linked investment contracts. The difference between the value of linked assets and that of linked liabilities is mainly due to short-term timing differences between policyholder premiums being received and invested in advance of policies being issued, and tax liabilities within funds which are reflected within the Group's tax liabilities.

Differences between assets and liabilities within the respective levels of the fair value hierarchy also arise due to the mix of underlying assets and liabilities within consolidated funds. In addition, third-party interests in consolidated funds are classified as Level 2.

The tables below analyse the Group's financial assets and liabilities measured at fair value by the fair value hierarchy described in note 12(b).

				£m
31 December 2024	Level 1	Level 2	Level 3	Total
Financial investments	49,052	10,292	16	59,360
Cash and cash equivalents	1,215	-	-	1,215
Derivative assets	-	26	-	26
Total financial assets measured at fair value through profit or loss	50,267	10,318	16	60,601
Third-party interests in consolidated funds	-	8,225	-	8,225
Derivative liabilities	-	53	-	53
Investment contract liabilities	51,745	-	13	51,758
Other liabilities	-	1	-	1
Total financial liabilities measured at fair value through profit or loss	51,745	8,279	13	60,037
				£m
31 December 2023	Level 1	Level 2	Level 3	Total
Financial investments	41,691	8,605	33	50,329
Cash and cash equivalents	1,091	-	-	1,091
Derivative assets	-	57	-	57
Total financial assets measured at fair value through profit or loss	42,782	8,662	33	51,477
Third-party interests in consolidated funds	-	7,444	-	7,444
Derivative liabilities	-	25	-	25
Investment contract liabilities	43,372	-	24	43,396
Other liabilities	-	1	-	1
Total financial liabilities measured at fair value through profit or loss	43,372	7,470	24	50,866

12(e): Level 3 fair value hierarchy disclosure

The majority of the assets classified as Level 3 are held within linked policyholder funds. Where this is the case, all of the investment risk associated with these assets is borne by policyholders and the value of these assets is exactly matched by a corresponding liability due to policyholders. The Group bears no risk from a change in the market value of these assets except to the extent that it has an impact on management fees earned.

Level 3 assets also include investments within consolidated funds attributable to the third-party interest in those funds. The Group bears no risk from a change in the market value of these assets except to the extent that it has an impact on management fees earned. Any changes in market value are matched by a corresponding Level 2 liability within third-party interests in consolidated funds.

The table below reconciles the opening balance of Level 3 financial assets to the closing balance at each year end:

		£m
	2024	2023
At beginning of the year	33	29
Fair value gains/(losses) credited/(charged) to profit or loss1	4	(1)
Sales	(17)	(1)
Transfers in	8	27
Transfers out	(12)	(21)
Total Level 3 financial assets at the end of the year	16	33
Unrealised fair value (losses)/gains recognised in profit or loss relating to assets held at the year end	(3)	2

¹Included in Investment return.

All of the assets that are classified as Level 3 are suspended funds for 2023 and 2024.

Transfers into Level 3 assets in the current year total £8 million (2023: £27 million). This is mainly due to funds from Level 1 being suspended and moved to Level 3. Suspended funds are valued based on external valuation reports received from fund managers. Transfers out of Level 3 assets in the current year of £12 million (2023: £21 million) result from a transfer to Level 1 assets relating to assets that are now being actively repriced (that were previously stale) and where fund suspensions have been lifted.

The table below reconciles the opening balance of Level 3 financial liabilities to the closing balance at each year end:

		£m
	2024	2023
At beginning of the year	24	25
Fair value gains credited to profit or loss1	(2)	-
Transfers in	-	20
Transfers out	(9)	(21)
Total Level 3 financial liabilities at the end of the year	13	24
Unrealised fair value losses recognised in profit or loss relating to liabilities at the year end	(2)	-

¹Included in Investment return.

12(f): Effect of changes in significant unobservable assumptions to reasonable alternatives

Details of the valuation techniques applied to the different categories of financial instruments can be found in note 12(a) above, including the valuation techniques applied when significant unobservable assumptions are used to value Level 3 assets.

For Level 3 assets and liabilities, no reasonable alternative assumptions are applicable and the Group therefore performs a sensitivity test of an aggregate 10% (2023: 10%), which is a reasonably possible change in the value of the financial asset or liability. It is therefore considered that the impact of this sensitivity will be in the range of £2 million (2023: £3 million) to the reported fair value of Level 3 assets, and £1 million (2023: £3 million) to the reported fair value of Level 3 liabilities, both favourable and unfavourable.

12(g): Fair value hierarchy for assets and liabilities not measured at fair value

Certain financial instruments of the Group are not carried at fair value. The carrying values of these are considered reasonable approximations of their respective fair values as they are either short term in nature or are repriced to current market rates at frequent intervals.

13: Cash and cash equivalents

13(a): Analysis of cash and cash equivalents

			£m
		31 December 2024	31 December 2023
Cash at bank		369	444
Money market funds		1,215	1,091
Cash and cash equivalents in consolidated funds		365	324
Total cash and cash equivalents per statement of cash flows		1,949	1,859

The Group's management does not consider that the cash and cash equivalents balance arising due to consolidation of funds of £365 million (2023: £324 million) is available for use in the Group's day-to-day operations. The remainder of the Group's cash and cash equivalents balance of £1,584 million (2023: £1,535 million) is considered to be available for general use by the Group for the purposes of the disclosures required under IAS 7 Statement of Cash Flows. This balance includes policyholder cash as well as cash and cash equivalents held by regulated subsidiaries to meet their capital and liquidity requirements.  

