Quilter

For the 
generations 
of today and 
tomorrow

Annual Report 2020

Contents
Strategic Report
IFC  The quick read
1  Highlights
12  Chairman’s statement
17  Our response to COVID-19
20  Chief Executive Officer’s statement  

and Q&A
30  Our markets
34  Our strategy
39  Key performance indicators
42  Business model
44  Platform Transformation Programme
46  Responsible business
60  Financial review
70  Risk review
78  Viability statement and going concern

Governance Report
81  Chairman’s introduction  
to corporate governance 

82  Governance at a glance
83  Our leadership and governance structure
84  Board of Directors 
88  Quilter leadership
90  The work of the Board in 2020 
90  Section 172 (1) statement
99  Governance in action
102  Board Corporate Governance and 

Nominations Committee report 
108  Board Audit Committee report 
116  Board Risk Committee report 
119   Board Technology and Operations 

Committee report

122  Board Remuneration Committee report 
128  Directors’ Remuneration Policy
133  Annual Report on Remuneration 
148  Our approach to governance 
152  Directors’ Report

Financial statements
157  Statement of Directors’ responsibilities
158  Independent auditors’ report 
167  Primary financial statements 
172  Notes to the financial statements 
250  Appendices
256  Parent Company financial statements

Other information
267  Shareholder information 
270  Alternative Performance Measures 
274  Glossary

Business highlights
Quilter delivered robust results for 2020, 
reflecting solid financial performance, 
strategic progress and operational 
improvement, despite global disruption.

Strategic highlights
 – Migrations of clients and advisers 
onto new UK Platform completed 
in early 2021.

 – Largely completed integration of advice 
acquisitions and reorganised advice 
business around customers.

 – Announced strategic alignment of 
Quilter Cheviot and Quilter Private 
Client Advisers. 

 – Initiated strategic review of Quilter 

International.

 – Continued capital management 

discipline: £196 million returned to 
shareholders via share buyback and 
Odd-lot Offer.

Operational highlights
 – Maintained high levels of client 

engagement and operational resilience 
despite global lockdowns.

 – Implemented technology upgrades 

and system enhancements, remotely.
 – Optimisation initiatives on track to deliver 
c.£50 million cost savings by end-2021.

Financial performance highlights

Assets under management and 
administration (“AuMA”)*

Net client cash flow ((cid:522)NCCF(cid:523))*

£117.8bn

£1.6bn

2020
2019

£117.8bn

£110.4bn

2020
2019

£0.3bn

£1.6bn

Ad(cid:77)usted profit before tax*

Adjusted diluted earnings per share*

£168m

2020
2019

£168m

182m

8.5p

2020
2019

8.5p
8.6p

IFRS profit(cid:18)(loss) after tax from 
continuing operations 

Recommended total dividend per share

£89m

2020
2019

(£21m)

4.6p

2020
2019

£89m

4.6p

4.0p

5.2p

 Continuing operations.
Including contribution from QLA.

All 2019 comparatives presented above exclude Quilter Life Assurance (“QLA”), which was sold  
on 31 December 2019.

Alternative Performance Measures (“APMs”)
(cid:58)e assess our financial performance using a variety of measures including APMs, as explained 
further on page 270. These measures are indicated with an asterisk: *

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

Quilter is a leading 
UK-focused full-service 
wealth manager, providing 
advice-led investment 
solutions and investment 
platform services to over 
900,000 customers 

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

1

 
 
 
 
The quick 
read

For a quick, highly-compressed 
version of our 2020 Annual Report 
read these two pages.

The full report starts on page 2 
and the very latest information 
about our business is online at 
quilter.com(cid:18)investor-relations

Find out more:
 – 2020 Results presentation
 – Quarterly trading 
announcements

 – Responsible business insight
 – Introduction to Quilter 

presentations

Our business 

Quilter is a leading UK-focused 
full-service wealth manager, providing 
advice-led investment solutions and 
investment platform services to over 
900,000 customers.

Our purpose
Our purpose is to help create 
prosperity for the generations 
of today and tomorrow. 

We strive to do this through 
supporting long-term advice-based 
relationships, delivering good investment 
management performance while 
maintaining consistently high-quality 
customer service.

Our strategy
Quilter has been on a multi-year 
transformation to become the modern, 
UK-focused wealth manager it is today. 
Our strategy is focused on delivering 
good customer outcomes through 
whatever channel clients choose 
to access our services, growing our 
business segments, and improving 
efficiency to make Quilter the best 
version of itself it can be. 

Our strategy 
Page 34 

How we operate
The business is comprised of 
two segments: Advice and Wealth 
Management and Wealth Platforms. 

1. Advice and Wealth Management 

encompasses the financial planning 
businesses, Quilter Financial Planning, 
Quilter Private Client Advisers and 
Quilter Financial Advisers; the 
discretionary fund management 
business, Quilter Cheviot; and Quilter 
Investors, the multi-asset investment 
solutions business. 

2. Wealth Platforms includes Quilter 
Investment Platform and Quilter 
International.

Our business model 
Page 42

Our customer offer 

Quilter aims to be the best place to 
obtain trusted financial advice in the UK. 
(cid:58)e offer customers trusted financial 
advice and quality-assured investment 
choice, through an open and transparent 
model, with competitive pricing at every 
part of the value chain. We are 
committed to operating and investing 
responsibly, for the long-term benefit 
of all our stakeholders. 

Our approach to 
responsible business 
and our stakeholders

We are committed to operating 
responsibly for the long-term benefit 
of our stakeholders. Our approach to 
responsible business focuses on the 
Environmental, Social and Governance 
(ESG) issues which are most material to 
our stakeholders, and which affect our 
ability to create long-term financial and 
non-financial value.

Read more:
Responsible business 
Page 46

Our stakeholders 
Page 90

Our investment  
proposition

Quilter offers investors a unique 
combination of capabilities covering 
the wealth value chain, with scale and 
leading positions in a growing market, 
and momentum for future growth. 

1.  Full-service wealth manager providing 
choice and delivering good customer 
outcomes.

2. Leading positions across one of the 
world’s largest wealth markets, with 
strong structural growth drivers.

3. Multi-channel proposition and 

investment performance driving 
integrated flows and long-term 
customer and adviser relationships.

4. Attractive top-line growth and the 
opportunity for operating leverage.
5. Strong balance sheet with low gearing 
and good cash generation to drive 
shareholder returns.

Our markets
Page 30

We have a 
clear purpose 
and ambition

2

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

We deliver our ambition by:

Being customer focused  

Offering choice and flexibility  

Being open and transparent  

Acting and investing responsibly  

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

3

 
 
 
 
At Quilter, we believe in the value 
of advice and are focused on bringing 
advice-led wealth solutions to clients 
through the most appropriate channel. 
Our advisers tailor their advice to each 
client’s requirements and risk appetite, 
and we use their feedback to design 
investment solutions which meet 
their needs.
Throughout the COVID-19 global pandemic, our priority has 
been to ensure the safety and welfare of our colleagues, to 
continue to provide the highest levels of service, to support 
and guide customers through market volatility, and to deliver 
for our broader community and our shareholders.

To read more about how we focused on supporting 
our stakeholders through the COVID-19 global 
pandemic, turn to ‘Our response to COVID-19’ on page 17.

4

Quilter | Annual report 2020

We are 
customer 
focused

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

5

 
 
 
 
We offer 
choice and 
flexibility

6

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

Choice and flexibility are at the heart of 
Quilter’s offering to clients. Customers 
have choice in how they access us, and 
they can use as many parts of our 
offering as they prefer. ‘Choice’ is 
also key to our investment solutions 
proposition as we provide our advisers 
and their clients with quality-assured 
choice rather than unlimited choice. 

To read more about how we offer clients choice 
and flexibility, turn to ‘(cid:37)usiness model’ on page 42.

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

7

 
 
 
 
We describe our business model 
as ‘omni-channel’ as customers may 
seek our services through whichever 
channel they choose. As part of our 
unbundled approach, customers 
will only ever pay us for the services 
they take from us. Our pricing is 
competitive across each part of the 
value chain, and we do not have 
hidden charges.
Our Platform is the second largest adviser-focused 
investment platform in the UK. It is available to clients 
of both Quilter’s advisers and to independent financial 
advisers. Early 2021 saw the culmination of a significant 
multi-year project to complete the upgrade of our 
platform onto new technology.

To read more about our Platform Transformation 
Programme, turn to page 44.

8

Quilter | Annual report 2020

We are 
open and 
transparent

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

9

 
 
 
 
We act 
and invest 
responsibly

10

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

We are committed to operating 
responsibly, for the long-term benefit of 
all our stakeholders. Our approach has 
been shaped by the ESG issues which 
matter most to our stakeholders and is 
set out in our Shared Prosperity Plan. 
One of the plan’s three pillars focuses on 
investing responsibly. We are committed 
to integrating responsible investment 
principles across all areas of the 
business, from financial advice, to 
investment and wealth management, 
and investment platforms. 

Further detail on how we operate responsibly is 
available in our Responsible Business review on page 46.

Quilter | Annual report 2020

11

 
 
 
 
Chairman’s 
statement

Glyn Jones
Chairman

12

Quilter | Annual report 2020

 2020 was a year 
of strong progress 
for Quilter, which 
demonstrated the 
resilience of our 
business model and 
balance sheet in 
challenging times.

Introduction
2020 has been a year unlike any other. 
Not since the 1918 Spanish flu has the world 
experienced a global health pandemic on the 
scale of CO(cid:57)ID-19. The resulting lockdown 
measures and restrictions on travel and social 
activity have led to a global economic 
downturn of a scale not seen since the 1929 
Great Depression. The developed world’s 
response to the crisis has involved 
unparalleled monetary and fiscal stimulus 
both in terms of the amount and speed of the 
response. Equity markets experienced one of 
the sharpest bear markets on record followed 
by an extraordinary rally based on the 
economic stimulus measures and expectation 
of effective vaccines and their global roll-out. 
These events presented a severe shock and 
unprecedented challenges across the world. 

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

The immediate challenges for Quilter from 
these events were threefold(cid:29)

1. To protect the health and wellbeing of our 
staff as they shifted to working from home.
2. To ensure continuity of service to advisers 
and end customers notwithstanding the 
move to home working and thereby 
maintain operational resilience.

3. To protect the financial health of the 

business faced with uncertainty as to the 
longevity of events and how much worse 
things could get.

In various parts of this Annual Report, 
we comment in some detail on how we 
responded to each of these challenges. I want 
to provide my own perspective and overview.

Our executive team did an excellent (cid:77)ob in 
rapidly rolling out the technology to facilitate 
home working and to modify our processes 
and controls. This included increased 
digitalisation and heightened data and cyber 
security controls. These changes allowed us 
to meet our second challenge – providing 
continuity of customer service and operational 
resilience throughout our business. Across 
Quilter our staff have done a magnificent 
(cid:77)ob to adapt to the new environment. (cid:58)e 
recognised early on that for many staff home 
working would be difficult and potentially 
stressful. Strong support services were put 
in place to assist. 

Quilter | Annual report 2020

13

 
 
 
 
Chairman’s statement
continued

In reference to the financial health of the 
business – we were focused on our balance 
sheet strength and on our capacity to 
generate cash and profits. (cid:58)e had 
implemented prudent capital and cash 
policies at Listing, and our strengths in both 
areas served us well going into the crisis. Our 
cash resources were further strengthened as 
we received the proceeds of the sale of Quilter 
Life Assurance at the end of 2019. As a wealth 
manager, long-term customer relationships 
are at the heart of our business model. This 
gives rise to annuity income which helped 
underpin our profitability despite the impact 
of market volatility and the downturn in 
investor sentiment to invest new monies. 
Actions to curtail costs and cut back on 
discretionary spend, including not undertaking 
a number of small potential acquisitions, have 
further helped defend profitability and cash 
resources. Overall, while our profitability for 
2020 is down on 2019 and the plans we had 
at the beginning of the year, it is nevertheless 
a very respectable outcome in the 
circumstances. Our financial strength has 
allowed us to continue to pay dividends and 
to return the proceeds of the Quilter Life 
Assurance sale in a phased share buyback 
programme. I also note Quilter has not 
furloughed any staff or received any UK 
Government assistance.

At the same time as addressing the above 
wholly unexpected challenges, I am pleased 
to note that we continued to execute on many 
key change pro(cid:77)ects. The highest profile of 
these pro(cid:77)ects was our Platform 
Transformation Pro(cid:77)ect ((cid:522)PTP(cid:523)). This pro(cid:77)ect 
completed successfully in February 2021 
with the final migration. More details on the 
implementation of this pro(cid:77)ect are featured 
later in this report.

Quilter International
In December 2020, we announced the (cid:37)oard 
had begun a strategic review of the Isle of 
Man-based Quilter International business. 
The strategic options range from a decision to 
retain the business through to a disposal. This 
review has made considerable progress but is 
ongoing. (cid:58)e continue to note that if a disposal 
were to be decided upon, there is no certainty 
that any potential transaction will be 
concluded. The (cid:37)oard expects that it will be 
able to update the market on the outcome 
of the strategic review in the first half of 2021.

Lighthouse
The (cid:37)oard was very disappointed to receive 
customer complaints in respect of (cid:37)ritish Steel
Pension Scheme ((cid:522)(cid:37)SPS(cid:523)) defined benefit 
transfers undertaken by Lighthouse prior 
to its acquisition by Quilter. In March 2020, 
therefore, the (cid:37)oard established a Committee 
to review the due diligence process in relation 
to the acquisition and in particular why it did 
not properly address the risk of potential 
unsuitable advice regarding these defined 
benefit transfers. An external law firm, Allen 
(cid:9) Overy LLP, were commissioned to assist the 
Committee by carrying out a detailed review. 
Their work has led to changes to strengthen 
our acquisition and disposal processes. 

Shareholder returns and dividend 
In 2020 Quilter delivered a total shareholder 
return of (0.9(cid:8)). This is down considerably on 
the 42(cid:8) return achieved in 2019 but is wholly 
explained by the impact of events in 2020 and 
that unlike other developed markets, both the 
FTSE-100 and the FTSE-2(cid:24)0 failed to recover 
their starting positions at 1 January 2020 by 
year end. The return compares well with our 
peer group and the UK market with the 
FTSE-100 and FTSE-2(cid:24)0 delivering a total 
return of (11.(cid:24)(cid:8)) and (4.(cid:25)(cid:8)) respectively. 

2020 total shareholder return 

2020 full year dividend 

-0.9%
4.6p

14

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Read more on our Board 
effectiveness review
Page 105

The (cid:101)37(cid:24) million share buyback programme 
which we announced with our 2019 Full (cid:60)ear 
results continued over the course of the year. 
(cid:37)y the end of December 2020, we had spent
(cid:101)1(cid:24)3 million to acquire 118 million shares 
at an average price of 129 pence. Our share 
buyback programme reduced the shares in 
issue by c.(cid:25)(cid:8), providing a 0.2 pence accretive 
impact to Quilter’s earnings per share. Further 
accretive impacts will be seen in 2021 as we 
continue with the share buyback programme.

(cid:58)e also completed the planned Odd-lot 
Offer which provided an inexpensive and 
convenient way for our retail shareholders 
who held fewer than 100 shares to exit their 
modest shareholdings. In aggregate, over 
200,000 shareholders participated in the 
Odd-lot Offer, resulting in our shareholder 
register nearly halving in number at a cost 
of (cid:101)21 million, representing a purchase price 
of 120 pence per share. These shares were 
transferred into the Quilter Employee (cid:37)enefit 
Trust for use in satisfying future staff share 
awards in a non-dilutive manner.

The (cid:37)oard is pleased to recommend a final 
dividend of 3.(cid:25) pence for 2020 which, together 
with the interim dividend of 1.0 pence per 
share paid in September 2020, takes the 
proposed full year dividend to 4.(cid:25) pence. 
This represents progression up our dividend 
pay-out target range. After excluding the 
component of the 2019 dividend which was 
effectively a return of capital from the Quilter 
Life Assurance proceeds, the underlying 
dividend increase is 1(cid:24)(cid:8).

The dividend will be paid on 17 May 2021, 
sub(cid:77)ect to shareholder approval at our 2021 
Annual General Meeting on 13 May 2021, to 
shareholders who are on the share register 
on 9 April 2021.

Board
Over the course of 2020, we saw some (cid:37)oard 
rotation. As previously advised, Cathy Turner 
and Suresh Kana stood down from the (cid:37)oard 
at the conclusion of the 2020 AGM. (cid:58)e 
welcomed Tim (cid:37)reedon to the (cid:37)oard in June 
2020. Tim brings a unique blend of experience 
and expertise as a former CEO in a FTSE-100 
savings and pensions business, and as a 
seasoned Non-executive Director in both a 
FTSE-100 company and private equity-backed 
businesses. He brings a deep understanding 
of UK regulated financial services, corporate 
governance in UK public companies, effective 
(cid:37)oard challenge and support in building a 
sustainable business for the long term. (cid:58)e are 
delighted to have an individual of Tim’s calibre 
and background with extensive knowledge of 
the long-term savings industry (cid:77)oin the (cid:37)oard.

Jon Little took on a new role in early 2020 
which meant he was unable to continue to 
commit the required time to his independent 
Non-executive Director role with Quilter. 
As a consequence, he stepped down from 
the Quilter (cid:37)oard on 30 September 2020. (cid:58)e 
thank Jon for all his support since (cid:77)oining the 
(cid:37)oard ahead of our Listing. His valued insights 
into the wealth management industry were 
very informative as we reshaped our business. 
(cid:58)e all wish him well in his future endeavours.

I am delighted that Ta(cid:93)im Essani has agreed to 
(cid:77)oin the Quilter (cid:37)oard with effect from 9 March 
2021. Ta(cid:93)im has a strong background in 
strategy, corporate development and mergers 
and acquisitions gained with Close (cid:37)rothers, 
Santander UK and GE Capital. Ta(cid:93)im’s skills 
and experience will add considerably to the 
(cid:37)oard’s deliberations. 

Following an externally facilitated (cid:37)oard 
effectiveness review in 2019, the Senior 
Independent Director, Ruth Markland, 
conducted a lighter touch review in 2020 to 
cover the performance of the (cid:37)oard, individual 
(cid:37)oard members and each of its Committees. 
The review concluded that the (cid:37)oard and its 
Committees continue to be fully effective in 
the discharge of their responsibilities but did 
identify a small number of areas for 
improvement. An action plan to address those 
areas of focus was agreed by the (cid:37)oard in 
November 2020 and the (cid:37)oard Corporate 
Governance and Nominations Committee 
is monitoring the delivery of that plan.

Quilter | Annual report 2020

15

 
 
 
 
Chairman’s statement
continued

Governance and culture
(cid:58)e recognise the importance of a healthy 
culture within a business to ensure successful 
delivery of strategic ambition. (cid:60)our (cid:37)oard 
takes an active role in shaping Quilter’s culture 
and is encouraged by our Executive team’s 
concerted efforts in 2020 to drive greater 
inclusion and diversity across the organisation.

Managing a business responsibly is key to 
an organisation’s long-term success and for 
Quilter that includes being a responsible 
investor. (cid:58)e recognise the role of investors, 
along with other parts of the economy, in 
supporting the transition to a low carbon 
economy – vital for the long-term prosperity 
of us all. Quilter is taking a proactive approach 
to embedding ESG considerations across the 
whole value chain of our business.

Despite the logistical constraints imposed 
by CO(cid:57)ID-19, Quilter has continued to 
maintain a high level of engagement with 
existing and prospective shareholders this 
year. Overall engagement in 2020 has been 
broadly unchanged on 2019, albeit this year’s 
engagement has been almost entirely in a 
virtual environment making use of digital 
technologies. In early 2020, I met with our 
largest shareholders in South Africa, in 
person. In January 2021 both our Senior 
Independent Director and I hosted virtual 
meetings with our largest shareholders 
covering topics including corporate 
governance and executive remuneration.

Looking ahead
(cid:58)e look forward to 2021 with confidence and 
the expectation of a strong global economic 
recovery. However, we recognise considerable 
external risks remain – particularly new 
variants of CO(cid:57)ID-19, the pace of global 
vaccination roll-outs, the uncertain path of 
global economic recovery, dealing with high 
public debt levels, possibly higher inflation, 
rising interest rates in due course, and finally 
the reaction of equity markets to all these 
issues – especially as nearly all global market 
indices, with the exception of the UK at the 
time of writing, are at all-time highs. 

Notwithstanding the unprecedented external 
shocks, 2020 was a year of strong progress 
for Quilter, and one in which we demonstrated 
the resilience of our business model and 
balance sheet in challenging times. Our people 
have risen to the challenge of new working 
arrangements while remaining focused on 
achieving good outcomes for our customers. 
Our Executive team proved to be agile and 
resilient in the face of adversity.

On behalf of the (cid:37)oard, I would like to thank 
our management team and all our colleagues 
for their effort, focus and commitment to 
achieving our goals in what has been a 
uniquely challenging year. Thank you also to 
our shareholders for your continued support.

Glyn Jones
Chairman

Further insight into how we deliver for 
our stakeholders can be found on pages 
50 to 59 and in our s172(1) statement 
on pages 90 to 96.

Our stakeholders and s172(1) statement
In undertaking its duties in 2020, the (cid:37)oard 
and management continued to be mindful 
of the need to appropriately balance the 
interests and expectations of Quilter’s key 
stakeholders. Throughout this report we 
describe how stakeholders have been 
considered as Quilter strives to achieve its 
purpose of helping create prosperity for 
the generations of today and tomorrow. 

16

Quilter | Annual report 2020

Our response to 
COVID-19

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

How has Quilter 
managed through 
the global COVID-19 
pandemic for all its 
stakeholders?

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

17

 
 
 
 
Our response to COVID-19
continued

Quilter took a multi-dimensional approach 
to managing through the CO(cid:57)ID-19 pandemic. 
Our initial focus was on ensuring colleagues’ 
health and safety, maintaining operational 
resilience with high levels of client service, 
and rising to the challenge of broader social 
responsibility. As well as supporting 
colleagues, clients and communities, Quilter 
remained focused on delivering good 
outcomes for shareholders.

Quilter’s response through the pandemic 
has been characterised across three 
dimensions: 
 – Focus on the welfare of our colleagues, 

advisers, customers and charitable partners, 
and continuity of high-quality service(cid:30)

 – Continued strategic delivery(cid:30) and
 – Financial resilience, focused on cost 

reduction and efficiency, and supported 
with strong liquidity. 

Quilter’s response was overseen by 
the Executive Committee and the Crisis 
Management Gold Committee, comprised of 
key senior executive leaders from across the 
business. The (cid:37)oard and (cid:37)oard Committees 
met regularly to review CO(cid:57)ID-19-related 
responses and the Group’s resource position. 

(cid:58)hen the scale of the CO(cid:57)ID-19 pandemic 
became apparent, Quilter mobilised at pace 
with over 98(cid:8) of colleagues across our UK, 
Isle of Man, Ireland, Dubai, Hong Kong and 
Singapore offices working from home from 
late March 2020. Throughout the lockdowns, 
we adopted an active engagement strategy 
to ensure colleagues were supported through 
these difficult times. (cid:37)usiness contingency 
plans were implemented through accelerated 
delivery of IT and remote telephony solutions, 
allowing Quilter to maintain high client service 
levels to support advisers and customers. 
Management were also cognisant of broader 
social responsibilities given the significant 
support measures put in place by the UK 
Government, reflecting the unprecedented 
situation. This limited some of the cost 
measures which Quilter would normally 
expect to take in response to equity market 
declines reducing revenues. This included 
deferring Optimisation-linked redundancies 
during the first UK lockdown.

Quilter’s management and the (cid:37)oard regularly 
reviewed financial budgets and operating 
plans in response to the challenges arising 
from CO(cid:57)ID-19 and the uncertain outlook. 
(cid:58)ith a robust business model and financial 
resource position, low leverage, and as an 
active manager of our risk exposures across 
the risk universe, we were confident in our 
operational and financial resilience, and 
remained focused on completing principal 
strategic pro(cid:77)ects including the PTP and 
Optimisation plans. Quilter also has access 
to revolving credit facilities of (cid:101)12(cid:24) million 
provided by a syndicate of five banks with a 
maturity date of February 202(cid:24). These have 
remained undrawn since inception in 2018.

In response to the challenging revenue 
environment, management planned to 
reduce expenses by c.(cid:101)30 million in 2020, 
and achieved a reduction of c.(cid:101)40 million, 
through lower variable compensation, 
reduced marketing spend and other 
short-term initiatives. Despite these tactical 
cost savings, we noted in our first quarter 
trading statement that management no longer 
expected to meet the targeted 27(cid:8) operating 
margin for 2020 due to lower market levels 
leading to lower AuMA and hence revenues. 
Quilter did not furlough any staff nor use 
support measures made available to 
companies by the UK Government.

The (cid:37)oard reviewed and continued to 
recommend the approval for the 2019 final 
dividend. The Company also paid a 2020 
interim dividend and recommended to 
shareholders a final dividend for 2020. 
As a significant provider of retirement 
solutions to the UK public, Quilter believes 
companies who are in a position to do so 
should maintain dividends which provide 
important income for pension plans.

Read more:
Case studies on capital management
Page 99

Quilter’s financial position
Pages 60 to 69

Quilter’s approach to risk management
Pages 70 to 77

18

Quilter | Annual report 2020

How we supported our stakeholders

Focus on welfare 
and continuity 
of service

Colleagues

 – Moved to 98(cid:8)(cid:14) 
work from home
 – Expanded staff 

health and 
wellbeing 
programme, 
including mental 
health wellbeing

Clients and 
advisers

 – Enabled remote 

call centres
 – ‘There For (cid:60)ou’ 
rolled out to 
23,000(cid:14) adviser 
firms

Communities

Investors

 – (cid:101)200k(cid:14) UK 
National 
Emergencies Trust 
donation

Focus on welfare and continuity of service/Strategic delivery

 – Deferred 

 – Ensured business 

 – Quilter Foundation 

 – (cid:101)37(cid:24)m share 

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

Optimisation-
linked 
redundancies 
during first UK 
lockdown

continuity
 – Advisers 

supported their 
clients through 
market volatility

Strategic delivery

 – Restructured 

offices globally to 
be compliant with 
local COVID-19 
regulations

Financial resilience

 – Did not take UK 
Treasury support

 – Quilter Financial 
Planning and 
Quilter Cheviot 
systems upgrade
 – Supported greater 
digital adoption 
to meet client 
demands and 
improve efficiency

 – Adviser financial 

support 
arrangements 
in place

To read more, turn to 
our s.172 statement
Pages 90 to 96

continued to 
support (cid:60)oung 
Carers, with 
colleagues 
mentoring 
remotely

buyback initiated, 
final 2019 and 
2020 dividends 
paid (final 
recommended) 
and Odd-lot Offer 
completed

 – Financial Adviser 
School remained 
open with initial 
module made 
available online for 
free

 – Delivered PTP, 
with final two 
migrations 
undertaken during 
full UK lockdown

 – c.(cid:101)40m tactical 
cost savings 
achieved in 
response to more 
challenging 
markets

 – Improved net 
client cash flow
 – Robust financial 

results

Quilter | Annual report 2020

19

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

 
 
 
 
Chief Executive 
Officer’s statement

2020 was a year 
that presented many 
challenges but our 
people have risen to 
them and we have come 
through strategically 
better positioned.

Paul Feeney
Chief Executive Officer

20

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Execution
2020 will go down as one of the more 
demanding years in living memory with an 
unprecedented level of personal and business 
turmoil across the world. Our hearts go out 
to all those whose lives have been forever 
blighted by the consequences of CO(cid:57)ID-19, 
whether through the passing of loved ones, 
financial hardship or having to deal with the 
personal challenges and mental health 
consequences of isolation during lockdown.

Against this backdrop, I have been nothing but 
humbled by the dedication, resilience, passion 
and single-minded focus of all my colleagues 
across Quilter to deliver against the odds. 
They have not only met the expectations 
of all our stakeholders but have risen to the 
challenge of ensuring that, despite the 
unprecedented environment, 2020 was 
business-as-normal when it came to delivering 
for our customers, executing upon our 
strategic plans or (cid:77)ust being there to support 
one another.

The four things that characterised Quilter 
through the crisis were(cid:29)
 – our focus on the welfare of our colleagues, 

advisers, customers and charitable partners(cid:30)

 – a focus on maintaining continuity of 

customer service at a high level and ensuring 
operational resilience(cid:30)

 – our financial resilience, with an unrelenting 
focus on costs and efficiency, coupled with 
strong liquidity following the sale of Quilter 
Life Assurance(cid:30) and

 – our continued strategic delivery including 
delivering PTP, implementing our new 
General Ledger and adviser payments 
system as well as integrating the advice 
acquisitions made in 2019.

Related material online
Coronavirus should bring 
out the best in companies 
and responsible investors
Jane Goodland, Corporate 
Affairs Director discusses 
how the immediate fight 
against coronavirus has 
put company behaviour 
in the spotlight.

I am also pleased that our work has been 
recognised across the industry through the 
various awards we have won this year. In 
particular, being named (cid:522)Company of the (cid:60)ear(cid:523) 
in the recent FT Adviser service awards, 
retaining Quilter Financial Planning’s spot as 
the UK’s number one financial advice firm and 
more recently, Quilter Cheviot being awarded 
wealth manager of the year in the Professional 
Adviser (cid:58)ealth Partnership Awards. 

2020 was a year that presented many 
challenges but our people have risen to them 
and have come through stronger with our 
business better positioned. The future has 
arrived early, and we have embraced it.

Strategic delivery
There are three strands to our strategic 
transformation agenda at Quilter and the 
more uncertain environment makes our 
focus on execution even more resolute(cid:29)

 – we will leverage the transformational 

power of our new UK Platform to deliver 
faster growth and productivity; 

 – we will make Quilter a simpler business, 

focused on customer to drive even better 
customer outcomes; and

 – we will optimise our business by 

completing the cost reduction plans we 
set out in March 2019 to drive operational 
leverage.

I am delighted to report that PTP has been 
successfully completed with the final migration 
occurring (cid:77)ust after year end in February 2021, 
during a full UK lockdown. This followed a 
successful initial migration of c.8(cid:8) of the total 
platform assets in February 2020 which 
demonstrated that our platform technology 
worked well at scale and proved our ability 
to undertake a large migration in a safe and 
controlled manner. Our second migration 
completed in November 2020, in line with the 
revised timeline we set out in response to 
changed circumstances arising from CO(cid:57)ID-19. 
That migration covered the ma(cid:77)ority (c.70(cid:8)) 
of total platform assets and c.2,000 adviser 
firms. Finally, around (cid:24),000 adviser firms were 
involved in the last migration in February 2021. 
In a number of instances, firms in this last 
migration do not use Quilter as a primary 
platform and we anticipate that their 
successful transfer onto our market-leading 
technology will be a gateway to a stronger 
business relationship over time.

Each migration followed the same rigorous 
approach(cid:29)
 – intense planning and validation of our 
readiness plans ahead of migration, 
incorporating a number of dry runs and 
dress rehearsals(cid:30)

 – elevated post-migration customer and 
adviser support in the immediate post-
migration period(cid:30) and

 – incorporating adviser feedback to drive 
system improvements and embedding 
lessons learned from each migration into 
our planning for the next migration. 

Quilter | Annual report 2020

21

 
 
 
 
Chief Executive Officer’s statement
continued

Successful platform migrations on this scale 
are rare and they are rare for a reason given 
their complex organisational, logistical and 
technological demands. (cid:58)e are pleased 
to have not only successfully completed 
this programme safely but to also have 
embedded the core competencies for a 
transformation pro(cid:77)ect of this scale into 
our core business skillset.

(cid:58)e are delighted to have reached this 
milestone and our unique combination 
of flexible product wrappers, sophisticated 
management of investment solutions and 
range of tools, all built on robust new 
technology, delivers an advanced platform 
experience for the intermediary community. 
(cid:58)e have already received excellent feedback 
on day-to-day usability, simplicity of portfolio 
management as well as our bespoke reporting 
features. Each of these are designed to make 
an adviser’s life easier. Our award-winning 
technical expertise has supported advisers 
to quickly adapt to fully use the Platform’s 
capability which, coupled with our 
commitment to service, delivers a market 
leading offering.

Turning to Quilter Financial Planning, our focus 
has been on integrating the acquisitions we 
made in 2019. Charles Derby was re-branded 
to Quilter Financial Advisers, our mass a(cid:606)uent 
National business. The integration of 
Lighthouse is largely complete with advisers 
adopting the Quilter Financial Planners 
proposition, advice standards and technology. 
The generation of new client leads through 
our affinity relationships has remained strong 
despite the inevitable impact of CO(cid:57)ID-19. 

I appointed Stephen Ga(cid:93)ard as Chief Executive 
Officer of Quilter Financial Planning in June 
with a view to repositioning the business 
to drive stronger net flows from a more 
productive base of advisers. Over the last 
five years we have built up a strong, hard 
to replicate, advice business focused 
on delivering good customer outcomes. 
Stephen’s focus is straightforward(cid:29) to take 
our existing strong franchise and simplify 
it to deliver cost effective, client focused 
propositions that deliver good outcomes to 
our customers. This makes the next stage of 
Quilter Financial Planning’s evolution a very 
exciting one. (cid:58)hile this will lead to certain 
advisers who are either not fully aligned with 
our proposition or who lack sufficient scale 
or strategic alignment leaving the business 
in 2021, we will have a simpler, higher growth 
business delivering quality-assured client 
outcomes to an even higher level of 
consistency.

In line with these plans to simplify our 
business and better align our resources to our 
principal customer groupings, we will transfer 
Quilter Private Client Advisers into Quilter 
Cheviot later this year. Combining these 
businesses will allow us to deliver a seamless 
proposition encompassing advice and 
bespoke investment management. (cid:58)here 
desired, this will ensure integrated delivery 
of good client outcomes while helping us 
maximise the growth potential within our 
higher net worth proposition.

I am also pleased to announce that, sub(cid:77)ect to 
regulatory approval, Steven Levin will be taking 
on an additional role as CEO of Quilter 
Investors while maintaining his existing 
responsibilities for the Quilter Investment 
Platform. As we seek to drive growth and 
efficiency across Quilter, we believe it makes 
sense to bring these two parts of our 

Delivering our strategy – the journey so far
(cid:58)e have been on a multi-year transformation to deliver Quilter as the modern, UK-focused 
wealth manager it is today. 

2017
Old Mutual 
Managed 
Separation 
announced.

2018
Managed Separation 
completed.

Listed on LSE and JSE 
as Quilter plc.

Sold Single Strategy asset 
management business.

2019
Acquired Charles 
Derby Group and 
Lighthouse Group 
plc.

Sold Quilter  
Life Assurance.

2020
–  Migrated c.80(cid:8) of UK Platform assets onto new 

technology, completing remaining migration in early 2021.
–  Largely completed integration of advice acquisitions and 

reorganised advice business.

– Continued to broaden Quilter Investors’ product suite.
–  Quilter Cheviot’s investment performance remained 

strong.

– Initiated strategic review of Quilter International.

22

Quilter | Annual report 2020

Read more about PTP 
Page 44 

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

organisation closer together. I have tasked 
Steven with simplifying the client experience 
and ensuring a seamless approach to 
customer pricing and proposition 
development to further drive and deliver 
good customer outcomes.

(cid:58)e have also simplified and broadened the 
Quilter Investors product range through fund 
consolidation and new product launches, 
including our new multi-asset income suite 
and Cirilium (cid:37)lend proposition. (cid:37)oth of these 
new investment propositions have significant 
assets under management and are 
performing well versus peers.

Our Optimisation programme continues 
to progress in line with plan. There are three 
strands to Optimisation(cid:29) 
 – driving closer integration of capabilities 

across Quilter(cid:30)

 – rationalising technology and discretionary 

spend processes(cid:30) and 

 – driving efficiency as interdependencies 

are streamlined. 

Our net Optimisation run-rate savings 
increased by (cid:101)22 million from the end 2019 
level, to total run-rate savings of (cid:101)4(cid:25) million to 
date and are ahead of where we expected to 
be at this point. (cid:58)hile we delayed some staff 
restructuring activities at the outset of the 
CO(cid:57)ID-19 situation, good progress on the 
overall programme has been maintained. 
Notably, we took completion of our new 
London property in August and exited all 
three of our legacy London sites in 2020. 
Although CO(cid:57)ID-19 lockdowns have limited 
our ability to make the most of our new 
space, I am excited by the opportunities 
to collaborate that it will provide once 
we are able to return to the office.

I was pleased with 
consistent gross 
sales of £5.7 billion 
onto the Quilter 
Investment Platform 
in the period.

Operational delivery

Gross sales

Assets under management(cid:18)administration

£10.9bn (11%)
£117.8bn+7%

Delivering good customer outcomes through 
a trusted advice relationship is central to the 
Quilter business model. The Quilter Investment 
Platform is at the heart of our business, 
providing the investment ‘wrappers’ and other 
functionality to meet both our clients’ and 
their advisers’ needs, while our investment 
solutions provide the intellectual capability 
to deliver the outcomes our clients seek. 
Confidence in our proposition is demonstrated 
through both the continued attraction of our 
solutions to independent financial advisers 
and the resilience of our integrated flows. 

(cid:58)e experienced substantial improvement 
in net flows year-on-year even though gross 
client cash flows into the business were 
around 11(cid:8) lower at (cid:101)10.9 billion. NCCF 
increased to (cid:101)1.(cid:25) billion versus (cid:101)0.3 billion 
in 2019. This reflected improved persistency 
in client assets across each of Quilter Cheviot, 
Quilter International and the Quilter 
Investment Platform. Across the Group, overall 
levels of client retention improved to 92(cid:8) 
versus 88(cid:8) (90(cid:8) excluding the impact of 
the specific team departure in Quilter Cheviot) 
in 2019. The overall level of Defined (cid:37)enefit 
((cid:522)D(cid:37)(cid:523)) to Defined Contribution ((cid:522)DC(cid:523)) flows 
were broadly stable on 2019 and we 
welcomed the FCA announcement on plans 
to reform the D(cid:37) transfer market which will 
help promote better, industry-wide, customer 
outcomes. I am pleased to note that our 
existing approach was already consistent 
with the FCA’s announcement.

Overall AuMA increased by c.7(cid:8) over the 
course of the year with a closing balance of 
(cid:101)117.8 billion at 31 December 2020 compared 
with (cid:101)110.4 billion at 31 December 2019. 
Average AuMA, the principal driver of net 
management fee revenue, of (cid:101)107.9 billion 
for the year, was modestly above the 2019 
level of (cid:101)10(cid:24).7 billion. 

Quilter | Annual report 2020

23

 
 
 
 
Chief Executive Officer’s statement
continued

I was pleased with the consistent gross sales 
of (cid:101)(cid:24).7 billion onto the Quilter Investment 
Platform in the period with the increase in 
NCCF from (cid:101)0.9 billion in 2019 to (cid:101)1.(cid:24) billion in 
2020 while undertaking two ma(cid:77)or client asset 
migrations during the year. This consistency 
provides a solid foundation from which our 
new platform will be able to drive stronger 
flows given the wider range of products we 
can offer and assets we can hold. 

Quilter International experienced modestly 
lower gross and net flows versus the prior 
year and the (cid:37)oard continues to engage in a 
strategic review to consider how best to drive 
improved value to our shareholders from this 
business. (cid:58)e will update on this in due course.