13(b): Analysis of net cash flows from operating activities:

			£m
	Notes	Year ended 31 December 2024	Year ended 31 December 2023
Cash flows from operating activities
Profit before tax		35	88
Adjustments for
Depreciation of property, plant and equipment		11	12
Depreciation of investment property		1	-
Movement on contract costs		(8)	(6)
Amortisation and impairment of intangibles		40	41
Fair value and other movements in financial assets		(3,891)	(3,200)
Fair value movements in investment contract liabilities	15	3,153	2,528
Other changes in investment contract liabilities		5,209	2,682
Other movements		41	47
		4,556	2,104
Net changes in working capital
Decrease/(increase) in derivatives position		59	(12)
Increase in loans and advances		(18)	(4)
Increase/(decrease) in provisions	16	65	(23)
Movement in other assets and other liabilities		(43)	(16)
		63	(55)
Taxation paid		(69)	(26)
Net cash flows from operating activities		4,585	2,111

14: Ordinary Share capital

At 31 December 2023 and 31 December 2024, the Company's equity capital comprises 1,404,105,498 Ordinary Shares of 8 1/6 pence each with an aggregated nominal value of £114,668,616. All Ordinary Shares have been called up and fully paid.

All Ordinary Shares issued carry equal voting rights. The holders of the Company's Ordinary Shares are entitled to receive dividends as declared and are entitled to one vote per share at shareholder meetings of the Company.

15: Investment contract liabilities

The following table provides a summary of the Group's investment contract liabilities:

		£m
	2024	2023
Carrying amount at 1 January	43,396	38,186
Fair value movements	3,153	2,528
Investment income	912	785
Movements arising from investment return	4,065	3,313
Contributions received	8,222	5,358
Withdrawals and surrenders	(3,661)	(3,212)
Claims and benefits	(260)	(245)
Other movements	(4)	(4)
Change in liability	8,362	5,210
Investment contract liabilities at end of the year	51,758	43,396

For unit-linked investment contracts, movements in asset values are offset by corresponding changes in liabilities, limiting the net impact on profit.

The benefits offered under the unit-linked investment contracts are based on the risk appetite of policyholders and the return on their selected investments and collective fund investments, whose underlying investments include equities, debt securities, property and derivatives. This investment mix is unique to each individual policyholder.

For unit-linked business, the unit liabilities are determined as the value of units credited to policyholders. Since these liabilities are determined on a retrospective basis, no assumptions for future experience are required. Assumptions for future experience are required for unit-linked business in assessing whether the total of the contract costs asset and contract liability is greater than the present value of future profits expected to arise on the relevant blocks of business (the "recoverability test"). If this is the case, then the contract costs asset is restricted to the recoverable amount. For linked contracts, the assumptions are on a best estimate basis.

16: Provisions

						£m
Year ended 31 December 2024	Customer remediation exercise provision	Compensation provisions	Sale of subsidiaries provision	Property provisions	Clawback and other provisions	Total
Balance at beginning of the year	-	17	3	10	16	46
Charge to profit or loss	76	10	-	-	4	90
Used during the year	-	(5)	(2)	(2)	(6)	(15)
Unused amounts reversed	-	(8)	-	(1)	(1)	(10)
Balance at 31 December 2024	76	14	1	7	13	111
						£m
Year ended 31 December 2023	Customer remediation exercise provision	Compensation provisions	Sale of subsidiaries provision	Property provisions	Clawback and other provisions	Total
Balance at beginning of the year	-	23	15	12	19	69
Charge to profit or loss	-	17	-	-	6	23
Used during the year	-	(14)	(12)	(2)	(8)	(36)
Unused amounts reversed	-	(9)	-	-	(1)	(10)
Balance at 31 December 2023	-	17	3	10	16	46

Customer remediation exercise provision

Based on the results to date of the Skilled Person Review, which is not yet complete, together with other evidence available, the Group considers that a customer remediation exercise in relation to ongoing advice will likely be required. As such, a present obligation exists and a provision of £76 million has been recognised at 31 December 2024 (31 December 2023: £nil) relating to potential remediation following the review of the delivery of ongoing advice services by the Appointed Representative firms in the Quilter Financial Planning network. A reasonable estimate of the provision has been determined based upon a potential customer remediation exercise, whereby the population of customers who are at the highest likelihood of having not received the expected level of service from their adviser would be identified. These customers would be invited to join the Review if they believe that they have not received ongoing advice and if they wish to have their situation reviewed by Quilter. Appropriate and proportionate redress would be paid to impacted customers. Following the initial draft results of the statistically reliable representative cohort of customers undertaken by the Skilled Person, together with other available evidence, the Group has determined a reasonable estimate of a provision for potential cost to settle the obligation based upon this approach, considering uncertainties and based upon key assumptions. The draft results from the Skilled Person Review have been extrapolated from their sample to the population of all customers who paid an ongoing advice charge between 2018 and 2023 (inclusive of both years). An independent expert has reviewed the results of the Skilled Person Review on a sample basis to determine, based on the available evidence, the cases where the expected level of service from their adviser may not have been received, and these results have been considered in determining the provision. An estimate of the response rate of customers to join the Review, and of the associated administrative costs, has been determined based upon experience from previous past business reviews performed by the Group, and assumptions on the number of customers who may be subject to the review process.

The provision recognised, based upon the approach described above, includes an estimate of the refund of ongoing advice charges for customers impacted, interest payable to customers at rates in line with the Financial Ombudsman Service interest rates, and administrative costs, both internal and external, to perform the potential customer remediation exercise. Customer redress is expected to be calculated and paid to relevant customers over a two-year period to December 2026. Of the total £76 million provision outstanding, £33 million is estimated to be payable within one year. Where amounts are estimated to be payable after 12 months, these payments have been discounted to their present value. The discount rate used is not a significant estimate given the short time period over which payments are expected to be made.

The following table presents the potential change to the provision balance at 31 December 2024 as a result of movements in the key assumptions:

							£m
							31 December 2024
						Increase		Decrease
Percentage point change in proportion of population where satisfactory service evidence is unavailable of 10%						16		(16)
Percentage point change in response rate of 10%						14		(14)
Change in administrative costs of 10%						3		(3)

Significant uncertainty exists regarding the scope and method of a potential remediation exercise, which will be informed by the final results of the Skilled Person Review and follow further discussions with the FCA, including the customer cohorts to be involved within the Review and the customer and Appointed Representative firm contact strategies, the proportion of the population of customers charged a fee where satisfactory evidence of servicing is unavailable, the response rate of customers contacted and the administrative costs. The financial impact could be materially higher or lower than the amount of the provision.

Separate to the Skilled Person Review and the related provision for the potential customer remediation exercise, where the Group's regular adviser oversight controls have determined, based on the available evidence, that a customer may not have received the servicing that they have paid for, or where the Group has received complaints from customers regarding ongoing servicing, this has been investigated, and, where appropriate, remediation has been undertaken and recognised as a normal business as usual expense.

Compensation provisions

At 31 December 2024, compensation provisions total £14 million (31 December 2023: £17 million). The net reduction of £3 million during the year consists of additional charges to profit or loss of £10 million, compensation and professional fees payments of £5 million and £8 million release of unused amounts following further review work completed during the year. Compensation provisions comprise the following:

Lighthouse pension transfer advice provision of £1 million (31 December 2023: £6 million)

A further review of a sample of Lighthouse DB to DC pension transfer advice cases not relating to the British Steel Pension Scheme is being conducted by an independent expert to identify any cases of unsuitable DB to DC pension transfer advice. The review is being conducted under a Group managed past business review process, and the sample has been selected on a risk-based approach. The review of this sample has identified some additional cases where customer redress is required. Until the review of the relevant sample has been completed, uncertainty exists as to the number of cases where this will be required and the value of total redress which may be payable. A provision for redress relating to the review of this further sample of cases was increased at 31 December 2023, based upon the suitability review of cases, and the anticipated number of cases required to be reviewed. Payments of £1 million were made to customers during 2023. Anticipated costs associated with the redress activity of £2 million were included within the provision at 31 December 2023.

During 2024, redress payments of £1 million were made to customers, £1 million of professional fees were paid, and £3 million of the provision related to customer redress was unused and reversed, as a result of the redress calculations performed for customers being lower than forecast at 31 December 2023, due to changes in the assumptions used to perform the calculations and market movements of the pension scheme values during 2024. Given that the review is nearing completion, the Group's estimate of the remaining liability is expected to be utilised in full and settled within the next 12 months.

Compensation provisions (other) of £13 million (31 December 2023: £11 million)

Other compensation provisions of £13 million include amounts relating to internally conducted past business reviews, the cost of correcting deficiencies in policy administration systems, including redress, any associated litigation costs and the related costs to compensate current and former policyholders and customers. This provision represents management's best estimate of expected outcomes based upon past experience, and a review of the details of each case. Due to the nature of the provision, the timing of the expected cash outflows is uncertain. The best estimate of the timing of outflows is that the majority of the balance is expected to be settled within 12 months.

A provision of £7 million, included within the balance, has been recognised at 31 December 2024 (31 December 2023: £nil) relating to internally conducted past business reviews of ongoing servicing within Quilter Financial Planning, as part of the Group's normal business operations. The estimate of the provision has been determined for the current status of the past business reviews and redress estimated based upon an initial analysis of adviser servicing records. Customer redress is expected to be calculated and paid to relevant customers during 2025.

A provision of £2 million, included within the balance, has been recognised at 31 December 2024 (31 December 2023: £3 million) relating to potentially unsuitable DB to DC pension transfer advice provided by adviser businesses other than Lighthouse. The estimate of the provision has been updated for the current status of the past business reviews and redress estimated based upon the Group's experience of past business reviews. Customer redress is expected to be calculated and paid to relevant customers during the first half of 2025.

The Group estimates a reasonably possible change of +/- £4 million from the £13 million balance, based upon a review of the cases and the range of potential outcomes for the customer redress payments.

Sale of subsidiaries provision

The sale of subsidiaries provision totals £1 million at 31 December 2024 (31 December 2023: £3 million), and includes the following:

Provisions arising on the sale of Quilter International of £nil (31 December 2023: £2 million)

Quilter International was sold in November 2021, resulting in provisions totalling £17 million being established in respect of costs related to the disposal including the costs of business separation and data migration activities.

The costs of business separation arise from the process required to separate Quilter International's infrastructure, which was complex and covered a wide range of areas including people, IT systems, data, contracts and facilities. A programme team was established to ensure the transition of these areas to the acquirer. These provisions were based on external quotations and estimates, together with estimates of the incremental time and resource costs required to achieve the separation, which was expected to occur over a two-to-three-year period from the date of the sale.

The most significant element of the provision was the cost of migration of IT systems and data to the acquirer. Calculation of the provision was based on management's best estimate of the work required, the time it was expected to take, the number and skills of the staff required and their cost, and the cost of related external IT services to support the work. In reaching these judgements and estimates, management made use of its past experience of previous IT migrations following business disposals.