Over the course of the year, we recruited 
137 Restricted Financial Planners, bringing our 
total to 1,842 net of departures. Limited net 
organic growth was a function of the external 
environment coupled with increased focus 
on individual adviser productivity. (cid:58)e expect 
further departures during 2021 as we 
reposition Quilter Financial Planning to drive 
better flow momentum while delivering good 
customer outcomes. The pipeline of firms 
seeking to (cid:77)oin our network remains strong. 
(cid:58)e have continued to add to the Quilter 
Cheviot investment team and our Investment 
Manager headcount increased to 1(cid:25)9 at the 
end of 2020 from 1(cid:25)7 in December 2019 and 
a low of 1(cid:24)(cid:24) at the end of December 2018. 
(cid:58)e expect to continue to selectively add to 
our Investment Manager headcount which will 
support growth in assets under management 
over time.

Our investment propositions continued 
to deliver good investment performance 
for clients. The medium and long-term 
performance at Quilter Cheviot continued 
to outperform relevant ARC benchmarks, 
remaining mainly first or second quartile, 
to the end of December 2020. 

Quilter Investors’ multi-asset solutions 
performance was also good, with 
performance on the biggest range, Cirilium 
Active, improving markedly to deliver second 
quartile outcome on a one-year view across 
all five active portfolios, with its longer-term 
performance also strong. (cid:58)ealth Select 
continues to perform strongly over one, three 
and five years and we broadened access to 
this range by adding it to our restricted adviser 
panel. Cirilium (cid:37)lend has performed 
satisfactorily since launch, remaining mostly 
second quartile. A notable milestone was 

24

Quilter | Annual report 2020

reached with the Cirilium Passive range 
passing through the (cid:101)2 billion AuM mark, 
making it Quilter Investors’ third 
largest solution. 

I was delighted to recruit (cid:37)ambos Hambi as 
Chief Investment Officer of Quilter Investors 
in November from Aberdeen Standard 
Investments ((cid:522)ASI(cid:523)). At ASI, (cid:37)ambos was 
Head of Multi-Manager Strategies and led one 
of the biggest fund selection teams in the UK. 
(cid:37)ambos has a strong reputation for his 
down-to-earth, patient long-term investment 
approach – he will be a strong cultural fit 
with Quilter.

Business performance
I am very satisfied with our ad(cid:77)usted profit 
before tax for 2020 of (cid:101)1(cid:25)8 million, down 8(cid:8) 
on 2019, given the broader market 
environment experienced during the year. 
Lower total net fee revenue of (cid:101)(cid:25)82 million 
(2019(cid:29) (cid:101)712 million) reflected a decline in 
revenue margins as a result of the mix shift 
in Quilter Investors and Quilter International, 
as well as the planned repricing on the Quilter 
Investment Platform. Our overall revenue 
out-turn for the year has been better than we 
anticipated at the time of our Interim Results 
as a result of stronger market levels during the 
second half of the year. This, together with our 
commitment to cost discipline, has supported 
the profit out-turn. 

In 2020 we focused strongly on cost 
management to protect the overall P(cid:9)L from 
volatility in the external environment. A year 
ago, ahead of CO(cid:57)ID-19 impacting markets, 
we were expecting a 2020 cost out-turn of 
around (cid:101)(cid:24)(cid:25)0 million. After the sharp decline 
in markets at the end of March, we set a 
revised target of (cid:101)(cid:24)30 million with our first 
quarter 2020 trading update with the intention 
of reducing expenditure by c.(cid:101)30 million. 
(cid:58)e outperformed against this target and 
delivered tactical reductions in expenditure 
of c.(cid:101)40 million versus our plan through lower 
variable compensation costs, reduced 
marketing and development spend and other 
short-term initiatives. As a result, full year 
operating expenses came in well below our 
revised target with a year-on-year decline of 
(cid:101)1(cid:25) million to (cid:101)(cid:24)14 million (2019(cid:29) (cid:101)(cid:24)30 million). 
This was achieved despite absorbing a full year 
of costs from the Quilter Financial Planning 
acquisitions made during 2019, which added 
(cid:101)12 million of costs including restructuring 
spend, as well as a (cid:101)7 million higher charge for 
the 2020 FSCS levy and other regulatory costs. 
(cid:58)e also accommodated costs stranded from 

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Ad(cid:77)usted profit before tax(cid:13) 

Ad(cid:77)usted diluted earnings per share

£168m (8%)
8.5p (1%)

the sale of Quilter Life Assurance, and property 
dual-running costs in relation to the new 
London premises. Separately, there was a cost 
drag of (cid:101)(cid:24) million relative to our expectations 
in respect of CO(cid:57)ID-19 related expenses from 
support arrangements, costs of additional 
equipment required to enable staff to work 
from home and the impact of deferring certain 
planned redundancies until later in the year. 

The decline in our operating margin for the full 
year was limited to a percentage point to 2(cid:24)(cid:8) 
(2019(cid:29) 2(cid:25)(cid:8), excluding Quilter Life Assurance) 
representing a significantly better out-turn 
than the 21(cid:8) achieved in the first half of the 
year. Given more robust market levels and a 
better revenue outlook, the ma(cid:77)ority of the 
c.(cid:101)40 million of tactical cost savings achieved 
in 2020 are expected to return to the expense 
line in 2021. As these savings contributed to 
an improvement in the operating margin of 
around six percentage points, underlying 
year-on-year progress into 2021 should be 
considered against a base excluding the 
benefit of these essentially one-time savings. 

Our IFRS profit after tax from continuing 
operations was (cid:101)89 million, compared to a loss 
of (cid:101)21 million in 2019. The difference between 
this measure and our Ad(cid:77)usted Profit is largely 
due to non-cash amortisation of intangible 
assets, our (cid:37)usiness Transformation expenses 
and changes in the impact that policyholder 
tax positions can have on the Group’s results. 
(cid:37)usiness Transformation costs will remain in 
2021, reflecting the final expenditure on PTP 
and further expenses incurred as part of our 
Optimisation initiatives.

Ad(cid:77)usted earnings per share of 8.(cid:24) pence 
compared with 8.(cid:25) pence from Quilter’s 
continuing operations in 2019. On an IFRS 
basis, we delivered basic EPS from continuing 
operations of (cid:24).1 pence versus a loss of 
1.1 pence per share for the comparable period 
of 2019 on the same basis. Period-end shares 
declined by (cid:25).2(cid:8) or 118.3 million as a result 
of our share buyback programme. 

Finally, the provision made in respect of 
certain D(cid:37) pension transfers for former (cid:37)SPS 
members is unchanged since the interim 
results. (cid:58)e continue to work and co-operate 
with the FCA and the skilled person who has 
been appointed in relation to this matter, 
and their work is described in more detail 
elsewhere in this report. (cid:58)hilst the relevant 
advice pre-dated our acquisition of 
Lighthouse, we have ensured that Lighthouse 
has responded to the situation consistent with 
our values.

Culture
Creating an inclusive and diverse culture where 
all colleagues feel they can be themselves has 
always been a core tenet of our cultural 
agenda. As much as this sub(cid:77)ect is important 
to all of us at Quilter, events elsewhere in 2020 
really laid bare how much still needs to be 
done. The death of George Floyd in the US and 
subsequent protests in May emphasised the 
importance of decisive action and my own 
communication on the topic acted as a 
catalyst for colleagues opening up and 
demonstrated to me that, as an organisation, 
we had further work to do. In response, we 
created two new pan-Quilter employee 
networks for cultural diversity and LG(cid:37)T(cid:14), 
to complement our existing gender equality 
network. (cid:58)e also launched an enhanced suite 
of family-friendly policies, appointed a new 
Head of Inclusion and (cid:58)ellbeing, significantly 
enhanced our diversity data, implemented a 
diverse shortlist requirement for our most 
senior management roles and have begun to 
speak openly on these issues both internally 
and externally. In 2021 we will report our 
ethnic diversity data for the first time and 
set future targets. I was also pleased with our 
progress on the proportion of women in our 
senior management, meeting our target of 
3(cid:24)(cid:8) by the end of 2020. (cid:58)e have more room 
to improve and have reset our target to reach 
a minimum of 38(cid:8) by the end of 2023. It is a 
priority for us to build on our progress in 2021 
and I am confident that we will do so.

(cid:58)e monitor colleague engagement on a 
quarterly basis. This is an established process 
at Quilter that has been in place since prior to 
our Listing. (cid:58)e purposefully stepped up our 
communication over the period of lockdown 
with my Executive Committee and I sending 
weekly updates to colleagues across the 
organisation and encouraging feedback to 
help foster a greater spirit of involvement. 
I am delighted that our regular ‘Peakon’ 
engagement scores across the organisation 
remain at a consistently high level.

Quilter | Annual report 2020

25

 
 
 
 
(cid:58)e are optimistic that flow momentum 
will continue to improve in 2021. (cid:37)oosting 
accessibility to our (cid:58)ealth Select range by 
including it in our restricted proposition in 
Quilter Financial Planning will improve asset 
retention and integrated flows. (cid:58)hile this 
may have an adverse impact on the revenue 
margin in Quilter Investors, these actions 
should be accretive to assets under 
management and administration which 
drive revenue generation.

(cid:58)e remain focused on controlling costs 
through both our Optimisation programme 
and other management initiatives and expect 
the 2021 cost out-turn to be around 
(cid:101)(cid:24)(cid:25)0 million, assuming broadly stable 
markets. (cid:58)e need to ensure Quilter is fit 
for the future and so our Optimisation plans 
remain on track to deliver planned savings 
of (cid:101)(cid:24)0 million by end 2021. Our work on 
Optimisation has also identified additional 
cost savings of (cid:101)1(cid:24) million which we intend 
to realise by mid-2022. To achieve this, the 
Group expects to incur additional (cid:37)usiness 
Transformation expense of (cid:101)1(cid:25) million. 

2020 has been an intense year with significant 
progress on strategic execution coupled with 
strong operational performance. Since we 
Listed, our focus has been on transformation. 
Our focus is now on execution, leveraging the 
strengths and capabilities of the modern 
integrated wealth manager that we have built. 
Now that Quilter is much closer to being the 
finished article, I look forward to the business 
reaching its full potential in 2021 and beyond.

Paul Feeney
Chief Executive Officer

Chief Executive Officer’s statement
continued

(cid:58)e have a deep commitment to acting and 
investing responsibly and in 2020 we made 
excellent progress towards embedding 
environmental, social and governance ((cid:522)ESG(cid:523)) 
factors throughout our business. Climate 
change is undoubtedly the most significant 
challenge the world faces and tackling it 
is a responsibility of everyone. In 2020 we 
formalised our climate change strategy with 
the ob(cid:77)ective to reduce Quilter’s contribution 
to climate change and support the transition 
to a low carbon economy. To achieve this 
ambition, we have developed a framework 
which is helping us to reduce our direct 
carbon footprint, embed climate 
considerations in our investment 
management and stewardship activity, offer 
clients climate-focused investment solutions 
and align with the Task Force on Climate-
related Financial Disclosure. I am pleased 
with our progress on incorporating ESG 
considerations into our entire value chain. (cid:58)e 
are embedding ESG into our standard advice 
process to help clients invest according to 
their ESG preferences, and we are embedding 
ESG even more deeply into our standard 
investment management processes, both 
within our multi-asset investment solutions 
and our discretionary wealth management 
business. (cid:58)e celebrated the 10-year 
anniversary of our Climate Assets Fund which 
has benefited from increasing investor interest 
in ESG funds. To provide clients and advisers 
with greater transparency, in 2020 we 
incorporated ESG ratings for third-party funds 
available on our UK platform. Upon this solid 
foundation we will enhance our approach to 
responsible investment even further in 2021.

Outlook
Markets globally entered 2021 on an optimistic 
note and recent CO(cid:57)ID-19 vaccine related news 
has been positive, with roll-out plans 
progressing well in the UK. Although the full 
economic impact of the pandemic is only (cid:77)ust 
beginning to be experienced, in terms of 
broader social challenges, I am optimistic that 
the worst may be behind us. Quilter remains 
well positioned in an industry with secular 
long-term growth prospects. Completing the 
migration of assets onto our new UK platform 
in February 2021 was a watershed moment 
for the Group, not (cid:77)ust because this has been 
a key area of focus internally and externally 
over the last five years but, more importantly, 
because the new Platform will strengthen the 
cohesion between our different UK business 
capabilities and will be a catalyst for faster 
growth in the future.

26

Quilter | Annual report 2020

Chief Executive Officer’s 
Q&A

After a year of 
market volatility, 
global economic and 
social disruption, Chief 
Executive Officer 
Paul Feeney answers 
key questions to explain 
why Quilter remains 
well positioned to 
capture growth.

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

27

 
 
 
 
Chief Executive Officer’s Q&A 
continued

Q.

Q.

You’ve previously talked about 
Quilter not being the finished 
article – are you there yet?

Now you have completed PTP, 
what is the main challenge for 
the business?

Paul Feeney
Chief Executive Officer

A.

(cid:58)ith our foundations for growth in place, 2021 
will be about two things(cid:29) growth and efficiency. 
Our focus is to deliver strong performance 
and execution.

Through 2021, we will continue to leverage 
opportunities from recent adviser acquisitions 
to help satisfy continued strong demand for 
financial advice. The Quilter Investment 
Platform team is focused on broadening and 
deepening relationships with advisers and 
their clients in order to drive flows and capture 
greater share from our advisers to peers’ 
platforms. (cid:58)e will continue to broaden our 
suite of investment management solutions 
to meet client needs, and deliver good 
performance and value. Organising ourselves 
around customers will mean we can further 
develop our customer-focused propositions, 
and continue to improve business efficiency. 

A.

At the time of our Listing in 2018, I detailed 
how Quilter was transforming itself to become 
a leading, modern UK-focused wealth 
manager – the timeline on page 22 
summarises our achievements over the past 
two and a half years. (cid:58)e have made excellent 
progress. The strategic review of Quilter 
International is ongoing and we will update 
the market in 2021 once this has concluded.

The final migration of clients and advisers onto 
our new UK Platform in early 2021 was the last 
item on our original ‘to do’ list. (cid:58)ith PTP 
complete, I am delighted our foundations are 
now in place to accelerate our growth plans. 
I am excited about the opportunities ahead 
to drive growth and efficiency. 

Q.

How important is your 
business culture in delivering 
your strategy?

A.

Our culture is hugely important to the delivery 
of our strategy. Our purpose binds us, our 
values connect us and our culture makes 
us who we are. I believe passionately in the 
importance of nurturing an inclusive and 
diverse culture, where caring for each other 
and our community is at the heart of 
everything we do. 

28

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Read more about 
our market
Page 30

Q.

Q.

How has the change in working 
practices from the COVID-19 
pandemic changed the nature 
of the business?

What do you see as the 
principal challenges for Quilter 
in the years ahead?

A.

The pandemic brought the future forward and 
prompted an acceleration of initiatives which 
were already underway at Quilter. It expedited 
digital adoption right across the organisation 
to capture productivity benefits from changed 
client behaviours. 

I have often said that the future of financial 
advice is not one of man versus technology, 
of human advice versus robo-advice, rather 
a combination of the two(cid:29) integrated, digital 
financial advice. 2020 proved that to be true. 
All our advisers are now serving their clients 
digitally. A survey of advisers in the national 
division of Quilter Financial Planning found 
88(cid:8) of advisers would continue to include 
remote advice when the pandemic is over. 

Through the pandemic, we used technology 
to deliver solutions such as digital signatures, 
with many legacy paper-based processes 
re-engineered to allow a greater degree of 
automation and client focus. Online customer 
registrations on the UK Platform increased 
materially versus last year as customers 
adapted their engagement preferences. In 
Quilter International, over half the interactions 
with advisers are now online through (cid:58)ealth 
Interactive digital accounts. (cid:58)e look forward 
to building on this digital adoption, supporting 
efficiency initiatives across Quilter. 

A.

The achievement of our transformation 
is not the end(cid:29) we must continue to evolve 
and anticipate the needs of our clients. 

(cid:37)uilding relationships and preparing for 
younger generations’ expectations is key 
to building a sustainable business legacy. 
Investment products which protected our 
savings in the past will not do so in the future 
– we must continue to build solutions and 
propositions which deliver good outcomes to 
our customers, in line with their risk appetite 
and ESG focus. The CO(cid:57)ID-19 pandemic has 
taught us to embrace change and we will 
continue to do so, positioning our business 
as one-Quilter, to reflect the needs of 
our customers.

Q.

Is there anything on the 
regulatory horizon for the 
industry which concerns you? 

A.

The FCA has conducted multiple reviews 
of the different aspects of the UK wealth 
management industry’s operations in recent 
years and found it to be functioning well. 
Like the FCA, we have a strong focus on the 
delivery of value for customers and believe 
our omni-channel, unbundled model has 
resilience in delivering value to all our 
stakeholders. 

Quilter | Annual report 2020

29

 
 
 
 
Our markets

As a wealth manager serving clients 
throughout their lives, Quilter operates 
within markets offering secular growth 
potential(cid:29) the advice industry, wealth 
management, and investment 
management. (cid:58)hile participants face 
challenges such as constrained supply 

of financial advisers, fee pressure, 
the cost of regulation and ongoing 
regulatory and fiscal changes, there 
is scope for differentiated business 
models to win market share, such 
as those with omni-channel business 
models like Quilter. 

Macro trends affecting the environment in which we operate

Global health pandemic

Changing demographics

Climate change and 
responsible investment

Key trend
The economic and social fallout from the 
2020 CO(cid:57)ID-19 pandemic has disrupted 
many industries globally. UK wealth 
management has not been immune 
to the disruption, feeling the affects of 
market volatility on client portfolios, and 
is likely to be impacted by governments’ 
monetary and fiscal responses, all of 
which drive a strong demand for trusted 
financial advice. 

The global pandemic brought the future 
forward. Changes which we thought 
would take years to come to the fore, 
such as adviser adoption of digital 
technology, client appetite for socially 
conscious investments. Investment 
platforms which can be accessed 24(cid:18)7 
whether through apps, websites or 
telephony, are increasingly seen as 
business norms. (cid:37)usinesses which 
embrace change and evolve to meet 
client needs and deliver good customer 
outcomes will have long-term 
sustainability. 

Key trend
The UK population continues to age, 
with people living longer. Consequently, 
the average age of the population – and 
the cost of supporting a larger number 
of people in retirement – is increasing. 
(cid:58)ith the ‘baby boomer’ generation now 
in their (cid:24)0s and (cid:25)0s, a large proportion 
of the population is preparing for and(cid:18)or 
reaching retirement age in the UK. 
This is a strong force behind increasing 
demand for financial advice and new 
investment solutions.

People turned (cid:25)7 in 2019 vs 20091

People turned (cid:24)(cid:24) in 2019 vs 20091

+35%
+15%

Key trend
The perceptions of a company’s impact 
on the environment are changing as 
governments, investors and society 
encourage businesses to transition 
to a low carbon economy. 

As a service industry, wealth managers 
typically have a comparatively low 
carbon footprint. However they have 
a responsibility to reduce their own 
environmental intensity, and they have 
an even more significant role to play 
in influencing the responsible resource 
consumption of the companies in which 
they invest on behalf of their clients. 
As clients recognise the influence their 
savings and investments can have 
on the environment and society more 
broadly, there is an increased demand 
for responsible investment solutions 
and products which offer responsible 
investing. ESG will become increasingly 
woven into the investment world’s fabric. 

Total funds managed in responsible 
investment funds 2019-20202 

+67%

1   Source(cid:29) ONS UK – England and (cid:58)ales 

Population, 2019.

2   Source(cid:29) The Investment Association, 

‘2020 – the (cid:60)ear in Review’.

30

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Wealth management-specific trends affecting 
the market in which we operate

Digital innovation

Large and growing 
wealth market

Fiscal changes and 
increase in savings 
accessibility driving 
complexity

Key trend
Technology is omnipresent in our lives. 
(cid:58)ealth Management has been a 
relatively late adopter of digital 
innovation and is ripe for disruption. 
Clients increasingly expect digital access 
to their investment portfolios and 
seamless multi-channel experiences 
throughout the wealth management 
(cid:77)ourney. Robo-advice technologies 
remain in their infancy with only modest 
levels of market adoption. Artificial 
intelligence and robotics are also being 
incorporated into middle and back-office 
functions, bringing opportunities for 
improved risk management and 
operational efficiency. 

Key trend
The UK wealth management market 
is the fifth largest in the world3 and is 
forecast to grow to over (cid:101)2 trillion in 
AuMA by 2024. (cid:58)hile the ‘baby boomer’ 
generation is a key customer 
demographic as they prepare to enter 
retirement, intergenerational wealth 
transfer will be a support to the 
sustainability of the industry. (cid:37)uilding 
relationships with younger generations 
will be a key for the future. 

Key trend
UK Pension Freedom resulted in 
increased choice and flexibility for 
individuals to manage their long-term 
savings. (cid:58)ealth managers now advise 
and manage customers’ funds beyond 
the accumulation phase, well into the 
retirement phase, supporting clients 
throughout their savings and investment 
life cycle. The disruption caused by 
continually changing taxes, allowances 
and reforms has created a very complex 
path for individuals to navigate, driving 
increased need for advice.

UK long-term savings market forecast4 
AuMA ((cid:101)tn) 

People aged 4(cid:24)-(cid:24)4 feel they understand 
enough about pensions to make 
decisions about saving for retirement(cid:24)

2024e
2014

£1.2tn

£2.3tn

3   Source(cid:29) Credit Suisse, Global (cid:58)ealth 

Databook 2019.

4   Source(cid:29) FCA, Platforum, Pimfa, PAM Directory, 

Oliver (cid:58)yman estimates(cid:30) Includes assets managed 
by financial advisers, wealth managers and held on 
platforms. Does not include occupational pensions 
or annuities.

<50%

(cid:24)   Source(cid:29) ONS (cid:522)Early indicator estimates from 

(cid:58)ealth and Assets Survey(cid:523), published August 2020.

Quilter | Annual report 2020

31

 
 
 
 
Our markets
continued

Wealth management-specific trends affecting the market in which we operate 
(continued)

Strong demand for advice 
as cost of delivery increases

Savings and investments 
consolidating onto 
Platforms

Growth in outcome-based 
client-focused investment 
solutions

Key trend
Modern wealth managers increasingly 
use open architecture wrap platforms 
which offer transparent pricing and good 
investment choice. It is no longer a 
unique selling point to have easy-access 
digital services at competitive prices. 
Platforms are benchmarked on the 
quality of their service, back-office 
functionality and their wider technical 
support to advisers. 

Key trend
The industry has shifted from opaque, 
traditional life savings products to more 
modern, transparent solutions, aligned 
with the client’s risk appetite and 
attitude to responsible investment 
identified through the advice process. 
The investment solutions part of the 
value chain is highly competitive in its 
pricing, and in a world of lower asset 
returns, advisers are looking to find 
the best value for their clients.

Key trend
The UK Advice market is limited in its 
number of participants and advisers 
are increasingly focusing on managing 
a smaller but more active customer 
base, with higher investable assets. 
This has been supported through a shift 
in compensation structures, evolving 
from commission-based to ongoing 
fee-based models. 

The regulatory environment is making it 
harder for smaller independent financial 
advisers to survive as regulatory 
oversight increases and professional 
indemnity insurance ((cid:522)PII(cid:523)) cost and FSCS 
levy increases exceed revenue growth. 
(cid:58)hile demand for advice increases, its 
supply has become more constrained.

2018-2019 annual increase in PII 
premiums paid by financial adviser firms(cid:25)

Compound annual growth in total 
UK platform market 2009 to 20197

Percentage of global asset management 
AuM in ‘Solutions’

+17%

+21%

2018
2008

14%

9%

(cid:25)   Source(cid:29) ONS (cid:522)Early indicator estimates from 

7   Source(cid:29) Platforum 2009 total platform AUM vs 

(cid:58)ealth and Assets Survey(cid:523), published August 2020.

Fundscape 2019 Q2 total platform AuM.

32

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

How these trends affect Quilter and its operations

The completion of the PTP unlocks the next 
stage in Quilter’s development as it provides 
the opportunity to capture greater share 
of the growing Platform market as well 
as improve cohesion between the 
Quilter businesses. 

Technology has been a key enabler for 
Quilter in managing through the CO(cid:57)ID-19-
disrupted environment. The business is 
encouraging the use of digital access and 
client service solutions to maintain and 
enhance client engagement, and 
implementing new technologies such 
as robotics to make back-office processes 
more efficient. 

As Quilter continue to evolve, increasingly 
working as one Quilter, organised around 
the client, we will provide a smoother 
customer experience. (cid:58)orking more 
efficiency and cohesively will bring benefits 
to all stakeholders.

Quilter firmly believes the wealth 
management industry can weather short-
term uncertainty with structural growth 
opportunities intact. The CO(cid:57)ID-19 
pandemic, regulatory changes and other 
macro influences may impact the short term, 
but we draw confidence from historical data 
which demonstrates robust levels of savings 
continue through market cycles. 

Multi-year industry trends were reaffirmed 
by market volatility arising from the CO(cid:57)ID-19 
pandemic, and the subsequent potential for 
policy changes to pension allowances and 
wealth taxes underlines the need for trusted, 
face-to-face advice in the UK. The ageing 
population will mean there is a large potential 
market of individuals who will require advice 
for years to come and regulatory changes 
such as Pensions Freedom have created the 
opportunity to support an individual through 
their investment life cycle. For advisers, the 
pandemic has highlighted the far-reaching 
benefits of being supported by a broad 
umbrella of an advice-centric business 
such as Quilter.

Quilter’s investment solutions are designed 
to deliver good customer outcomes through 
the market cycle, and to meet a client’s 
risk appetite while being agnostic between 
active and passive management styles. 
ESG will increasingly be woven into the 
investment world fabric and Quilter sees 
opportunity to be a leader in responsible 
wealth management.

Governance report
Page 80 

Quilter | Annual report 2020

33

 
 
 
 
Our 
strategy

34

Quilter | Annual report 2020

As set out at the time of our Listing in 2018, 
Quilter has transformed the shape of its 
business to become the modern, UK-focused 
wealth manager it is today. 

Guided by our outlook of the wealth 
management industry, our strategy is focused 
on achieving good customer outcomes and 
growing our business proposition, delivering 
these from an efficient operating base and 
managed within a prudent risk framework. 

Underpinning these priorities is an 
understanding that embodying the right 
culture will help not only the achievement 
of our strategic ob(cid:77)ectives but also in meeting 
our commitments to operating in a 
responsible manner for the benefit of all 
our stakeholders, as set out in our Shared 
Prosperity Plan.

Our strategy will enable us to(cid:29)
 – become the leading provider of insightful, 

trusted financial advice in the UK(cid:30)

 – provide outcome-based, responsible 

investment solutions, focused on meeting 
the real needs of our customers(cid:30)

 – offer easy and simple access for clients 

 – deliver top-line growth and operating 

to manage investments on one platform 
in an appropriate wrapper(cid:30)

leverage(cid:30) and

 – ultimately achieve our purpose of helping 
to create prosperity for the generations 
of today and tomorrow. 

Our four strategic pillars

1. 
Delivering on 
customer outcomes

2. 
Advice and Wealth 
Management 
growth

3. 
Wealth Platforms 
growth

4. 
Optimisation and 
efficiency 

Underpinned by

Our culture and commitment to responsible business

Quilter believes that a company’s values must reflect what it stands for as they drive the 
achievement of its purpose. Ensuring colleagues embody Quilter’s cultural values of being 
pioneering, dependable and stronger together connects the business and shapes behaviour 
towards all our stakeholders. Having the right culture will help Quilter achieve its strategy while 
delivering sustainable long-term value for all. 

Read more about our 
responsible business 
commitments, strategy 
and progress against our 
KPIs during the year
Page 46

Strategic pillar 1:
Delivering on customer outcomes

Strategic objective:
Focus on ensuring good customer outcomes 
and risk-ad(cid:77)usted investment returns while 
delivering quality service to customers. 
Developing appropriate investment 
propositions and solutions is key to the 
delivering of this ob(cid:77)ective. 

Related KPIs
 – NCCF(cid:18)opening AuMA
 – Integrated net flows

Other performance indicators
 – Asset retention
 – Investment performance
 – Levels of upheld complaints

Asset retention

92% 

2020 performance
 – Ensured business continuity through 
CO(cid:57)ID-19 disruption, with advisers 
supporting clients through market volatility.

 – NCCF as a percentage of opening AuMA 

improved one percentage point reflecting 
an improvement year-on-year in net flows.

 – Integrated net flows continued to 

demonstrate the strength of the Quilter 
business model, remaining resilient in a 
market of lower client flows.

 – Quilter Investors’ investment performance 
was good, with performance of the largest 
range, Cirilium Active, improving markedly 
on a one-year view, and (cid:58)ealth Select 
continuing to perform strongly. 

 – Quilter Cheviot continued to deliver good 

performance for customers, broadly 
delivering out-performance relative to 
relevant benchmarks over three, five and 
ten-year periods.

 – Strong asset retention reflected higher levels 
of business continuity and adviser support 
through the early months of the CO(cid:57)ID-19 
pandemic relative to some peers.

 – Complaints received increased year-on-year, 

with the increase associated to historic 
advice provided by Lighthouse prior to 
its acquisition by Quilter. Aside from these, 
complaints remained low and levels of 
upheld complaints were below the 
industry average.

 – Quilter won a number of awards through 
the year including being named ‘Company 
of the (cid:60)ear’ at the 2020 FT Financial Adviser 
Service Awards.

Focus for 2021
 – Continue to provide trusted, quality 

financial advice.

 – Provide high-quality solutions which meet 

the needs of our customers, at competitive 
prices, at every part of the value chain.

 – Drive investment performance and deliver 

good outcomes for customers.

 – Maintain good customer service and 

organise business propositions around the 
client to improve the customer experience. 

 – Continue to integrate responsible 

investment principles Quilter-wide. 

 – Continue to uphold the principle of treating 

customers fairly, including maintaining 
robust processes around complaints and 
their appropriate resolution.

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

35

 
 
 
 
Our strategy 
continued

36

Quilter | Annual report 2020

Strategic pillar 2:
Advice and Wealth Management growth

Strategic objective:
Advice 
 – Grow by adding advisers through 
recruitment and acquisitions, and 
supporting individual adviser productivity. 
 – Support the Financial Adviser School intake 

and graduates.

 – Develop differentiated High Net (cid:58)orth and 
Affluent(cid:18)Mass Affluent advice propositions. 

Investment management 
 – (cid:37)uild out Quilter Investors and use adviser 
feedback to provide building blocks for 
market-leading solutions. 

 – Add investment managers to support Quilter 

Cheviot’s business growth.

Related KPIs
 – Integrated net flows
 – Number of restricted financial planners
 – Number of investment managers

Other performance indicators
 – Adviser productivity

New advisers graduated from the Quilter 
Financial Adviser School

167

2020 performance
 – 2(cid:8) growth in RFPs, with acquisitions 

purposefully scaled back as focused on 
integrating those acquired in 2019.

 – Integrated adviser acquisitions, with focus on 
supporting advisers to improve productivity.
 – 1(cid:25)7 new advisers graduated from the Quilter 
Financial Adviser School – with moving to a 
predominantly digital delivery model, 
improving access to a more diverse future 
generation of financial planners. 

 – (cid:58)ealth Select products made available to 

RFPs as well as IFAs to meet client demand 
for managed portfolio solutions.
 – Gross flows into Quilter Investors’ 

broadened product suite increased, 
diversifying revenue streams.

 – Net addition of two investment managers 

to Quilter Cheviot team.

 – Gross outflows from Quilter Cheviot 

reduced year-on-year as the impact of 2018’s 
investment manager departures fell away.
 – Announced Private Client Advisers is to be 

moved under the organisational 
management of Quilter Cheviot in 2021 to 
improve cohesion in servicing customers.

Focus for 2021
 – Quilter Financial Planning is well positioned 
to support clients as market sentiment 
improves and subsequently drive NCCF.
 – Continue to broaden proposition to larger 

customer base, leveraging affinity 
relationships and expanded functionality 
as a result of new platform.

 – Further simplify our advice and investment 

management proposition, organising around 
customers.

 – Continue to build flow momentum into 

Quilter Investors’ product suite as advisers 
and their clients seek value and good returns 
through the market cycle.

 – Capitalise on Quilter Cheviot’s larger 

investment management team.

 – Continue to embed responsible investment 

philosophies into the proposition and 
explore opportunities to meet clients’ 
ethical investing needs.

Strategic pillar 3:
Wealth Platforms growth 

Strategic objective:
Investment Platform
 – Safely deliver PTP with high quality support 
for customers and advisers throughout the 
migration process.

 – Once implemented, realise the benefits of 

the more modern platform and its enhanced 
proposition for advisers.

International
 – Maintain focus of geographic footprint 
and ensure high quality and value of 
new business.

Related KPIs
 – Integrated net flows

Other performance indicators
 – Control of costs to deliver PTP
 – NCCF from RFPs onto UK Platform
 – NCCF from IFAs onto UK Platform
 – NCCF into International

Uplift in online account activation during 2020

80%

2020 performance
 – Final migration of UK Platform clients 

achieved safely and successfully in February 
2021, despite migration timeline disruption 
as a consequence of CO(cid:57)ID-19.

 – Significant increase in usage of the customer 
portal and good uptake of new functionality 
such as adviser self service from cohorts 
migrated in 2020.

 – PTP spend to end-December 2020 totalled 
(cid:101)174 million. Programme budget revised at 
2020 Interim Results from (cid:101)18(cid:24) million to 
c.(cid:101)200 million due to dual running costs as 
a result of the extended timeline to complete 
the programme due to CO(cid:57)ID-19.

 – Improved net flows into Quilter Investment 

Platform despite market volatility, with 
business-as-usual transfers out to 
competitor platforms reduced significantly 
while transfers in remained steady. Adviser 
feedback indicated this reflected Quilter’s 
higher level of business continuity and 
adviser support.

 – Resilient flows within Quilter International.
 – Initiated strategic review of Quilter 

International.

Focus for 2021
 – Leverage improved functionality from new 
platform technology to grow market share 
with independent advisers and reduce flow 
leakage from Quilter RFPs.

 – Complete re-brand of the platform to Quilter 

Investment Platform. 

 – Decommission legacy platform and continue 
to support colleagues who will be leaving the 
Company, through the award-winning ‘Hello 
Tomorrow’ programme.

 – Continue to evolve responsible investment 

functionality for advisers within the platform.

 – Conclude and implement strategic review 

of Quilter International.

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

37

 
 
 
 
Our strategy 
continued

38

Quilter | Annual report 2020

Strategic pillar 4:
Optimisation and efficiency

Strategic objective:
 – Drive operational leverage through 

enhanced scale and improved efficiency 
in operational processes. 

 – Target, as disclosed in 2018’s Annual Report, 

was for a two-percentage point 
improvement in 2020 operating margin and 
a further two-percentage point 
improvement in 2021. 

 – Note(cid:29) As a consequence of CO(cid:57)ID-19 

induced market volatility and the uncertain 
revenue outlook, we moved away from the 
2020 target. 2021 target has been revised 
to a two-percentage point improvement 
on 2020, after ad(cid:77)usting for 2020 tactical 
cost savings. 

Related KPIs
 – Operating margin
 – Ad(cid:77)usted profit before tax

Other performance indicators
 – Control of costs to deliver the Optimisation 

programme

 – Employee engagement scores
 – Internal surveys monitoring cost awareness 

and positive cultural change

Run-rate savings delivered to date

Operating margin

£46m
25%

2020 performance
 – Mobilised efficiency initiatives including 

delayering and streamlining the business.

 – General Ledger(cid:18)procurement system 
pro(cid:77)ects progressed to January 2021 
implementation.

 – Delivered (cid:101)13 million savings in the year 

when compared to the original 2018 cost 
base, with full year run-rate of (cid:101)22 million 
and (cid:101)4(cid:25) million total run-rate across the 
programme to date.

 – Cognisant of social responsibilities as a 

business operating in unprecedented times, 
paused planned organisational design 
initiatives during the first UK lockdown.
 – (cid:101)33 million costs incurred in the year to 

deliver the programme, totalling (cid:101)(cid:24)8 million 
since Optimisation began.

 – In April 2020, confirmed no longer expected 
to meet the targeted 27(cid:8) operating margin 
for 2020 due to lower market levels leading 
to lower AuMA and hence revenues. 
However management actions limited 
decline in operating margin in 2020 to one 
percentage point.

 – Reaffirm should markets remain broadly 
consistent with market levels, expect to 
improve 2021 operating margin by two 
percentage points compared with 2020 
achievement, after ad(cid:77)usting for one-off 
tactical savings in 2020.

Focus for 2021
 – Continue strict cost management to deliver 

remaining planned efficiencies.

 – Seek opportunities for further operational 
efficiency and organisational cohesion.
 – Complete implementation of new, and 

decommissioning of legacy, systems allowing 
for further future operational leverage.
 – Further reduce stranded costs associated 
with the sale of Quilter Life Assurance.
 – Complete final re-brand of business to 

Quilter to unify the business and provide 
a strong foundation from which to grow 
market share.

 – Continue to support employee engagement 

through the transition period.

 – Explore opportunities to achieve further 

efficiencies following the successful 
completion of PTP.

Key performance indicators

Quilter has identified the key 
performance indicators (“KPIs”) it 
believes are useful in assessing the 
Group’s performance against its 
strategic priorities. They encompass 
both financial and non-financial 
measures, as set out below.

Updates to Key Performance 
Indicators in 2020
Following a review of the KPIs to ensure 
our measurements remain relevant and 
appropriate for our strategy, the metric 
for the ‘IFRS profit(cid:18)(loss)’ KPI has 
changed from ‘IFRS profit before tax 
attributable to equity holders’ to ‘IFRS 
profit(cid:18)(loss) after tax from continuing 
operations’, as this is a key IFRS statutory 
measure used to monitor the financial 
performance of the business.

Restricted financial  
planners (“RFPs”)

Investment  
managers (“IMs”)

Definition
Number of advisers licensed to advise 
clients across Pension, Investment and 
Protection solutions, but only permitted 
to recommend products and solutions 
from providers on the Quilter Financial 
Planning Restricted Panel. 

Definition
Number of individuals who provide 
investment management services to 
clients of Quilter Cheviot in line with 
individual circumstances and 
investment ob(cid:77)ectives.

Link to strategy

Link to strategy

2

2

Performance in 2020
We achieved net growth of 2% in RFPs 
in 2020. Organic growth for the year 
was limited as a result of the external 
environment coupled with a scaling back 
of acquisitions as we focused on fully 
integrating those acquired in 2019.

Performance in 2020
We welcomed a net additional two 
investment managers in the year. 
Growth was lower than anticipated as 
hiring new investment managers was 
more challenging in the CO(cid:57)ID-19 
pandemic environment.

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

Outlook for 2021
During 2021, we expect further 
departures as we reposition Quilter 
Financial Planning to drive better net 
flow momentum from a more 
productive base of advisers, while 
delivering good customer outcomes. 
The pipeline of firms seeking to (cid:77)oin 
our network remains strong.

Outlook for 2021
Our rebuild strategy to replace the team 
which departed in 2018 is complete. 
(cid:58)e expect to continue to add to our 
investment manager headcount and for 
those new hires to contribute to support 
growth in AuM over time.

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Restricted financial planners ((cid:523)RFPs(cid:523))

Investment managers (“IMs”)

2020
2019
2018
2017
2016

1,842
1,799

1,621

1,561

1,423

2020
2019
2018
2017
2016

169
167

155

164

158

Quilter | Annual report 2020

39

Strategic pillars key:
1. Delivering on customer outcomes.
2. Advice and Wealth Management growth.
3. Wealth Platforms growth.
4. Optimisation and efficiency.

*   See page 270 for alternative performance measures. 

 
 
 
 
 
Our Key Performance Indicators
continued

NCCF/Opening assets 
under management/
administration (“AuMA”)*

Integrated net inflows* 

Adjusted profit  
before tax* 

Definition
Total net flows as a percentage of 
opening AuMA. This measure evaluates 
the level of flows during the period in 
relation to the asset base, discretely 
from market movements. 

Definition
Total NCCF that has flowed through two 
or more businesses within Quilter. It is a 
lead indicator of revenue generation 
driven by the Group’s integrated 
business model. 

Definition
Represents the underlying operating 
profit of the Group. It therefore ad(cid:77)usts 
IFRS profits for key ad(cid:77)usting items such 
as goodwill impairment and 
amortisation of intangibles, business 
transformation costs, financing costs on 
external borrowings, and policyholder 
tax ad(cid:77)ustments, excluding non-core 
operations, as detailed in Note 7 in the 
financial statements.

Link to strategy

1

Link to strategy

1, 2, 3

Link to strategy

4

Performance in 2020
NCCF(cid:18)opening AuMA increased one 
percentage point in 2020, which 
reflected the substantial improvement 
in net flows year-on-year. Absolute NCCF 
increased to £1.6 billion compared to 
(cid:101)0.3 billion in 2019. This reflected 
improved persistency in client assets 
across Quilter Cheviot, Quilter 
Investment Platform and Quilter 
International.

Outlook for 2021
With the PTP migrations complete and 
improving customer sentiment, we 
expect to build back towards our (cid:24)(cid:8) 
NCCF target over the near term. 

Performance in 2020
Integrated net inflows decreased 
by 12(cid:8) in 2020 due to the challenging 
environment for advisers presented 
by the pandemic and the associated 
restrictions providing less opportunity 
to attract new business.

Performance in 2020
Ad(cid:77)usted profit before tax was down 
8(cid:8) from 2019, driven by decreased 
revenue across the business partially 
offset by lower costs driven by 
continued cost discipline.

Outlook for 2021
As we seek to organise ourselves around 
our customer, with a simpler advice 
proposition underpinned by a high-
quality platform and investment 
solutions, we expect to drive greater 
market share and subsequently 
integrated net inflows.

Outlook for 2021
After an intense year of strategic 
progress, 2021 will be a year of 
execution, business focus and efficiency 
as we accelerate growth momentum 
across our businesses while remaining 
focused on controlling costs. 

NCCF/Opening AuMA

Integrated net flows

Ad(cid:77)usted profit before tax

1%
0%

2020
2019
2018
2017
2016

5%

6%

9%

2020
2019
2018
2017
2016

£2.3bn

£2.6bn

£2.2bn

£4.7bn

£5.2bn

2020
2019
2018
2017
2016

£168m

£182m

£176m

£235m
£233m

£143m

£128m

£209m
£208m

40

Quilter | Annual report 2020

 Continuing operations.
Including QLA.

 
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Operating  
margin*

IFRS profit/(loss)

Total shareholder  
return (“TSR”)

Definition
Represents ad(cid:77)usted profit before 
tax divided by total net fee revenue. 
Operating margin is a profitability 
measure that reflects the percentage 
of total net fee revenue that flows into 
ad(cid:77)usted profit before tax.

Definition
IFRS profit after tax from continuing 
operations, prepared in accordance with 
IFRS. For remuneration purposes, IFRS 
profit before tax is ad(cid:77)usted to exclude 
amortisation of intangible assets, 
policyholder tax ad(cid:77)ustments and other 
one-off items (refer to Note 7(c)) and 
page 133 of the Remuneration Report.

Definition
The difference between the opening and 
closing share price1 over the period, plus 
any dividends paid during that period.

1   Performance shown for QLT as traded on the 

London Stock Exchange.

Link to strategy

Link to remuneration

Link to remuneration

4

Performance in 2020
The Group’s operating margin declined 
as a result of the reduction in revenue due 
to the CO(cid:57)ID-19 pandemic’s impact on 
financial markets, the decline in revenue 
margin with a shift to lower margin 
products in Quilter Investors and Quilter 
International, and Quilter Investment 
Platform’s repricing. Lower revenue was 
partially offset by tactical cost savings 
during the year and continued savings 
from the Optimisation programme. 

Outlook for 2021
Optimisation plans remain on track to 
deliver planned cost savings and a 
year-on-year improvement in operating 
margin, after ad(cid:77)usting for the unwind in 
2021 of the temporary, CO(cid:57)ID-19-related 
tactical cost savings achieved in 2020.

Performance in 2020
IFRS profit after tax from continuing 
operations increased primarily due 
to the change in policyholder tax and 
the tax credit for the year ended 
31 December 2020. IFRS profit before 
tax, excluding amortisation, policyholder 
tax ad(cid:77)ustments and one-off items 
decreased in 2020 due to the exclusion 
of ad(cid:77)usted profit for QLA, following 
its sale on 31 December 2019.

Outlook for 2021
IFRS profit after tax from continuing 
operations can vary significantly 
year-on-year depending on the 
change in policyholder tax. Excluding 
policyholder tax, IFRS profit is likely to 
increase as spend on Optimisation and 
PTP declines with the delivery of the 
Optimisation programme and the new 
UK platform, respectively.

Performance in 2020
In 2020, capital markets experienced 
extreme volatility, with the UK market 
impacted by post-election certainty, 
diminishing then re-emerging (cid:37)rexit 
concerns, and the CO(cid:57)ID-19 pandemic. 
Quilter’s TSR for the year was (0.9(cid:8)). 
While a reduction on 2019 levels, the 
return compared well with peers and 
the FTSE-100 and FTSE-2(cid:24)0 indices 
which delivered total returns of (11.(cid:24)(cid:8)) 
and (4.(cid:25)(cid:8)), respectively. Our share 
buyback programme impacted the 
2020 TSR with the 118 million share 
repurchases reducing the shares in issue 
and subsequently having a 0.2 pence 
accretive impact to Quilter’s earnings 
per share. Further accretive impacts 
will be seen in 2021 as we continue 
with the share buyback programme.

Operating margin

IFRS profit(cid:18)loss 

Total shareholder return

2020
2019
2018
2017
2016

25%

26%
26%

29%

30%

24%

29%

25%

32%

2020

2020

2019

2019

2018

2018

£87m

£89m

£(21)m

£66m

2020
2019
2018
2017
2016

(0.9)

(11%)

N/A
N/A

£141m

£131m

42%

 Continuing operations.
Including QLA.

 IFRS profit before tax (excluding amortisation, 
policyholder tax ad(cid:77)ustments and one-off items).
 IFRS profit(cid:18)(loss) after tax from continuing 
operations.

IFRS profit(cid:18)(loss) and TSR are linked to Executive 
Remuneration. For more information, see Directors’ 
Remuneration Report on page 133.
*   See page 270 for alternative performance measures.

Quilter | Annual report 2020

41

 
 
 
 
Business model

Quilter is an omni-channel full-service 
wealth manager, with an open and 
unbundled model and client choice at 
the heart of the offering. Our business 
model supports our advisers and their 
clients as their financial requirements 
evolve throughout their lives.

Adapting to changing regulation 
and the industry’s shifting value chain, 
eight years ago Quilter embarked on a 
multi-year transformation from a UK and 
European life assurer with an ageing 
platform to a modern, UK-focused 
wealth manager. 

Today:
 – We are the UK’s second largest advice 

firm, offering an multi-channel 
approach where clients access our 
services either through a Quilter 
adviser or an independent adviser.
 – We are the second-largest adviser-led 

investment platform in the UK, 
providing high-quality service and 
market-leading functionality and 
technical support, at competitive prices. 

 – Our customer-driven, risk-based, 

investment solutions are designed 
to deliver good outcomes through 
the market cycle, and are agnostic 
between active and passive 
management styles.

We use our resources:
 – Colleagues: Quilter is a people-driven 
business – our culture helps us achieve 
our purpose while operating in a 
responsible manner. 

 – Technology and expertise: our highly 
skilled, passionate colleagues, experts 
in the fields of financial planning and 
investments, combined with our 
technological capabilities provide 
high-quality service and strong 
customer engagement.

 – Risk management and operational 
resilience: our risk management, 
governance and controls help achieve 
good customer outcomes and provide 
a strong foundation to continue to 
provide high levels of service in 
challenging environments.

 – Financial resources: we use our 

financial resources to invest for growth, 
as well as to facilitate inorganic 
opportunities, where appropriate.

42

Quilter | Annual report 2020

We combine our resources with 
our strengths:
 – We make financial advice and 

investments more accessible, through 
our unique omni-channel model.
 – We offer trusted financial advice and 
quality-assured investment choice, 
where clients only pay for what 
they use.

 – We act and invest responsibly, guided 
by our values of being pioneering, 
dependable and stronger together.
 – (cid:58)e are trusted experts in what we do.
 – We are financially strong and 

positioned for growth.

We meet the wealth needs of our client 
bases which span the wealth spectrum:
 – Advice.
 – Platforms and wrappers.
 – Investment solutions.
 – Discretionary investment 

management.

 – Portability of offshore investments.

Together, our unique model enables us 
to deliver value for all our stakeholders:
 – Advisers: helping advisers to manage 
and grow their business by providing 
a high-quality investment proposition.
 – Customers: helping to create secure 
financial futures through high-quality 
advice, products and service.
 – Colleagues: creating an inclusive 

workplace that enables colleagues 
to thrive.

 – Communities: helping improve 
financial capability and tackling 
wellbeing and employment barriers 
in our communities, while reducing the 
environmental impact of our business.

 – Regulators: delivering on our 

regulators’ expectations by providing 
financial solutions to customers in 
a responsible, risk-managed and 
compliant manner.

 – Investors: delivering business growth 
and generating long-term sustainable 
returns through a resilient model.

Read more:
Our culture and values, page 34

Our approach to responsible 
business, page 46

Our colleagues, page 52

Our financial review, page 60 

Our risk management, page 70

What we do

A typical UK-based customer 
approaching Quilter to manage their 
wealth needs three things(cid:29) ‘a financial 
plan’, a means of holding their assets 
safely (‘platform’) in the right tax efficient 
wrapper and an investment strategy 
aligned with their risk appetite and 
investment hori(cid:93)on – ‘solutions’. (cid:58)e 
earn revenues from the assets under 
our management or administration 
as a result of providing advice-led 
investment solutions and our platform 
to customers across the UK and in 
select international markets.

Quilter has a multi-channel access 
model, with two core strategies – the 
first whereby customers can come to 
us through our advisers or secondly 
through the open market channel 
with their own independent adviser. 
When we support a customer to 
manage their wealth in more than one 
area, and therefore earn more than one 
revenue stream, we refer to it as an 
‘integrated flow’. 

The unbundled, open nature of our 
model, offering flexibility to use one, 
two or all three components, is a key 
competitive advantage, provides 
customers and their advisers with 
choice at every stage and imposes 
external market discipline on 
our propositions. 

For Quilter, our model provides greater 
market breadth, customer and adviser 
choice, supporting long-term customer 
relationships. Our scale and leading 
market positions in each of our business 
segments enables us to benefit from 
strong structural growth dynamics 
and capture an increasing share 
of the market.

What we do

Customers

We have a broad customer base, 
spanning the breadth of the wealth 
spectrum. This provides us with 
opportunity to attract a large share 
of the market.

High net worth

Affluent and mass affluent

Predominantly clients with more than  
£250,000 of investable assets

Predominantly clients with between 
£50,000 and £250,000 of investable 
assets

Investment approach

Bespoke portfolios

Multi-asset, risk-adjusted solutions

Financial advice

‘Omni-channel’ means a client can come 
to us through a Quilter adviser, an 
independent adviser, or invest directly. 
We earn revenues from the advice 
provided by our advisers. A client typically 
pays a one-off initial advice fee, then an 
ongoing annual advice fee representing 
a percentage of their investment.

Platforms and wrappers

Investment platforms are depositaries 
for managing and holding investments, 
with assets held in collective investment 
accounts or appropriate tax efficient 
wrappers such as ISAs or pensions. Our 
platforms are available to Quilter advisers 
and independent advisers, as well as 
directly via a dedicated customer portal. 
(cid:58)e earn revenues from the assets held. 
A client pays a fee on a quarterly basis, 
representing a percentage of their 
investments under administration.

Investment solutions

Quilter offers a full-breadth of 
investment management services, 
ranging from bespoke portfolios at 
Quilter Cheviot to unitised, risk-based 
multi-asset solutions at Quilter Investors. 
A client pays an annual management 
charge based on their assets under 
management.

Quilter  
Private Client 
Advisers

Third-party 
independent  
advisers

Quilter  
Financial 
Planning

Quilter 
Financial 
Advisers

Third-party 
independent 
advisers

Quilter RFP gross 
flows to  
Quilter Cheviot

£0.5bn

Quilter Financial Planning 
gross flows to Quilter 
Investment Platform

£1.8bn

Quilter Cheviot

Quilter International

Quilter  
Investment Platform

Third-party 
investment 
platforms

AuMA advised by 
Quilter RFPs

8%

Total AuM

£25.3bn

Total AuM

£21.8bn

Quilter Investment Platform AuMA 
advised by Quilter Financial Planning

16%

Quilter Investment Platform AuMA 
managed by Quilter Investors

21%

Total AuM

£62.5bn

Third-party funds 
and solutions

Quilter Investors

Quilter Investors AuMA advised 
by Quilter RFPs

48%

Quilter Investors AuMA managed 
on Quilter Investment Platform

56%

Total AuM

£23.2bn

Quilter | Annual report 2020

43

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

 
 
 
 
 
Steven Levin
Chief Executive Officer, 
Quilter Investment Platform 
and Quilter Investors

Platform Transformation 
Programme

Moving to our next phase focused on growth 
and efficiency
The final migration of clients and advisers 
onto our new platform in early 2021 was the 
cumulation of a three and a half year project 
known as our Platform Transformation 
Programme ((cid:522)PTP(cid:523)). The purpose of the 
project to replace our UK Platform was to 
significantly upgrade its functionality as well 
as ensuring its underlying technology was 
brought up to modern standards, making 
it highly resilient and scalable to support 
business growth for the foreseeable future.

The new platform is central to delivering on 
Quilter’s growth ambitions. (cid:58)e have taken the 
unique attributes of the old platform for which 
Quilter is renowned, including adviser tools 
and very high service levels, and added 
market-leading functionality, a broader 
product range and improved ease of use. 

With the completion of PTP, Quilter will improve 
cohesion between our business areas and 
focus on bringing advice-led, wealth solutions 
to clients through the most appropriate 
channel(cid:29) an omni-channel approach. 

PTP is a critical catalyst to enable the 
transformation of Quilter into a modern, 
advice-led wealth manager. The pro(cid:77)ect has 
taken just over three years from signing terms 
to implementation, with this undertaken by 
teams across Quilter working in collaboration 
with our partners at FN(cid:61) and Deloitte. As with 
any pro(cid:77)ect of this significance and scale, there 
have been a few unexpected challenges to 
manage along the way and our focus 
throughout has been to deliver the project 
in a controlled and measured way to ensure 
a safe migration for advisers and our clients 
from our old platform to the new. 

Our previous platform – one of the 
original investment platforms in the UK – 
has continued to be well regarded, with 
industry-wide recognition and acclaim. 
However, it was based on legacy programming 
code. (cid:58)hile this continued to meet clients’ 
needs, it was becoming increasingly difficult 
to maintain and lacked the range of products 
and investment options which competitor 
platforms now offer. (cid:37)uilt on new, modern 
technology, the new platform offers a broader 
array of products and investment choices 
as well as greater IT resilience.

Near-term opportunities linked to the new 
platform include:
 – Attracting a greater share of platform 

business from Quilter RFPs.

 – Targeting a wider base of advisers in the 

open market IFA channel.

 – Accessing a broader market of clients.
 – Continuing to broaden the suite of solutions 
provided by Quilter Investors available on 
the Platform.

 – Growing our reach through discretionary 

investment management.

Further growth opportunities in the 
longer-term will be through providing new 
ways for customers to access the digitally-
ready platform, leveraging our new dedicated 
customer portal, helping broaden how 
advisers can service their clients.

Read more:
Board Technology and Operations 
Committee report
Page 119

Assets under administration on new platform

Accounts migrated

£62.5bn 

Customers migrated 

490k+

600k+ 

Rows of data processed across the three 
migrations

2.5bn+

44

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Strategic benefits of PTP
Improving cohesion between our business capabilities and providing opportunity to broaden and deepen relationships 
with advisers and their clients.

Financial advice

Platforms and wrappers

Investment solutions

Source
Two strong distribution channels

Destination 
Open architecture 
investment solutions

Customers:
A(cid:606)uent and 
mass a(cid:606)uent

Quilter Restricted Financial 
Planners (QFP & QFA)

Independent Financial 
Advisers

Quilter
Investment 
Platform

Switches

Quilter 
Investors

Multi-asset 
risk-adjusted 
solutions

External platforms

Third-party 
products/
funds

Customers:
High net  
worth

Quilter Restricted Financial 
Planners (QPCA)

Quilter International

Independent Financial 
Advisers

Quilter Cheviot

Quilter
Cheviot

(cid:37)espoke 
portfolios

Commercial benefits of PTP
New and enhanced products and adviser(cid:18)customer management features, market-leading functionality, and ease of use.

Products: 
Supporting growth across generations

Functionality: 
Market-leading, attractive to broader adviser base

 – Junior ISA

 – Pension

 – ISA

New

 – Arrange withdrawals and income online

Enhanced

 – Flexi ISA capability

Enhanced

 –  Flexible income and regular withdrawal dates

 – General Investment Account

Enhanced

 –  Flexible Direct Debit collection dates

 – (cid:37)ond

Enhanced

 – New adviser management information and reporting suite

Investments: 
Opportunity to re-engage with inactive firms

Ease of use: 
Single-source potential for Quilter RFPs

 –  Option to invest in ETFs and Investment Trusts

 – Access to cash accounts

New

New

 – Online user experience

 – Cross browser functionality

 – Range of available discretionary investment 

Enhanced

 – Mobile and tablet optimised

management solutions

New

New

New

New

New

Enhanced

Enhanced

New

 – Adviser model portfolio management

Enhanced

 –  Improved view and control of investments through online 

Enhanced

customer centre

Quilter | Annual report 2020

45

 
 
 
 
Jane Goodland
Group Corporate 
Affairs Director

Responsible business

We are guided by our purpose, values and 
commitment to act and invest responsibly. 
We are here to help the generations of today 
and tomorrow to prosper, and so it is 
imperative that we consider how our activities 
affect long-term investment value for our 
customers, colleagues, shareholders and 
other stakeholders. This is what we call 
‘Shared Prosperity’. 

It is this multi-stakeholder mindset that 
naturally guided our response to the 
pandemic and enabled us to balance the 
interests of our customers, colleagues, 
advisers and wider society. Within a very short 
timeframe the vast majority of our colleagues 
were working remotely, including our 
customer and adviser call centres, financial 
advisers and investment managers. We also 
created new and innovative ways to support 
advisers and their clients, for example via our 
“There for You” online hub we gave access to 
a wide array of mental health, wellbeing and 
practical resources to help advisers and 
clients adjust to new ways of working. 
Meanwhile through our charity, The Quilter 
Foundation, we were amongst the first donors 
to the National Emergencies Trust appeal and 
the Disasters Emergency Committee, donating 
almost £243,000 to support those most 
vulnerable and at risk of the economic and 
health impacts of COVID-19. 

Aside from our COVID-19 response we also 
made progress during the year against the ten 
commitments of the Shared Prosperity Plan. 
We reached an important milestone towards 
our goal of creating an inclusive and diverse 
workplace, achieving our target of increasing 
female representation in senior management 
to 35% – a public pledge we made as a 
signatory to the HM Treasury’s Women in 
Finance Charter. Our work on inclusion cannot 
and will not end there. We have set ourselves 
a new target to further increase female 
representation in senior management roles 
to 38 – 43(cid:8) by end 2023. Like many firms, 
the Black Lives Matter movement provided 
a much-needed trigger for us to sharpen our 
focus on cultural and racial inclusion in our 
workplace. One of the first steps we took was 
to improve our measurement which has 
enabled us to disclose workforce ethnicity 
data in this report on page 53.

Another key development during the year 
was the formalisation of our climate change 
strategy which sets out our approach to 
measure, manage and reduce our 
contribution to climate change both as a 
business and an investor. We began the 
process to improve our climate-related 
disclosures by putting in place a programme 
which will enable us to align with the Financial 
Stability Board’s Task Force on Climate-related 
Financial Disclosures (“TCFD”) framework by 
the end of 2021. We also made good progress 
with respect to our commitment to embed 
responsible investment principles across 
our whole business. In particular we 
further embedded ESG factors into our 
investment management processes and 
made good progress to enhance our financial 
advice process. 

Looking forward
In 2021 we will continue to focus on the issues 
that matter most to our stakeholders. We will 
embed our climate change strategy more 
deeply and work to understand our impact 
in more detail, particularly in regard to our 
investments. We will also work towards setting 
an emissions target for Quilter. Embedding 
and enhancing our responsible investment 
capabilities across our entire business will 
continue to be a key priority. Across financial 
advice, investment management and our 
platforms, we understand our responsibility 
to help clients and advisers invest in a way that 
is aligned with their views on sustainability. 
Work to increase gender and ethnic diversity 
in senior management is vital as we seek to 
create an inclusive and diverse workplace.

Quilter is here for a 
reason – to help create 
prosperity for the 
generations of today 
and tomorrow.

46

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Our responsible business governance framework

Responsible business governance
The Board oversees Quilter’s approach 
to responsible business and has 
delegated this to the Corporate 
Governance and Nominations 
Committee chaired by Quilter’s 
Chairman, Glyn Jones.

Within the Executive Management team 
Quilter Chief Executive Officer, Paul 
Feeney, has overall accountability for 
ensuring we do business responsibly. 
The wider executive management team 
also have specific ‘responsible 
leadership’ requirements embedded 
into their annual objectives.

Paul Feeney and the Executive 
Management team are supported by 
the Responsible Business Forum, which 
is a management group that provides 
oversight, direction and challenge with 
respect to Quilter’s approach to 
responsible business. The Forum, which 
is chaired by the Group Corporate Affairs 
Director, meets quarterly and comprises 
members from each operating business 
and key corporate functions.

Quilter Board

Board Corporate Governance and Nominations Committee
Chaired by Glyn Jones, Chairman

Executive Management team
Led by Paul Feeney, Chief Executive Officer

Responsible Business Forum
Led by Jane Goodland, Group Corporate Affairs Director

Responsible business strategy
Launched in 2018, Quilter’s ‘Shared Prosperity Plan’ is our framework for delivering responsible and sustainable growth. 

The plan is informed by what matters most to our stakeholders and focuses on three core themes. These themes are 
underpinned by ten commitments through which we aim to create long-term value for our stakeholders:

Financial wellbeing 
We want to help customers, colleagues 
and communities improve their financial 
wellbeing, which plays a vital part in our 
overall health and happiness. 

Inclusive growth 
We believe we have a responsibility to 
help build a more inclusive economy in 
which everyone has equal opportunities 
to fulfil their potential and thrive. 

To improve financial wellbeing, we are 
committed to: 

To pursue inclusive growth, we are 
committed to: 

 – Create secure financial futures for our 
customers through quality products 
and service 

 – Promote financial wellbeing for our 

colleagues

 – Improve access to financial advice, 

saving, and investing 

 – Create an inclusive workplace that 

enables colleagues to thrive 
 – Help our communities to thrive 

Responsible investment 
We invest responsibly to help create 
prosperity for the generations of today 
and tomorrow, and to provide people 
with confidence and choice to invest 
for a sustainable future. 

As a responsible investor, we are 
committed to: 

 – Embed responsible investment 
principles across our business
 – Exercise active stewardship of our 

customers’ assets

 – Empower communities to manage 

through employment and wellbeing

 – Reduce the environmental intensity 

money well for life

of our activities

Operating responsibly
Underpinning our Shared Prosperity Plan, we are committed to operating our business ethically,  
lawfully and with integrity at all times. 

Quilter | Annual report 2020

47

 
 
 
 
Responsible business
continued

48

Quilter | Annual report 2020

Updates to the plan in 2020
We did not make any material alterations to 
the Shared Prosperity Plan during 2020 as the 
themes of financial wellbeing, inclusive growth 
and responsible investment all remain 
relevant to our business. We reset our target 
for women in senior management as we met 
our 2020 target.

Shared Prosperity Plan performance 
in 2020
(cid:58)e have identified non-financial KPIs to help 
assess Quilter’s performance against the 
Shared Prosperity Plan commitments. 
Progress against these KPIs is shown opposite. 

Our plan and the UN Sustainable 
Development Goals
The UN Sustainable Development Goals 
(“SDGs”), adopted by all United Nations 
Member States in 2015, are a universal call 
to end poverty, protect the planet and create 
sustainable economic growth by 2030. 

Our Shared Prosperity Plan 
performance in 2020

Themes

Financial wellbeing

Relevant Sustainable Development Goal

Inclusive growth

Through the Shared Prosperity Plan we are 
contributing to several of the SDGs:

Relevant Sustainable Development Goal

Responsible investment

Relevant Sustainable Development Goal

Goal 1: Good health and wellbeing
Goal 5: Gender equality
Goal 8: Decent work and economic growth
Goal 10: Reduced inequalities
Goal 12: Responsible consumption 
and production
Goal 13: Climate action

How we understand our stakeholders
To help people prosper, we understand that 
we have a responsibility to act and invest 
responsibly for the long-term benefit of our 
customers, colleagues, advisers and society as 
a whole. Ultimately, we believe this is the only 
way to build a sustainable business that can 
deliver superior performance and long-term 
value for our shareholders too. 

Please refer to page 90 for a detailed 
breakdown of who are stakeholders are 
and how we engage with them.

Responding to COVID-19
The COVID-19 pandemic has naturally been 
an issue of concern for all stakeholders in 2020. 
Given its gravity and prominence we have a 
dedicated section covering our stakeholder 
led response to COVID-19 on page 17.

Our Shared Prosperity Plan 

performance in 2020

Our commitments and key performance indicators

1.  Create secure financial futures for 

2.  Promote financial wellbeing 

3.  Empower communities to manage 

customers through quality products 
and service

Customer asset retention

for all our colleagues

their money well for life

Percentage of colleagues feeling 
confident about money

Number of people benefiting from 
financial literacy support

2020
2019
2018
2017
2016

XX,XXX

XX,XXX

92%

88%

91%

N/A
N/A

2020
2019
2018
2017
2016

XX,XXX

XX,XXX

81%

2020
2019
2018
2017
2016

7,811

6,529

XX,XXX

XX,XXX

11,276

4.  Improve access to financial advice, 

saving and investing

5.  Create an inclusive and diverse 
culture that enables our people 
to thrive

6.  Help our communities to thrive 

through employment and wellbeing

Number of Restricted Financial 
Planners (”RFPs”)

Proportion of women in 
senior management roles

2020
2019
2018
2017
2016

XX,XXX

XX,XXX

1,842
1,799

1,621

2020
2019
2018
2017
2016

XX,XXX

XX,XXX

Number of people benefiting from 
Quilter Foundation employment 
and wellbeing support

35%

32%

33%

2020
2019
2018
2017
2016

1,822

N/A

XX,XXX

XX,XXX

3,685

7.  Embed responsible investment 
principles across our business

8.  Exercise active stewardship 

9.  Reduce the environmental intensity 

of customers’ assets

of our activities 

PRI Strategy & Governance rating 

‘A’ rating

Number of company meetings 
in which we voted

Tonnes of carbon dioxide (”TCO2e”) 
per full-time colleague/contractor

2020
2019
2018
2017
2016

171
174

XX,XXX

XX,XXX

348

2020
2019
2018
2017
2016

0.63

0.92

0.83

XX,XXX

XX,XXX

Quilter | Annual report 2020

49

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

 
 
 
 
Responsible business
continued

Delivering for 
customers

50

Quilter | Annual report 2020

Shared Prosperity Plan commitments

 – Create secure financial futures for 

customers through quality products 
and service.

 – Improve access to financial advice, 

saving and investing.

 – Embed responsible investment 
principles across our business.

 – Exercise active stewardship 

of customers’ assets.

Providing quality products and service
Quilter is committed to helping people create 
secure financial futures through quality 
products and service. In 2020, overall asset 
retention for the Group – a measure of our 
ability to delivery good outcomes and retain 
customers – increased to 92% (2019: 88%) 
driven mainly by improvements in the Quilter 
Investment Platform.

For the second consecutive year, Quilter 
topped the FTAdviser Top 100 Financial 
Adviser rankings. The rankings (cid:77)udge firms 
on a number of objective measures including 
those which are important to customers such 
as adviser qualifications, amount of 
experience and staff retention, business 
growth and investment outcomes. The 
achievement is recognition of our continued 
commitment to providing high quality 
face-to-face advice.

Quilter Cheviot continued to perform well for 
customers, delivering out-performance 
relative to their relevant benchmarks over one, 
three, five and ten-year periods. Meanwhile, 
Quilter Investors’ investment performance 
was good, with performance of the largest 
range, Cirilium Active, improving markedly on 
a one-year view, and Wealth Select continuing 
to perform strongly.

Complaints received increased year-on-year, 
with the increase associated to historic advice 
provided by Lighthouse prior to its acquisition 
by Quilter. Aside from these, complaints 
remained low and levels of upheld complaints 
were below the industry average.

Responsible investment 
We are committed to investing responsibly, 
to help create prosperity for the generations 
of today and tomorrow. 

We incorporate environmental, social 
and governance considerations across the 
business, from the financial advice we give, 
to how we manage investments and hold the 
companies into which we invest to account for 
their actions. For people who want to invest 
for a specific sustainable outcome or to avoid 
a particular issue, we offer a range of 
dedicated responsible investment solutions. 

We are a signatory of the UN-backed 
Principles for Responsible Investment (“PRI”) 
and achieved an ‘A’ rating for our responsible 
investment strategy and governance in the 
PRI’s 2020 annual assessment.

ESG integration
In 2020 we continued our work to integrate 
responsible investment principles as standard 
into our advice and investment management 
processes, as well as enhancing ESG related 
disclosures. Much of our work here has been 
brought into sharper focus by the new wave of 
ESG regulation driven by the EU’s Sustainable 
Finance Action Plan and will come to fruition 
in 2021. 

Across both of our investment management 
businesses – Quilter Cheviot and Quilter 
Investors – a significant proportion of the 
assets we manage are invested in third-party 
funds. Therefore a vital component of our 
approach to ESG integration is understanding 
how external fund managers incorporate ESG 
into their investment process. In 2020, our 
fund research team provided enhanced 
training for analysts and improved ESG 
assessment in the fund manager appointment 
and monitoring process.

Stewardship
Where we do invest directly in listed equity 
(mainly through our discretionary investment 
manager, Quilter Cheviot), we continued and 
enhanced our stewardship activity through 
proxy voting and pro-active engagement with 
company management. In 2020, Quilter 
Cheviot voted at 348 company meetings, 
double that the previous year. The significant 
increase was a result of an expanded voting 
universe, extended to include all holdings in 
which we hold more than £2 million or 0.2% 
of the company. 

Exclusions
In 2020 Quilter continued to apply ethical 
exclusions to investment portfolios when 
instructed by the client. We also maintained 
our firm-wide exclusion on controversial 
weapons. Where we invest directly, we do not 
knowingly invest in securities (equity or debt) 
of listed companies involved in the 
manufacture, development or trade of 
anti-personnel mines or cluster munitions.

Sustainability solutions and reporting
In 2020 we continued to disclose ESG fund 
ratings for third-party funds on the Quilter 
Investment Platform, helping advisers and 
customers to consider the impact of their 
investments as part of an informed decision 
making process.

For customers seeking a specific sustainable 
outcome, Quilter Cheviot’s Climate Assets 
Fund offers a way of targeting long-term 
capital appreciation by focusing on investment 
opportunities arising from the convergence 
of global sustainability issues such as climate 
change, resource scarcity and population 
shifts. In 2020 the Climate Assets Fund 
performed strongly and has delivered 
superior returns when compared with 
its benchmark over three, five and 
ten-year periods.

Using our voice to champion and 
protect customers
During 2020 we retained our strong focus 
on vulnerable customers. In addition to our 
comprehensive internal programmes to 
ensure customer-facing colleagues are 
equipped to support vulnerable customers, 
we continued to chair the industry working 
group of TISA to raise standards across the 
industry. This has involved working with 
charities to release a series of help sheets 
to support financial firms understand the 
difficulties that different vulnerabilities may 
create and the development of an online 
self-assessment tool which will be available 
free of charge to financial services firms.

(cid:58)e also led public calls for the UK Government 
to protect our clients and consumers more 
widely against the threat of financial scams 
online. Our research in 2020 revealed a 
110% increase in brand impersonation 
and association scams, whereby organised 
criminals ‘clone’ the brand of reputable 
financial services firms or claim association in 
order to sell non-existent investment products 
on fake websites and through paid advertising 
search engines. 

Quilter has called for the UK Government 
to include financial harms within its flagship 
Online Harms Bill, which would legally 
require social media platforms and 
search engines to remove scam adverts 
immediately upon notification and improve 
due diligence processes.

Data privacy and IT security
In the course of our business, customers, 
advisers and colleagues trust us with their 
personal data which can include sensitive 
and(cid:18)or financial information. The collection 
and use of personal data is governed by 
our Privacy Policy and overseen by a Group 
Data Protection Officer ((cid:522)GDPO(cid:523)) with the 
support of a formal committee, the Quilter 
Privacy Forum. 

The Board Technology and Operations 
Committee, chaired by independent Non-
executive Director, Moira Kilcoyne, oversees 
Quilter’s IT strategy, including our approach to 
information and data security. At an executive 
management level, the Group Chief Operating 
Officer is responsible for IT strategy and is 
supported by the Chief Information Security 
Officer ((cid:522)CISO(cid:523)) and team, with input also from 
the GDPO and Data Guardians embedded in 
our operating businesses. All colleagues and 
full-time contractors are required to complete 
mandatory annual training to ensure they 
understand what is required of them with 
respect to data privacy and IT security. 
Read more in our Board Technology 
and Operations Committee report 
on page 119.

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

51

 
 
 
 
Responsible business
continued

Delivering for 
colleagues

52

Quilter | Annual report 2020

Related Shared Prosperity 
Plan commitments

 – Promote financial wellbeing 

for our colleagues.

 – Create an inclusive workplace 

that enables colleagues to thrive.

Colleague engagement and development
We seek views from colleagues through 
our weekly engagement survey, providing 
senior leaders and managers with 
meaningful real-time engagement feedback. 
The engagement score for 2020 was 
7.4 out of 10 (2019: 7.2 out of 10) which 
is ahead of the industry benchmark for 
colleague engagement.

In 2020 we modernised our learning approach 
by introducing ‘Degreed’, an online learning 
platform that provides our colleagues with 
complete control of their own learning and 
development. Over 1,990 colleagues used 
the platform in 2020, with 20,317 learning 
items completed.

Code of Conduct 
Our Code of Conduct sets out the duties and 
expectations of all colleagues and includes 
acting with integrity and respect, treating 
customers fairly, managing conflicts of 
interest, good market conduct, information, 
data and communications, use of Company 
assets, prevention of financial crime and 
working with regulators and governments. 
Colleagues are required to undertake annual 
mandatory training to ensure they fully 
understand the requirements of the Code 
of Conduct. During 2020, 99% of colleagues 
completed this training, up from 96% in 2019.

Whistleblowing and speaking up
In line with our whistleblowing policy, 
colleagues are required to report knowledge 
or suspicion of malpractice or actions that 
endanger Quilter Group’s employees or 
assets. The whistleblowing policy provides 
employees who raise concerns in good faith 
with protection from detriment to their future 
employment opportunities Concerns can 
be reported to line managers, Risk and 
Compliance or via the independent 
confidential ethics hotline which is available 
year round. All reports are fully investigated 
and escalated to senior management and 
George Reid, independent Non-executive 
Director and designated Group 
Whistleblowing Champion.

Colleague mental and financial wellbeing
‘Thrive’ is our colleague wellbeing initiative 
which supports our people with their mental, 
physical, social and financial wellbeing and 
is supported by 120 colleague ‘Thrive 
Ambassadors’ internally. We enhanced mental 
health support by introducing ‘Spill’, which 
provides all employees with access to 
mental health resources, tools and online 
counselling services.

In 2020 we continued our financial wellbeing 
programme which promotes a range of 
information, employee benefits and guidance 
to support colleagues to feel more confident 
about money and pensions.

Remuneration
Our remuneration policy seeks to promote 
reward structures that encourage appropriate 
behaviour, avoid excessive risk taking, protect 
customers and support the creation and 
preservation of sustainable value for the 
benefit of all relevant stakeholders. All 
employees and suppliers providing on site 
services in the UK are paid no less than the 
real Living Wage (2020: £10.85 per hour for 
London and £9.50 per hour outside of 
London) calculated annually by the Living 
Wage Foundation and is a voluntarily initiative. 

The Directors’ Remuneration Policy includes 
the alignment of pension arrangements to the 
wider workforce, with pension provisions for 
Executive Director appointments set at 10% 
of base salary.

Creating an inclusive and diverse workplace
We promote equal opportunities and ensure 
that no job applicant or colleague is subject to 
less favourable treatment on the grounds of 
gender, marital status, nationality, ethnicity, 
age, sexual orientation, responsibilities for 
dependents, or physical or mental disability. 

We achieved our target of increasing female 
representation in senior management to 35% 
by the end of 2020 – a public pledge we made 
as a signatory to the HM Treasury’s Women in 
Finance Charter. Quilter’s 2020 target was 
originally set at 35-40% of the ExCo-1 
population. Due to a number of reporting line 
changes in January 2020 the ExCo-1 
population halved in size. As a result we 
changed the target population to our ‘senior 
leadership community’ (SLC), a defined group 
of senior leaders that more accurately reflects 
our senior management than ExCo-1 which is 
solely dictated by reporting lines. We have set 

a new target of 38-43% female representation 
in the SLC by end 2023. Fewer women in 
senior leadership roles is one of the main 
drivers behind our gender pay gap. The 
median pay gap was 30% (£6.72 per hour), 
a reduction of 2% compared with 2019.

We are committed to increasing BAME 
representation at all levels across Quilter 
and have set a target to increase BAME 
representation in senior management from 
2% in 2020 to 5% by end of 2023. BAME 
colleagues earned £0.73 per hour (4%) less 
than non-BAME colleagues based on median 
pay gap data, reflecting the fairly even spread 
of BAME colleagues across pay quartiles. 
A lower percentage (79%) of BAME colleagues 
received a bonus than non-BAME colleagues 
(86%). The underlying data indicates that 
majority of cases are those that joined after 
31 October 2019 and as such would not have 
met our eligibility criteria to be considered for 
a 2019 bonus, paid in March 2020. 

We aim to achieve our diversity targets 
through enhanced policies, talent development, 
recruitment and succession planning. Strategy 
and progress is overseen by Quilter’s Inclusion 
and Diversity Steering Committee, chaired by 
the Chief Executive Officer.