During the year, £2 million (31 December 2023: £9 million) of the provision related to decommissioning works has been used, and the project has been completed.

Provision for tax warranty claim £1 million (31 December 2023: £1 million)

This provision is for warranty claims relating to the sale of former subsidiaries. The amount is expected to be realised within one year.

Property provisions

Property provisions total £7 million (31 December 2023: £10 million). Property provisions represent the discounted value of expected future costs of reinstating leased property to its original condition at the end of the lease term, and any onerous commitments which may arise in cases where a leased property is no longer fully used by the Group. The estimate is based upon property location, size of property and an estimate of the cost per square foot. Property provisions are used or released when the reinstatement obligations are satisfied. The associated asset for the property provisions relating to the cost of reinstating property is included within Property, plant and equipment.

Of the £7 million provision outstanding, £1 million (31 December 2023: £3 million) is estimated to be payable within one year. The majority of the balance relates to leased properties which have a lease term maturity of more than five years.

Clawback and other provisions

Clawback and other provisions total £13 million (31 December 2023: £16 million) and include amounts for the resolution of legal uncertainties and the settlement of other claims raised by contracting parties and indemnity commission provisions. Where the impact of discounting is material, provisions are discounted at discount rates specific to the risks inherent in the liability. The timing and final amounts of payments, particularly those in respect of litigation claims and similar actions against the Group, are uncertain and could result in adjustments to the amounts recorded.

Included within the balance at 31 December 2024 is £10 million (31 December 2023: £12 million) of clawback provisions in respect of potential refunds due to product providers on indemnity commission within the Quilter Financial Planning business. This provision, which is estimated and charged as a reduction of revenue at the point of sale of each policy, is based upon assumptions determined from historical experience of the proportion of policyholders cancelling their policies, which requires Quilter to refund a portion of commission previously received to the product provider. Reductions to the provision result from the payment of cash to product providers as refunds or the recognition of revenue where a portion of the indemnity commission is assessed as no longer payable. The provision has been assessed at the reporting date and adjusted for the latest cancellation information available. At 31 December 2024, an associated balance of £6 million recoverable from brokers is included within Trade, other receivables and other assets (31 December 2023: £8 million).

The Group estimates a reasonably possible change of +/- £3 million, based upon the potential range of outcomes for the proportion of cancelled policies within the clawback provision, and a detailed review of the other provisions.

Of the total £13 million provision outstanding, £6 million is estimated to be payable within one year (31 December 2023: £7 million).

17: Contingent liabilities

The Group, in the ordinary course of business, enters into transactions that expose it to tax, legal, regulatory and business risks. The Group recognises a provision when it has a present obligation as a result of past events, it is probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made (see note 16). Possible obligations and known liabilities where no reliable estimate can be made, or it is considered improbable that an outflow would result, are reported as contingent liabilities.

The Group routinely monitors and assesses contingent liabilities arising from matters such as business reviews, litigation, warranties and indemnities relating to past acquisitions and disposals.

Tax

The Group is committed to conducting its tax affairs in accordance with the tax legislation of the countries in which it operates and this includes compliance with legislation related to levies, sales taxes and payroll deductions.

The tax authorities in the countries in which the Group operates routinely review historical transactions undertaken and tax law interpretations made by the Group. All interpretations made by the Group are made with reference to the specific facts and circumstances of the transaction and the relevant legislation.

There are occasions where the Group's interpretation of tax law may be challenged by the tax authorities. The consolidated financial statements include provisions that reflect the Group's assessment of liabilities which might reasonably be expected to materialise as part of their review. The Group is satisfied that adequate provisions have been made to allow for the resolution of tax uncertainties.

Due to the level of estimation required in determining tax provisions, amounts eventually payable may differ from the provision recognised.

DB to DC pension transfer advice redress

As set out in note 16, a sample of Lighthouse DB to DC pension transfer advice cases not relating to the British Steel Pension Scheme is being reviewed under a Group-managed past business review process. Until the review has finalised, which is expected during the first half of 2025, uncertainty exists as to the value of total redress that will be payable.

Customers have the legal right to challenge the outcome of the review in respect of their case via a complaint to the Financial Ombudsman Service. The review is being undertaken by a party who is independent from the Group and has run a robust process overseen by the FCA. The Financial Ombudsman Service may uphold further challenges, which may lead to further redress payable by the Group.

It is possible that further material costs of redress may be incurred in relation to past business reviews. Further customer redress costs may also be incurred for other potential unsuitable DB to DC pension transfer advice provided across the Group.

Any further redress costs, and any differences between the provision and the final payment to be made for any unsuitable DB to DC pension transfer cases, will be recognised as an expense or credit in profit or loss.

Complaints, disputes and regulations

The Group is committed to treating customers fairly and remains focused on delivering good outcomes for customers to support them in meeting their lifetime goals. During the normal course of business, from time to time, the Group receives complaints and claims from customers including, but not limited to, complaints to the Financial Ombudsman Service and legal proceedings, enters into commercial disputes with service providers and other parties, and is subject to discussions and reviews with regulators. The costs, including legal costs, of these issues as they arise can be significant and, where appropriate, provisions have been established.

Ongoing Advice Review

As disclosed in note 16, the Group has recognised a provision for a reasonable estimate of the cost of a potential customer remediation exercise in relation to ongoing advice. However, until the results of the Skilled Person Review are finalised and further discussions with the FCA are progressed, there is significant uncertainty as to the nature, scope and form of any potential future customer remediation exercise. This includes consideration of the customer cohorts to be involved within a potential customer remediation exercise, and the customer and Appointed Representative firm contact strategies.