We remained an active supporter of public 
initiatives such as LGBT Great, a collaboration 
aiming to be a catalyst for LGBT+ inclusion 
within the investment industry and 
championed by our Chief Operating Officer, 
Karin Cook. 

Diversity data (as at 31 December 2020):

Total split by gender

2,317 (54%)

1,964 (46%)

2019: Male 2,550 (53%), Female 2,286 (47%)

Quilter plc Board split by gender

6 (67%)

3 (33%)

2019: Male 7 (64%), Female 4 (36%)

Executive Committee split by gender

5 (83%) 1 (17%)

2019: Male 9 (75%), Female 3 (25%)

Senior Leadership Community split by gender

89 (65%)

47 (35%)

2019: Male 75 (68%), Female 26 (32%) 

Male(cid:581) Female

Total split by ethnicity*

2,975 (92%) 271 (8%)

Quilter plc Board split by ethnicity

9 (90%)

1 (10%)

Executive Committee split by ethnicity

6 (100%)

Senior Leadership Community split by ethnicity

115 (98%) 3 (2%)

Non-(cid:37)AME(cid:581) BAME

*Total workforce ethnicity data is based on number 
of colleagues disclosing their ethnicity (76% of colleague 
community). Colleagues who selected ‘unknown’ or chose not 
to disclose their ethnicity are not included in the calculation.

2020 Pay gap data

Gender

Hourly pay gap

Bonus gap

Women receiving bonuses

Men receiving bonuses

Ethnicity

Hourly pay gap

Bonus gap

BAME receiving bonuses

Non-BAME receiving bonuses

2020 Pay quartile data

First quartile

Second quartile

Third quartile

Fourth quartile

Mean

Median

34%

65%

13%

33%

30%

39%

4%

15%

86%

84%

79%

86%

Men

73%

58%

44%

44%

Women

Non-BAME

BAME

27%

42%

56%

56%

92%

91%

93%

90%

8%

9%

7%

10%

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

53

 
 
 
 
 
Responsible business
continued

Delivering for 
advisers

Related Shared Prosperity 
Plan commitments

 – Improve access to financial advice, 

saving and investing.

Helping advisers manage and grow 
their business
Whether an RFP in the Quilter Financial 
Planning network or an Independent Financial 
Adviser using Quilter Investment Platform to 
service clients, advisers can rely on us to help 
them manage and grow their business, and 
ultimately help their clients prosper.

In 2020 we launched our ‘There for You’ hub 
available to all financial advisers. Initially in 
response to the COVID-19 pandemic, the hub 
is the first time we have created a one-stop 
shop of resources, including tools to support 
client conversations and events hosted by 
Quilter experts. Over 2,000 advisers attended 
our online ‘There for You’ events, which 
focused on practical support and expertise to 
them and their business during the pandemic.

For RFPs in the Quilter Financial Planning 
network, we offer stability through strong 
financial backing and the security of a 
comprehensive compliance regime to enable 
them to run their business safely and profitably. 
Addressing the challenges many advice firms 
face in finding affordable Professional 
Indemnity Insurance, the Quilter Financial 
Planning network offers member firms PII to 
those authorised to write business by us and 
where they follow our advice process. 

The Quilter Investment Platform won a total of 
nine highly sought-after awards, as recognised 
by financial advisers for its quality products 
and outstanding service. Awards included a 
platinum rating for the sixth year running from 
the independent price comparison and 
research provider, ‘AdviserAsset’. Their rating 
is based on the results of charge comparisons 
and platform due diligence run by advisers 
using AdviserAsset tools and analyses over 
150,000 reports and questionnaires.

Quilter was also awarded ‘Company of the 
Year’ award from prestigious Financial Adviser 
Service Awards.

Wellbeing support
(cid:37)eing a financial adviser can be a hugely 
rewarding role. We also understand that it can 
be a demanding one, and sometimes involves 
dealing with complex client emotions and 
helping them navigate difficult personal 
situations. The COVID-19 pandemic also 
brought with it unprecedented challenges 
for advisers, with many more likely to be 
struggling with stress, anxiety and burnout 
as the need to adapt their support for clients 
increased dramatically. 

In direct response to these unprecedented 
challenges we opened up our colleague 
wellbeing programme – ‘Thrive’ – to the 
financial adviser community during Mental 
Health Awareness (cid:58)eek. A first of its kind in 
the industry, advisers were able to access a 
wealth of resources to support their wellbeing, 
and ultimately equip them to support their 
clients too. 

The hub included podcasts and videos from 
our own wellbeing experts, as well as external 
specialist, resources on how to adapt to 
changing ways of working and advice on how 
to cope with isolation and build resilience. We 
also made online mental health service, ‘Spill’, 
available to advisers.

54

Quilter | Annual report 2020

 
Training the next generation of advisers
In 2017 we launched the Quilter Financial 
Adviser School to train and develop the next 
generation of financial advisers. (cid:58)e provide 
not (cid:77)ust the qualifications, but also the skills 
needed to enjoy a successful career and 
provide an outstanding level of service 
to clients.

The Quilter Financial Adviser School is 
a trusted partner of The London Institute 
of Banking & Finance (‘LIBF’), one of the top 
providers of professional and academic 
financial services qualifications. To become 
a trusted partner, we have demonstrated 
that our training programmes meet the 
LIBF’s strict requirements for delivering 
high-quality learning.

In 2020, 167 people graduated from the 
Quilter Financial Adviser School, which is the 
largest cohort to graduate in one year and 
brings the total number of graduates to 337 
since it launched 2017. The increase in 
graduates in 2020 was enabled by an 
improved digital training proposition. We have 
since supported the vast majority of graduates 
into employment as financial advisers so they 
are now helping customers to achieve their 
financial goals.

Training and development
We are committed to the ongoing professional 
development of our RFPs in the Quilter 
Financial Planning network. This is good for 
advisers, good for their clients and also good 
for our business. Our academies and 
masterclasses help advisers develop their 
knowledge and skills of specific markets, 
including: wealth, auto-enrolment, mortgage 
and protection. 

Throughout the year we worked extensively 
with advisers to prepare them for migration 
to the new Quilter Investment Platform, 
supporting thousands of advisers and 
their clients to transition smoothly to the 
new platform.

Transition to digital
The pandemic changed the way advisers 
interacted with their customers as face-to-face 
advice moved online. With customers 
impacted by a range of factors affecting their 
personal circumstances or family members, 
we made it easier for advisers to stay in touch 
and engage with them by identifying a number 
of ‘reasons to talk’ to depending on their 
current situation and financial needs. (cid:58)e 
covered eight topics, ranging from maximising 
tax allowances and intergenerational wealth 
through to coping with redundancy. Each topic 
was presented as a pack which included 
background information, advice on how they 
could help, sales aids and pre-approved 
customer communications.

Advisers understand that social media 
is a great way of starting or joining in 
conversations that help their firm stay at the 
forefront of their customers minds. With all 
activity regulated by the FCA, we helped 
advisers promote the benefits of financial 
advice to prospective clients by creating 
specifically themed, compliance approved 
social media adverts. Each advert can be 
personalised by advisers to suit their brand 
through an automated process via the Hub 
(with no additional charge), then downloaded 
in the relevant size for LinkedIn, Facebook 
and Instagram. 

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

55

 
 
 
 
Responsible business
continued

Delivering for 
communities and 
the environment

56

Quilter | Annual report 2020

Related Shared Prosperity 
Plan commitments

 –  Support communities to manage money 

well for life.

 – Empower communities to thrive through 

employment and wellbeing.

 – Reduce our environmental intensity.

 – Operate responsibly.

Climate change
In 2020 Quilter formalised its approach 
to climate change. Our strategic objective 
is to reduce Quilter’s contribution to climate 
change and support the transition to a low 
carbon economy. To achieve our ambition, 
we have a framework which helps us to reduce 
our direct carbon footprint, embed climate 
considerations in our investment 
management and stewardship activity, offer 
clients climate-focused investment solutions 
and align with the Task Force on Climate-
related Financial Disclosure. 

The Task Force on Climate-related 
Financial Disclosures (“TCFD”)
The financial sector has a critical role in the 
transition to a low carbon economy; however 
better-quality information is needed on risks, 
opportunities and impacts of climate change. 
TCFD has provided a framework to help 
companies to disclose comprehensive, 
comparable and high-quality information. 

As per the mandatory requirements 
of premium listed companies outlined 
by HM Treasury in November 2020, we are 
committed to a fully aligned TCFD climate 
disclosure for the financial year 2021. (cid:58)e have 
chosen not to fully adopt TCFD early as we 
believe a fair and accurate disclosure at this 
stage would be difficult to achieve due to 
carbon data limitations relating to investment 
portfolios and climate scenario analysis 
requirements. In this report we instead 
provide a partial disclosure focused on 
governance and current climate metrics 
related to Quilter’s operational emissions, 
as well an outline of the steps we are taking 
in 2021 to fully align with TCFD.

Climate change governance
The Board Risk Committee will oversee the 
management of climate-related risks and 
opportunities and review progress as part 

of its regular reporting from the business. 
The Board Corporate Governance and 
Nominations Committee oversees Quilter’s 
responsible business and responsible 
investment strategy, both of which address 
Quilter’s climate change response in its direct 
operations and in its investment propositions. 

The Quilter Executive Committee, chaired 
by the Chief Executive Officer, is responsible 
for setting Quilter’s overall climate change 
strategy. The Executive Committee receives 
quarterly updates regarding responsible 
business matters, which include progress 
towards our climate change strategy. 

Responsibility for climate-related risk, and 
TCFD specifically, rests with the Executive Risk 
Forum, chaired by the Chief Executive Officer. 
The Forum oversees present and emerging 
risks to the business to ensure they are 
managed appropriately, reporting into the 
Board Risk Committee. Given the recent 
emergence of climate change as an 
established risk typology, a sub-committee 
of the Executive Risk Forum has been 
established to ensure focus is dedicated to 
climate-related risk and alignment with TCFD 
specifically. Individual responsibility for 
climate-related risk rests with the Risk & 
Actuarial Director, who holds regulatory 
accountability for this as the Senior 
Management Function holder. 

Climate change strategy and 
risk management
During 2021 we are taking the necessary 
steps to fully align with TCFD. We will complete 
our assessment and measurement of our 
climate-related risks and opportunities, 
including those within the investment 
solutions we manage on behalf of clients. 
We will also enhance our risk management 
framework to ensure it fully reflects the 
climate risks relevant to the business and 
its risk appetite. 

Existing stewardship activity undertaken 
by our investment management businesses 
already includes climate change issues and 
this will continue to be an area of engagement 
going forward. 

Climate change metrics and targets
Quilter has reported the greenhouse gas 
emissions resulting from its operations (scope 
1 and 2) since it became a public company 
in 2018. In 2021 we will complete the 

measurement of emissions resulting from our 
core investment portfolios (scope 3 emissions) 
enabling us to report on this in our next TCFD 
aligned disclosure. We will also work towards 
establishing a greenhouse gas reduction 
target across our scope 1, 2 and 3 emissions.

We also continued to participate in the CDP 
(formerly ‘Carbon Disclosure Project’), the 
world’s leading voluntary disclosure system 
for companies to measure, disclose, manage, 
and ultimately reduce greenhouse gas 
emissions. We achieved a rating of ‘C’ for 
our 2020 disclosure.

Energy use is Quilter’s primary source of 
Scope 1 and 2 greenhouse gas emissions. 
In 2020 we continued our strategy of 
transitioning our offices to renewable energy 
tariffs. (cid:58)here we do not control the building, 
we proactively engage with landlords to 
transition to renewable energy tariffs if they 
have not done so already. In 2020 we 
successfully engaged the landlord of our new 
London headquarters to change to a 
renewable energy tariff.

We are pleased to report a 33% reduction in 
total Scope 1 and Scope 2 (location-based) 
greenhouse gas emissions in 2020, from 4,042 
TCO2e in 2019 to 2,705 TCO2e. See table below 
for a full breakdown of our Scope 1 and Scope 
2 greenhouse gas emissions and associated 
energy use data in 2020. 

Emissions adjustments for 2019
We have updated our 2019 greenhouse gas 
emissions to reflect a fluorinated gas leak at 
our Southampton office and a small number 
regional offices not included in previous 
reporting. Our 2019 Scope 1 emissions are 
now reported as 840 TCO2e, an increase from 
664 TCO2e originally reported. Scope 2 
(location-based) emissions are also reported 
higher at 3,202 TCO2e, in comparison with 
2,216 TCO2e originally reported. Scope 2 
(market-based) emissions are now reported as 
2,718 TCO2e in comparison with 1,378 TCO2e 
reported for 2019.

This also has the effect of increasing our 2019 
intensity ratio to 0.92 TCO2e per average 
number of colleagues in 2019.

Greenhouse gas emissions data

Total greenhouse gas emissions

Scope 1

Scope 2 (location-based)

Scope 2 (market-based)

Total Scope 1 + Scope 2 (location-based)

Intensity ratio – TCO2e/average number of colleagues

Streamlined Energy and Carbon Reporting (SECR)

TCO2e 
2020

302

2,403

1,882

2,705

0.63

kWh
2020

TCO2e 
2019

840

3,202

2,718

4,042

0.92

kWh
2019

Global energy use

UK energy use

12,159,853

11,794,568

14,227,728

13,707,697

Greenhouse gas reporting footnote:
All emissions data calculated according to the GHG Reporting Protocol – Corporate Standard. The GHG protocol categorises 
emissions according to ‘Scope’, as follows:

Scope 1 (Direct GHG)
These are emissions from sources that are owned or controlled by an organisation. This includes fuel combustion on site 
e.g. gas boilers, fleet vehicles and air-conditioning leaks.

Scope 2 (Energy Indirect GHG)
These are emissions from the consumption of purchased electricity, steam, or other sources of energy (e.g. chilled water) 
generated upstream from the organisation. For purchased electricity, organisations are required to report Scope 2 according 
to a ‘location based’ method and a ‘market-based’ method (see below):

Scope 2 – Location Based
This reflects the average emissions intensity of grids on which energy consumption occurs (using mostly grid-average 
emission factor data).

Scope 2 – Market Based
This reflects emissions from electricity that organisations have purposefully chosen and therefore includes where they may 
have renewable energy contracts in place or generate their own energy.

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

57

 
 
 
 
Responsible business
continued

Delivering for 
communities and 
the environment 
(continued)

58

Quilter | Annual report 2020

The Quilter Foundation
The Quilter Foundation is Quilter’s registered 
charity and the cornerstone of our community 
engagement work. Through grant-making and 
the generous support of colleagues, advisers 
and customers, The Quilter Foundation has 
donated £2.2 million to charity partners since 
launching in 2018, enabling them to provide 
financial literacy, employment and wellbeing 
support to 23,000 young people in our 
local communities.

Improving financial literacy
We continued our long-term partnership with 
leading financial education charity, My(cid:37)nk, 
to fund the provision of expert led money 
management lessons to young people 
aged 11–25 in local communities. COVID-19 
restrictions seriously inhibited face-to-face 
delivery in 2020 and despite this, the 
programmes still reached 7,811 young people 
in the year. 

During 2020 Quilter continued to co-chair 
KickStart Money which is helping to transform 
the long-term savings habits of the next 
generation. Twenty of the UK’s leading saving 
and investment firms are working together to 
champion financial education for children 
aged seven and upwards. Through the 
programme’s delivery partner, MyBnk, 
expert-led financial education sessions 
reached 19,000 pupils since its launch in 2017. 
KickStart Money also campaigns for effective 
financial education for every young person 
from primary school onwards. During 2020, 
27 UK Members of Parliament lent their 
support to the campaign, bringing the total 
number of parliamentary supporters of the 
campaign to 57.

Employability and skills development
Government data shows the persistency of 
UK youth unemployment over recent years, 
which has been exacerbated by the COVID-19 
pandemic. In 2020 we delivered the first year 
of our three-year partnerships with skills and 
employability partners School of Safe New 
Futures, School of Hard Knocks and Street 
League. The programmes have so far 
supported 143 young people aged between 
16 and 25.

Wellbeing and respite support 
for young carers
One in five secondary school children may 
be caring for a loved one with a serious illness, 
disability or mental health issues. Very often, 
this at the expense of their own mental health 
and future prospects. The Quilter Foundation 
and Quilter colleagues have continued to work 
with our charity partners – Carers Trust, The 
Mix and Crossroads Care – supporting 2,000 
young carers in local communities in 2020. 
Since launching the partnerships in 2018, we 
have directly supported 5,600 young carers 
across the UK and Isle of Man.

COVID-19 relief
The Quilter Foundation donated £243,000 to 
trusted partners – National Emergencies Trust 
and Disasters Emergency Committee – to 
provide urgent COVID-19 relief and support 
to vulnerable communities across the UK and 
internationally.

Human rights
We recognise our responsibility to not only 
respect the rights and freedoms of those that 
work for Quilter but also of those in our supply 
chain. Our human rights policy has been 
shaped by internationally recognised 
principles, laws and conventions such as the 
International Bill of Human Rights, The 
International Labour Organization 
conventions, the UN Guiding Principles on 
Business and Human Rights, the UN Global 
Compact, The Modern Slavery Act 2015, The 
Human Rights Act 1998 and the Equality Act 
2010. Our human resource and supplier 
policies and processes prohibit all forms of 
modern slavery, forced labour, compulsory 
labour and child labour. These also promote 
equal opportunity and prohibit any form of 
discrimination or unfair treatment on the 
grounds of protected characteristics, or 
because of any other personal factor. We 
respect the right of employees to associate 
for the purposes of collective bargaining 
and colleagues are free to join a union 
of their choice.

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Financial crime and anti-bribery 
and corruption
As a financial services company we recognise 
the potential risk of being a target for financial 
crime, including money laundering, terrorist 
financing, tax evasion and fraud. (cid:58)e also 
acknowledge the potential risk of bribery and 
corruption which could result in financial loss, 
regulatory fines and(cid:18)or censure and damage 
to reputation. We have zero tolerance for 
financial crime, bribery or corruption and have 
robust control environment in place including 
the following policies: 1) Anti-Money 
Laundering and Counter Terrorist Financing 
Policy, 2) Anti-bribery and Corruption Policy, 
3) Fraud Prevention Policy. All colleagues are 
required to complete mandatory training 
on these topics annually to ensure that 
understand their role in preventing financial 
crime, bribery and corruption.

Working with suppliers
Our Third-Party Risk Management policy 
sets out requirements with respect to our 
procurement, outsourcing and supplier 
management activities. Our Supplier Code 
of Conduct applies to all suppliers and their 
sub-contractors that provide goods and 
services to Quilter. It sets out the minimum 
standards we expect our suppliers to adhere 
to when doing business with Quilter in 
addition to the contractual terms agreed. 
The Code covers legal compliance, ethical 
standards, conflicts of interest, anti-bribery 
and corruption, brands, trademarks and 
intellectual property, information and data 
protection, labour standards, living wage, 
discrimination, health and safety, and 
environmental management. We also expect 
them to promote these standards in their 
own supply chain where practical.

Tax
We are committed to full compliance with our 
tax obligations, paying the right amount of tax 
at the right time. We have zero tolerance for 
tax evasion and we do not promote tax 
avoidance or aggressive tax planning 
arrangements to our customers or to other 
parties. Our Tax Risk Policy sets out high-level 
requirements to ensure that tax calculations 
and filings comply with all applicable tax law 
and are prepared on a timely basis. 

Non-financial information statement
The Responsible Business review from page 
46 to 59 constitutes Quilter’s Non-Financial 
Information Statement, which complies with 
sections 414CA and 414CB of The Companies 
Act. The table below sets out where to find 
details on specific matters relevant to these 
requirements within this section and 
elsewhere in our Annual Report:

Anti-bribery and 
corruption 

Delivering for society  
– page 56 to 59.

Business model

Employees

Business model  
– page 42 to 43.

COVID-19 response  
– page 17 to 19.

Environmental 
matters

Human rights

Delivering for colleagues 
– page 52 to 53.

Delivering for society  
– page 56 to 59.

Delivering for society  
– page 56-59.

Non-financial KPIs Shared Prosperity Plan 
performance summary 
– page 48 to 49.

Principal risks

Social matters

Risk review 
– page 70 to 77.

COVID-19 response  
– page 17 to 19.

Delivering for society  
– page 56 to 59.

Read more: 
How we understand our stakeholders:
Regulators
See page 94

How we understand our stakeholders:
Investors
See page 91

Quilter | Annual report 2020

59

 
 
 
 
 
 
Financial 
review

Mark Satchel
Chief Financial Officer

60

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Review of financial performance

Overview 
During 2020 international equity markets experienced 
significant volatility as a consequence of the Coronavirus 
pandemic. (cid:57)olatility in equity market values can significantly 
impact the value of the Group’s AuMA, and therefore the 
Group’s revenue, as the ma(cid:77)ority of the Group’s revenue is 
based on asset levels. The FTSE-100 index ended the year 
down 14(cid:8) on closing 2019 levels while the MSCI (cid:58)orld index 
(G(cid:37)P) was up 11(cid:8) on the 2019 year-end index value. (cid:37)etween 
this, equity markets reached a low point towards the end of the 
first quarter of 2020, as indicated by the FTSE-100 index 
recording a low of (cid:24),(cid:25)72, a drop of 2(cid:24)(cid:8) from the start of the 
year, and the MSCI (cid:58)orld Index (G(cid:37)P) recording a low value of 
3,(cid:24)8(cid:25), a fall of 1(cid:25)(cid:8) from the opening index value as the start of 
the year. Global equity markets recovered in the second half of 
the year, with the FTSE-100 index up (cid:24)(cid:8) over this period and 
the MSCI (cid:58)orld Index (G(cid:37)P) up 10(cid:8) – buoyed predominantly 
by the performance of technology stocks in the US. 

The Group’s AuMA ended the year at (cid:101)117.8 billion, a 7(cid:8) 
increase from the opening position at the start of 2020. This 
increase comprised (cid:101)(cid:24).8 billion of positive market movements 
as a consequence of the equity market rally late in the year, 
and positive net client cash flow of (cid:101)1.(cid:25) billion. Ad(cid:77)usted profit 
before tax decreased by 8(cid:8) to (cid:101)1(cid:25)8 million, with a decline in 
overall revenue margins as a result of asset mix shifts in Quilter 
Investors and Quilter International, and the repricing on the 
Quilter Investment Platform. Generally, revenue adversely 
impacted by the fall in global markets in the first half of the 
year, had reversed in the subsequent period. The Group’s IFRS 
profit after tax from continuing operations was (cid:101)89 million, 
compared to a loss after tax of (cid:101)21 million in 2019. The 
improvement was primarily due to the positive impact on 
policyholder tax following the decline in equity market values, 
which can vary year-on-year as a result of market volatility. 

Ad(cid:77)usted diluted earnings per share from continuing 
operations were broadly unchanged at 8.(cid:24)p (2019(cid:29) 8.(cid:25)p). 

Alternative Performance Measures (“APMs”)
(cid:58)e assess our financial performance using a variety of 
measures including APMs, as explained further on pages 270 
to 273. In the headings and tables presented, these measures 
are indicated with an asterisk(cid:29) (cid:13)

I am pleased with the Group’s 
financial response to 2020’s 
challenging environment, 
focusing on cost management 
and our strong balance sheet.

Key financial highlights 

Year ended 31 December 2020

Continuing operations

Gross sales (£bn)*

Gross outflows ((cid:101)bn)(cid:13)

NCCF (£bn)*

Integrated net inflows 
(£bn)*

AuMA (£bn)*

NCCF/opening AuMA (%)*

Asset retention (%)*

Advice & 
Wealth 
Management

Wealth

Platforms Eliminations

Total
Group

7.1

(6.5)

0.6

0.9

48.5

1%

86%

7.3

(5.5)

1.8

1.4

84.3

2%

93%

(3.5)

2.7

(0.8)

10.9

(9.3)

1.6

–

2.3

(15.0)

117.8

n/a

n/a

1%

92%

Year ended 31 December 2019

Continuing operations1

Gross sales (£bn)*

Gross outflows ((cid:101)bn)(cid:13)

NCCF (£bn)*

Integrated net inflows 
(£bn)*

AuMA (£bn)*

NCCF/opening AuMA (%)*

Asset retention (%)*

Advice & 
Wealth 
Management

Wealth
Platforms

Eliminations

Total
Group

7.5

(7.8)

(0.3)

1.6

45.8

(1%)

81%

8.0

(6.6)

1.4

1.0

77.7

2%

90%

(3.2)

2.4

(0.8)

12.3

(12.0)

0.3

–

2.6

(13.1)

110.4

n/a

n/a

–

88%

1Continuing operations represent Quilter plc, excluding the results of Quilter Life 
Assurance ((cid:522)QLA(cid:523)) in 2019, which was sold to ReAssure on 31 December 2019.

Net client cash flow (“NCCF”)* 
Net client cash inflows were (cid:101)1.(cid:25) billion for the year 
(2019(cid:29) (cid:101)0.3 billion), during a period where the impact of 
CO(cid:57)ID-19 on the global economy has been dramatic, creating 
economic uncertainty and market volatility. The Group 
experienced slightly lower gross sales in 2020 due to the 
impact of the pandemic, which was more than offset by lower 
outflows in comparison to 2019, notably for Quilter Investment 
Platform, Quilter Cheviot, and Quilter International.

Net inflows to Quilter Investors were down 40(cid:8) on the prior 
year at (cid:101)0.3 billion (2019(cid:29) (cid:101)0.(cid:24) billion), driven by a decrease 
in flows from Quilter Financial Planning as the pandemic 
environment presented advisers with less opportunity to 
attract new business. Cirilium Active started the year with 
challenged investment performance which resulted in outflows 
and switches to lower margin in-house solutions. Pleasingly, 
performance improved during the year. Quilter Financial 
Planning attracted net inflows into Cirilium (cid:37)lend, Cirilium 
Passive and (cid:58)ealthSelect during the year and net inflows into 
(cid:58)ealthSelect via the Quilter Investment Platform were up 23(cid:8) 
when compared to the prior year.

Quilter | Annual report 2020

61

 
 
 
 
Financial review 
continued

Quilter Cheviot attracted net inflows of (cid:101)0.3 billion 
(2019(cid:29) outflow of (cid:101)0.8 billion), which was an improvement on 
the prior year, primarily due to lower levels of outflows linked 
to the Investment Managers ((cid:522)IMs(cid:523)) who resigned in mid-2018 
(2020(cid:29) (cid:101)0.2 billion outflow, 2019(cid:29) outflows of (cid:101)1.3 billion) and 
the loss of a (cid:101)0.2 billion quasi-institutional mandate in the 
second quarter of 2019. Excluding the departures of IMs who 
resigned in the summer of 2018, NCCF was stable at (cid:101)0.(cid:24) billion 
(2019: £0.5 billion).

Quilter Investment Platform recorded net inflows of (cid:101)1.(cid:24) billion, 
up (cid:25)7(cid:8) (2019(cid:29) (cid:101)0.9 billion) where the year-on-year reduction 
in gross sales has been more than offset by the reduction in 
outflows. The impacts of CO(cid:57)ID-19 reduced overall market 
activity as advisers spent most of the year focused on servicing 
existing clients rather than seeking to attract new clients given 
the restrictions on face-to-face meetings. Gross outflows were 
down 18(cid:8) to (cid:101)4.2 billion (2019(cid:29) outflow of (cid:101)(cid:24).1 billion). In 
addition, client led withdrawals were lower year-on-year as 
clients stayed invested during the worst periods of the market 
downturn and the UK lockdown restricted consumer spending, 
reducing withdrawals. D(cid:37) to DC pension scheme transfers 
were broadly stable with the prior year at (cid:101)0.9 billion 
(2019: £0.8 billion). 

Quilter International’s net inflows were down 40(cid:8) to (cid:101)0.3 billion 
(2019(cid:29) (cid:101)0.(cid:24) billion) as the prior year was supported by a small 
number of large single investments from Hong Kong and 
Latin America in the fourth quarter, which totalled (cid:101)0.3 billion. 
Excluding this, NCCF was broadly in line with the prior year.

(cid:49)(cid:72)(cid:87)(cid:3)(cid:565)(cid:82)(cid:90)(cid:86)(cid:3)(cid:11)(cid:101)(cid:69)(cid:81)(cid:12)

2020

2019

 % Change

Total integrated net inflows(cid:13)

Direct net inflows(cid:18)(outflows)

Eliminations

Total Quilter plc NCCF*

2.3

0.1

(0.8)

1.6

2.6

(1.5)

(0.8)

0.3

(12%)

–

–

433%

Integrated net inflows of (cid:101)2.3 billion were down 12(cid:8) from 
2019 ((cid:101)2.(cid:25) billion). The restricted channel of Quilter Financial 
Planning accounted for £0.8 billion (2019: £1.2 billion) of 
Quilter Investors’ net flows, (cid:101)1.2 billion (2019(cid:29) (cid:101)1.0 billion) 
of Quilter Investment Platforms’ net flows and (cid:101)0.3 billion 
(2019(cid:29) (cid:101)0.4 billion) of Quilter Cheviot net flows. The year-on-year 
improvement in direct net inflows was primarily driven by 
outflows related to the departure of a specific IM team at 
Quilter Cheviot not recurring in 2020, together with an 
increase in the performance of direct flows to the (cid:58)ealth 
Platforms businesses.

Total RFP headcount was 1,842 at 31 December 2020, up by 2(cid:8) 
from 1,799 at 31 December 2019. Organic growth for the year 
was limited as a result of the external environment coupled 
with a scaling back of acquisitions in Quilter Private Client 
Advisers as a consequence of the ongoing pandemic. 
Productivity(cid:13) for Quilter Financial Planning was (cid:101)1.3 million per 
RFP for the year (2019(cid:29) restated to (cid:101)1.(cid:25) million) as a result of 
reduced net inflows to Quilter Investors and Quilter Cheviot 
in light of the challenging market environment. Net inflows 
to Quilter Investment Platform performed well, up 20(cid:8) 
year-on-year, emphasising the strength of Quilter’s platform 
proposition and realising benefits from the acquisitions made 
in 2019. 

Asset retention* has increased to 92% (2019: 88%), 
predominantly as a result of lower outflows from Quilter 
Investment Platform and Quilter Cheviot.

Assets under management/administration (“AuMA”)*
AuMA was (cid:101)117.8 billion at 31 December 2020, up 7(cid:8) from 
31 December 2019 ((cid:101)110.4 billion), driven by positive market 
movements of (cid:101)(cid:24).8 billion and (cid:101)1.(cid:25) billion of net inflows. 

Quilter Investors’ AuM was (cid:101)23.2 billion, up 7(cid:8) since the start 
of the year (2019(cid:29) (cid:101)21.(cid:25) billion). The Cirilium fund range AuM 
increased by 11(cid:8) to (cid:101)12.3 billion at 31 December 2020 (2019(cid:29) 
(cid:101)11.1 billion), with (cid:101)0.1 billion of net outflows and (cid:101)1.3 billion 
of positive market movements. (cid:58)ithin the Cirilium fund range, 
net outflows from Cirilium Active to Cirilium Passive and 
Cirilium (cid:37)lend solutions was a notable characteristic during the 
year, with the CO(cid:57)ID-19 environment adding some acceleration 
to the trend experienced during 2019. The (cid:58)ealthSelect fund 
range AuM increased by 18(cid:8) to (cid:101)7.9 billion at the end of 
December 2020 (2019(cid:29) (cid:101)(cid:25).7 billion) with (cid:101)0.7 billion of net 
inflows and (cid:101)0.(cid:24) billion of positive market movement. Quilter 
Cheviot AuM of (cid:101)2(cid:24).3 billion increased by (cid:24)(cid:8) in the year, 
primarily as a result of positive market movements. Quilter 
Investment Platforms’ AuA increased by 9(cid:8) to (cid:101)(cid:25)2.(cid:24) billion, 
driven by increases in the market value of assets and net 
inflows. Net inflows of (cid:101)1.2 billion were received from Quilter 
Financial Planning and total assets held by Quilter Financial 
Planning clients on the platform was (cid:101)9.7 billion. Net inflows of 
(cid:101)0.3 billion were received from Independent Financial Advisers 
during the year (2019(cid:29) outflow of (cid:101)0.2 billion). Quilter 
International AuA of (cid:101)21.8 billion was a (cid:25)(cid:8) increase on the 
prior year (2019(cid:29) (cid:101)20.(cid:24) billion) primarily due to exposure to 
rebounding US and international markets, low surrender rates 
and broadly stable sales levels, partially offset by unfavourable 
exchange rate market movements.

IFRS profit after tax
The Group’s IFRS profit after tax was (cid:101)88 million for 2020, 
compared to (cid:101)14(cid:25) million in the prior year. 2019 included profit 
after tax from discontinued operations of (cid:101)1(cid:25)7 million, which 
related to the QLA business that was sold on 31 December 2019. 

62

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

IFRS profit after tax from continuing operations was (cid:101)89 million 
in 2020, compared to a loss after tax of (cid:101)21 million in 2019, 
primarily due to the impact of a decrease in policyholder tax, 
which can vary significantly year-on-year as a result of market 
volatility, and a reduction in IFRS operating and administrative 
expenses during 2020 driven by the costs associated with the 
delivery of the Optimisation programme and the Platform 
Transformation Programme.

The Group’s IFRS income and total expenses are impacted by 
the unit-linked investment contracts within Quilter Investment 
Platform and Quilter International, where the investment 
return on the underlying portfolio of assets is offset by a 
corresponding movement in policyholder liabilities. 
Consequently, the decrease of (cid:101)2.7 billion in IFRS income 
from (cid:101)7.4 billion in 2019 to (cid:101)4.7 billion in 2020 is offset by 
a corresponding decrease in IFRS total expenses, which was 
(cid:101)4.(cid:25) billion in 2020, reduced from (cid:101)7.4 billion in the prior year. 

Adjusted profit before tax*
Ad(cid:77)usted profit before tax reflects the (cid:37)oard’s view of 
the underlying performance of the Group and is used for 
management decision making and internal performance 
management. Ad(cid:77)usted profit before tax is a non-GAAP 
measure which ad(cid:77)usts IFRS profit for specific items, 
as detailed in note 7 of the consolidated financial statements 
on page 191, and is the profit measure presented for the 
Group’s segmental reporting. 

Ad(cid:77)usted profit before tax was (cid:101)1(cid:25)8 million for the year, 8(cid:8) 
lower than the prior year (2019(cid:29) (cid:101)182 million). Ad(cid:77)usted profit 
before tax for the Advice and (cid:58)ealth Management segment 
decreased by 13(cid:8) year-on-year and the (cid:58)ealth Platforms 
segment increased by 2(cid:8) compared to the prior year.

Total net fee revenue was (cid:101)(cid:25)82 million, 4(cid:8) lower than the prior 
year (2019(cid:29) (cid:101)712 million). Net management fees of (cid:101)(cid:24)(cid:24)2 million 
were lower than those of the prior year (2019(cid:29) (cid:101)(cid:24)79 million) 
predominantly due to market volatility, reduced new client 
activity as a consequence of CO(cid:57)ID-19, and the decline in 
overall revenue margins as a result of anticipated asset mix 
changes. The revenue margin was reduced following the 
Quilter Investment Platform reprice in April 2020, a 
continuation of the trend of clients switching from Cirilium 
Active to the lower margin Cirilium Passive and Cirilium (cid:37)lend 
funds, the non-recurrence of the 2019 revenue provision 
release within Quilter Investors, and the anticipated trend 
in Quilter International where the proportion of assets on 
older-style pricing structures was reducing relative to the si(cid:93)e 
of the overall book. The revenue margin within Quilter Cheviot 
remained broadly stable year-on-year. Other revenue of 
(cid:101)130 million was down marginally against prior year 
(2019(cid:29) (cid:101)133 million), primarily due to the impact of adverse F(cid:59) 
movements and lower interest rates and improved surrender 
experience for Quilter International, which were partially offset 
by higher advisory revenues generated by Quilter Financial 
Planning as a result of acquisitions made in 2019.

Operating expenses for the Group decreased from (cid:101)(cid:24)30 million 
in 2019 to (cid:101)(cid:24)14 million, primarily due to c.(cid:101)40 million of tactical 
cost savings made during the year, with lower variable 
compensation costs, decreased marketing spend, and delayed 
development spend, which were partially offset by increased 
FSCS levies and regulatory costs, expenses incurred to prepare 
the business for remote working and providing a safe CO(cid:57)ID-19 
workplace, and higher one-off costs in relation the London 
office move during the year. 

The Group’s overall operating margin has decreased to 2(cid:24)(cid:8) 
(2019(cid:29) 2(cid:25)(cid:8)) as a result of the reduction in revenue.

Financial performance from continuing operations 

(cid:21)(cid:19)(cid:21)(cid:19)(cid:3)(cid:11)(cid:101)(cid:80)(cid:12)

Net management fee(cid:13)

Other revenue(cid:13)

Total net fee revenue*

Operating expenses*

(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:13)

Tax

(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)

Operating margin ((cid:8))(cid:13)

Revenue margin (bps)(cid:13)

Advice & 
Wealth 
Management

Wealth 
Platforms

Head 
(cid:50)(cid:605)(cid:70)(cid:72)

Total
Group

279

117

396

(cid:11)(cid:22)(cid:19)(cid:25)(cid:12)

90

273

12

285

(cid:11)(cid:20)(cid:26)(cid:20)(cid:12)

(cid:20)(cid:23)(cid:23)

–

1

1

(cid:11)(cid:22)(cid:26)(cid:12)

(cid:11)(cid:22)(cid:25)(cid:12)

23%

63

40%

36

552

130

682

(cid:11)(cid:24)(cid:20)(cid:23)(cid:12)

168

(cid:3)(cid:11)(cid:20)(cid:25)(cid:12)

152

25%

51

Financial performance from continuing operations 

2019 (£m)

Net management fee(cid:13)

Other revenue(cid:13)

Total net fee revenue(cid:13)

Operating expenses*

Ad(cid:77)usted profit before tax(cid:13)

Tax

Ad(cid:77)usted profit after tax

Operating margin ((cid:8))(cid:13)

Revenue margin (bps)(cid:13)

Advice & 
Wealth 
Management

Wealth 
Platforms

Head 
Office

Total
Group

296

111

407

(304)

103

283

19

302

(190)

112

–

3

3

(36)

(33)

25%

67

37%

38

579

133

712

(530)

182

(22)

160

26%

55

Total net fee revenue*
The Group’s total net fee revenue decreased by 4(cid:8) to 
(cid:101)(cid:25)82 million (2019(cid:29) (cid:101)712 million) due to the mix shift within 
Quilter Investors and Quilter International to lower margin 
products, and the repricing of the Quilter Investment Platform 
resulting in the blended revenue margin for the Group to 
decrease by 4 bps to (cid:24)1 bps. Generally, revenue adversely 
impacted by the fall in global markets in the first half of the year 
reversed in the subsequent period and average AuMA for the 
year was (cid:101)107.9 billion (2019(cid:29) (cid:101)10(cid:24).7 billion).

Quilter | Annual report 2020

63

 
 
 
 
Financial review 
continued

Total net fee revenue for the Advice and (cid:58)ealth Management 
segment decreased by 3(cid:8) during the year, to (cid:101)39(cid:25) million 
(2019(cid:29) (cid:101)407 million). Quilter Investors’ net management fee 
revenue decreased by (cid:101)12 million from the prior year as 
a result of a non-recurring revenue provision release of 
c.(cid:101)8 million in 2019 and the earlier referenced mix shift to 
lower margin products. Total net fee revenue within Quilter 
Cheviot was 4(cid:8) lower at (cid:101)171 million (2019(cid:29) (cid:101)178 million) 
as average AuM was 1(cid:8) lower than prior year and reduced 
revenues were earned following the reduction in base interest 
rates in March 2020. Other revenue increased to (cid:101)117 million 
(2019(cid:29) (cid:101)111 million), principally due to the increase in advice 
fees in Quilter Financial Planning as a result of the acquisitions 
in 2019. (cid:58)ithin the revenue generated by advice, recurring and 
fixed fees increased by (cid:101)10 million against prior year, of which 
(cid:101)8 million related to the increase of acquisitions in the prior 
year, while revenues generated through initial fees reduced 
marginally on that of the prior year.

Operating expenses* 
Operating expenses decreased by (cid:101)1(cid:25) million to (cid:101)(cid:24)14 million 
during the year (2019(cid:29) (cid:101)(cid:24)30 million). The Group incurred 
(cid:101)7 million of additional FSCS levy and regulatory fee costs 
compared to the prior year, the acquisitions made by Quilter 
Financial Planning in 2019 increased operating expenses by 
(cid:101)12 million in 2020, and property dual-running costs in relation 
to the new London premises of (cid:101)10 million. These cost 
increases, and those arising from inflation, were more than 
offset by c.(cid:101)40 million of tactical cost savings, which included 
lower variable compensation costs, decreased marketing 
spend, and delayed development spend. Continued cost 
discipline was also achieved through further savings from the 
Optimisation programme, where additional in-year benefits 
of (cid:101)13 million were realised in 2020 compared to 2019. 

Further details on the Optimisation programme expense 
savings are provided further in the Financial review.

Total net fee revenue for the (cid:58)ealth Platforms segment 
was (cid:101)28(cid:24) million, down (cid:25)(cid:8) from (cid:101)302 million in 2019. 
Quilter Investment Platforms’ net fee revenue decreased by 
(cid:101)10 million, down (cid:25)(cid:8) to (cid:101)1(cid:25)7 million, despite higher average 
asset levels, due to the continuing trend of new business 
margins being lower than the existing back book rates, an 
increase in the proportion of assets for Quilter Financial Planning 
clients, and the platform reprice implemented in April 2020. 
Quilter International’s net fee revenue was (cid:101)7 million lower 
than the prior year at (cid:101)118 million, mainly as a result of the 
impact of adverse F(cid:59) movements, lower interest rates and 
improved surrender experience, which is reflected in the 
decrease in other revenue.

The revenue margin for Advice and (cid:58)ealth Management 
of (cid:25)3 bps was 4 bps lower in comparison to the prior year. 
This decline was predominantly due to a 7 bps decrease in 
the average revenue margin for Quilter Investors to (cid:24)3 bps, 
driven by the strategy to build out and develop a fuller suite 
of investment propositions. As previously reported, the 
comparative period margin included the impact of non-
recurring revenue provision releases in 2019. Quilter Cheviot’s 
revenue margin remained stable with that of the prior year at 
72 bps. The revenue margin for (cid:58)ealth Platforms decreased by 
2 bps to 3(cid:25) bps, due to the anticipated trend for lower margin 
products for new business written into Quilter International, 
and the charging structure reprice from April 2020 within 
Quilter Investment Platform. 

The Group’s revenue margin(cid:13) of (cid:24)1 bps was 4 bps lower than 
prior year (2019(cid:29) (cid:24)(cid:24) bps). 

(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:3)(cid:86)(cid:83)(cid:79)(cid:76)(cid:87)(cid:3)(cid:11)(cid:101)(cid:80)(cid:12)

Front office and operations

IT

Development

Support functions

Property

Regulatory fees and levies 

(cid:57)ariable compensation

Operating expenses*

2020

226

85

9

70

43

22

59

(cid:24)(cid:20)(cid:23)

20191

211

86

20

85

28

15

85

 530 

1For the 2019 comparatives, some costs have been reallocated between 
categories to align with current year presentation.

Front office and operations expenses increased by 7(cid:8) to 
(cid:101)22(cid:25) million (2019(cid:29) (cid:101)211 million), primarily due to the impact 
of the Quilter Financial Planning acquisitions made during the 
course of 2019 resulting in a full year run-rate of costs during 
2020, including one-off integration costs. 

IT expenses decreased by 1(cid:8) to (cid:101)8(cid:24) million (2019(cid:29) (cid:101)8(cid:25) million), 
driven by savings realised as part of the Optimisation 
programme, which were partially offset by increased 
information security costs.

Development expenses decreased by (cid:24)(cid:24)(cid:8) to (cid:101)9 million 
(2019(cid:29) (cid:101)20 million). The decrease was mainly due to lower 
development costs due to a reduction in regulatory change 
requirements in 2020 compared to the prior year, and 
postponed change activity as a consequence of CO(cid:57)ID-19. 

Support functions expenses decreased by 18(cid:8) to (cid:101)70 million 
(2019(cid:29) (cid:101)8(cid:24) million) driven by continued savings realised as part 
of the Optimisation programme, partially offset by increased 
costs in relation to the CO(cid:57)ID-19 pandemic to mobilise remote 
working across the business.

Property costs increased to (cid:101)43 million (2019(cid:29) (cid:101)28 million). 
This is driven by the property dual-run and exit costs 
associated with the London office move of approximately 
(cid:101)10 million as previously guided, and increased facilities costs 
incurred to provide a CO(cid:57)ID-19 secure environment.

(cid:25)(cid:23)

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Regulatory fees and levies, which includes the Group’s FSCS 
levies and FCA fees, have increased by 47(cid:8) to (cid:101)22 million 
(2019(cid:29) (cid:101)1(cid:24) million) driven by increased claims experience 
across the financial services industry in the UK, and which is 
levied by the FCA. Recent announcements by the FCA indicate 
that the industry FSCS levy may increase to over (cid:101)1 billion in 
2021(cid:18)22 – an increase of 48(cid:8) on that of the disclosed final levy 
in 2020(cid:18)21. Accordingly, it is anticipated that the FSCS levy cost 
to the Group will continue to increase in 2021.

(cid:57)ariable compensation costs decreased by 31(cid:8) to (cid:101)(cid:24)9 million 
as a result of the impact of CO(cid:57)ID-19 on the achievement of 
the Group’s planned ad(cid:77)usted profit before tax for the year. 
Management anticipate that variable compensation costs will 
increase to more normalised levels in future periods if current 
equity market levels are maintained, with the extent of the cost 
increase predominantly dependent upon the ad(cid:77)usted profit 
generated by the business.

Total operating expenses for 2021 are expected to be broadly 
in line with our original expectations for 2020, at around 
(cid:101)(cid:24)(cid:25)0 million, as variable compensation, marketing and 
development spend return to more normalised levels as the 
impact of CO(cid:57)ID-19 and the associated restrictions are eased, 
along with an anticipated increase in regulatory levies. 
Offsetting the increase will be further benefits arising from 
the Optimisation programme.

Taxation
The effective tax rate ((cid:522)ETR(cid:523)) on ad(cid:77)usted profit before tax 
was 10(cid:8) (2019(cid:29) 11(cid:8)). The Group’s ETR is lower than the UK 
corporation tax rate of 19(cid:8) principally due to profits from 
Quilter International being taxed at lower rates than the UK, 
and the change in the UK corporation tax rate from 1 April 2020 
from 17(cid:8) to 19(cid:8) which resulted in a rebase in the Group’s 
deferred tax assets and liabilities, and had a net positive 
impact to the tax expense. The Group’s ETR is dependent upon 
a number of factors including the level of Quilter International 
profits, as well as the UK corporation tax rate. 

The Group’s IFRS income tax expense on continuing business 
was a credit of (cid:101)3 million for the year ended 31 December 
2020, compared to a charge of (cid:101)(cid:25)(cid:25) million for the prior year. 
The primary reason for the IFRS income tax credit for the year 
is due to first-time recognition of a deferred tax asset in 
relation to accrued interest expense. The income tax expense 
or credit can vary significantly year-on-year as a result of 
market volatility and the impact market movements have on 
policyholder tax. The recognition of the income received from 
policyholders (which is included within the Group’s IFRS 
revenue) to fund the policyholder tax liability can vary in timing 
to the recognition of the corresponding policyholder tax 
expense, creating volatility to the Group’s IFRS profit or loss 
before tax attributable to equity holders. An ad(cid:77)ustment is 
made to ad(cid:77)usted profit before tax to remove these distortions, 
as explained further on page 67 and in note 7(b) of the 
consolidated financial statements.

Earnings Per Share (“EPS”) 
(cid:37)asic EPS for 2020 was (cid:24).0 pence (2019(cid:29) 8.0 pence). (cid:37)asic EPS 
is based on the Group’s IFRS profit and reported including 
both continuing and discontinued operations. For 2020, 
the basic EPS from continuing operations was (cid:24).1 pence 
(2019: (1.1) pence), and (0.1) pence relates to discontinued 
operations (2019(cid:29) 9.1 pence). Discontinued operations in 2019 
included profit attributable to the QLA business, and the gain 
on sale, whilst 2020 only includes a residual amount of costs 
associated with business disposals. During the year, the 
average number of shares in issue decreased to 1,842 million 
(2019(cid:29) 1,902 million). The average number of shares in issue 
used for the basic EPS calculation was 1,7(cid:25)0 million (2019(cid:29) 
1,83(cid:24) million), after the deduction of own shares held in 
Employee (cid:37)enefit Trusts and consolidated funds of 82 million 
(2019(cid:29) (cid:25)7 million). The reduction in the number of shares in 
issue in the year is due to the share buyback programme, 
which commenced in 2020, with 118 million shares bought and 
cancelled during the year. The decrease in shares in issue as a 
result of the buyback, and the corresponding impact on the 
average number of shares in issue used for the EPS calculation, 
led to an increase of 0.2 pence in the basic EPS for 2020. 

The average number of shares in issue used for the diluted EPS 
calculation was 1,797 million (December 2019(cid:29) 1,8(cid:25)3 million). 
This includes the dilutive effect of shares and options awarded 
to employees under share-based payment arrangements of 
37 million (December 2019(cid:29) 28 million). The dilutive effect of 
share awards has continued to increase due to more share 
options being awarded to employees.

Optimisation 
The Optimisation programme has delivered notable 
efficiencies and improvements in operational performance 
for the Group through greater technology utilisation and 
integration activity. Our technology enabled transformation 
over 2020 included successful deployment of new finance 
and procurement modules as part of our general ledger 
consolidation and modernisation activity effective from 
January 2021. The HR module, efficiency gains and further 
technical releases will follow in 2021. The automation of manual 
operational processes within Quilter International using 
robotics has continued and only a few deployments remain 
in what has been a transformational initiative for the business. 
Further potential deployment of robotics in the wider Quilter 
business is under assessment.

Quilter continued to leverage support function centres of 
excellence to achieve cost savings and reduce spend across 
the business by introducing tighter supplier management 
practices, insourcing capabilities and rationalising and 
consolidating technology and other suppliers across 
the Group.

Quilter | Annual report 2020

65

 
 
 
 
Financial review 
continued

In addition to benefits arising from prior years, the Group 
delivered a further (cid:101)13 million of cost reduction in 2020 against 
the 2018 cost base, with (cid:101)22 million of run-rate benefit 
bringing the total delivered run-rate to (cid:101)4(cid:25) million and 
associated implementation costs since inception of (cid:101)(cid:24)(cid:25) million. 
Given CO(cid:57)ID-19, management made the decision to delay 
certain planned activities in the short term which marginally 
reduced the timing of the realised benefit profile in 2020. The 
Optimisation programme remains on track to deliver the initial 
expected cost reductions.

The increase in the provision subsequent to acquisition of 
(cid:101)(cid:24) million has been recognised within expenses of the Group, 
with (cid:101)1 million of this provision utilised during the year.
The final costs of redress for cases upheld will depend on 
specific calculations on a case-by-case basis, and will be 
impacted by market movements and other parameters 
affecting the defined contribution scheme asset. Final 
redress costs are therefore exposed to volatility from these 
movements which may result in final settlement cost varying 
from the amounts currently provided.

Quilter will continue to transform with focus turning now 
towards operational and customer-facing areas of the business 
as the Group seeks to integrate further, drive efficiencies and 
improve both the adviser and customer experience whilst also 
pursuing benefits within support function centres of excellence 
post technology implementations. Therefore, in addition to the 
benefits and costs previously announced, the Group has 
extended the Optimisation business transformation with 
additional optimisation annualised run-rate savings of 
c.(cid:101)1(cid:24) million identified with costs to achieve of c.(cid:101)1(cid:25) million 
expected to be realised by mid-2022. At the outset of the 
Optimisation pro(cid:77)ect the Group indicated that certain business 
activities were out of scope due to our focus on delivering a 
successful platform migration and to limit disruption to those 
parts of the business responsible for revenue generation. 
(cid:58)ith the Platform migration now complete, the Group is now 
considering the potential for a final phase of Optimisation 
efficiencies and expects to provide an update on this in the 
latter part of the year.

Lighthouse DB to DC complaints 
As reported in the Group’s 2019 Annual Report, a provision 
was recognised in relation to a number of complaints received 
on pension transfer advice provided by Lighthouse for (cid:37)ritish 
Steel Pension Scheme members, prior to the Group’s 
acquisition of Lighthouse in June 2019. All the complaints 
received related to transfers before that date and, as such, 
the provision was established within the fair value of the 
Lighthouse assets and liabilities acquired with a corresponding 
increase in goodwill.

A total provision of (cid:101)28 million (31 December 2019(cid:29) (cid:101)12 million) 
has been calculated for the potential redress of all (cid:37)ritish Steel 
cases, including anticipated costs of legal and professional fees 
associated with the redress activity. The provision was increased 
during 2020 following the publication of the FCA thematic review 
and additional client complaints being received. 

The recognition of the total provision of (cid:101)28 million has been 
apportioned between the fair value of net assets of Lighthouse 
at acquisition and the expenses of the Group. (cid:101)24 million 
(31 December 2019(cid:29) (cid:101)12 million) is recognised within the fair 
value of net assets acquired and impacts the goodwill balance 
recognised upon acquisition. The impact on the goodwill 
balance was partially offset by the recognition of an insurance 
recovery asset of (cid:101)3 million, and a deferred tax asset of 
(cid:101)2 million, resulting in a net increase to goodwill of (cid:101)19 million. 

Further details are provided in notes (cid:25)(a), 28 and 3(cid:24) to the 
financial statements.

Reconciliation of adjusted profit before tax* to IFRS profit
Ad(cid:77)usted profit before tax for the Group was (cid:101)1(cid:25)8 million 
(2019(cid:29) (cid:101)182 million from continuing operations excluding 
Quilter Life Assurance which was sold 31 December 2019). 

The Group’s IFRS profit after tax from continuing operations 
was (cid:101)89 million, compared to a loss after tax of (cid:101)(21) million 
in 2019, primarily due to the change in policyholder tax, which 
can vary significantly year-on-year as a result of market 
volatility. The table below provides the reconciliation of the 
Group’s ad(cid:77)usted profit before tax to the IFRS profit(cid:18)(loss) after 
tax for 2020 and 2019.

Ad(cid:77)usted profit before tax(cid:13) reflects the profit from the 
Group’s core operations and is calculated by making certain 
ad(cid:77)ustments to IFRS profit to reflect the Directors’ view of the 
Group’s underlying performance. Details of these ad(cid:77)ustments 
are provided in note 7 of the consolidated financial statements.

The ‘impact of acquisition and disposal related accounting’ 
costs of (cid:101)42 million (2019(cid:29) (cid:101)(cid:24)4 million) include amortisation 
of acquired intangible assets of (cid:101)4(cid:24) million (2019(cid:29) (cid:101)4(cid:24) million), 
acquisition and disposal related costs, including the unwinding 
of discounting on contingent consideration of (cid:101)1 million (2019(cid:29) 
(cid:101)9 million), partially offset by fair value gains on the revaluation 
of contingent consideration of (cid:101)4 million (2019(cid:29) (cid:101)nil). These 
costs have decreased in 2020, principally due to the impact 
of no material acquisitions being made during the year.

The loss on business disposals of (cid:101)1 million (2019(cid:29) profit 
of (cid:101)103 million) represents transaction and separation costs 
recognised during the year, which relate to the sale of the 
QLA and Single Strategy businesses in prior years. The Group 
recognised a profit on disposal of (cid:101)103 million in the prior year 
in relation to the sale of QLA to ReAssure on 31 December 2019. 

(cid:37)usiness transformation costs of (cid:101)70 million (2019(cid:29) (cid:101)77 million) 
include (cid:101)38 million (2019(cid:29) (cid:101)(cid:24)7 million) incurred on the UK 
Platform Transformation Programme and (cid:101)33 million of costs 
(2019(cid:29) (cid:101)18 million) in relation to the Optimisation programme. 
In 2020, a credit of (cid:101)1 million has been recognised in relation to 
the separation of Quilter Investors as a result of the sale of the 
Single Strategy business, and in 2019 restructuring costs of 
(cid:101)3 million were incurred as a result of the sale of QLA.

66

Quilter | Annual report 2020

(cid:53)(cid:72)(cid:70)(cid:82)(cid:81)(cid:70)(cid:76)(cid:79)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)
(cid:87)(cid:68)(cid:91)(cid:3)(cid:87)(cid:82)(cid:3)(cid:918)(cid:41)(cid:53)(cid:54)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)

For the year ended 31 December 2020

For the year ended 31 December 2019

(cid:101)(cid:80)

Advice and (cid:58)ealth Management

(cid:58)ealth Platforms

Head Office

(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:13)(cid:3)

Reallocation of QLA costs

(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:13)(cid:3)

Ad(cid:77)usting for the following(cid:29)

Impact of acquisition and disposal related accounting

(Loss)(cid:18)profit on business disposals

(cid:37)usiness transformation costs

Managed Separation costs

Finance costs

Policyholder tax ad(cid:77)ustments

Customer remediation 

Total adjusting items before tax

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)
to equity holders*

Tax attributable to policyholder returns

Income tax credit(cid:18)(expense)

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)2

Continuing 
Operations

Discontinued
 Operations1

Total

Continuing 
Operations

Discontinued
 Operations1

90

114

(36)

168

–

168

 (42)

–

 (70)

–

 (10)

9

 (5)

(cid:3)(cid:11)(cid:20)(cid:20)(cid:27)(cid:12)

 50

 36

3

89

–

–

–

–

–

–

–

(1)

–

–

–

–

–

(cid:3)(cid:11)(cid:20)(cid:12)

(cid:3)(cid:11)(cid:20)(cid:12)

–

–

(cid:11)(cid:20)(cid:12)

90 

114

 (36)

168

–

 168

(42)

 (1)

 (70)

–

(10)

9

(5)

(cid:11)(cid:20)(cid:20)(cid:28)(cid:12)

(cid:23)(cid:28)

36

3

88

103

112

(33)

182

(26)

156

(54)

–

(77)

(6)

(10)

(62)

–

(209)

(53)

98

(66)

(21)

–

53

–

53

26

79

–

103

–

–

–

(12)

10

101

180

76

(89)

167

1Discontinued operations includes the results of the Quilter Life Assurance ((cid:522)QLA(cid:523)) business in 2019.
2IFRS profit(cid:18)(loss) after tax.

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

Total

103

165

(33)

235

–

235

(54)

103

(77)

(6)

(10)

(74)

10

(108)

127

174

(155)

146

i

F
n
a
n
c
a

i

l

Managed Separation costs were nil (2019(cid:29) (cid:101)(cid:25) million), reflecting 
costs associated with our successful separation from Old 
Mutual plc and Listing in June 2018. In 2019, this cost was 
primarily incurred on the rebranding activities within the 
business, with residual costs expected to be incurred in early 
2021 for the final rebranding activity of the UK Platform 
business following the final client asset migration.

Finance costs were (cid:101)10 million (2019(cid:29) (cid:101)10 million) wholly related 
to the interest and amortisation of setup fees on the Tier 2 
bond and Revolving Credit Facility.

Policyholder tax ad(cid:77)ustments from continuing operations 
were a credit of (cid:101)9 million for 2020 (2019(cid:29) debit of (cid:101)74 million) 
in relation to the removal of distortions arising from market 
volatility that can, in turn, lead to volatility in the policyholder 
tax charge between periods. The recognition of the income 
received from policyholders (which is included within the 
Group’s IFRS revenue) to fund the policyholder tax liability 
can vary in timing to the recognition of the corresponding tax 
expense, creating volatility to the Group’s IFRS profit(cid:18)(loss) 
before tax attributable to equity holders.

The customer remediation ad(cid:77)ustment of (cid:101)(cid:24) million in 2020 
relates to the impact of post-acquisition market movements 
on the (cid:37)ritish Steel complaints provision relating to Lighthouse. 
The (cid:101)10 million credit in the prior period relates to the release 
of the voluntary customer remediation provision in QLA 
associated with certain legacy products.

Cash generation*
Cash generation measures the proportion of ad(cid:77)usted profit 
after tax that is recognised in the form of cash generated from 
operations. The Group achieved a cash generation rate of 8(cid:25)(cid:8) 
of ad(cid:77)usted profit after tax over 2020 (2019(cid:29) 8(cid:24)(cid:8), restated for 
continuing business only following the disposal of QLA).

Review of financial position
Capital and liquidity 

Solvency II
The Group’s Solvency II surplus is (cid:101)1,021 million at 31 December 
2020 (31 December 2019(cid:29) (cid:101)1,1(cid:25)8 million), representing a 
Solvency II ratio of 217(cid:8) (31 December 2019(cid:29) 221(cid:8)). The 
Solvency II information for the year to 31 December 2020 
contained in this results disclosure has not been audited. 

The Group’s Solvency II capital position is stated after allowing 
for the impact of the recommended final dividend payment 
of (cid:101)(cid:25)1 million (2019(cid:29) (cid:101)(cid:25)4 million).

(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:82)(cid:85)(cid:92)(cid:3)(cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:11)(cid:101)(cid:80)(cid:12)

Own funds

Solvency capital requirement ((cid:522)SCR(cid:523))

Solvency II surplus

Solvency II coverage ratio

31 December
20201

31 December
20192

1,897

876

1,021

(cid:21)(cid:20)(cid:26)(cid:8)

2,132 

964 

1,168 

221%

1Filing of annual regulatory reporting forms due by 20 May 2021.
2As represented within the Quilter plc Group Solvency and Financial Condition 
Report for the year ended 31 December 2019.

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

(cid:25)(cid:26)

 
 
 
 
 
Financial review 
continued

The 4 percentage point decrease in the Group Solvency II 
ratio from the 2019 position is primarily due to the capital 
movements associated with the Odd-lot Offer and Tranches 1 
and 2 of the share buyback net of profit recognised in the year 
and changes in capital requirements for the Group. The (cid:37)oard 
believes that the Group Solvency II surplus includes sufficient 
free cash and capital to complete all committed strategic 
investments, including the UK Platform Transformation 
Programme. Quilter expects to continue to maintain a solvency 
position significantly in excess of its internal target in the near 
term as a consequence of the surplus capital arising from the 
sale of QLA that is still intended to be returned to shareholders 
via further share buybacks.

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

(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:82)(cid:90)(cid:81)(cid:3)(cid:73)(cid:88)(cid:81)(cid:71)(cid:86)(cid:3)(cid:11)(cid:101)(cid:80)(cid:12)

Tier 11 

Tier 22 

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:54)(cid:82)(cid:79)(cid:89)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3)(cid:918)(cid:918)(cid:3)(cid:82)(cid:90)(cid:81)(cid:3)(cid:73)(cid:88)(cid:81)(cid:71)(cid:86)

At 
31 December
2020

At 
31 December 
2019

1,688

209

(cid:20)(cid:15)(cid:27)(cid:28)(cid:26)

1,925

207

2,132

1All Tier 1 capital is unrestricted for tiering purposes.
2Comprises a Solvency II compliant subordinated debt security in the form 
of a Tier 2 bond, which was issued at (cid:101)200 million in February 2018.

The Group SCR is covered by Tier 1 capital, which represents 
193(cid:8) of the Group SCR of (cid:101)87(cid:25) million. Tier 1 capital represents 
89(cid:8) of Group Solvency II own funds. Tier 2 capital represents 11(cid:8) 
of Group Solvency II own funds and 20(cid:8) of the Group surplus.

Dividend 
The (cid:37)oard has recommended a final dividend of 3.(cid:25) pence 
per share at a total cost of (cid:101)(cid:25)1 million. Sub(cid:77)ect to shareholder 
approval, the recommended final dividend will be paid on 
17 May 2021 to shareholders on the UK and South African 
share registers on 9 April 2021. For shareholders on our South 
African share register a dividend of 7(cid:25).8878(cid:25) South African 
cents per share will be paid on 17 May 2021, using an exchange 
rate of 21.3(cid:24)774. This will bring the dividend for the full year 
to 4.6 pence per share (2019: 5.2 pence per share).

Holding company cash 
The holding company cash statement includes cash flows 
generated by the three main holding companies within the 
business(cid:29) Quilter plc, Old Mutual (cid:58)ealth Holdings Limited and Old 
Mutual (cid:58)ealth UK Holding Limited. The flows associated with 
these companies will differ markedly from those disclosed in the 
statutory statement of cash flows, which comprises flows from 
the entire Quilter plc Group including policyholder movements.

The holding company cash statement illustrates cash received 
from the key trading entities within the business together with 
other cash receipts, and cash paid out in respect of corporate 
costs and capital servicing (including interest and dividends). 
Other capital movements, including those in respect of 
acquisitions and disposals together with funding for ongoing 

68

Quilter | Annual report 2020

business requirements, are also included. It is an unaudited 
non-GAAP analysis and aims to give a more illustrative view 
of business cash flows as they relate to the Group’s holding 
companies compared to the IFRS consolidated statement 
of cash flows which is prepared in accordance with 
IAS 7 ((cid:522)Statement of cash flows(cid:523)) and includes commingling 
of policyholder related flows.

(cid:101)(cid:80)

2020

2019

Opening cash at holding companies 
at 1 January

Quilter Life Assurance business sale 
– cash proceeds

Quilter Life Assurance business sale 
– cost of disposal

Single Strategy business sale 
– deferred consideration received

Share repurchase and Odd-lot Offer

Dividends paid

Net capital movements

Head Office costs and Optimisation 
programme funding

Interest costs

Net operational movements

Cash remittances from subsidiaries

Net capital contributions and investments

Other net movements

Internal capital and strategic 
investments

Closing cash at holding companies 
at end of period

815

–

(24)

7

(198)

(81)

(cid:11)(cid:21)(cid:28)(cid:25)(cid:12)

(74)

(9)

(cid:11)(cid:27)(cid:22)(cid:12)

170

(94)

5

81

(cid:24)(cid:20)(cid:26)

416

446

(7)

–

–

(92)

347

(49)

(9)

(58)

307

(200)

3

110

815

Net capital movements
Net capital movements in the year were an outflow of 
(cid:101)29(cid:25) million. This includes (cid:101)1(cid:24)7 million relating to the share 
repurchase programme (including (cid:101)4 million of costs), 
(cid:101)21 million for the Odd-lot Offer and (cid:101)20 million in respect 
of additional share repurchases to cover future vesting awards, 
and two dividend payments made to shareholders of (cid:101)(cid:25)4 
million on 18 May 2020 and (cid:101)17 million on 21 September 2020. 
(cid:101)24 million of costs relating to the disposal of the QLA business 
were also incurred during the year in line with expectations, 
with (cid:101)7 million received in respect of final proceeds from the 
Single Strategy business sale.

Net operational movements
Net operational movements were an outflow of (cid:101)83 million 
for the year and includes (cid:101)74 million of corporate and business 
transformation costs. Interest paid of (cid:101)9 million relates to 
coupon payments on the Tier 2 bond and non-utilisation fees 
for the revolving credit facility. 

Internal capital and strategic investments 
The net inflow of (cid:101)81 million is principally due to (cid:101)170 million 
of cash remittances from the trading businesses partially offset 
by (cid:101)94 million of capital contributions distributed to support 
business operational activities, particularly due to the impact 
of CO(cid:57)ID-19 and funding provided for the Platform 
Transformation Programme. 

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Balance sheet

(cid:54)(cid:88)(cid:80)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:11)(cid:101)(cid:80)(cid:12)

Assets

Financial investments

Contract costs/deferred 
acquisition costs

Cash and cash equivalents

Reinsurers’ share of insurance 
policyholder liabilities2

Goodwill and intangible assets

Trade, other receivables and 
other assets

Other assets

Total assets

Equity

Liabilities

Investment contract liabilities

Insurance contract liabilities2

Third-party interests in 
consolidated funds

Contract liabilities/deferred 
revenue

(cid:37)orrowings-sub-ordinated debt

Lease liabilities

Trade, other payables and other 
liabilities

Other liabilities

Total liabilities

Total equity and liabilities

At 
31 December 
2020
Total

At 
31 December 
2019 
(restated)1
Total

At 
1 January
 2019 
(restated)1
Total

63,274

413

1,921

–

556

701

507

(cid:25)(cid:26)(cid:15)(cid:22)(cid:26)(cid:21)

(cid:20)(cid:15)(cid:27)(cid:26)(cid:27)

57,407

–

6,513

379

199

120

672

204

57,207

455

2,253

–

592

605

439

61,551

2,071

52,455

–

5,318

403

198

137

801

168

58,054

551

2,305

2,162

550

718

371

64,711

2,005

56,450

602

3,833

456

197

–

979

189

(cid:25)(cid:24)(cid:15)(cid:23)(cid:28)(cid:23)

(cid:25)(cid:26)(cid:15)(cid:22)(cid:26)(cid:21)

59,480

61,551

62,706

64,711

1See note 4(b) for details of changes to comparative amounts.
2The consolidated statement of financial position at 1 January 2019 includes 
balances for Deferred acquisition costs. Reinsurers’ share of insurance 
policyholder liabilities and insurance contract liabilities relating to the Quilter 
Life Assurance ((cid:522)QLA(cid:523)) business that was sold on 31 December 2019.

The Group balance sheet at 31 December 2020 has total 
equity of (cid:101)1,878 million (31 December 2019(cid:29) (cid:101)2,071 million). 
Total equity has decreased by (cid:101)193 million during the year, 
predominantly due to the payment of dividends totalling 
(cid:101)81 million in the year (2019(cid:29) (cid:101)92 million) and a reduction 
of (cid:101)179 million in relation to the Group’s share buyback 
programme, partially offset by the recognition of (cid:101)88 million 
of statutory IFRS profit after tax.

Financial investments increased from (cid:101)(cid:24)7,207 million at 
31 December 2019 to (cid:101)(cid:25)3,274 million at 31 December 2020, 
predominantly due to positive market performance, following 
the recovery from CO(cid:57)ID-19 related market losses in Q1 2020, 
and positive net client cash flows in Quilter Investment 
Platform and Quilter International. The corresponding impact 
is reflected in Investment contract liabilities (an increase from 
(cid:101)(cid:24)2,4(cid:24)(cid:24) million at 31 December 2019 to (cid:101)(cid:24)7,407 million at 
31 December 2020). 

Cash and cash equivalents of (cid:101)1,921 million decreased by 
(cid:101)332 million from (cid:101)2,2(cid:24)3 million at 31 December 2019. The 
decrease includes (cid:101)198 million of payments made in respect 
of the Group’s share buyback programme, Odd-lot Offer and 
other share purchases, together with dividend payments of 
(cid:101)81 million. Included within this balance are cash investments 
due to policyholders, and cash to support the capital and 
funding requirements of the business. 

Goodwill and intangible assets decreased by (cid:101)3(cid:25) million to 
(cid:101)(cid:24)(cid:24)(cid:25) million at 31 December 2020. The decrease is largely due 
to the amortisation of intangible assets of (cid:101)47 million, partially 
offset by a (cid:101)7 million increase in the Lighthouse goodwill 
balance, which is (cid:101)40 million at 31 December 2020 
(31 December 2019(cid:29) (cid:101)33 million).

Trade, other receivables and other assets increased by 
(cid:101)9(cid:25) million to (cid:101)701 million, mainly due to an increase in unsettled 
trades across the business at the balance sheet date.

Other assets of (cid:101)(cid:24)07 million increased by (cid:101)(cid:25)8 million from 
(cid:101)439 million at 31 December 2019. The balance is comprised of 
property, plant and equipment, loans and advances, deferred 
and current tax assets and derivative assets. Movement in the 
year principally relates to an increase in deferred tax assets 
and a higher derivative asset balance associated with the 
consolidation of funds. 

Trade, other payables and other liabilities decreased by 
(cid:101)129 million to (cid:101)(cid:25)72 million at 31 December 2020. The decrease 
includes the impact of a reduction in outstanding death claims 
and surrenders recognised at the year end, together with a 
decrease in other liabilities associated with the consolidation 
of funds.

Other liabilities have increased from (cid:101)3(cid:25) million to (cid:101)204 million 
primarily due to an increase in provisions, deferred tax 
liabilities and in derivative liabilities associated with the 
consolidation of funds.

Changes to comparative amounts 
Following a review of the Group’s consolidated investment 
funds, changes to previously reported comparative amounts 
on the consolidated statement of financial position, 
consolidated income statement, and consolidated statement 
of cash flows have been identified and changes to comparative 
amounts have been accordingly reflected in this year’s financial 
statements. There has been no impact on the Group’s profit 
for the current or prior year, including the Group’s KPIs and 
alternative performance measures, and no impact on equity 
for any of the periods presented. In accordance with the 
requirements under the accounting standards, an additional 
balance sheet has been presented as at 1 January 2019, as the 
opening balance sheet for the comparative year, which reflects 
the changes (as also presented in the balance sheet section 
above). Full details, and the financial line items impacted, 
are included in note 4(b) on page 175 of the consolidated 
financial statements.

Quilter | Annual report 2020

69

 
 
 
 
Matt Burton
Chief Risk Officer

Risk review

Introduction
Effective risk management is key to Quilter 
delivering on its strategy to be a modern, 
UK-focused wealth manager. Strong risk 
culture and risk management disciplines 
have been demonstrated by Quilter’s 
response to the CO(cid:57)ID-19 outbreak, where 
management of the risk of physical harm 
to customers and employees has guided 
Quilter’s decision making throughout the 
pandemic. Similarly, customers place their 
trust in Quilter to help manage their financial 
wellbeing, and it is critical that the interests 
of customers guide key decision making to 
support strong customer outcomes.

How we manage risk
Our Enterprise Risk Management Framework 
(“ERMF”) is embedded across Quilter and 
encompasses a number of elements to 
help Quilter assess and manage its risk 
exposures. A strong and embedded risk 
culture is vital in ensuring that risk 
implications are considered when making 
strategic and operational decisions, and that 
Quilter understands its risk profile and 
manages the business on a continuous basis 
within the approved risk appetite. The ERMF 
drives consistency across Quilter and aims 
to support the evaluation and management 
of business opportunities, uncertainties 
and threats in a structured and 
disciplined manner.

Quilter’s effective 
response to the 
COVID-19 pandemic 
shows strong risk 
management 
disciplines in action.

Risk governance
Quilter maintains a Group Governance 
Manual (“GGM”) which sets out Quilter’s 
approach to governance and the processes 
by which Quilter operates. The Quilter 
governance model is designed to promote 
transparency, accountability and consistency 
through the clear identification of roles, the 
separation of business management and 
governance and control structures, and by 
tracking performance against 
accountabilities. The segregation of risk 
taking, oversight and assurance is codified in 
Quilter’s three lines of defence model, which 
ensures clear accountability and ownership 
for risk and controls.

During 2020, the Risk Function developed a 
Risk Function Charter which provides further 
clarity on the purpose and role of the Risk 
Function, and the means by which it 
maintains its objectivity and independence 
from management.

The Executive Risk Forum is the primary 
management committee overseeing the risk 
profile of the Quilter. This forum is chaired 
by the Quilter Chief Executive Officer, with 
representation from across Quilter. Ongoing 
oversight of the risk profile and of risk 
management arrangements is undertaken 
by the Board Risk Committee, with relevant 
matters also being considered by the Board. 
Similar arrangements are maintained locally 
in each significant business area. 

On a quarterly basis, the Quilter Chief Risk 
Officer formally reports the second line 
perspective on the risk profile of the firm, 
performance against risk appetite and a 
second line perspective on the effectiveness 
of management responses.

Policy framework
The Quilter Policy Suite forms an integral part 
of our governance and risk management 
framework, ensuring an appropriate system 
of internal control. Together with the GGM, 
they form the basis of clear delegated 
authorities and accountabilities, ensuring 
there is appropriate Board oversight and 
control of important decisions, and efficient 
and effective management of day-to-day 
business. The GGM and policies are approved 
and adopted by the Board. The policies are 
subject to an annual policy compliance 
review, with results provided to the Board. 

70

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter’s three lines of defence model

First line of defence

Second line of defence

Third line of defence

Management and employees

Risk Function

Group Internal Audit

Primary responsibility for managing risks 
as part of day-to-day activities, in line 
with risk policies and appetite. Business 
management decides which risks to 
take and the exposure to assume.

The Risk Function, which includes 
Compliance, provides objective 
oversight, monitoring and independent 
challenge of the first line’s risk taking, 
and risk management.

Group Internal Audit provides the 
Board and Management with 
independent, objective assurance. 

Risk appetite framework
Our risk appetite is the amount of risk 
we are willing to take on in the pursuit 
of our strategic priorities and is defined 
by the Board. Culturally, it sets the tone 
regarding our attitude towards 
risk-taking. Risk appetite also plays 
a central role in informing decision 
making across Quilter, protecting and 
enhancing the return on capital 
invested. This risk appetite approach 
is applied consistently across Quilter.

To support the strategic decision-
making process, we apply risk 
preferences which provide guidelines 
for striking the appropriate balance 
of risk and reward when setting our 
business strategy.

A set of Strategic Risk Appetite 
Principles has been set by the Board. 
These principles provide the top-of-
the-house guidance on our attitude 
towards key areas of risk for Quilter 
and support the ongoing management 
and oversight of risk, and are 
supported by a series of more granular 
risk appetite statements, measures, 
policies and standards. Quilter’s 
position against these principles is 
measured on a regular basis through 
the monitoring of underlying risk 
metrics. 

Risk-based planning 
On an annual basis a Risk Plan is 
developed based upon a risk analysis 
exercise. This analysis encompasses 
a risk assessment of the prevailing risk 
profile, as well as external factors, 
including regulatory change. The Risk 
Plan details the activities that will be 
implemented by the Risk Function 
across the risk domains, including 
regulatory compliance, and includes 

Strategic risk appetite principles 

Customer

Liquidity

Capital

Control environment

Quilter will ensure fair customer 
outcomes 

Owner(cid:29) Chief Operating Officer

Quilter will ensure that it has 
su(cid:605)cient liquidity to meet its 
financial and fundin(cid:74) o(cid:69)li(cid:74)ations

Owner(cid:29) Chief Financial Officer

(cid:52)uilter (cid:90)ill hold or ha(cid:89)e access 
to su(cid:605)cient capital to maintain its 
o(cid:90)n capital needs

Owner(cid:29) Chief Financial Officer

(cid:52)uilter (cid:90)ill at all times operate 
a ro(cid:69)ust control en(cid:89)ironment

Owners(cid:29) Chief Operating Officer, Chief 
Risk Officer, Chief Internal Auditor

both advisory and monitoring 
activities. The Risk Plan is approved, 
and progress tracked, by the Board 
Risk Committee.