In addition, where redress payments are made to customers, the Group has the ability to seek appropriate reimbursement from the relevant Appointed Representative firms who have been unable to demonstrate that the ongoing advice service paid by the client was provided. Should the Group make payments to customers, recompense to the Group can be sought from the relevant Appointed Representative firm who has benefited from the majority of the revenue recognised over the period of the servicing agreement. Any reimbursement would not be recognised as an asset until such time as recoverability became virtually certain, and would only be disclosed, but not recognised, as a contingent asset if and when a cash inflow becomes probable.

18: Capital and financial risk management

18(a): Capital management

The Group manages its capital with a focus on capital efficiency and effective risk management. The capital management objectives are to maintain the Group's ability to continue as a going concern while supporting the optimisation of return relative to the risks. The Group ensures that it can meet its expected capital and financing needs at all times having regard to the Group's Business Plans, forecasts, strategic initiatives and the regulatory requirements applicable to Group entities.

The Group's overall capital risk appetite is set with reference to the requirements of the relevant stakeholders and seeks to:

·      maintain sufficient, but not excessive, financial strength to support stakeholder requirements;

·      optimise debt to equity structure to enhance shareholder returns; and

·      retain financial flexibility by maintaining liquidity including unutilised committed credit lines.

The primary sources of capital used by the Group are equity shareholders' funds of £1,423 million (2023: £1,519 million) and subordinated debt which was issued at £200 million in January 2023. Alternative resources are utilised where appropriate. Risk appetite has been defined for the level of capital, liquidity and debt within the Group. The risk appetite includes long-term targets, early warning thresholds and risk appetite limits. The dividend policy sets out the target dividend level in relation to profits.

The regulatory capital for the Group is assessed under UK Solvency II requirements.

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

The Group is subject to UK Solvency II group supervision by the Prudential Regulation Authority. The Group is required to measure and monitor its capital resources under the UK Solvency II regulatory regime. The UK Solvency II regime replaced Solvency II with effect from 31 December 2024 reporting. Comparative figures for regulatory capital for 2023 are presented on a Solvency II basis.

The Group's UK life insurance undertaking is included in the Group solvency calculation on a UK Solvency II basis. Other regulated entities are included in the Group solvency calculation according to the relevant sectoral rules. The Group's UK Solvency II surplus is the amount by which the Group's capital on a UK Solvency II basis (own funds) exceeds the UK Solvency II capital requirement (solvency capital requirement or "SCR"). 

The Group's UK Solvency II surplus is £851 million at 31 December 2024 (2023: £972 million), representing an SCR coverage ratio of 219% (2023: 271%) calculated under the standard formula. The UK Solvency II regulatory position at 31 December 2024 allows for the impact of the recommended Final Dividend payment of £57 million (2023: £50 million).

The UK Solvency II position as at 31 December 2024 (unaudited estimate) and 31 December 2023 is presented below:

		£m
	31 December 20241	31 December 20232
Own funds	1,566	1,540
Solvency capital requirement	715	568
UK Solvency II surplus	851	972
UK Solvency II coverage ratio	219%	271%

¹Filing of annual regulatory reporting forms due by 27 May 2025.

²As reported in the Group Solvency and Financial Condition Report for the year ended 31 December 2023.

The Group's own funds include the Quilter plc issued subordinated debt security which qualifies as capital under UK Solvency II. The composition of own funds by tier is presented in the table below.

		£m
Group own funds	31 December 2024	31 December 2023
Tier 11	1,366	1,336
Tier 22	200	204
Total Group UK Solvency II own funds	1,566	1,540

¹All Tier 1 capital is unrestricted for tiering purposes.

²Comprises a UK Solvency II compliant subordinated debt security in the form of a Tier 2 bond, which was issued at £200 million in January 2023.

The Group's UK life insurance undertaking is also subject to UK Solvency II at entity level. Other regulated entities in the Group are subject to the locally applicable entity-level capital requirements in the countries in which they operate. In addition, the Group's asset management and advice businesses are subject to group supervision by the FCA under the UK Investment Firms Prudential Regime ("IFPR").

During 2024, the capital requirements for the Group and its regulated subsidiaries were reported and monitored through regular Group Financial Risk Management Committee meetings. Throughout 2024, the Group has complied with the regulatory requirements that apply at a consolidated level and Quilter's insurance undertakings and investment firms have complied with the regulatory capital requirements that apply at entity level.

18(a)(ii): Loan covenants

Under the terms of the revolving credit facility agreement, the Group is required to comply with the following financial covenant: the ratio of total net borrowings to consolidated equity shareholders' funds shall not exceed 0.5.      

			£m
		31 December 2024	31 December 2023
Total external borrowings of the Company		198	198
Less: cash and cash equivalents of the Company		(135)	(110)
Total net external borrowings of the Company		63	88
Total shareholders' equity of the Group		1,423	1,519
Tier 2 bond		198	198
Total Group equity (including Tier 2 bond)		1,621	1,717
Ratio of Company net external borrowings to Group equity		0.039	0.051

The Group has complied with the covenant since the facility was originally created in 2018.

18(a)(iii): Own Risk and Solvency Assessment ("ORSA") and Internal Capital Adequacy and Risk Assessment ("ICARA")

The Group ORSA process is an ongoing cycle of risk and capital management processes which provides an overall assessment of the current and future risk profile of the Group and demonstrates the relationship between business strategy, risk appetite, risk profile and solvency needs. These assessments support strategic planning and risk-based decision making.