Conduct risk
The Financial Conduct Authority 
(“FCA”) is the primary conduct 
regulator for Quilter’s UK regulated 
entities. Quilter takes its regulatory 
obligations in relation to customers 
and our conduct seriously and is 
committed to operating in a 
responsible and compliant manner.

expects from its staff are set out 
in the Quilter Code of Conduct. 
This code has been updated to 
reflect expectations of individuals 
set out in the FCA’s Conduct Rules 
which were implemented as part 
of the Senior Managers and 
Certification Regime.

Conduct risk is a core element 
of Quilter’s ERMF, recognising that 
conduct risks can both impact, 
and result from, other risks within 
the risk universe.

Quilter seeks to deliver on these 
obligations through culture and 
values, backed by a rigorous 
governance system and an approach 
to compliance that drives fair 
outcomes for customers. The 
standards of behaviour Quilter 

Conduct risk is monitored across 
Quilter’s businesses, with quarterly 
reporting on Quilter’s conduct risk 
profile, emerging issues and trends. 
(cid:58)here areas of concern are noted, 
actions are identified and are tracked 
to completion.

Quilter | Annual report 2020

71

 
 
 
 
Risk review
continued

Prudential risk
Quilter is regulated by the Prudential 
Regulation Authority ((cid:522)PRA(cid:523)) under Solvency II 
and by the FCA under Capital Requirement 
Directive regulations, and is subject to 
insurance prudential requirements in a small 
number of other (cid:77)urisdictions, including the 
Isle of Man and Ireland. To meet these 
regulations, we operate a consistent approach 
to risk management across Quilter. As such, 
we have integrated the Own Risk and Solvency 
Assessment ((cid:522)ORSA(cid:523)) and Internal Capital 
Adequacy Assessment Process ((cid:522)ICAAP(cid:523)) into 
our risk management framework. Quilter’s 
ORSA and ICAAP are comprehensive risk 
processes which set out how risks are 
managed and how risks might change over 
time as we execute our strategy and respond 
to developing situations. 

(cid:58)e analyse the capital required to protect the 
sustainability of Quilter and how those capital 
requirements might develop over our planning 
period. The assessments include a range of 
stress and scenario testing covering a broad 
range of scenarios, including market shocks, 
new business growth scenarios and 
operational risk events. These tests are in 
addition to the regulatory solvency capital 
requirements, which allow for severe and 
extreme scenarios and stresses (1 in 200-year 
risk events). Critical to our process is preparing 
management action plans should adverse 
events occur. This provides assurance that 
Quilter is both well capitalised and prepared 
to take necessary action.

Operational risk
Quilter operates processes to facilitate the 
identification and management of operational 
risk and the reporting of risk events. A 
discipline of Risk and Control Self Assessments 
(“RCSAs”) is undertaken across Quilter and risk 
events are reported via our risk system, with 
root cause analysis conducted on material 
events. 

Remuneration and reward
The most important element to risk 
management is a good culture of risk informed 
decision making. We believe that a good risk 
culture enables effective management of risk. 
(cid:58)e link risk management to performance and 
development, as well as to Quilter’s 
remuneration and reward schemes. An open 
and transparent working environment which 
encourages our people to embrace risk 
management, and speak up where needed, 
is critical to the achievement of our ob(cid:77)ectives.

72

Quilter | Annual report 2020

Risk profile
2020 has been a truly unprecedented year, as 
the world has grappled with a pandemic which 
has caused disruption on an unparalleled 
scale. Quilter has adapted well to these 
challenges, with operations and key 
programmes continuing, many in a largely 
virtual manner. Key successes, including two 
client migrations within the Platform 
Transformation Programme, have evidenced 
that Quilter has been able to implement 
complex change in challenging circumstances. 

All of Quilter’s principal risks and uncertainties 
has been impacted to some degree by 
CO(cid:57)ID-19. Quilter’s business performance has 
been impacted by the challenging economic 
and market environment. Nevertheless, the 
recovery in markets in the second half of 2020 
and net inflows contributed to Quilter’s AuMA 
increasing by c.7% during the year and Quilter 
reporting solid financial results. Quilter has 
remained financially strong, with robust 
capital, solvency and liquidity positions 
throughout 2020. The impact of CO(cid:57)ID-19 has 
required focused cost management during 
the year, balanced with the need to ensure 
good customer outcomes and a robust 
control environment. Supporting staff, 
advisers and customers through a difficult 
year have remained at the forefront of 
Quilter’s approach in 2020. 

(cid:37)eyond CO(cid:57)ID-19, the Quilter Financial 
Planning business has been under scrutiny in 
relation to historical defined benefit advice 
provided by Lighthouse prior to its acquisition 
by Quilter. As announced in June 2020, the 
FCA has initiated a skilled persons ((cid:522)s.1(cid:25)(cid:25)(cid:523)) 
review into historic advice given by Lighthouse, 
prior to its acquisition, and has also 
commenced an enforcement investigation into 
whether Lighthouse has breached certain FCA 
requirements in connection with advising on 
and arranging defined benefit pension 
transfers in the period from 1 April 201(cid:24) 
to 30 April 2019. Quilter is committed to 
ensuring fair outcomes for impacted 
customers. A lessons learned exercise has 
been undertaken, and a series of control 
environment enhancements have been made.

The implementation of the UK-EU Trade and 
Cooperation Agreement has reduced the 
geopolitical risk profile and should lessen 
investor concerns, although the full impacts 
of the end of the (cid:37)rexit transition period 
are yet to be seen. 

Principal risks and uncertainties

The Directors have carried out a robust assessment of the 
principal and emerging risks facing Quilter, including those 
that would threaten its business model, future performance, 
solvency and liquidity as well as those risks that are non-
financial in nature. The articulation of these principal risks 
and uncertainties are consistent with Quilter’s Enterprise Risk 
Framework categorisation, and with the Top Risk reporting 
that is undertaken quarterly to the (cid:37)oard. 

Business and strategic risks

Economic environment

Quilter’s principal revenue streams are asset value-related and 
as such Quilter is exposed to the condition of global economic 
markets. The evolving CO(cid:57)ID-19 pandemic continues to have 
significant impacts on economic activity resulting in market 
volatility. These conditions are expected to continue into 2021, 
alongside residual uncertainty in relation to the full impacts 
of the implementation of the UK-EU Trade and Cooperation 
Agreement. (cid:57)olatility in debt, equity and currency markets may 
adversely impact customer investment portfolios which in turn 
impacts Quilter’s ability to generate fee-based revenue. 

The (cid:37)oard requires management to put in place actions to 
mitigate these risks, and controls to maintain risk exposures 
within acceptable levels defined by Quilter’s risk appetite. 

The table below sets out Quilter’s principal risks and 
uncertainties, including Executive Committee member 
ownership and key mitigants being implemented by 
management. The risk trend noted is the residual risk trend 
(risk after the application of mitigants) during 2020.

Risk owner

2020 risk 
trend

Mitigation

Chief 
Financial 
Officer

 – Annual stress and scenario 

analysis exercise

 – Strength of balance sheet

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

Business financial performance 

Risk owner

2020 risk 
trend

Mitigation

The challenging external environment experienced in 2020 is 
set to continue to impact net flows, revenues and profitability 
into 2021, with margin compression also set to be expedited by 
the current conditions. Prudent cost management, both 
through tactical in year savings, and longer-term Optimisation 
initiatives has reduced the cost base, though increasing 
Financial Services Compensation Scheme levies present a 
further cost challenge. An unmitigated negative impact on 
earnings, share price and/or capital position could have a 
resulting adverse effect on Quilter’s market credibility and 
financial standing.

Chief 
Financial 
Officer

 –  Ongoing cost efficiency 

focus

 – Optimisation initiatives 
 –  Financial risk policies, 
standards and limits

 Residual risk decreased during 2020

 Residual risk increased during 2020

 Residual risk remained broadly stable during 2020

Quilter | Annual report 2020

73

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

 
 
 
 
Risk review
continued

Business and strategic risks (continued)

Investment performance

Risk owner

2020 risk 
trend

Mitigation

Strong investment performance within Quilter Investors’ fund 
management proposition and within Quilter Cheviot’s 
discretionary fund management proposition are key to enable 
Quilter to meet customer expectations and to grow its 
customer base, and assets under management. Weaker 
short-term performance of Quilter Investors’ Cirilium Active 
range was noted during volatile markets in the first quarter of 
2020, with a range of management actions ongoing to support 
stronger performance. Stronger performance has been 
observed for the remainder of the year as these management 
actions have been implemented, reducing the residual risk 
profile. Longer term under-performance of core investment 
management propositions could have a material effect on 
Quilter’s business, financial performance and reputation.

Change

Quilter continues to be subject to material change 
programmes, as a series of long-running programmes are 
due to be completed during 2021, including the PTP. The scale 
of change is reducing, in particular, as PTP nears completion. 
A series of new business change programmes including the 
work to strengthen controls at Quilter Financial Planning, and 
several key digital and data initiatives will be ongoing in 2021. 
This delivery profile carries a delivery risk, a risk of 
implementation issues, and a dependence on key individuals. 
As 2021 progresses there will be a need to ensure these 
pro(cid:77)ects remain on track to deliver the intended benefits, 
without risking disruption to continuing operations and the 
control environment. 

Chief 
Executive 
Officer 
– Quilter 
Investors

Chief 
Executive 
Officer 
– Quilter 
Cheviot

Risk owner

Chief 
Operating 
Officer

Chief 
Executive 
Officer 
– Quilter 
Investment 
Platform 
(PTP)  

 –  (cid:37)olstered Quilter Investors’ 
leadership team, including 
a new Chief Investment 
Officer

 –  Enhanced Quilter Investors’ 

performance and 
investment risk oversight 
and monitoring 

2020 risk 
trend

Mitigation

 – Successful PTP migration 

preparation and migration 
events in 2020, with final 
migration on track for 
Q1 2021

 – Active management and 

prioritisation of the change 
portfolio

 – Enhanced executive 

oversight and change 
assurance

 –  Programme and portfolio 
governance arrangements

Operational and regulatory risks

Advice

Risk owner

2020 risk 
trend

Mitigation

Quilter’s financial advice services are sub(cid:77)ect to fundamental 
regulatory conduct requirements to assure suitability of 
advisory recommendations. Failure to operate effective 
arrangements to support the delivery of suitable advice could 
expose Quilter to risks associated with customer detriment, 
regulatory censure and remediation programmes, and 
consequential impacts to the Group’s business, financial 
condition and reputation. The current scrutiny of the defined 
benefit transfer advice provided by Lighthouse has increased 
the risk profile during 2020 given the need to remediate 
impacted cases where relevant and deliver fair outcomes 
for customers.

Chief 
Executive 
Officer 
– Quilter 
Financial 
Planning 

 – Ongoing work to enhance 
the advice and adviser 
control framework within 
Quilter Financial Planning

 –  Enhanced suitability 

monitoring and oversight 
arrangements 

74

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Operational and regulatory risks (continued)

Information technology

Risk owner

2020 risk 
trend

Mitigation

Chief 
Operating 
Officer

Quilter’s business is highly dependent on its technology 
infrastructure and applications to perform necessary business 
functions, including to support the provision of services to 
customers. CO(cid:57)ID-19 has required adaptation to mass home 
working, which has been successfully achieved across Quilter. 
Much of Quilter’s legacy IT estate is currently being replaced, 
with a move to Software as a Service ((cid:522)SAAS(cid:523)) applications 
reducing the Group’s internal technology complexity, though 
increasing reliance on third-parties. Failure to manage 
technology risk could have a material adverse impact on 
Quilter’s business, its resilience capabilities, financial condition, 
operations and its reputation.

 –  Technology strategy 

to support the transition 
to modern applications 
and retirement of legacy 
technology
 –  Infrastructure 

Transformation 
Programme to deliver 
technology enhancement 
across Quilter’s estate
 – Active systems monitoring
 –  Policy suite and standards 
compliance arrangements

Information security 

Risk owner

2020 risk 
trend

Mitigation

Quilter’s business, by its nature, requires it to store, retrieve, 
evaluate and utilise customer and company data and 
information, some of which is highly sensitive. The CO(cid:57)ID-19 
conditions mean there is increased remote handling of data. 
Quilter is sub(cid:77)ect to the risk of information security breaches 
from parties with criminal or malicious intent. Should Quilter’s 
intrusion detection and anti-penetration software not 
anticipate, prevent or mitigate a network failure or disruption, 
it may have a material adverse effect on Quilter’s customers, 
business, financial condition, operations and reputation. 

Chief 
Operating 
Officer

 – Ongoing Information 

Security Improvement 
Programme

 –   Cyber threat defences 

and monitoring
 –   Data governance 
arrangements

 –   Information security policy 
and standards compliance 
arrangements

People 

Risk owner

2020 risk 
trend

Mitigation

Quilter relies on its talent to deliver its service to customers 
and to implement the broad range of strategic change 
initiatives that are currently being delivered. In 2020 the 
CO(cid:57)ID-19 operating conditions have posed further people 
challenges, although a strong focus on supporting staff 
through this difficult time has reduced its impact. People risk 
has remained elevated but broadly stable during 2020. Failure 
to retain key staff or to attract suitable talent may impact the 
delivery of Quilter’s strategy and may have an adverse impact 
on Quilter’s business, its financial and operational 
performance and its delivery of service to customers.

Chief 
Operating 
Officer  

 –  Phasing key change 
programmes to 
avoid conflicts

 –  Performance evaluation 

arrangements and related 
performance and risk-
adjusted remuneration 
arrangements
 –  Regular employee 

engagement surveys 
 –  Quilter’s staff wellbeing 

initiative, ‘Thrive’

Quilter | Annual report 2020

75

 
 
 
 
Risk review
continued

Operational and regulatory risks (continued)

Third party, including outsourcing

Risk owner

2020 risk 
trend

Mitigation

Quilter procures certain services from third parties, which 
will increase as the Platform Transformation Programme 
concludes and results in significant business process and 
technology outsourcing to FN(cid:61). If Quilter does not effectively 
oversee its third-party providers, they do not perform as 
anticipated, or Quilter experiences technological or other 
problems with a third party, Quilter may experience 
operational difficulties, increased costs and loss of business, 
potential customer detriment and damage to its reputation. 
A decreasing residual risk profile is observed as Quilter’s 
third-party oversight arrangement matured through 2020, 
reducing the risk of material incidents. 

Operational resilience 

Operational resilience was added to Quilter’s principal risks 
and uncertainties in Q2 2020, given the magnitude of the 
disruption posted by CO(cid:57)ID-19. The pandemic has tested 
Quilter’s ability to respond and adapt to sudden disruptions 
and has shown Quilter to successfully manage during this crisis 
period. Following the maturing of crisis management protocols, 
the focus in 2021 will switch to reviewing standards for 
articulating critical processes and dependencies, and of the 
effectiveness of testing such that the firm can robustly 
demonstrate preparedness for future scenarios, and manage 
the risk that future events could pose to customers or Quilter. 
The trend represents a stable residual risk trend since 
inclusion in Quilter’s principal risks and uncertainties 
in Q2 2020. 

Chief 
Operating 
Officer

 –  Maturing of Quilter’s 

Third-Party Risk 
Management Framework 

 – Implementation of a 

systemised approach 
to outsourcing
 – Third Party Risk 

Management Policy and 
standards compliance 
arrangements

Risk owner

2020 risk 
trend

Mitigation

Chief 
Operating 
Officer

(Since Q2 
2020)

 –  Operational resilience 
policy and processes
 –  Systemised inventories 
of critical processes and 
dependencies

 –  Resilience plans and testing

Regulatory

Risk owner

2020 risk 
trend

Mitigation

Chief Risk 
Officer

Quilter is subject to regulation in the UK by the PRA and the 
FCA, and by a range of regulators internationally. Additionally, 
the firm is sub(cid:77)ect to the privacy regulations enforced by 
Information Commissioner’s Office and international 
equivalents. Quilter faces risks associated with compliance 
with these regulations and to changes in regulations or 
regulatory focus or interpretation in the markets in which 
Quilter operates. Failure to manage regulatory compliance 
effectively could result in regulatory censure, including the 
possibility of fines or prohibitions which could impact business 
performance and reputation. An increased risk profile was 
noted in 2020 as a result of regulatory attention in respect 
of Quilter Financial Planning.

 –  Compliance advice and 
monitoring programme
 –  Regulatory engagement 

management

 –  Regulatory horizon 

scanning 

 –  Staff training and staff 

awareness programmes 

 –  Compliance policy and 
standards compliance

76

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Emerging risk radar

Quilter is a long-term business and 
as such we monitor risks which are 
less certain in terms of timescales 
and impact. The emerging risk profile 
is subject to regular review by 

management committees and the 
(cid:37)oard. The identification of these risks 
contributes to our stress and scenario 
testing which feeds into our strategic 
planning process and informs our 

capital calculations. The following are 
the emerging risks we feel are the 
most significant. 

Near term

Medium term

Longer term

Generational shifts
The UK is experiencing shifts in 
generational wealth accumulation with 
newer generations potentially less able 
to accumulate wealth and assets from 
income. Existing intergenerational 
tensions are being further accelerated 
by an ageing population and the 
impact of the CO(cid:57)ID-19 pandemic on 
the economic outlook. Robotics and, 
in the longer term, artificial intelligence 
and the increased need to manage 
natural resources all have the potential 
to materially change the nature of the 
future labour force (for example, 
through mass unemployment), which 
represents additional challenge to 
Quilter’s target market. There is a risk 
of strategic failure to adapt to future 
customer needs. 

Pandemic evolution
The resurgence of the pandemic in late 
2020 and early 2021 is causing further 
economic pressure as well as direct 
impacts on our customers, people, 
advisers and operations. The rapid 
roll-out of the vaccine in the UK gives 
reason for optimism in the medium-
term outlook, though further 
disruption is likely in the short term 
and there remains uncertainty as to 
the pace and shape of economic 
recovery. Quilter’s NCCF, AuM, 
profitability and free cash levels could 
be materially affected by an extended 
or volatile economic recovery.

Cyber threat developments 
Evolving sophisticated cyber criminality 
presents a persistent threat of attack, 
capable of compromising the 
continuity of operations, or the 
security and integrity of information. 
Quilter’s cyber risk landscape is made 
more complex by the current remote 
working environment. 

Margin pressure
There is increasing impetus to provide 
wealth management services at a 
lower overall cost to customers. 
In line with Quilter’s aim to offer 
competitive pricing at every point in 
the value chain, there will be a need 
to re-evaluate the costs charged to 
customers, which include advice 
fees, platform costs and fund 
management fees. 

Political and regulatory change
Changes in regulation resulting from 
the shifting expectations of our 
regulators and the UK’s withdrawal 
from the EU could have a material 
impact on Quilter. Income, wealth and 
corporation tax rises are also possible, 
to restore public finances following the 
pandemic. For example, changes to 
pension tax relief for high earners and 
other tax changes affecting customer 
wealth could impact Quilter’s NCCF 
and AuM. 

Climate change/ESG 
Increased frequency of climate-related 
risk events or a disorderly transition to 
a low carbon economy could give rise 
to additional costs, and adversely 
impact asset values and investment 
performance. The acceleration of 
government, regulatory and corporate 
activity in support of meeting climate 
change targets requires Quilter to 
develop its approach to the 
identification and management of the 
risks associated with climate change. 
There is increasing focus on 
sustainability and sustainable 
investing, bringing opportunity and 
also increased pressure from investors 
and customers to bring about change. 
Quilter is focused on delivering against 
its climate and ESG responsibilities, 
including developing the required 
TCFD for the 2021 financial year.

Disruptive competition
There is increased competition 
in the wealth management industry 
and an acceleration in technological 
advancements. A rapidly shifting 
external environment brings 
opportunity for greater competitive 
disruption with potential to erode 
Quilter’s market share. 

Quilter | Annual report 2020

77

 
 
 
 
Viability statement 
and going concern

The one-year planning period has greater 
certainty, and is used to set detailed budgets 
across the Group. Although three years is 
regarded as an appropriate period for the 
assessment of the Group’s viability, the Board 
also regularly considers other strategic 
matters that may affect the longer-term 
prospects of the Group. This will include the 
Board’s assessment of the principal risks and 
uncertainties facing the Group in the longer 
term, including any emerging risks, such as the 
impact of COVID-19, climate change and the 
generational shifts potentially impacting the 
ability of newer generations to accumulate 
wealth from income. The Board’s longer-term 
view is that the Group will continue to grow as 
a wealth manager, serving clients throughout 
their lives encompassing their accumulation 
and decumulation phases.

The Board’s assessment included reviews of 
capital, liquidity and solvency, and assessment 
of the principal risks over the three-year 
planning period, which included the impact 
of COVID-19. A large portion of the Group’s 
revenue is correlated to the Group’s AuMA, 
which can move materially when there is 
significant volatility in global financial markets, 
as was experienced in 2020 with the impact of 
the CO(cid:57)ID-19 pandemic. The effect of changes 
in market levels, and the associated impact on 
investor sentiment, were all considered as 
part of the planning process, particularly in 
the calculation of expected market growth 
rates. In 2020, management actions were 
taken on costs as a result of the impact of 
COVID-19, to realise tactical cost savings of 
c.£40 million. Additional management actions 
available to further reduce costs were also 
considered during the planning process.

Viability statement
In accordance with provision 31 of the 2018 
UK Corporate Governance Code, the Directors 
have assessed the prospects of the Group for 
a period longer than the 12 months required 
in the going concern statement.

Quilter’s Risk Appetite Framework supports 
the delivery of Quilter’s strategy and business 
plan with risk preferences and appetite playing 
a central role in informing decision making 
across the Group.

Every year, the Board considers a three-year 
strategic plan and also an ORSA for the Group, 
as required by our UK regulators. The plan 
makes certain key assumptions in respect 
of the competitive markets and political 
environments in which the Group operates, 
economic assumptions, the level of support 
provided to companies within the Group and 
the impact of key strategic initiatives including 
the delivery of future benefits associated with 
the new platform. This year, the strategic plan 
considered the impact of COVID-19, and the 
risks and challenges this presents to the 
Group, in particular the potential for further 
volatility in debt, equity and currency markets 
which can adversely impact the Group’s 
AuMA, revenue and profitability. 

Quilter’s Risk 
Appetite Framework 
supports the delivery 
of Quilter’s strategy 
and business plan 
with risk preferences 
and appetite playing 
a central role in 
informing decision 
making across 
the Group.

78

Quilter | Annual report 2020

S
t
r
a
t
e
g
i
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Appropriate aspects of the strategic plan 
are stress-tested under the ORSA and ICAAP 
reviews to understand and help set capital 
and other requirements. The stress tests 
considered include 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 
1-50 and 1-200 year events. In 2020, the 
underlying case on which the stress tests were 
based, assumed starting equity market levels 
at the low point in 2020 as a result of the 
COVID-19 pandemic, which provided a 
conservative starting position. A stress test 
was also performed for an additional scenario 
relating to COVID-19, which assumed further 
lockdowns resulting from spikes in infection 
rates occurring over the three-year planning 
period leading to lower NCCF, and lower 
revenue and profitability as a result of equity 
market falls. In all severe but plausible adverse 
tests, sufficient capital and liquidity were 
available after management actions, 
demonstrating the Group’s resilience to 
adverse conditions. Management actions 
included the cessation of dividend payments 
in the most extreme scenarios, as well as 
actions to reduce costs, which included 
reductions in variable compensation costs, 
discretionary spend, and staff recruitment 
freezes, similar to the tactical cost savings 
utilised in the current year.

Reverse stress tests, which are performed to 
identify events which would make the current 
plan unviable, have also been performed. The 
results of these tests indicate that the Group 
can reasonably expect to have sufficient 
capital and liquidity to be able to meet its 
liabilities over the planning period and could 
sustain a significant equity market fall, after 
management actions, well below the market 
falls experienced during the first half of 2020 
during the COVID-19 pandemic, with no 
foreseeable market recovery. 

The Board regularly monitors performance 
against a range of predefined key 
performance indicators and early warning 
thresholds, which will identify if developments 
fall outside of the Group’s risk appetite or 
expectations, allowing management action 
to be taken.

The Strategic Report, on pages 1 to 79, 
sets out the Group’s financial performance, 
business environment, outlook and financial 
management strategies. In addition, details 
of the Group’s principal risks and risk 
management framework is set out 
on pages 73 to 76.

Conclusion on viability
Considering the Group’s current capital 
and trading position, its principal risks, and 
remaining three-year period of the strategic 
plan, with due consideration of the impact 
of the COVID-19 pandemic, the Board has 
reasonable expectation that the Company 
and the Group can continue in operation, 
and meet their liabilities as they fall due 
for the period to 31 December 2023.

Going concern
The Directors have considered the resilience 
of the Group, taking into account its current 
financial position, the principal risks facing 
the business and the effectiveness of the 
mitigating strategies which are or will be 
applied. As a result, the Directors believe 
that the Group is well placed to manage its 
business risks in the context of the current 
economic outlook and have sufficient financial 
resources to continue in business for a period 
of at least 12 months from the date of 
approval of these consolidated financial 
statements, and continue to adopt the going 
concern basis in preparing the consolidated 
financial statements.

This Strategic Report was approved by the 
Board on 10 March 2021.

Glyn Jones
Chairman
On behalf of the Board

Quilter | Annual report 2020

79

 
 
 
 
Governance Report

81  Chairman’s introduction  
to corporate governance 

82  Governance at a glance
83  Our leadership and governance structure
84  Board of Directors 
88  Quilter leadership
90  The work of the Board in 2020 
90  Section 172 (1) statement
99  Governance in action
102  Board Corporate Governance and Nominations 

Committee report 

108  Board Audit Committee report 
116  Board Risk Committee report 
119   Board Technology and Operations Committee 

report

122  Board Remuneration Committee report 
128  Directors’ Remuneration Policy
133  Annual Report on Remuneration 
148  Our approach to governance 
152  Directors’ Report

80

Quilter | Annual report 2020

Chairman’s introduction 
to corporate governance

Dear Shareholder,
Over the course of 2020, your Board has 
had to ensure that our business responded 
quickly and effectively to the impacts of the 
COVID-19 pandemic. The response enabled 
Quilter to continue to serve all of its 
stakeholders during a time of great stress 
and concern for our people, our customers 
and the communities in which we operate.

Your Board is engaged in building a resilient 
business for the long term. At the same 
time as we were supporting the Quilter 
management team in taking appropriate 
tactical decisions to protect our business, 
we also focused on the continued 
transformation of our business and 
ensuring that the strategic direction 
remained appropriate for a rapidly 
changing world. The Board has also focused 
on ensuring that a strong culture that puts 
our customers at the heart of everything 
we do is embedded across the organisation 
and the Board has continued to monitor 
progress in that regard. 

Quilter has continued to comply with 
the recommendations of the 2018 UK 
Corporate Governance Code (the Code) 
throughout 2020 and the unprecedented 
crises has provided many examples of how 
Quilter has sought to operate in the best 
interests of all of its stakeholders, despite 
the very difficult circumstances. From 
protecting the health and mental wellbeing 
of employees and advisers to providing 
reassurance and trusted financial advice to 
our customers during a dramatic decline in 
markets and an extended period of market 
volatility, Quilter has continued to operate 
in line with our values. For our 
shareholders, the financial resilience of our 
business has enabled Quilter to continue to 
pay dividends and to make progress in our 
share buyback programme which we 
announced early in 2020. Further examples 
of how the Board has operated in 2020 and 
continued to engage with stakeholders are 
set out on pages 90 to 101.

Long-term success is built on a culture of 
continuous improvement. Therefore, given 
the customer complaints arising in the 
Lighthouse business before its acquisition 
by Quilter, the Board decided to review the 
due diligence process in relation to the 
acquisition and in particular the due 
diligence on the advice given in relation 
to (cid:37)ritish Steel Pension Scheme defined 
benefit transfers. A Committee comprising 
independent Non-executive Directors 
under the leadership of Rosie Harris, 
oversaw the review which was assisted 
by external legal advisers. The Committee 
presented a comprehensive overview of 
the findings of this review to the (cid:37)oard 
in September 2020. Management have 
developed a detailed action plan to ensure 
that the lessons learned are fully 
embedded into the organisation.

Looking ahead
The Quilter Board has supported and 
encouraged management to stay focused 
during 2020 on delivering our critical major 
strategic programmes, in particular 
Optimisation and our Platform 
Transformation Programme. With the 
recent completion of our third and final 
phased adviser migration to our new 
Investment Platform, a major building block 
for the long-term success of our business 
is now in place. The Board commenced 
a strategic review of Quilter International 
in 2020 and expects to advise the outcome 
in the first half of 2021.

Our Corporate Governance Framework 
has continued to serve us well through a 
very challenging year, allowing us to ensure 
that the long-term prospects of the Group 
were protected and enabling your Board 
to look forward to 2021 with confidence 
in the resilience and strong potential 
of our business. 

Glyn Jones
Chairman

Glyn Jones
Chairman

Key activities
The Board has engaged in 
the following key governance 
activities during the year.

Reviewing and setting 
the Group’s strategy
Page 97

Setting stretching but 
achievable financial and 
operating targets
Page 97 

Reviewing the response 
to COVID-19
Page 97 

Monitoring the delivery 
of the Operating Plan and 
key strategic programmes
Page 98

Overseeing the Group’s 
management of material 
risks
Page 98

Ensuring the Group’s 
people strategy and 
culture are aligned with 
the business strategy
Page 98

Monitoring the 
investment performance 
of our funds and solutions
Page 98

Monitoring how well 
we serve our customers 
Page 98

Quilter | Annual report 2020

81

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

 
 
 
 
Governance at a glance

Board highlights

Industry knowledge and experience

Gender 

Length of tenure for Chairman and 
Non-executive Directors

Female 4 (40%)
Male 6 (60%)

0-2 years 2
2-3 years 2
3-4 years 2
4-5 years 2

Accounting and finance 2
Asset management 3
Distribution 1
Governance 2
Insurance 1 
International financial services 4
IT and operations 2  
Legal 1 
Risk 2 
(cid:58)ealth management 3

As at 10 March 2021.

Board membership 
The composition of the Board and the Board Committees 
meets the requirements of the Code. 

The Directors’ attendance at each meeting of the Board 
is set out in the table opposite. 

The 2018 UK Corporate Governance Code
The Board considers that during 2020 the Company has 
complied with the principles and provisions of the Code. 

The Code, issued by the Financial Reporting Council (“FRC”), 
and associated guidance are available on the FRC website at 
www.frc.org.uk.

You can read more about how we apply and comply with 
the Code and other relevant rules and regulations on 
pages 148 to 151.

82

Quilter | Annual report 2020

Board meeting attendance during 2020

Chairman and 
Executive Directors

Glyn Jones

Paul Feeney

Mark Satchel

Independent Non-
executive Directors

Tim Breedon

Rosie Harris

Suresh Kana

Moira Kilcoyne

Jon Little

Ruth Markland

Paul Matthews

George Reid

Cathy Turner

Scheduled Board 
meetings attended/ 
eligible to attend

Additional meetings 
attended/eligible  
to attend

10/10

10/10

10/10

5/5

9/10

5/5

10/10

6/6

10/10

10/10

10/10

5/5

5/5

5/5

5/5

1/1

12/12

0/0

1/1

2/2

12/12

2/2

12/12

0/0

Where exceptionally, due to other commitments, a Director has been unable to 
attend a meeting, they have separately submitted their comments and input on 
the matters under discussion to the Chair of the Board or the relevant Board 
Committee. Rosie Harris was unable to attend one Board meeting during the year 
due to a long-standing prior commitment.

In addition to the meetings reported above, sufficient time was provided, 
periodically, for the Chairman to meet privately with the Senior Independent 
Director and the Non-executive Directors.

The additional meetings reported above related to the oversight of the Lighthouse 
Committee and the Return of Capital Committee.

 
Our leadership and 
governance structure

The Board

Chairman

Senior Independent 
Director

Independent Non-
executive Directors

The Chairman is accountable to 
shareholders for leading the Board 
and ensuring the Board receives timely, 
accurate information to take good 
decisions for the benefit of all stakeholders.

The Senior Independent Director 
supports the Chairman on all 
governance issues and provides a 
communication channel between the 
Chairman and Non-executive Directors.

The Non-executive Directors support 
and constructively challenge the 
executive team within a spirit of 
partnership and mutual respect.

Board Committees

Board Corporate 
Governance and 
Nominations 
Committee

Board Audit 
Committee

Board Risk 
Committee

Board Technology 
and Operations 
Committee

Board 
Remuneration 
Committee

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

Chair: Glyn Jones

Chair: George Reid

Chair: Rosie Harris

Chair: Moira Kilcoyne

Chair: Ruth Markland

Number of meetings

Number of meetings

Number of meetings

Number of meetings

Number of meetings

4

13

9

Responsibilities:
 – Reviews composition 
of the Board and 
recommends the 
appointment of new 
Directors
 – Considers 

succession plans for 
Chairman and other 
Board positions

 – Considers succession 

plans for key 
executive leadership 
positions

 – Monitors corporate 
governance issues
 – Oversees the annual 
Board performance 
review

 – Provides oversight 
of the Group’s 
responsible business 
agenda

Responsibilities:
 – Reviews accounting 
policies and the 
contents of financial 
reports

 – Monitors disclosure 

controls and 
procedures
 – Considers the 

adequacy and scope 
of the external and 
internal audit 
functions

 – Oversees the 

relationship with our 
external auditors

Responsibilities:
 – Monitors and 
reviews the 
effectiveness of the 
internal control and 
risk management 
system

 – Provides advice to 

the Board on the top 
risks faced by the 
Group

 – Recommends the 
total level of risk 
Quilter is prepared 
to take (risk appetite)

 – Monitors the risk 

 – Monitors the 

profile

effectiveness of 
internal financial 
controls

 – Advises the Board 
on risk strategy

 – Oversees the 

effectiveness of the 
Compliance function

14

Responsibilities:
 – Oversees the 

implementation, 
execution and 
delivery of the 
Technology Strategy 
and Operations 
Strategy

 – Provides oversight 
and challenge on 
Technology and 
Operations risk 
profile
 – Oversees 

Information Security, 
Information 
Management and 
Operational 
Resilience strategy, 
systems and controls

 – Oversees strategic 
technology and 
operational change 
programmes

8

Responsibilities:
 – Sets the overarching 

principles and 
parameters of 
remuneration policy 
across Quilter
 – Considers and 

approves 
remuneration 
arrangements for 
Executive Directors 
and Senior 
Executives

 – Approves individual 

remuneration 
awards

 – Agrees changes 

to Senior Executive 
incentive plans

Paul Feeney

Executive Directors 

Mark Satchel 

The Executive Directors are accountable to the Chairman for their contribution on the Board. The executive team reports to the Chief Executive  
for business areas and delivery of Board-approved Operating and Business Plans.

Executive Committee

Executive Risk Forum

Operating Committee

Responsible Business Forum 

Key management committees

Quilter | Annual report 2020

83

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

 
 
 
 
Board of Directors

Chairman and Executive Directors

Glyn Jones
Chairman

Paul Feeney
Chief Executive Officer

Mark Satchel 
Chief Financial Officer

Appointed November 2016

Appointed August 2012

Appointed March 2019

Board and Committee membership

Board and Committee membership

Board and Committee membership

 Board 
 Board Remuneration Committee 
  Board Corporate Governance and 
Nominations Committee (C)

 Board

 Board

Skills and experience: 
Glyn Jones has over 20 years’ experience 
of chairing Boards, including those of 
Aldermore Group, Aspen Insurance 
Holdings, Hermes Fund Managers, 
BT Pension Scheme Management 
and Towry. This extensive experience 
provides him with the skills and 
understanding needed to lead an 
effective and cohesive (cid:37)oard at Quilter. 
His significant experience in UK and 
international financial services, gained 
during his tenures as CEO of Gartmore 
Investment Management and Coutts 
Group, and whilst running Standard 
Chartered’s international private banking 
business in Hong Kong, provides him 
with the necessary knowledge to lead 
discussions on key business matters 
including strategy, performance and 
risk. Glyn is a Fellow of the Institute 
of Chartered Accountants in England 
and Wales.

Skills and experience: 
Mark Satchel brings deep finance, 
corporate action and business 
experience to the Board. He joined 
Old Mutual in the UK in January 2000 
and held numerous leadership positions 
within the finance function and 
businesses there, during which time he 
played key roles in the acquisitions of 
Intrinsic (now Quilter Financial Planning) 
and Quilter Cheviot. This experience has 
been invaluable in ensuring that Quilter 
effectively executes its strategy, for 
example allowing him to lead the 
successful disposal of Quilter Life 
Assurance. Mark previously served as 
Chief Financial Officer of the business 
from 2010 to August 2017 and as 
Corporate Finance Director for the 
17-month period to March 2019. Mark 
is a qualified Chartered Accountant in 
South Africa and worked for KPMG both 
in South Africa and Canada prior to 
moving to the UK. Mark is a Trustee of 
The Old Grey Europe Charitable Trust.

Skills and experience: 
Paul Feeney is an experienced, 
entrepreneurial leader, having held 
various senior business roles in large 
international financial services 
businesses, including as Chief Executive 
Officer of Nat(cid:58)est Private (cid:37)ank, and 
NatWest Investments USA, Group 
Managing Director and Head of 
Distribution for Gartmore Investment 
Management, and Global Head of 
Distribution at BNY Mellon Asset 
Management International. During 
his career, Paul has developed a deep 
understanding of the challenges, risks 
and opportunities faced by the industry, 
thereby enabling him to create and 
develop the vision and strategy of the 
Group. Paul’s strong commercial acumen 
and dynamic leadership style allow him 
to effectively oversee the execution of 
our strategy. In recognition of his role 
in the industry, in January 2021 Paul 
was asked to Chair the FCA Practitioner 
Panel. Paul is passionate about 
promoting good mental health, and 
issues around mental health, both 
across the industry and at Quilter where 
he has sponsored the Thrive campaign 
to support colleagues including those 
impacted by the pandemic.

84

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Senior Independent Director

Independent Non-executive Directors

Ruth Markland

Tim Breedon CBE

Tazim Essani

Appointed June 2018

Appointed June 2020

Appointed March 2021

Board and Committee membership

Board and Committee membership

Board and Committee membership

 Board
 Board Audit Committee
  Board Corporate Governance and 
Nominations Committee
 Board Remuneration Committee (C)

 Board
  Board Corporate Governance and 
Nominations Committee
 Board Remuneration Committee
 Board Risk Committee 

 Board
 Board Remuneration Committee 

Skills and experience: 
Ruth Markland, a solicitor and previously 
Managing Partner of Freshfields 
Bruckhaus Deringer’s Asia business, has 
a wealth of FTSE-100 Board experience. 
She spent over 10 years on the Boards 
of Standard Chartered plc and Sage 
Group plc, where she served as Senior 
Independent Director and Chair of the 
Remuneration Committees. Ruth was 
also an independent Non-executive 
Director of Deloitte LLP for five years 
until May 2020 and is a member of the 
Supervisory Board of Arcadis NV. She 
has a strong understanding of corporate 
governance and Boardroom dynamics, 
enabling her to act as a helpful sounding 
board for the Chair and other Board 
members. Ruth was appointed Chair of 
the Board Remuneration Committee in 
May 2020, having served as a member 
since joining the Board. Her extensive 
knowledge of remuneration governance 
and best practice, together with her 
deep understanding of the 
remuneration framework at Quilter, 
have enabled her to have an immediate 
impact in this new role.