The underlying ORSA processes cover the Group and consider how risks and solvency needs may evolve over the planning period. The ORSA includes stress and scenario tests, which are performed to assess the financial and operational resilience of the Group.

The Group ORSA report is produced annually. This summarises the analysis, insights and conclusions from the underlying risk and capital management processes in respect of the Group. The ORSA report is submitted to the PRA as part of the normal supervisory process and may be supplemented by ad hoc assessments where there is a material change in the risk profile of the Group outside the usual reporting cycle.

In addition to the Group ORSA process, an entity-level ORSA process is performed for Quilter Life & Pensions Limited, with its results included in the Group ORSA report.

The Group ICARA process is an ongoing cycle of risk and capital management processes, similar to the ORSA process. The Group ICARA process is performed for the prudential consolidation of Quilter's investment and advice firms under IFPR requirements. The ICARA process is also performed at an entity level for Quilter's UK investment firms, which are Quilter Investment Platform Limited, Quilter Investors Limited, Quilter Cheviot Limited and NuWealth Limited.

The Group ICARA report is produced annually. This summarises the analysis, insights and conclusions from the underlying risk and capital management processes in respect of Quilter's IFPR prudential consolidation group.

The conclusions of the ORSA and ICARA processes are reviewed by management and the Board throughout the year.

18(b): Credit risk

Overall exposure to credit risk

Credit risk is the risk of adverse movements in credit spreads (relative to the reference yield curve), credit ratings or default rates leading to a deterioration in the level or volatility of assets, liabilities or financial instruments resulting in loss of earnings or reduced solvency. This includes counterparty default risk, counterparty concentration risk and spread risk.

The Group has established a Credit Risk Framework that includes a Credit Risk Policy and Credit Risk Appetite Statement. This framework applies to all activities where the Group is exposed to credit risk, either directly or indirectly, ensuring appropriate identification, measurement, management, monitoring and reporting of the Group's credit risk exposures.

The credit risk arising from all exposures is mitigated by ensuring that the Group only enters into relationships with appropriately robust counterparties, adhering to the Group Credit Risk Policy. For each asset, consideration is given as to:

·      the credit rating of the counterparty, which is used to derive the probability of default;

·      the loss given default;

·      the potential recovery which may be made in the event of default;

·      the extent of any collateral that the Group has in respect of the exposures; and

·      any second order risks that may arise where the Group has collateral against the credit risk exposure.

The credit risk exposures of the Group are monitored regularly to ensure that counterparties remain creditworthy, that there is appropriate diversification of counterparties and that exposures are within approved limits. At the end of 2024, the Group's material credit exposures were to financial institutions (primarily through the investment of shareholder funds), corporate entities (including external fund managers) and individuals (primarily through fund management trade settlement activities).

There is no direct exposure to non-UK sovereign debt within the shareholder investments. The Group has no significant concentrations of credit risk exposure.

Other credit risks

The Group is exposed to financial adviser counterparty risk through a number of loans that it makes to its financial advisers and the payment of upfront commission on the sale of certain types of business. The risk of default by financial advisers is managed through monthly monitoring of loan and commission debt balances.

The Group is also exposed to the risk of default by fund management groups in respect of settlements. This risk is managed through the due diligence process which is completed before entering into any relationship with a fund group. Amounts due to and from fund groups are monitored for prompt settlement and appropriate action is taken where settlement is not timely.

Legal contracts are maintained where the Group enters into credit transactions with a counterparty.

Impact of credit risk on fair value

Due to the limited exposure that the Group has to credit risk, credit risk does not have a material impact on the fair value movement of financial instruments for the year under review. The fair value movements on these instruments are mainly due to changes in market conditions.

Maximum exposure to credit risk

The Group's maximum exposure to credit risk does not differ from the carrying value disclosed in the relevant notes to the consolidated financial statements.

Loans and advances subject to 12-month expected credit losses are £56 million (2023: £38 million) and other receivables subject to lifetime expected credit losses are £268 million (2023: £297 million). Those balances represent the pool of counterparties that do not require a rating. These counterparties individually generate no material credit exposure and this pool is highly diversified, monitored and subject to limits.

Exposure arising from financial instruments not recognised on the statement of financial position is measured as the maximum amount that the Group would have to pay, which may be significantly greater than the amount that would be recognised as a liability. The Group does not have any significant exposure arising from items not recognised on the statement of financial position.

The table below represents the Group's exposure to credit risk from cash and cash equivalents.

														£m
		Credit rating relating to cash and cash equivalents
31 December 2024		AAA		AA		A		B		<BBB		Not rated1		Carrying value
Cash at amortised cost, subject to 12-month ECL		-		73		296		-		-		365		734
Money market funds at FVTPL		1,215		-		-		-		-		-		1,215
Total cash and cash equivalents		1,215		73		296		-		-		365		1,949
													£m
	Credit rating relating to cash and cash equivalents
31 December 2023	AAA		AA		A		B		<BBB		Not rated1		Carrying value
Cash at amortised cost, subject to 12-month ECL	-		63		381		-		-		324		768
Money market funds at FVTPL	1,091		-		-		-		-		-		1,091
Total cash and cash equivalents	1,091		63		381		-		-		324		1,859

¹Cash included in the consolidation of funds is categorised as not rated (see note 13(a)).

Impairment allowance

Assets that are measured and classified at amortised cost are monitored for any expected credit losses on either a 12-month or lifetime ECL model. The majority of such assets within the Group are measured on the lifetime ECL model, with the exception of some specific loans that are on the 12-month ECL model.