Skills and experience: 
Tim Breedon has a distinguished 
career in financial services, with past 
appointments including Group Chief 
Executive Officer of Legal (cid:9) General, 
being a Member of the Takeover Panel, 
and holding Non-executive Director 
roles with the Association of British 
Insurers and the Financial Reporting 
Council. Tim is an experienced Non-
executive Director and Committee 
member, having served on the Boards 
of Barclays plc and Barclays Bank plc 
since 2012, where he Chairs the Board 
Risk Committee and is a member of 
the Board Audit Committee, Board 
Nomination Committee and Board 
Remuneration Committee. He is also 
Chairman of Apax Global Alpha Limited. 
Tim’s extensive business leadership and 
governance best-practice experience 
enables him to provide challenge, advice 
and support to Quilter management on 
business strategy, performance, decision 
making and governance matters. 

Skills and experience: 
Tazim Essani’s wealth of experience 
in senior executive roles at regulated 
financial services businesses over the 
last 30 years equips her well to provide 
strategic guidance and constructive 
challenge to Quilter’s leadership team. 
Her executive career has focused on 
strategy and business development to 
drive growth and transformation, with 
her previous roles including a senior 
business strategy role at Santander UK, 
Group Head of Corporate Development 
at Close Brothers Group plc and senior 
roles at GE Capital and Royal Bank of 
Scotland. Throughout her career, Tazim 
has developed a deep understanding of 
corporate finance, strategy and business 
development, enabling her to contribute 
strongly to the Board’s deliberations. 
Her extensive transformational change 
experience will be invaluable in 
supporting delivery of Quilter’s strategy. 
Tazim is a Non-executive Director of City 
of London Investment Group plc.

Quilter | Annual report 2020

85

 
 
 
 
Board of Directors 
continued

Independent Non-executive Directors

Rosie Harris

Moira Kilcoyne

Paul Matthews

Appointed April 2017

Appointed December 2016

Appointed August 2018

Board and Committee membership

Board and Committee membership

Board and Committee membership

 Board
 Board Audit Committee
 Board Risk Committee (C)
  Board Technology and Operations 
Committee

 Board
 Board Risk Committee
  Board Technology and Operations 
Committee (C)

 Board
 Board Remuneration Committee 
 Board Risk Committee 
  Designated Employee Non-executive 
Director

Skills and experience: 
Rosie Harris has extensive knowledge 
and experience of risk management 
within the insurance and wealth 
management industries, having served 
as Chief Risk Officer for UK Life at Aviva, 
Group Risk Director at Old Mutual plc 
and Chief Risk Officer (Insurance) and 
Managing Director, General Insurance 
at Lloyds Banking Group plc. She is also 
currently Chair of Tokio Marine Kiln’s 
Insurance business, a Non-executive 
Director of its Syndicates businesses and 
Chairs its Risk Committee. This extensive 
experience has been invaluable as 
Quilter has developed and embedded 
its risk management framework. Rosie 
provides valuable insights into managing 
and mitigating the risks that are inherent 
in running a successful wealth 
management business. Rosie is a 
member of the Institute of Chartered 
Accountants in England and Wales and 
a Council Member of the University 
of Birmingham.

Skills and experience: 
Moira Kilcoyne brings over 25 years’ 
technology and cyber security 
leadership, having spent much of her 
career working in senior technology 
roles at Morgan Stanley and Merrill 
Lynch, latterly executing global change 
management and transformative IT 
implementation as Co-Chief Information 
Officer for Global Technology and Data 
at Morgan Stanley. Moira is also currently 
a Non-executive Director of Citrix 
Systems Inc and Arch Capital Group. This 
experience, gained at both executive and 
non-executive level, together with her 
understanding of business operations, 
operational resilience, management of 
data and supplier oversight, equips her 
to oversee and challenge the design and 
delivery of Quilter’s technology and 
operations strategies as well as the 
delivery of Quilter’s new investment 
platform. Moira is Trustee of the Board 
of Manhattan College.

Skills and experience: 
Paul Matthews is an experienced 
FTSE-100 Board Director who has over 
four decades’ worth of knowledge of the 
savings and pensions industry. His 
career at Standard Life, spanning nearly 
30 years, where his roles included Group 
Executive Director, Chief Executive 
Officer UK (cid:9) Europe and Chairman of 
Standard Life Wealth, enables him to 
identify, and support management to 
understand, the opportunities and risks 
facing Quilter, particularly in its 
distribution businesses. This insight 
enables him to effectively assess and 
challenge the executive’s strategy 
proposals, execution and risk 
management. As an executive mentor 
at Merryck (cid:9) Co, Paul uses his extensive 
leadership skills and experience to coach 
senior leaders. Paul’s track record in 
leading major businesses that rely on 
having strong leadership and positive 
cultures is also helpful in discharging 
his role in providing the vital linkage 
between the Board and Quilter’s 
employees.

86

Quilter | Annual report 2020

Independent Non-executive Directors

Company Secretary

George Reid

Patrick Gonsalves

Appointed February 2017

Appointed January 2017

Board and Committee membership

 Board
 Board Audit Committee (C)
 Board Risk Committee 
  Board Technology and Operations 
Committee

Skills and experience: 
George Reid spent over 20 years in the 
accounting profession, specialising in 
providing audit services to the financial 
services industry. During lengthy tenures 
at PwC, and, latterly, at Ernst (cid:9) (cid:60)oung 
LLP as Managing Partner and Head of 
Financial Services for Scotland and UK 
regions, George gained a deep 
understanding of accounting and audit 
matters, and the robust financial control 
environments required for a modern 
wealth management business. Such 
experience allows him to critically assess 
key accounting and financial 
considerations including those 
associated with Quilter’s corporate 
transactions. George is a Fellow of the 
Institute of Chartered Accountants in 
England and Wales and Chairman of the 
Children’s Hospice Association Scotland.

Skills and experience: 
Patrick Gonsalves is an experienced
Company Secretary with broad 
experience across the financial services 
industry gained with Lloyds Bank, 
NatWest Bank and, up until December 
2016, as Deputy Secretary of Barclays 
plc. Patrick was appointed Company 
Secretary of Quilter in January 2017 
and is a Fellow of the Institute of
Chartered Secretaries and
Administrators. Patrick has extensive
experience of providing advice and 
support to listed company boards 
in periods of significant change which 
is relevant to his role at Quilter.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

87

 
 
 
 
Quilter leadership

Quilter Executive Committee

The Board has delegated the day-to-day 
management of Quilter to Paul Feeney, 
as Chief Executive Officer. Paul exercises 
these powers through the Quilter 
Executive Committee, the membership 
of which comprises the Chief Executive 
Officers of some of Quilter’s businesses 
and key function heads.

The Executive Committee meets 
regularly to ensure the effective 
implementation of the business strategy, 
our customer strategy, the financial 
performance of the business against our 
Business Plan and the culture and risk 
management of our business.

Other senior leaders join meetings 
as required.

Quilter’s Executive Committee is led 
by Paul Feeney, Chief Executive 
Officer. Mark Satchel, Chief 
Financial Officer is a member. Their 
biographies can be found on page 84

Other Executive Leadership Team 
biographies are available online at 
quilter.com

Matt Burton
Chief Risk Officer

Karin Cook
Chief Operating Officer

Skills and experience: 
Matt Burton was appointed as Chief 
Risk Officer in May 2019 and has been 
instrumental in defining, setting and 
managing Quilter’s risk profile. Matt 
joined the business as Chief Internal 
Auditor in April 2016, in which role he 
built a highly effective Internal Audit 
team providing invaluable independent 
assurance and consultancy to the Board 
and Executive management. Prior to 
joining Quilter, he was a partner in 
PwC’s Financial Services Practice with 
responsibility for leading Internal Audit 
services to the Insurance and Investment 
Management sector. Matt has over 
2(cid:24) years’ experience across financial 
services having held senior roles in 
Credit Suisse, where he was Chief 
Auditor for EMEA, and Deutsche Bank. 
Matt is a member of the Institute of 
Chartered Accountants in England 
and Wales.

Skills and experience: 
Karin Cook was appointed to Quilter plc 
in January 2019 as Chief Operating 
Officer. She has over 30 years’ 
experience in financial services, 
most recently at Lloyds Banking Group 
covering customer operations, 
payments, technology, security, property 
and procurement. She previously 
worked at HSBC, Morgan Stanley and 
Goldman Sachs in senior operations, 
technology and finance roles. These 
deep skills and experiences enable Karin 
to be instrumental in driving efficiency 
across all areas of the Group. Karin 
chairs the Quilter Operating Committee, 
providing oversight on material 
technology and operational change 
programmes. She is a passionate, 
committed and informed ally to the 
LGBT+ community and was recently 
identified in this year’s OUTstanding 
LGBT+ Role Model Lists from Involve – 
The Inclusion People.

88

Quilter | Annual report 2020

Quilter Executive Committee

Steven Levin
Chief Executive Officer,  
Quilter Investment Platform

Andy McGlone
Chief Executive Officer,  
Quilter Cheviot

Stephen Gazard*
Chief Executive Officer,
Quilter Financial Planning

Skills and experience: 
Andy McGlone was appointed as Chief 
Executive Officer of Quilter Cheviot in 
October 2018. He has over 25 years’ 
experience in investment management, 
having worked in the evolved Quilter 
Cheviot business for his entire career, 
beginning at Quilter Goodison in 1994 
as a Trainee Investment Manager. He 
served as Managing Director of Quilter 
Cheviot prior to becoming CEO. His deep 
knowledge of Quilter and the investment 
management business provides Andy 
with the ideal combination of skills and 
understanding to continue to ensure 
strong investment performance for 
its clients and to develop the Quilter 
Cheviot business in line with Quilter’s 
strategy. Andy is a Chartered Fellow 
of the Chartered Institute for Securities 
and Investments.

Skills and experience: 
Stephen Gazard became Chief Executive 
Officer of Quilter Financial Planning in 
June 2020, having joined in 2017 as its 
Group Managing Director. He brings 
a wealth of industry experience to this 
role, including as a financial planner and 
advice business owner. Prior to joining 
Quilter, Stephen had been Managing 
Director of Sesame Bankhall Group for 
four years, during which time he 
delivered its corporate restructure and 
cultural transformation. Stephen has 
held numerous senior leadership roles in 
the wealth management industry and is 
ideally placed to ensure Quilter Financial 
Planning continues to provide good 
outcomes for its customers and high-
quality support for its advisers. Stephen 
is also Vice Chairman of Meningitis Now.

Skills and experience: 
Steven Levin was appointed as 
Chief Executive Officer of the Quilter 
Investment Platform in October 2015, 
and has been appointed Chief Executive 
Officer of Quilter Investors with effect 
from 1 April 2021. Steven has dedicated 
the majority of his career to Old Mutual 
and Quilter, during which time he has 
held senior business roles such as Global 
Head of Distribution and Managing 
Director of Skandia International 
(now Quilter International) and Global 
Product (cid:9) Proposition Director for Old 
Mutual plc. Steven started his career 
as an equity analyst. Steven’s extensive 
experience in developing and 
distributing financial products has been 
instrumental in enabling him to advance 
and grow the Quilter Investment 
Platform business, including in the 
implementation of Quilter’s new 
investment platform. This proven 
leadership, and his experience and 
understanding of asset management 
and investments, has made him the ideal 
candidate to bring together Quilter 
investment and distribution to better 
support our customers in the next stage 
of Quilter’s strategic journey. Steven is 
a qualified Actuary and a Chartered 
Financial Analyst.

*  Stephen Gazard regularly attends 
Executive Committee meetings 
although he is not a member.

Quilter | Annual report 2020

89

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

 
 
 
 
The work of the Board  
in 2020

Board activity and decision making

Section 172 (1) statement 

The Companies Act 2006 (the Act) and the UK Corporate 
Governance Code 2018 require the annual report to provide 
information that enables our stakeholders to assess how the 
Directors of Quilter have performed their duties under section 
172 of the Act. The Act provides that Quilter Directors must 
act in a way that they consider in good faith, would be most 
likely to promote the success of Quilter for the benefit of 
shareholders as a whole. In doing so, Quilter Directors 
must have regard, amongst other things, to the factors 
set out below:
 – the likely consequences of any decision in the long term;
 – the interests of Quilter’s colleagues;
 – the need to foster the Company’s business relationships;
 – the impact of Quilter’s operations on the community and 

the environment;

 – the desirability of the Company maintaining a reputation 

for high standards of business conduct; and

 – the need to act fairly for all our members.

Building Quilter to deliver long-term success for all our 
stakeholders 
The Board is clear that engaging, consulting and making 
decisions balancing the needs, interests and expectations of 
our key stakeholders is critical to Quilter achieving its purpose 
of helping create prosperity for the generations of today and 
tomorrow. On occasions these competing stakeholder views 
can be contradictory and it is the Board’s role to navigate these 
complexities to achieve long-term success. The Board has a 
comprehensive stakeholder engagement programme and 
seeks to act in the best interests of the Group, and to be fair 
and balanced in its approach. In addition to direct engagement 
with our stakeholders, papers submitted to our Boards and 
Board Committees across the Group identify for their 
consideration where stakeholders could be impacted by the 
proposals. At all times, the Boards remain focused on ensuring 
good customer outcomes. Some of the ways the Quilter Board 
engages with our stakeholders, including some examples of 
how our Board has considered stakeholders when it made key 
strategic decisions in 2020, can be found on the following 
pages. In addition, throughout this report, we state how 
consideration of stakeholders has been embedded as part 
of our business operations. 

You can also read more about how Quilter operates in our 
Responsible Business Report on pages 46 to 59.

The (cid:37)oard identified six key stakeholder groups whose 
interests and needs it regularly considers. This year, the Board 
refined our stakeholder map to state a broader consideration 
of who our stakeholders are, and given how important 
advisers are to Quilter’s long term success, this group 
is now described explicitly. 

Board activity

Business performance oversight 35%
People and culture 10%
Strategy and delivery of strategy 20%
Stakeholder management 10%
Risk management and governance 25%

Key decisions made by the Board 
in 2020

Reviewing 
Reviewing the Group’s strategy to ensure that it remains 
appropriate for a rapidly changing environment and deciding 
to initiate a strategic review of the Group’s international business.

Supporting 
Supporting the Quilter management team as they provided 
visible and clear leadership for our people, took difficult 
decisions to ensure that Quilter and its people safely navigated 
the COVID-19 pandemic, including revising priorities, and 
supporting our staff and advisers by extending additional 
support, such as the Thrive initiative, to adviser firms.

Endorsing
Endorsing management’s decision to split our second phased 
adviser migration for our Platform Transformation Programme 
into two tranches to mitigate the risk of negatively impacting 
our customers and advisers.

Protecting 
Protecting the interests of shareholders by continuing the 
Group’s share buyback programme and paying a modest 
interim dividend for 2020, given the resilience of our business.

Setting 
Setting stretching but achievable financial and operating targets 
for management that ensured delivery of our strategic objectives 
and financial performance in line with the expectations of our 
shareholders and customer-focused services and products.

90

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Investors

Who are they

Investor priorities 

How the Board engages 
with our investors

The Board considers investors in its broadest sense including equity and debt investors, 
alongside analysts and rating agencies. Just over half of the Group’s shareholders are registered 
in South Africa, with the remaining 47% of our shareholders on the UK share register.

 – A resilient business model which generates long-term sustainable returns for shareholders
 – A sustainable and growing dividend supported by cash flow and capital generation
 – Robust corporate governance that ensures effective oversight and control of the business
 – Financial strength and resilience that enables the business to withstand external shocks
 – A business with a clear and successful strategy that is delivering growth and sustainable returns

Private shareholders
Our private shareholders are supported 
day-to-day by our registrars based in the UK 
and in South Africa. We closely monitor the 
performance of our registrars to ensure the 
service our shareholders receive globally 
is appropriate. 

In 2020, given we were unable to hold an open 
Annual General Meeting (“AGM”) due to UK 
Government restrictions on public gatherings 
in place at that time, we set up a specific AGM 
Hub to enable our private shareholders to 
raise questions with the Chairman on the 
business of the meeting in advance of our 
AGM. We strongly encouraged shareholders 
to vote before the meeting.

The Group’s full year and interim results are 
sent by email to our shareholders who have 
provided consent for e-communications, 
and in addition we provide comprehensive 
information on our website, quilter.com. 

During the year, the Board approved the 
Odd-lot Offer which provided small private 
shareholders with a cost-effective way to 
sell their shares in Quilter and reduced the 
number of private shareholders by 200,000. 

Shareholders, analysts and rating agencies 
The Board and management maintain 
a regular and constructive dialogue with 
investors, to communicate with existing and 
potential shareholders on the Company’s 
strategy, governance and performance. 
This helps to promote investor confidence 
and ensure continued access to capital. 
The Chairman and Senior Independent 
Director met with our major shareholders 
in an annual governance roadshow covering 
business strategy, performance, remuneration 
and broader governance matters and at the 
same time received valuable feedback from 
them. In addition, the Chief Executive Officer 
and Chief Financial Officer provided updates 
on our results and financial performance, 
undertaking two live webcasts and conducting 
245 meetings with shareholders, debt holders 
and prospective investors in 2020. 

The Company participates in investor 
conferences to engage with existing and 
prospective investors. Alongside the Chief 
Executive Officer and Chief Financial Officer, 
senior management provide insight into 
business strategy which helps showcase the 
quality of the Quilter leadership team.

The Board received regular updates from the 
Head of Investor Relations on key shareholder 
and debt holder issues and concerns. This 
included an annual presentation involving our 
corporate advisers on market dynamics and 
corporate perception.

Outcomes 

The Board considers investor feedback on an ongoing basis. An example of how shareholders’ 
interests are considered is set out in the Governance in action case study on page 99. In this 
case study, we detail how the Board decided to launch the share buyback programme and the 
factors considered when the Board approved the payment of the interim dividend in 2020. 

In March 2020 at the beginning of the COVID-19 pandemic when market volatility was prevalent 
and investor confidence fragile, the (cid:37)oard took the decision not to extend a new Sharesave 
Scheme to employees. While employees value this share plan with a 45% take-up in 2019, the 
(cid:37)oard decided it was appropriate to manage costs in line with Quilter’s wider efforts to make 
temporary tactical efficiencies rather than offer this additional benefit to colleagues at that time. 

Quilter | Annual report 2020

91

 
 
 
 
The work of the Board in 2020
continued

Section 172 (1) statement (continued)

Colleagues

Who are they

Colleague priorities

How the Board engages 
with our colleagues

At Quilter, we treat all full-time, part-time and contract staff as colleagues. The success of the 
delivery of our strategy is dependent on talented and committed people, focused on delivering 
for our stakeholders in accordance with our values of Pioneering, Dependable and Stronger 
Together. We have 4,176 colleagues, who each take pride in working towards being part of an 
inclusive and diverse Quilter. We aspire to achieve a culture where everyone feels included, 
empowered and inspired to do the right thing for customers. 

 – Customer and value-led culture
 – Investment in people development and technology
 – Compelling colleague proposition
 – Attractive reward structure
 – An open and inclusive culture

Following Cathy Turner stepping down from the Board in May 2020, the Board asked Paul 
Matthews to act as our Non-executive Director with responsibility to ensure that the Board 
understand the views of employees. Sharing the insights he gains from attending the Quilter 
Employee Forum, he ensures that colleagues’ views are taken into consideration as part of the 
Board’s decision making. A full description of how this happens, including some of the metrics 
the Board look at on a regular basis, are set out on pages 100 and 101. 

In addition to this mechanism, individual Directors meet regularly with individuals identified 
as future senior leaders. 

The Executive Directors directly engage with colleagues across the business and during 2020 
provided frequent video updates to colleagues on business priorities, successes and to thank 
colleagues during this period of remote working.

In 2020, the Board focused on measures to improve diversity and inclusion and you can read 
more about the initiatives in the Board Corporate Governance and Nominations Committee 
Report on page 104.

Outcomes 

Paul Matthews, our Non-executive Director responsible for representing the views of the 
workforce to the Board, shares his insights on 2020 on pages 100 and 101.

You can read more about our approach to promoting diversity and inclusion and colleague 
engagement in the Chief Executive Officer’s statement on page 2(cid:24) and on delivering for our 
colleagues in the Responsible Business Report on pages 52 and 53. 

Read more examples of 
how these stakeholders 
have been considered
Pages 52 and 53

In the Annual Report on Remuneration on page 138 you can read about the decision to create 
a small discretionary bonus pool to recognise the contribution of the wider workforce during 
the COVID-19 pandemic.

92

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Communities

Who are they

Community priorities

How the Board engages 
with our stakeholders

Outcomes

Read more examples 
of how these 
stakeholders have 
been considered
Pages 56 to 59

The (cid:37)oard broadly defines Communities to mean the societies in which we operate and where our 
products are sold. Quilter’s ability to deliver sustainable value for stakeholders depends on the 
engagement we have with key stakeholders representing the communities’ needs, including policy 
makers, business partners, non-governmental organisations (“NGOs”) and other interest groups.

Communities

Suppliers

(cid:58)e target our efforts to make a difference in 
the communities we are located in or where 
our products and services are used. 

We recognise the key role our suppliers play 
in helping us manage our business and deliver 
quality services for our customers.

 – Protecting customers and investors
 – Operating responsibly, including wider environmental impacts
 – Being treated fairly and professionally during the sourcing process

Throughout the COVID-19 pandemic Quilter 
has proactively engaged with our suppliers 
as part of our focus on operational resilience. 
This regular dialogue enables us to gain 
assurance, and support the needs of the 
supply chain.

Quilter recognises our suppliers are key to our 
business success and therefore to drive future 
collaboration and strengthen our supplier 
relationships we hosted a virtual supplier 
summit in September 2020, a first for Quilter. 
Bringing together a selection of hand-picked 
critical and important suppliers, our executive 
team shared insights into our values, goals 
and priorities.

The Board has delegated direct oversight of 
the Responsible Business agenda to the Board 
Corporate Governance and Nominations 
Committee. The Chairman updates the Board 
on relevant matters including the views of key 
stakeholders, such as policy makers, NGOs 
and other interest groups to understand what 
is important to them. 

Our work to provide comprehensive and rapid 
support for customers, colleagues, advisers 
and investors is set out on pages 17 to 19. 

Quilter reduced its operational greenhouse 
gas emissions by 33% compared with 2019. 

The Quilter Foundation directly supported 
13,525 young people in local communities, 
providing vital financial education, 
employment and wellbeing support.

Quilter continued to integrate environmental, 
social and governance (“ESG”) considerations 
across its investment management and 
stewardship activity, and achieved an ‘A’ rating 
in The United Nations backed Principles for 
Responsible Investment (“PRI”) annual 
assessment. In respect to stewardship of the 
companies we invest in, our voting at company 
meetings increased by 104% compared with 
the previous year.

Our strategic objective is to reduce Quilter’s 
contribution to climate change and support 
the transition to a low carbon economy. 
Our framework helps us to reduce our 
direct carbon footprint, embed climate 
considerations in our investment management 
and stewardship activity and offer clients 
climate focused investment solutions. 

Quilter | Annual report 2020

93

 
 
 
 
The work of the Board in 2020
continued

Section 172 (1) statement (continued)

Regulators

Who are they

Regulator priorities

How the Board engages 
with our stakeholders

Outcomes

We have an open and transparent relationship with our regulators and other government 
authorities. Our core UK regulators are the Financial Conduct Authority and the Prudential 
Regulation Authority. We also have multiple international regulators who oversee our 
international business activities, including the Isle of Man Financial Services Authority 
and the Central Bank of Ireland.

Each regulator has its own statutory ob(cid:77)ectives to fulfil. These centre around ensuring firms are 
run in a safe and sound way to achieve fair outcomes for consumers and ensure the integrity 
of financial markets, promoting effective competition in the interests of consumers. The UK 
regulators publish annual business plans setting out their specific priorities within the context 
of these wider objectives.

Transparent and open regulatory relationships are fundamentally important to Quilter and its 
Board, and this principle forms the basis of our approach to regulatory engagement, deployed 
across the Quilter Group. We liaise with each regulator regularly to ensure our business is 
aligned to the evolving regulatory framework and is operating to regulatory expectations. The 
Board Risk Committee receives quarterly reporting on key regulatory relationships and matters 
under discussion as part of its standing agenda, and the Quilter Chief Risk Officer, as a standing 
attendee of each Board meeting, provides further updates as needed. The FCA attends a Quilter 
Board meeting annually to share directly their thoughts on our business and key areas of focus. 

In addition, we have a regular programme of meetings on a one-to-one basis between our 
UK regulators and our Chief Executive, Chief Finance Officer, the Chairman and other (cid:37)oard 
Committee Chairs, covering all aspects of the regulatory agenda. Examples of key matters 
discussed include customer outcomes, operational and financial resilience, future strategy 
and plans for the Group, and diversity.

Our understanding of our regulators’ priorities, which have customer outcomes and sustainable 
business at their centre, forms an integral part of the Board’s decision making. Papers presented 
are required to consider stakeholder interests in their recommendations, including importantly 
customer and regulatory considerations, and is reflected practically in Quilter’s (cid:37)oard Risk 
Appetite towards regulatory compliance. The Board has a low appetite for non-compliance with 
regulations and this position is reflected, for example, in the levels of investment in Quilter’s 
change programme focused on regulatory change and delivering this in a timely way.

94

Quilter | Annual report 2020

Advisers

Who are they

Financial advisers are core to our business, delivering personalised financial advice tailored 
to meet the specific needs of the customer. Our business model means we have three core 
adviser strategies comprising 1) our National business, through which our advisers provide 
high-quality financial advice under the Quilter brand 2) our advice Network business, which 
partners with third party advice firms providing them with a compelling investment proposition 
and robust regulatory control framework and 3) third-party independent financial planners 
(“IFAs”) who utilise our investment platform or place clients’ assets within Quilter investment 
management solutions. 

As a firm believer in the value of advice, Quilter is committed to developing existing advisers and 
bringing new advisers into the industry. Since its inception in 201(cid:25), (cid:25)43 financial advisers have 
graduated from our own-branded educational facility for advisers, the Quilter Financial Adviser 
School. In 2020, 211 financial advisers completed the qualification.

Priorities for advisers

 – A compelling investment proposition
 – The provision of high-quality, productive environments in which to operate safely
 – A robust and intuitive platform

How the Board engages 
with our stakeholders

The (cid:37)oard receives regular updates from the Chief Executive Officer on key issues impacting 
advisers both within Quilter Financial Planning’s Network and National businesses and third-
party advisers who use our investment platform to serve their and our customers. 

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

The Customer reports scrutinised by the Board and Board Risk Committee provide key insights 
on how effectively and safely Quilter is supporting advisers in serving customers and, in order 
to better understand advisers’ views and culture, the Board has requested that data collated 
on our employees’ opinions and culture is extended to include advisers. In addition, Paul 
Matthews, who also serves on the Quilter Financial Planning Limited Board, engages regularly 
with advisers to understand their needs and priorities, reporting back to the Board on his 
findings. This included attending the bi-annual Quilter Financial Planning Adviser Conference in 
February 2020. The Board has also supported management’s decision to extend the support 
for employees’ mental wellbeing to advisers. More information on the support provided is 
available on page 54.

The (cid:37)oard and the (cid:37)oard Technology and Operations Committee committed significant time 
in 2020 to ensuring the new Quilter Investment Platform is suited for the needs of advisers and 
their customers. Given 2020’s challenging circumstances, the decision to split the second 
phased adviser migration into two stages was taken to limit the potential for disruption to 
advisers and customers. You can read more about our Platform Transformation Programme 
on pages 44 and 45. 

The Board Technology and Operations Committee also provided oversight of the plans for, and 
progress in, delivering new technology solutions that are central to supporting Quilter Financial 
Planning’s advisers, including the new payments system implemented in February 2021, which 
ensures advisers are properly and promptly paid for the advice they provide. 

During the early part of 2020 the Board closely monitored the programme of work commenced 
in 2019 to further strengthen the robustness of the Quilter Investors investment process. 

One important outcome was the safe implementation of the new investment platform, which 
enables advisers to provide excellent advice and support for customers and an enhanced range 
of services.

Quilter | Annual report 2020

95

Outcomes

Read more examples of 
how these stakeholders 
have been considered
Pages 54 and 55

 
 
 
 
The work of the Board in 2020
continued

Section 172 (1) statement (continued)

Customers

Who are they

Our customers use our products and services to meet their long-term financial needs and 
achieve their aspirations. Ensuring customers are at the heart of everything we do is critical 
to Quilter’s long-term success. Maintaining strong relationships built on the delivery of 
outstanding service and outcomes, a positive reputation and trust are key to the longevity 
of Quilter’s performance. 

By the end of 2020 Quilter spent £174 million enhancing the core investment platform 
and further enhancements to our customer proposition are planned in 2021. 

Customer priorities

 – Products that meet their needs, expectations and risk appetite
 – Excellent customer service and access to products across all channels
 – Personalised customer propositions

How the Board engages 
with our customers 

Earning and retaining the trust of customers is a high priority and the Board receives regular 
reports on the outcomes achieved for customers. The customer reports in 2020 confirmed that 
Quilter generally provided a resilient and consistent service to customers through the pandemic. 
The Board asked management to ensure direct feedback on end-customer satisfaction is 
obtained in addition to the feedback via advisers. The Board also challenged management to 
develop better mechanisms for measuring whether value for money is being delivered for all 
customers based on the work conducted by Quilter Investors in 2020. 

All Board papers include, where appropriate, analysis of the impacts to customers of the 
proposals under consideration. 

The Board looks to benchmark performance achieved for customers and uses insight from 
a range of internal and external research, including net promoter scores and other customer 
indices, to improve services. The Board receives regular updates and reports on the progress 
of Quilter’s strategy, including the development of plans for the next strategic phase, ensuring 
the customer remains at the heart of our strategic investment.

The Board receives reports providing analysis and guidance in relation to the competitive 
environment and market share, which enables strategic insight and allows the Board to take 
decisions that are focused around the needs of customers.

The Board is committed to doing whatever is necessary to ensure all customers impacted 
by past conduct failures receive fair recompense. 

To ensure that our leadership team continue to put customers at the heart of everything we do, 
a customer metric is included in the executive scorecard that drives the remuneration of our 
senior executive team. 

Outcomes

When the size and scale of the COVID-19 pandemic became apparent, the Board endorsed 
management’s action to support customers impacted by the pandemic. This included 
heightened internal controls to prevent fraud and cyber crime.

During 2020, a number of claims were received in relation to historic pension transfer advice in 
respect of the British Steel Pension Scheme provided by Lighthouse prior to its acquisition. This 
subsequently led to the FCA initiating a skilled person’s review and an enforcement investigation, 
as noted elsewhere in this report. As a result, the Board has ensured that, working closely with 
the skilled person and the FCA, Lighthouse reviews relevant cases and offers remediation if the 
historic pension transfer advice in respect of the British Steel Pension Scheme was not suitable.

Read more examples of 
how these stakeholders 
have been considered
Pages 50 and 51

The introduction of the new investment platform is a further example of how the Board 
has overseen enhancements in how we engage with customers. Read more about this 
on pages 44 and 45. 

96

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Your Board discharged its responsibilities in 2020 by

Actions

Purpose

Reviewing and setting 
the Group’s strategy

The Board held a two-day in person strategy meeting in August 2020 which met all the 
government guidance for ‘gatherings’ in place at that time. The management team, guided by 
the Board, assembled detailed analysis of each business area and details of industry trends 
which provided key insights on which the strategy is based. The executive team then presented 
a proposed long-term strategy which the Board tested and challenged. In setting the strategy, 
the Board carefully considered the needs of customers, shareholders, employees, advisers, the 
communities in which we operate and the need to maintain constructive relationships with our 
regulators. A key consideration was whether the global pandemic was likely to make permanent 
changes to the markets in which we operate, the expectations of our customers and the 
changes the business would need to make to adjust to those changes. The Board endorsed the 
overall direction of the strategy which requires the business to become more customer-centric 
and to drive greater efficiency throughout our business to better serve our customers and 
advisers and continue to enhance returns for our shareholders.

As part of the review of the Group strategy in the summer of 2020, the Board concluded 
that management should conduct a strategic review of the Quilter International business. 
Management were asked to provide the Board with a detailed analysis of a range of options 
for the business including retention of the business, alternative growth strategies or a sale 
to a third party, so that a fact-based decision that benefited all stakeholders in the long term 
could be reached. 

Setting stretching but 
achievable financial and 
operating targets for 
management

In October and November 2020, the Board reviewed and approved a Business Plan for the 
forthcoming three-year period. The (cid:37)usiness Plan sets financial and non-financial targets for the 
period and shows the capital and liquidity impacts of that plan which are aligned to the Group’s 
risk appetite. Given the significant uncertainty in the external environment at the time of setting 
the Business Plan, management were asked to rebase some elements of the Business Plan to 
take account of market movements in November 2020.

Reviewing the response 
to COVID-19

Alongside the production of the Business Plan, management developed an Operating Plan that 
set out the key initiatives and programmes of work required to deliver the Business Plan and the 
Group Strategy. The Board carefully considered the resources available to deliver the Operating 
Plan, the alignment of the financial and Operating Plans, the achievability of the plans and the 
risks to delivery. Particularly, in 2020, the Board had to consider the challenges in delivering 
significant change programmes while the business continues to work largely remotely.

(cid:58)hen the business moved to largely remote working in March 2020, and the first national 
lockdown was announced, management carefully reviewed all planned change activities and 
deprioritised certain programmes, such as new product launches for Quilter Investors. It was 
clear that our revenues would be impacted by lower markets and that cost control would be 
important to secure the long-term position of the business. Despite the imperative to control 
costs, your Board supported management’s decision to also protect our employees. Some 
redundancies that had been long planned to take place in the first half of 2020 were delayed, 
given how difficult it would be for those seeking employment at that time. Management also 
identified the key pro(cid:77)ects, such as the Platform Transformation Programme, which are critical 
to the future of the Group and prioritised those areas to ensure delivery would be safely 
achieved. The Board also considered how the experience of working remotely will permanently 
change the way that our people wish to work and agreed to keep this under review.

Quilter | Annual report 2020

97

 
 
 
 
The work of the Board in 2020
continued

Your Board discharged its responsibilities in 2020 by (continued)

Actions

Purpose

Monitoring the delivery of 
the Operating Plan and key 
strategic programmes

Throughout the year, the (cid:37)oard has received quarterly updates from the Chief Executive Officer 
on the delivery of the 2020 Operating Plan to ensure that the business continued to make 
progress on delivery of its strategy and the Business Plan.

In addition, the Chief Operating Officer reported half yearly on the areas within her 
responsibility. She confirmed that Quilter’s operations have remained resilient throughout 2020, 
despite the challenges presented by COVID-19 and material improvements have been delivered 
in our IT infrastructure and security.

Overseeing the Group’s 
management of material 
risks

The business remained financially strong throughout 2020 with robust capital and solvency 
positions which should provide comfort to our shareholders, regulators and those we do 
business with. 

In addition to the usual quarterly reports from the Chief Risk Officer, the (cid:37)oard has spent time 
overseeing the handling of customer complaints arising from the Lighthouse acquisition and 
ensuring that any lessons arising from them have been fully learnt and embedded. 

Ensuring the Group’s people 
strategy and culture are 
aligned with the business 
strategy

The Board has continued to monitor closely the health, welfare and engagement of our people 
and the culture of our business. Regular employee opinion surveys (Peakon surveys) confirmed 
that the Group has an engaged and committed workforce and the Board encouraged 
management to extend its work in these areas to include those advisers who we do not employ, 
but are still critical to the success of our business.

At the Board’s request, management brought forward detailed plans on enhancing the diversity 
of our workforce which are discussed on pages 52 and 53. The culture of the organisation is 
considered to be well aligned to the Group’s purpose and strategy with a strong customer-
oriented mindset and it is clear that our colleagues have gone the extra mile in 2020 to continue 
to support our customers despite the obvious challenges. The high visibility of the leadership 
team through the isolation of home working has been strongly welcomed by our people. The 
Board has requested more granular information on the culture of individual businesses to 
ensure that any inconsistencies across the Group are identified and addressed.

Read more in the 
Responsible Business 
Report
Pages 52 and 53

Monitoring the investment 
performance of our funds 
and solutions

The Board has continued to regularly scrutinise the investment performance being delivered by 
Quilter Investors and Quilter Cheviot for their respective customers. In a year of volatile markets 
with at times unprecedented market falls, the Board has continued to emphasise the 
importance of robust investment processes and strong monitoring of investment risk. 

Monitoring how well 
we serve our customers

The Board has continued to guide the development of a comprehensive set of metrics to ensure 
that we are providing outstanding service to our customers. There is good evidence to confirm 
that Quilter has continued to provide strong customer service despite the challenges faced in 
2020 when the first UK national lockdown coincided with the first phased migration to our new 
investment platform. Management reacted quickly when problems were identified in this 
difficult period.

98

Quilter | Annual report 2020

Governance 
in action

Case study on capital management 

Return of capital

In 2019 when the Board approved 
the sale of Quilter Life Assurance to 
ReAssure, the Board engaged with 
its major shareholders to obtain their 
views on the use of the sale proceeds. 
Having also discussed the matter with 
the Group’s brokers, the Board agreed 
to return the sale proceeds to 
shareholders by way of a share buyback 
programme. The Board approved a 
programme with a value of up to 
£375 million, subject to remaining 
within certain pre-set parameters over 
share price and trading volumes. To 
ensure appropriate oversight, and given 
the challenges of buying back shares in 
a fairly illiquid stock on the UK and 
South African Stock Exchanges, the 
Board was clear that the programme 
needed to be subject to staged 
regulatory and Board approval. 
The Board delegated to the Return 
of Capital Committee, chaired by Glyn 
Jones, alongside the Chair of the Board 
Risk Committee, Rosie Harris, and the 
Chair of the Board Audit Committee, 

George Reid, with our Chief Executive 
Officer, Paul Feeney, and our Chief 
Financial Officer, Mark Satchel, authority 
to oversee the programme within the 
parameters set by the Board and 
consider on an ongoing basis whether 
the return of capital continued to be 
appropriate and in the best interests 
of our shareholders. 

In March 2020, the (cid:37)oard was finalising 
our 2019 results at the same time as the 
first signs emerged that CO(cid:57)ID-19 was 
likely to become a global pandemic. The 
Board Committee exercised close 
scrutiny over the programme to ensure 
that it remained in the best interests of 
our shareholders and, as part of our 
shareholder governance meetings held 
in February 2020, reconfirmed with our 
major shareholders remained 
supportive of the launch of a share 
buyback programme. Over the next few 
months, the pandemic impacted 
markets causing significant share price 
volatility globally. At a time when many 

other companies were suspending their 
dividend payments, we stayed in close 
contact with our lead regulators and 
monitored Quilter’s share price, overall 
capital, liquidity and free cash. During 
2020, the Committee met on three 
occasions and received updates from 
management regarding the progress 
of the share buyback programme and 
ensured that the Company stayed 
within risk appetite in terms of our 
capital, liquidity and free cash 
positions. Given the dislocations and 
volatility in markets during 2020, it has 
at times been challenging to maintain 
the pace of the share buyback 
programme, in part driven by the 
current structure whereby the 
programme is designed to buy back 
an equivalent number of shares on 
the London and Johannesburg Stock 
Exchanges to maintain our current 
shareholder profile. 