Impairment allowance	£m
Balance at 1 January 2023	(1.1)
Change due to change in counterparty balance	(0.4)
Additional impairment in the year1	(4.3)
31 December 2023	(5.8)
Change due to change in counterparty balance	(0.8)
Change due to change in counterparty credit rating	(0.1)
Additional impairment in the year	(2.4)
Write-offs	0.2
31 December 2024	(8.9)

¹The 2023 additional impairment figure was presented as £1.5 million in the 2023 financial statements and has now been presented as £4.3 million due to the reclassification of a credit against loan receivables. This reclassification, which had no net impact on loan receivables, was made in order to ensure comparability between the figures presented for 2023 and 2024.

18(c): Market risk

Market risk is the risk of an adverse change in the level or volatility of market prices of assets or liabilities resulting in loss of earnings or reduced solvency. Market risk arises from changes in equity, bond and property prices, interest rates and foreign exchange rates. Market risks are linked to wider economic and geopolitical conditions and may be driven by the crystallisation of climate-‑related financial risks. Market risk arises differently across the Group's businesses depending on the types of financial assets and liabilities held.

The Group has a market risk policy which sets out the Group's requirements for the management of market risk.

The Group does not undertake any principal trading for its own account. The Group's revenue is however affected by the value of assets under management and administration and consequently the Group has exposure to equity market levels and economic conditions. Scenario testing is undertaken to test the resilience of the business to severe but plausible events, including assessment of the potential implications of climate-related risks and opportunities, and to assist in the identification of management actions.

18(c)(i): Equity risk

In accordance with the market risk policy, the Group does not generally invest shareholder assets in equity, or related collective investments, except where the exposure arises due to:

·      mismatches between unitised fund assets and liabilities. These mismatches are permitted, subject to maximum limits, to avoid excessive dealing costs; and

·      seed capital investments. Seed capital is invested within new unitised or other funds within the Group at the time when these funds are launched. The seed capital is then withdrawn from the funds as policyholders and customers invest in the funds.

The above exposures are not material to the Group.

The Group derives fees (e.g. annual management charges) and incurs costs (e.g. in respect of outsourced service providers) which are linked to the performance of the underlying assets. Therefore, future earnings will be affected by equity market performance.

Equity sensitivity testing

A movement in equity would impact the fee income that is based on the market value of the investments held by or on behalf of customers. The sensitivity is applied as an instantaneous shock to equity at the start of the year. The sensitivity analysis is not limited to the unit-linked business and therefore reflects the sensitivity of the Group as a whole.

		£m
Impact on profit after tax and net assets	31 December 2024	31 December 2023
Impact of 10% increase in equity	26	26
Impact of 10% decrease in equity	(26)	(26)

18(c)(ii): Interest rate risk

Interest rate risk arises primarily from bank balances held with financial institutions.

A rise in interest rates would also cause an immediate fall in the value of investments in fixed income securities within clients' investment funds, resulting in a fall in fund-based revenues.

Conversely, a reduction in interest rates would cause a rise in the value of investments in fixed income securities within clients' investment funds. It would also reduce the interest rate earned on cash deposits and money market funds.

Exposure of the financial statements to interest rates are summarised below.

Interest rate sensitivity testing

The impact of an increase and decrease in market interest rates of 1% is tested (e.g. if the current interest rate is 5%, the test allows for the effects of an instantaneous change to 4% and 6% from the start of the year). The test allows consistently for similar changes in investment returns and movements in the market value of any fixed interest assets backing the liabilities. The sensitivity of profit to changes in interest rates is provided.

		£m
Impact on profit after tax and net assets	31 December 2024	31 December 2023
Impact of 1% increase in interest rates	9	9
Impact of 1% decrease in interest rates	(9)	(9)

18(c)(iii): Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group's functional currency is pounds sterling, which accounts for the majority of the Group's transactions. The Group has minor exposure to Euros, through the Group's Irish subsidiary and to the South African Rand, due to the listing on the Johannesburg Stock Exchange and the payment of a proportion of shareholder dividends in Rand. During 2024, the Group had limited exposure to foreign currency risk in respect of other currencies due to its non-UK operations and foreign currency transactions.

18(d): Liquidity risk

Liquidity risk is the risk that there are insufficient assets or that assets cannot be realised in order to settle financial obligations as they fall due or that market conditions preclude the ability of the Group to trade in illiquid assets in order to maintain its asset and liability matching ("ALM") profile. The Group manages liquidity on a daily basis through:

·      maintaining adequate high-quality liquid assets and banking facilities, the level of which is informed through appropriate liquidity stress testing;

·      continuously monitoring forecast and actual cash flows; and

·      monitoring a number of key risk indicators to help in the identification of a liquidity stress.

Individual businesses maintain and manage their local liquidity requirements according to their business needs within the overall Group Liquidity Risk Framework that includes a Group Liquidity Risk Policy and Group Liquidity Risk Appetite Statement. The Group framework is applied consistently across all businesses in the Group to identify, manage, measure, monitor and report on all liquidity risks that have a material impact on liquidity levels. This framework considers both short-term liquidity and cash management considerations and longer-term funding risk considerations.

Liquidity is monitored centrally by Group Treasury, with management actions taken at a business level to ensure each business has sufficient liquidity to cover its minimum liquidity requirement, with an appropriate buffer set in line with the Group Liquidity Risk Appetite Statement.

During 2024, Quilter plc and its subsidiaries have operated above their individual liquidity targets and there were no material liquidity stresses identified during the year. Daily liquidity monitoring continues across the Group to enable timely identification of any emerging issues.

The Group maintains contingency funding arrangements to provide liquidity support to businesses in the event of liquidity stresses. Contingency Funding Plans are in place for each individual business under a Group Consolidated Contingent Funding Plan in order to set out the approach and management actions that would be taken should liquidity levels fall below liquidity thresholds which have been set to reflect the liquidity risk appetite of each business. The plans undergo a periodic review and testing cycle to ensure they are fit for purpose and can be relied upon during a liquidity stress.

Information on the nature of the investments and securities held is given in note 10.

The Group has a £125 million five-year revolving credit facility with a five-bank club that provides a form of contingency liquidity for the Group. No drawdown on this facility has been made since its original inception in February 2018. The Group entered into a five-year arrangement in January 2024 with the option to extend the facility for a further two-year period, to January 2031, and has continued to meet all the covenants attached to its financing arrangements. The first one-year extension has been exercised in January 2025 and approved by the bank club. This takes the current expiration date of the arrangement to January 2030. No drawdown on this facility has been made since its inception.

The financing arrangements are considered sufficient to maintain the target liquidity levels of the Group and offer coverage for appropriate stress scenarios identified within the liquidity stress testing undertaken across the Group.

18(e): Insurance risk

18(e)(i): Overview

Insurance risk covers risks arising under products provided by Quilter's life insurance firm, Quilter Life & Pensions Limited. These products do not meet the IFRS definition of insurance contracts.

Insurance risk covers risk of adverse experience of withdrawal, overrun in expenses or higher than expected mortality experience.

The sensitivity of the Group's earnings and capital position to insurance risks is monitored through the Group's capital management processes.

The Group manages its insurance risks through the following mechanisms:

·      Management of expense levels relative to approved budgets.

·      Analysis and monitoring of experience relative to the assumptions used to determine technical provisions.

Persistency

Persistency risk is the risk that the level of surrenders or withdrawals on products offered by Quilter Life & Pensions Limited occurs at levels that are different to the levels assumed in the determination of technical provisions. Persistency statistics are monitored monthly and a detailed persistency analysis at a product group level is carried out on an annual basis. Management actions may be triggered if persistency statistics indicate significant adverse movement or emerging trends in experience.

Expenses              

Expense risk is the risk that actual expenses and expense inflation differ from the levels assumed in the determination of technical provisions. Expense levels are monitored on a quarterly basis against budgets and forecasts. Expense drivers are used to allocate expenses to entities and products. Some product structures include maintenance charges. These charges are reviewed annually in light of changes in maintenance expense levels and the market rate of inflation. This review may result in changes in charge levels.

Mortality

Mortality risk is not material as the Group does not provide material mortality insurance on its products.

18(e)(ii): Sensitivity analysis

Sensitivity analysis has been performed by applying the following parameters to the financial statements for 2023 and 2024. Interest rate and equity and property price sensitivities are included within the Group market sensitivities above.

Expenses

The increase in expenses is assumed to apply to the costs associated with the maintenance and acquisition of contracts within the unit-linked business. It is assumed that these expenses are increased by 10% from the start of the year, so is applied as an expense shock rather than a gradual increase. The only administrative expenses that are deferrable are sales bonuses but as new business volumes are unchanged in this sensitivity, sales bonuses and the associated deferrals have not been increased. Administrative expenses have been allocated equally between life and pensions.

An increase in expenses of 10% would have decreased profit by £5 million after tax (2023: £5 million).

18(f): Operational risk

Operational risk is the risk of loss arising from inadequate or failed internal processes, or from personnel and systems, or from external events, resulting in an adverse impact to earnings or reduced solvency. Operational risk includes all risks resulting from operational activities, excluding the risks already described above and excluding strategic risks.

Operational risk includes, but is not limited to, the effects of failure of oversight and administration processes, IT and Information Security maintenance and development processes, advice processes (including oversight of ongoing servicing provided by financial advisers), investment processes (including settlements with fund managers, fund pricing and matching and dealing), people and HR processes, product development and management processes, legal risks (e.g. risk of inadequate legal contracts with third parties), change delivery risks (including poorly managed responses to regulatory change), physical and certain transitional financial risks arising from climate change, risks relating to the relationship with outsourced service providers and other suppliers, and the consequences of financial crime and business interruption events.

In accordance with Group policies, management has primary responsibility for the identification, measurement, assessment, management and monitoring of risks, and the escalation and reporting on issues to Executive Management.

The Group's Executive Management has responsibility for implementing the Group Operational Risk Framework and for the development and implementation of action plans designed to manage risk levels within acceptable tolerances and to resolve issues identified.

18(g): Contractual maturity analysis

Investment contract policyholders have the option to terminate or transfer their contracts at any time and to receive the surrender or transfer value of their policies, and these liabilities are therefore classified as having a maturity of less than three months. Although these liabilities are payable on demand, the Group does not expect that all liabilities will be settled within a short time period.

19: Related party transactions

In the normal course of business, the Group enters into transactions with related parties. Loans to related parties are conducted on an arm's length basis and are not material to the Group's results. There were no transactions with related parties during the current year or the prior year which had a material effect on the results or financial position of the Group. Full details of transactions with related parties, including key management personnel compensation is included within note 40 of the financial statements within the Group's 2024 Annual report. The Group's interest in subsidiaries and related undertakings are set out in Appendix A of the financial statements within the Group's 2024 Annual report.

20: Events after the reporting date

Final Dividend

On 5 March 2025, the Group announced a proposed Final Dividend for 2024 of 4.2 pence per Ordinary Share amounting to £57 million in total. Subject to approval by shareholders at the Annual General Meeting, the dividend will be paid on 27 May 2025.