Continuing to pay dividends in 2020 

Since Listing, Quilter has paid two 
dividends a year, in May and September, 
in line with our published dividend 
policy. Before approving our 2019 full 
year results in March 2020, the Board 
gave careful consideration to the 
emerging situation with respect to the 
COVID-19 pandemic and agreed that it 
was appropriate to pay a final dividend 
of 3.5 pence per share, which was 
approved by shareholders at our 
Annual General Meeting in May 2020. 

In the following months, Quilter, along 
with many other companies, paid close 
attention to our capital and free cash 
position and scrutinised what, if any, 
interim dividend it would be 
appropriate to pay in September 2020. 
Aware of the importance of our 
dividend to both private shareholders 

and institutional investors, including 
pension funds, the Board met in July 
2020, to review in detail management’s 
recommendation on the proposed 
dividend rate. We also remained in close 
and routine contact with our lead 
regulators regarding our thinking in 
respect of the dividend. Major 
shareholders consulted indicated that a 
smaller dividend at the lower end of the 
40-60% target pay-out ratio would be 
acceptable given the market 
circumstances. Given our strong cash 
and capital reserves, the Board agreed 
that it would be appropriate to pay a 
2020 interim dividend, but adopted 
a cautious position given the market 
conditions, progress on the share 
buyback and the business outlook 
at that time. 

The Board has again deliberated in 
depth on the pay-out ratio and final 
dividend for 2020, which was 
announced in March 2021, once again 
taking into consideration our financial 
position, the market conditions and 
business outlook. The Board has 
recommended to shareholders a full 
year final dividend of 3.(cid:25) pence per 
share. This will be put to shareholders 
for approval at our 2021 Annual 
General Meeting.

Quilter | Annual report 2020

99

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

 
 
 
 
 
Governance in action
continued

Employee engagement

The Quilter Board receives a wide range of information 
on Quilter’s employees through the course of the year. 
This ranges from the regular updates on People and Culture 
presented by our HR Director, reports from the Chief 
Executive Officer on current people initiatives and feedback 
in response to such actions as well as analysis from our risk 
team on the people risks in our business. Our risk team have 
particularly highlighted the pressures on our employees 
resulting from the high volume of change in the organisation. 
None of these sources of information are as valuable as 
direct meetings with our people which I have tried to achieve 
in 2020 either virtually or in person.

Looking forward
Having taken over as the Quilter Non-executive Director 
responsible for providing a linkage between the Quilter 
Board and our people in May 2020, and having so far met 
many people virtually, I am very much hoping to be able to 
meet more Quilter staff face-to-face in 2021. I hope that my 
interactions with the Quilter Employee Forum, the employee 
talent sessions the Board has recently relaunched and my 
regular visits to Quilter’s offices around the country will soon 
be possible in person rather than virtually. In this hope, I will 
be joined by many of my fellow Directors who in more 
normal times would routinely travel to our various offices 
to attend townhalls or roadshows and benefit from the 
one-to-one conversations that this enables. 

Paul Matthews
Independent Non-executive Director

I was delighted to be asked to succeed Cathy Turner as the 
employee representative on the Quilter Board. Quilter is 
fortunate to have employees who have a strong affinity with 
the Group and support its exciting strategy. During a period of 
rapid and sometimes difficult change to bring the business to 
full maturity, coupled with a global pandemic which has meant 
our employees have largely been operating remotely, it is 
impressive that employee engagement has remained strong 
during a challenging year.

Key themes

Supporting our people 
in difficult times

Quilter conducts regular surveys on employee engagement and during 2020 there was a 
particular focus on how well Quilter was supporting our employees through the pandemic and 
keeping them informed on a fast-moving and largely unprecedented situation. Having placed 
a high priority on employee wellbeing, with additional support provided by Quilter to both 
employees and advisers, it was reassuring that employees were appreciative of these efforts. 
This was confirmed by the strong results for specific questions in employee opinion surveys 
about Quilter’s response to the pandemic and supporting our people. Employees also 
recognised the significant efforts made to ensure that they had the right tools to fulfil their 
roles after moving to remote working. 

“ Quilter is doing a good job 
of keeping me updated with 
the information I need 
right now” 
Committee activity

“ Quilter is doing a good job 
of supporting me during 
COVID-19” 
Committee activity

Score 

8.0/10

Score 

8.0/10

Note: Quilter Peakon Survey September 2020.

100

Quilter | Annual report 2020

Key themes

Leadership

In difficult times, visible and vocal leadership becomes even more crucial and when I (cid:77)oined a 
meeting of the Quilter Employee Forum in September 2020, it was very clear that the efforts by 
the senior leadership team to be highly visible and accessible during remote working had been 
warmly welcomed by employees. Business and function leaders have successfully used video 
messaging to engage directly with employees. Employees shared with me their feedback that 
the cascading of key messages through line management was less effective and this will be an 
area of further focus going forward. 

Good progress has been made in setting expectations for Quilter’s leaders who are expected 
to demonstrate inclusive and responsible leadership practices and this is an area that the Board 
will monitor going forward.

“ Senior leaders role-model 
the behaviours underpinning 
our values”
Committee activity

“ My manager provides me 
with the support I need to 
complete my work” 
Committee activity

Score 

7.7/10

Score 

8.3/10

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Aligning our culture and 
values to our strategy

The proportion of our people who are inspired by the purpose and vision of Quilter is above 
the norm for the financial services industry and the ma(cid:77)ority feel that the strategy is taking 
Quilter in the right direction. Our employees highlight the need to build a better understanding 
of the work of other businesses and departments to enhance the cohesion of the Group. This 
is an area where we can improve even further with enhanced communications. There is strong 
alignment for our employees with the Quilter values of Dependable, Stronger Together and 
Pioneering and all three were above the average for the financial services industry. Some 
employees noted an element of risk aversion in the business and the Board has asked to see 
more granular analysis of the culture at a business level so that any material differences can 
be addressed.

One important measure of a strong and healthy culture is the extent to which employees feel 
able to voice concerns knowing that they will be listened to and appropriate action taken. The 
communications to staff in this area have been refreshed during the year and the employee 
survey makes it easy to highlight areas of potential concern and ensure that the organisation 
learns the appropriate lessons when things do not go according to plan. George Reid, who is 
our Whistleblowing champion, also references this in the Board Audit Committee report.

“ I am inspired by the 
purpose and vision of 
Quilter” 

Committee activity

“ The overall business 
strategy set by senior 
leadership is taking Quilter 
in the right direction” 
Committee activity

“ I feel able to report risks 
without fear of reprisal”  

Committee activity

Score 

7.4/10

Score 

7.9/10

Score 

8.2/10

Note: Quilter Peakon Survey September 2020.

Quilter | Annual report 2020

101

 
 
 
 
 
 
 
Board Corporate Governance and 
Nominations Committee report

Dear Shareholder,
The Board Corporate Governance and 
Nominations Committee is responsible 
for overseeing the Quilter Corporate 
Governance Framework and for ensuring 
that the composition of the Board and the 
skills and experience present within our 
senior leadership team is appropriate to 
support the successful delivery of the 
Quilter strategy. Additionally, the Committee 
is responsible for overseeing the delivery 
of the Group’s responsible business and 
responsible investing agenda. I set out 
opposite how the Committee has discharged 
its responsibilities in these areas.

In my Chairman’s statement on page 15, 
I noted some of the changes to our Board. 
This work has been overseen by this 
Committee to ensure that we have a strong 
Board with diverse and relevant experience. 

During the year the Committee undertook 
a thorough process to identify and assess 
candidates which resulted in the 
appointment of Tim Breeden to our Board. 
You can read more about the process and 
Tim’s impressions on pages 106 and 107. 
The search in the second half of 2020 for an 
ethnically diverse Non-executive Director 
who could bring valuable additional skills 
and experience to our Board led to the 
appointment of Tazim Essani in March 2021. 
Ta(cid:93)im brings corporate finance, strategy 
and business transformation experience. 
During the year, the Committee continued 
to focus on the combined skillset and 

Committee governance

capabilities of the Directors to ensure their 
effectiveness in driving our transformation 
strategy forward. (cid:58)e also continued to fulfil 
our core responsibility of reviewing the 
composition of the Board and Committees.

Based on its assessment for 2020, the 
Committee is satisfied that, throughout the 
year, all Non-executive Directors remained 
independent in accordance with the Code. 
In recommending Directors for re-election 
at our AGM, the Committee considered 
the performance of each Non-executive 
Director, as confirmed by the (cid:37)oard 
Effectiveness Review, and their ability to 
continue meeting the time commitment 
required, taking into consideration 
individual capabilities, skills and 
experiences and any relationships that 
have been disclosed. All Directors were 
considered to have the appropriate skills 
and experience for their roles.

In addition, the Committee has considered 
the overall strength of the executive talent 
pipeline, together with detailed executive 
succession planning aimed at supporting 
the development of executives who will 
support the delivery of Quilter’s strategy. 
Further detail on executive succession 
planning can be found on page 103.

Glyn Jones
Chairman

Glyn Jones
Chairman

Committee activity

Board evaluation 11%
Board and Board 
Committee succession 
planning 19%
Executive succession 
planning and talent 24%
Corporate governance 23%
Responsible business 
framework 23%

The Board Corporate Governance and Nominations Committee currently comprises the Chair 
of the Board and two independent Non-executive Directors. Details of the skills and experience 
of the Committee members can be found in their biographies on pages 84 and 85. 

Committee meetings 
attended/eligible to attend

Evaluation

As part of the 2019(cid:18)20 (cid:37)oard Effectiveness Review, the (cid:37)oard has 
assessed that the Committee membership is appropriate in providing 
challenge and oversight and that the Committee is operating effectively.

Discharging our 
responsibilities

The Committee reviewed its activities over the previous 12 months 
against its terms of reference and confirmed that it had fully discharged 
its responsibilities in line with its remit. The terms of reference are 
available at quilter.com.

Glyn Jones (C)

Tim Breedon

Suresh Kana

Ruth Markland

Cathy Turner

4/4

3/3

1/1

4/4

1/1

Attendance

The Chief Executive Officer and HR Director regularly attend Committee 
meetings, except when it would not be appropriate for them to do so.

Collaboration

The Chairman briefs the Board on key discussions and provides a written 
report to the Board, where feasible, after each meeting. The papers and 
reports presented to the Committee are made available to all Quilter 
Non-executive Directors.

Number of meetings

4

102

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Key areas of Committee focus

Board evaluation

Board and Board 
Committee succession 
planning

Executive succession 
planning and talent

Corporate Governance

Responsible business and 
responsible investing

Having completed a comprehensive, externally facilitated (cid:37)oard Effectiveness Review in 2019 the 
Committee concluded that a lighter touch, internally facilitated review would be appropriate in 
2020. Further details on the review can be found in the report on page 105 from Ruth Markland, 
our Senior Independent Director, who oversaw the review at the Committee’s request.

The Quilter Board membership is regularly reviewed by the Committee using a Board Skills and 
Experience Matrix to ensure that the Board has available to it all of the required skills to oversee 
the delivery of Quilter’s strategy and long-term success. In line with best practice, the Committee 
has also agreed the emergency succession arrangements for all of the key Board positions, 
including the Chairman of the Board, the Senior Independent Director and the Board Committee 
Chairs. Although strong candidates are available for each position on an emergency basis, it is 
still likely that some external recruitment would be required for permanent successors given 
that the Board is not large enough to carry a pool of succession candidates for all Board roles.

Following Dr Suresh Kana and Cathy Turner’s decision not to seek re-election at the AGM in 
May 2020, a search was commissioned to add at least one Non-executive Director to the Board. 
Details on the approach adopted to recruit Tim Breedon to the Board are set out overleaf. When 
Jon Little decided to step down from the Board in light of his other commitments, a further 
search was initiated, and the decision was taken to prioritise an ethnically diverse candidate who 
would also bring valuable additional skills and experience to the Board. The Board was also keen 
to continue to meet the target set by the Parker Review following the departure of Suresh Kana. 
That search resulted in the Committee recommending the appointment of Tazim Essani to the 
Board in March 2021. Further information on the diversity of our Board can be found on the 
following page.

The Committee has also spent considerable time evaluating the succession plans for senior 
executive roles. This included an assessment of the strengths of the senior management team, 
any development areas and the plans in place to address those. The succession plans sought to 
identify both emergency succession arrangements as well as longer-term succession candidates 
from those already in the business. In conducting the review of these succession plans the 
Committee carefully considered the need to create a pipeline of succession candidates that are 
suitably diverse in order to achieve the Group’s objectives in this area which are discussed in 
more detail overleaf. 

The Board has for some time held breakfast meetings with talented individuals within 
the organisation. Once it became clear that restrictions on face-to-face meetings would be 
relatively long lasting, the decision was taken to move these talent successions to be virtual 
meetings. We are very pleased to have reinstated this important link to potential future leaders 
of our business.

The Quilter Corporate Governance Framework places material emphasis on the role of our 
subsidiary Boards and during the year the Committee supported the changes to the Quilter 
Financial Planning and Quilter Investors Boards. Both Boards now have new Chairs and, given 
the importance to our customers of strong investment performance, the Quilter Investors 
Board has established an Investment Oversight Committee focused on reviewing investment 
processes, rules, controls and performance outcomes. 

The Group’s Subsidiary Governance Manual has been reviewed and an updated version was 
approved by the Committee early in 2021 that clarifies some of the reporting and escalation 
processes from subsidiary Boards.

The pace of change and strong interest in responsible business and responsible investing has 
continued to accelerate. A comprehensive review of the enhanced reporting now expected by 
investors has been conducted and the Group’s response to those new expectations can be 
seen in the Responsible Business report on pages 46 to 59. The Committee has also taken a 
keen interest in the development of a responsible investing strategy. Responsible investing is an 
area where Quilter sees significant potential to leverage Quilter’s unique skills. This is discussed 
in more detail in the Chief Executive Officer’s statement on page 26.

Quilter | Annual report 2020

103

 
 
 
 
Board Corporate Governance and 
Nominations Committee report 
continued

Key areas of Committee focus (continued)

The Board and the Board Corporate Governance and Nominations Committee have given 
significant consideration to the diversity of the (cid:37)oard and our workforce. A range of initiatives 
have been launched or reinvigorated during the year to drive diversity and inclusion across our 
businesses. These include establishing an Inclusion and Diversity Steering Committee chaired 
by Paul Feeney, creating networks for BAME and LGBT+ colleagues and the adoption of diverse 
short-lists for all roles at Executive Committee level and the executives who report to them. 
A range of family-friendly policies have been implemented during the year. Significant progress 
has been made in collecting comprehensive data on the diversity of our workforce to provide 
the basis for further targeted action. It is also pleasing that Quilter met its target of 35% of 
leadership roles being held by women. As at 31 December 2020, 26% of our senior management 
team, comprising the Executive Committee, the Company Secretary and their direct reports, 
are female but it is clear that more needs to be done.

The Board acknowledges that it has an obligation to both role-model and drive a culture of 
diversity and inclusion across Quilter. Consideration is given to the combination of skills, 
professional experience and personal qualities that are present and required on the Board in 
line with its stated intent to create a more diverse membership. All appointments are made on 
merit, taking account of the skills, experience, knowledge and background needed to ensure a 
rounded and effective (cid:37)oard. There is more to be done to ensure the continued diversity of the 
Board and creating opportunities for all is critical, so that a robust pipeline of diverse candidates 
is available. We will continue to strongly pursue these goals.

No members of the Quilter Board identify as having a disability or as coming from the LGBT+ 
community. As shown below, the composition of the Quilter Board meets the recommendations of 
the Hampton-Alexander Review for one third of its members to be women. This requirement has 
been met at all times since the Group’s Listing in June 2018 and three of the (cid:37)oard’s five Committees 
are chaired by female Directors. The Committee has carefully considered the recommendations 
of the Parker Review and the Board’s membership met its requirement to have at least one ethnically 
diverse Director on the Board up until May 2020, when Suresh Kana decided not to seek re-election 
at the 2020 AGM. The Board Corporate Governance and Nominations Committee launched a search 
in the second half of 2020 for a Non-executive Director who could bring valuable additional skills 
and experience to the (cid:37)oard from an ethnically diverse background. The Committee identified 
a short-list of candidates who met these criteria and recommended the appointment of Tazim 
Essani to the Board. The composition of the Quilter Board once again aligns with the Parker 
Review’s recommendations. During the year the Committee recommended to the Board the 
adoption of a new Board Diversity Policy which is available on the Quilter website at quilter.com.

Four of our seven Board leadership roles are held by women. The Board currently comprises 
nine white Directors and one ethnically diverse Director. 

Current female representation
on Board

Current female representation
in Board leadership roles

Current ethnic diversity
of the Board

40%

57%

10%

Female
Male 

Female 
Male 

Ethnically diverse
White 

(cid:37)oard leadership roles are the Chairman, Senior Independent Director and Chairs of our five (cid:37)oard Committees.
Data as at 10 March 2021. 

Board diversity 
and inclusion 

Read more in 
the Responsible 
Business Report
Pages 52 and 53

104

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Board effectiveness review

Ruth Markland
Senior Independent Director

The 2019/20 Board 
effectiveness review 
concluded that our Board 
and Committees are fully 
effective.

2019/20 effectiveness review and action plan 

Having overseen the externally facilitated (cid:37)oard effectiveness 
review in 2019 the Board Corporate Governance and 
Nominations Committee also asked me to oversee the 
internal review conducted in 2020. The review was conducted 
by way of a questionnaire which was completed by all Board 
members in September 2020 (except for Tim Breedon who 
had recently joined the Board, in June 2020) and a small 
number of executives who work closely with the Board. 
The questionnaire used for the evaluation was similar to 
that used for the 2019 review so that trend data was available, 
and it covered the performance of the Board, each of its 
Committees and individual Board members. 

I am pleased to report that the review concluded that the 
Board and the Board Committees continue to be fully 
effective in the discharge of their responsibilities. As usual, 
the review identified a small number of areas where 
improvements could be made. An action plan to address 
those areas of focus was agreed by the Board in November 
2020 and the Board Corporate Governance and Nominations 
Committee is monitoring the delivery of that action plan.

The (cid:37)oard effectiveness review included individual 
feedback for each Non-executive Director and the Chairman. 
Using the results of the review, the Chairman held one to 
one feedback meetings with each Non-executive Director. 
After consulting with my fellow Non-executive Directors as 
Senior Independent Director, I then provided the feedback 
to the Chairman.

2019/20 effectiveness review

The action plan approved by the Board in response to 
the Board effectiveness review included actions to: 

   Decision taken to conduct a lighter touch internally 
facilitated Board effectiveness review in 2019/20;

   Internally facilitated review conducted in September  

2020 by using a questionnaire designed to assess  
progress on issues identified in previous review;

   Review the management information and key 

performance indicators used to oversee the progress 
and performance of the business;

   Share additional reporting on succession planning 

with the Board;

   Outputs of the 2019/20 Board and Committee  
effectiveness review debated and agreed; and

   Introduce additional reporting from the subsidiary 

Boards; and

   Action plan to address issues identified and agreed  

   Share more granular reporting on culture at a 

by the Board and each Board Committee.

business level with the Board.

Quilter | Annual report 2020

105

 
 
 
 
Board Corporate Governance and 
Nominations Committee report 
continued

Refreshing the Board further strengthen the Board. Tim’s candidacy exceeded our 

criteria, as he also brings a strong risk, governance and investor 
lens to our Board. I am delighted we were able to appoint a 
director of Tim’s calibre and experience.

Q.   How did you approach the search?
An external executive search firm, Egon (cid:61)ehnder, was engaged 
to assist in the recruitment. Egon (cid:61)ehnder have no other 
connection to Quilter or any individual director. In line with our 
(cid:37)oard Diversity Policy, we only engage search firms who have 
signed up to the voluntary Code of Conduct on both gender 
and ethnicity. A long-list of candidates was identified by the 
search firm, from which a short-list of three candidates was 
interviewed in the first instance by me, our Chief Executive 
Officer and our HR Director. The candidates were 
independently ranked by us against the agreed selection 
criteria and there was unanimous agreement that Tim Breedon 
was the outstanding candidate based on his stronger track 
record in both the executive and non-executive phases of 
his career. Second round interviews were conducted with, 
amongst others, the Senior Independent Director, the 
Chairs of the Board Audit and Board Risk Committee, and 
independent references were taken up by the Chairman. The 
Board Corporate Governance and Nominations Committee 
considered feedback from the interviews and the references, 
alongside an analysis of Tim’s other directorships to assess 
whether there were any conflicts of interest or any issues in 
terms of his ability to commit the appropriate time to Quilter. 
Having concluded that there were no impediments to the 
appointment, and that Tim’s skills and experienced mapped 
strongly to the vacancy, the Board Corporate Governance and 
Nominations Committee recommended Tim’s appointment 
to the Board for their approval.

Q.  How did you change your 

recruitment process to take account 
of remote working?

For the first time in my career, this entire search was conducted 
virtually. All the key decisions to commence the search and all 
the meetings between the short-listed candidates and the 
Directors were conducted by video conference.

Q.  How did you keep the whole Board 

informed on progress of the 
recruitment?

As Chairman, I kept the Board Corporate Governance and 
Nominations Committee informed on progress and briefed the 
Board in full on the process and the proposed appointment for 
their approval. A detailed Board paper and action plan were 
shared with the Board.

Glyn Jones
Chairman

Q.  How does the Board decide 
to appoint a new NED?

The Board Corporate Governance and Nominations 
Committee is responsible to the Board for ensuring that the 
Board composition is appropriate for the successful delivery 
of the Quilter strategy. As part of that responsibility, the 
Committee has agreed and reviews on a regular basis a Board 
Skills and Experience matrix which identifies the skills and 
experience that are required to deliver Quilter’s strategy and 
promote the long-term success of Quilter. Directors’ skills and 
experience are mapped to this matrix and this enables areas 
where further strength is required to be identified. The (cid:37)oard 
also considers Board composition as part of the Board 
Effectiveness Review which you can read more about on 
page 105 and is led by the Senior Independent Director, 
Ruth Markland.

Q.  Why did the Board need a new 

non-executive Director?

As stated in our 2019 Annual Report, when Cathy Turner and 
Dr Suresh Kana indicated their intention not to seek re-election 
to the Quilter Board at the 2020 Annual General Meeting, the 
Board Corporate Governance and Nominations Committee 
agreed that an external search should be conducted to identify 
at least one new Non-executive Director.

Q.   What skills and experience were 

you looking for?

The brief the Committee agreed was to conduct a search to 
find a candidate who could bring strong listed company CEO 
experience and ideally a track record as a strong independent 
Non-executive Director with public company experience to 

106

Quilter | Annual report 2020

 
i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Tim Breedon shares 
his thoughts on joining 
the Quilter Board

Tim Breedon
Independent Non-executive Director

Q.  How much did you know about 

Quilter before joining the Board?
As a result of my range of non-executive director roles across 
the UK financial services industry I was very aware of Quilter 
and its ambitions, and I had observed with interest the 
Company’s successful listing and its continued progress 
thereafter. I admired the entrepreneurial nature of the 
leadership team and the careful stewardship by the 
Chairman. It is a young and exciting business with a clear 
strategy and a strong sense of purpose.

Q.   Why did you want to join Quilter 
and what skills and attributes do 
you bring to the Board and Quilter?
Having been a CEO of a FTSE-100 company operating in the 
UK long-term savings market, I intend to bring challenge, 
advice and support to Quilter management on business 
performance and decision making, as well as working with my 
fellow Board members in developing strategy and overseeing 
the delivery of long-term success for Quilter. I particularly 
enjoy working with management teams to help them to 
identify and exploit competitive advantage to deliver strong 
and sustainable business growth.

Q.  Joining during a pandemic, 

how did you get to grips with 
your new role? 

It is testament to the Chairman, the Board and many Quilter 
colleagues that I have felt so warmly welcomed, particularly as 
due to pandemic restrictions, I have so far only been able to 
participate in person at the annual strategy day. Quilter have 
arranged access to secure technology that has enabled me to 
join meetings and hold calls via secure video conferencing. 
Whilst I miss personal interactions, this has been a good 
substitute for face-to-face meetings. 

Q.   How long did it take to complete 

your induction?

I was very impressed with the speed, thoroughness and 
quality of the induction Quilter arranged for me. It was 
detailed and well-structured. Corporate Secretariat made 
arrangements for the induction and necessary background 
materials to be made available in a secure Board portal, and 
I met Quilter Executives by video conference or telephone. 
The induction was completed promptly, and I am still learning 
about Quilter. It takes time to get to know a business and I am 
conscious that there is always more to do.

Q.   What are your first impressions 
of Quilter and its culture?

Despite Quilter’s long history as part of the Old Mutual Group, 
it only became a listed company in 2018. As a result it is a 
maturing business, changing rapidly, and is still working 
towards fully achieving its desired business shape. It has 
grown quickly through acquisition and there are 
opportunities to further integrate the various elements and 
to bring the Quilter Group together more. Rebranding is an 
important part of this and the exercise is well underway to 
symbolically demonstrate a cohesive group. Now that the 
new investment platform is operational, the Group has what 
it needs to move forward rapidly to grasp the strategic 
opportunities ahead.

Q.   What do you see as the main 
opportunities and challenges 
for Quilter?

The financial services industry has been under pressure for 
some time now, challenged by global political and economic 
change, market instability, increased regulatory scrutiny and 
now a global pandemic. The external headwinds are strong, 
but I am confident that Quilter is poised to deliver on its 
potential and I am excited about how I can support 
management on the next stage of their journey.

Quilter | Annual report 2020

107

 
 
 
 
Board Audit Committee 
report

Dear Shareholder,
An important role for the Committee 
throughout the year, and particularly during 
the COVID-19 pandemic which required the 
vast majority of our employees to perform 
their roles remotely, has been providing 
robust governance over the Group’s 
financial reporting. During the year, we took 
the decision early to defer the release of the 
Group’s 2020 interim results by a few days 
in order to ensure we could deliver a robust 
set of financial statements, notwithstanding 
the remote working environment and 
the recent change of external auditors. 
Maintaining the transparency and integrity 
of our financial statements is of vital 
importance to our stakeholders, 
particularly in a period of significant 
market volatility. 

I reported to you last year that, following 
a detailed and comprehensive audit tender 
process, the Board would be 
recommending the appointment of PwC as 
the new auditors for the Group. PwC were 
formally appointed by our shareholders 
as the Group’s statutory auditors at the 
Annual General Meeting in May 2020. 
During the year, the Committee has closely 
monitored the auditor transition process 
and the preparations for and delivery 
of PwC’s first audit to ensure their 
effectiveness. Further details on the 
external auditor transition process are 
set out on page 115.

There is further information on how the 
Committee has discharged its role over the 
coming pages covering the following areas:

The Committee has continually assessed 
the state of the financial control 
environment throughout the year and is 
content that remote working has not led to 
any significant weakening in the operation 
of our internal financial controls and the 
controls over our financial reporting. 
We have continued to oversee the 
modernisation and optimisation of the 
finance function and the preparations 
for the migration to a new General Ledger. 
The first phase of the migration has now 
completed safely and as the work 
progresses the Group will adopt 
increasingly automated controls providing 
real time assessments of control 
effectiveness. The Committee also spent 
time reviewing the impact of the Platform 
Transformation Programme on financial 
controls and reporting. Further information 
on how the Committee has overseen the 
Group’s financial reporting and controls can 
be found on pages 109 to 112.

Another area where the pandemic required 
us to adapt our usual approach was the 
work of the Internal Audit function. The 
Committee took swift action following the 
onset of the pandemic to agree a revised 
set of priorities and a more flexible planning 
approach for the Internal Audit function, 
further details of which are set out on 
page 113.

Key areas of Committee focus:
 – Internal Audit; 
 – external audit, including the auditor 

transition; and

 – committee governance

Looking ahead, the Committee will be 
focused on ensuring that the completion 
of the Platform Transformation Programme 
and the launch of the new General Ledger 
are fully leveraged to continue enhancing 
the Group’s internal financial control 
environment. The Committee has set 
a clear set of objectives for what will be 
needed to achieve these enhancements, 
informed by the Controls Maturity 
Assessment conducted by PwC, and I will 
report on the progress made in the 2021 
Annual Report.

I would also like to take this opportunity 
to thank Suresh Kana, who served on the 
Committee until May 2020, for his insightful 
contributions during his appointment.

George Reid
Chair

108

Quilter | Annual report 2020

George Reid
Chair

Committee activity

Review of financial
statements 26%
Internal controls 18%
Internal and external
audit 31%
Regulatory compliance 
and reporting 19%
Governance 6%

Committee meetings 
attended/eligible to attend

George Reid (C)

Rosie Harris

Suresh Kana

Ruth Markland

13/13

13/13

5/5

13/13

Number of meetings

13

 
i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Key areas of Committee focus

Key area

Purpose

Financial reporting

The Group’s accounts are prepared in accordance with International Financial Reporting 
Standards ((cid:522)IFRS(cid:523)). Certain Alternative Performance Measures ((cid:522)APMs(cid:523)) are used to add insight 
for Quilter’s shareholders on the performance of the business, aligned with how the business 
is managed. The Committee has continued its close scrutiny of APMs to ensure that where 
they are used they are clearly highlighted and explained and are reconciled to statutory 
performance measures.

The Committee has reviewed the Accounting Policies and confirmed that they are appropriate 
to be used for the 2020 financial statements. Specific attention has been paid to the disclosures 
made in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, 
particularly the assumptions regarding provisions and unrecognised deferred tax assets. During 
the year, the Committee has also reviewed the preparations for IFRS 17 Insurance Contracts and 
its impact on the Group despite the delays in the implementation of this new standard and the 
reduced impact following the sale of the Quilter Life Assurance business. 

The Committee has reviewed the basis of accounting, the appropriateness of adopting the going 
concern basis of preparation for the Group’s financial statements, and the Group’s viability 
statement. In doing so, the Committee considered: 

 – the Group’s three-year Business Plan which includes consideration of the economic, regulatory, 

competitive and risk environment; and

 – the latest Group own risk and solvency statement, and internal capital adequacy assessment 
process, which cover current and future risk profile and solvency positions based on a series 
of core assumptions, stress tests and scenario analysis. 

The form of the viability statement and period covered by the statement were specifically 
considered by the Committee. The Committee was satisfied with the content of the viability 
statement and supported the time period of the statement which aligns with the three-year 
internal financial planning cycle. The viability statement can be found on pages 78 and 79.

The Committee reviewed and challenged the Interim Results for 2020 and the Annual Report 
for 2020, which included consideration of changes to comparative amounts of the consolidation 
of funds and the associated disclosures. The Committee’s reviews for the interim and full year 
were supported by analysis and discussion provided by the Finance and Actuarial teams, 
reports from the second line of defence on the solvency position and the reports of the 
external auditors. Having considered these inputs and the Committee’s own independent 
judgements, the Committee recommended to the Board the approval of each of these sets 
of financial statements. 

Quilter | Annual report 2020

109

 
 
 
 
Board Audit Committee report 
continued

Key areas of Committee focus (continued)

Key area

Purpose

Accounting judgements 
and estimates 

The Committee has continued to receive good support from the Quilter finance team which has 
enabled it to consider in advance of the end of each reporting period the approach that it would 
wish to take on the key areas of (cid:77)udgement and estimates that impact the financial results. 

Critical judgements and estimates, including principal estimates, deliberated by the Committee 
during review of the 2020 Annual Report included the treatment of:

Area of focus

Issue/role of the Committee 

Lighthouse pension transfer advice provision 
and insurance recovery asset

Deferred tax assets

Impairment of goodwill

The Committee reviewed the basis for 
recognition of the provision, in accordance with 
the requirements of IAS 37, and the estimates 
involved in the calculation. The information 
available as part of the skilled persons review, 
and how this was applied in the calculation of 
the provision by management, was considered 
and challenged where appropriate. The 
Committee also reviewed the judgements 
applied by management in determination of the 
insurance recovery asset. The disclosures in the 
Group’s financial statements were reviewed to 
ensure compliance with IFRS.

The approach taken for the recognition of 
deferred tax assets, and the estimations and 
assumptions used, were reviewed by the 
Committee, along with consideration of the 
associated disclosures in the Group’s financial 
statements for compliance with IAS 12.

The Committee considered the appropriateness 
of the key assumptions underpinning the 
Group’s goodwill impairment testing, and the 
sensitivities modelled, which required more 
focus this year in light of the COVID-19 and the 
impact on the Group. The Committee reviewed 
the associated disclosures in both the half-year 
and year-end financial statements to ensure 
these met the requirements under IFRS, and 
provided the relevant information to the 
readers of the financial statements.

In addition, the key performance indicators to be included in the Strategic Report were approved 
by the Committee and the Committee is content that they have been appropriately disclosed. 
Many of the above key areas of judgement and estimates are also commented on by PwC in 
their Auditor’s Report on pages 1(cid:24)8 to 1(cid:25)(cid:25). The Committee has carefully reviewed the contents 
of PwC’s opinion and considers that PwC’s views on these areas are closely aligned with those 
of the Committee.

110

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Key areas of Committee focus (continued)

Report

Purpose

Fair, balanced and 
understandable 

There has been a comprehensive review process to support the Board in reaching its conclusion 
that the 2020 Annual Report is fair, balanced and understandable and whether it provides the 
necessary information for shareholders to assess the Group’s position, performance, business 
model and strategy.

The process which enabled the Committee to reach this conclusion included: 
 – the production of the 2020 Annual Report, managed closely by the Chief Financial Officer, 
with overall governance and co-ordination provided by a cross-functional team of senior 
management; 

 – cross-functional support to drafting the 2020 Annual Report which included input from 
Finance, Risk, Investor Relations, Corporate Secretariat, HR and wider business leaders(cid:30) 

 – a robust review process of inputs into the 2020 Annual Report by all contributors, to ensure 

disclosures were balanced, accurate and verified, with further comprehensive reviews by senior 
management; 

 – a review by the Company Secretary of all Board and Board Committee minutes to ensure all 

material matters considered at Board-level meetings have been disclosed in the 2020 Annual 
Report; 

 – a specific management paper detailing the 2020 year-end assessment of fair, balanced and 

understandable; 

 – a formal review by the Board Audit Committee of the draft 2020 Annual Report in advance 

of final sign-off; and 

 – a final review by the Quilter Board of Directors. 

Having carefully reviewed and considered all relevant information, the Committee is satisfied 
that, taken as a whole, the 2020 Annual Report is fair, balanced and understandable and has 
confirmed that to the Quilter (cid:37)oard. This process was also undertaken in respect of the Group’s 
2020 Interim Results to ensure that, taken as a whole, based on the information supplied to it 
and challenged by the Committee, they were fair, balanced and understandable, and the 
Committee advised the (cid:37)oard to that effect. 

Quilter | Annual report 2020

111

 
 
 
 
Board Audit Committee report 
continued

Key areas of Committee focus (continued)

Report

Purpose

Controls over financial 
reporting 

Alternative performance 
measures

CASS compliance 

Regulatory reporting

Whistleblowing 

112

Quilter | Annual report 2020

As reported in prior years, there is an ongoing programme of work to strengthen and enhance 
the internal financial controls and governance framework that underpins the Group’s financial 
reporting. This work is being closely monitored by the Committee and management have 
continued to report on the state of the financial control environment throughout the year, which 
has shown that good progress is being made towards delivering the enhancements required. 
The Committee has also spent time overseeing the work to ensure adequate controls on the 
financial reporting processes for the new investment platform and reviewing the state of the 
financial control environment within the Quilter Financial Planning business, given the recent 
restructure of its finance team and the number of acquisitions undertaken in recent years. 

The Committee has received frequent updates from the Head of Financial Control on how 
the Finance function has operated and maintained the effectiveness of financial controls and 
financial reporting processes given the national lockdowns, which required the ma(cid:77)ority of 
finance staff to work remotely. To ensure sufficient focus on this key area of work, we agreed 
to defer our 2020 interim results announcement by a few days. We have also analysed the 
increased risk of fraud driven by the pandemic and the mitigating actions taken in response.

As part of the process to review and challenge the 2020 financial statements, the Committee 
considered the processes and controls in place to provide reasonable assurance regarding the 
reliability of financial reporting and the preparation of the financial statements. The Chair of the 
Committee has reported on this to the Board.

The Committee understands that APMs are an area of particular focus in terms of the 
understanding of the Group’s financial statements by shareholders and other stakeholders and 
the enhancements made to these disclosures in 2019 have continued to be refined in the 2020 
Annual Report. Careful consideration has been given to these disclosures and the Committee 
is satisfied that they provide clear definitions and explanations of the APMs, as well as a 
reconciliation of the APMs to the nearest IFRS measure which has been cross-referenced 
to Quilter’s KPIs. See pages 270 to 273.

Monitoring compliance with the CASS rules, and the programmes of work under way in each 
of the regulated businesses to maintain appropriate CASS controls, is crucial to protecting the 
interests of Quilter’s customers. The Committee performs this role by reviewing reports on 
CASS produced by the internal and external auditors, the second line of defence and by 
management. This has included overseeing the impact of our Platform Transformation 
Programme on our CASS processes and controls and the performance of third-party suppliers 
who manage the CASS arrangements in certain parts of the business. We have also heard from 
management about the challenges faced by the businesses in maintaining the CASS control 
environment while operating remotely due to the pandemic and the actions taken to mitigate 
any increased risk.

During the year, the Committee reviewed, challenged and recommended to the Board for 
approval the Solvency II reporting for the Quilter businesses for the 2019 year end and, in doing 
so, were supported by detailed reports on the disclosures from management, the second line 
Actuarial function and the external auditors. The Committee also scrutinised and approved the 
methodology and assumptions to be applied to the 2020 year-end Solvency II reporting and 
reviewed the 2020 year-end consolidated Capital Requirements Directive IV disclosures for 
the Group ahead of their publication on Quilter’s website.

Quilter is committed to ensuring a transparent and open culture that encourages employees 
to speak up. To support this, it is important that the Group’s whistleblowing arrangements are 
not only effective in practice but are seen by staff and all other stakeholders as being fair, safe, 
rigorous and effective in addressing concerns. During the year, the Committee has reviewed the 
effectiveness of the whistleblowing processes in place across the Group and reviewed the 
details of specific whistleblowing complaints and the outcome of management’s investigations. 
The Committee has continued to encourage management to embed a (cid:522)speak up(cid:523) culture in the 
organisation and to find new ways to test that issues are being raised by our people. The Chair 
of the Board Audit Committee is the Whistleblowing Champion for Quilter.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Key areas of Committee focus (continued)

Report

Internal Audit 

External audit

Purpose

Quilter’s shareholders and customers can take comfort that the Group’s Internal Audit function 
is mature, appropriately focused and functioning efficiently and effectively. The Chief Internal 
Auditor attends all meetings of the Committee and has reported in detail on the work 
conducted by Internal Audit including key statistical analysis on the results of its work, the pace 
at which management are addressing any issues raised and the extent to which management 
have self-identified the issues being raised by Internal Audit. This is an important indicator of the 
maturity of the Group’s control framework and this measure is tracked closely. The Committee 
has regular meetings with the Chief Internal Auditor without management present, in 
accordance with best practice.

In March 2020, an urgent review was undertaken to identify measures that the Internal Audit 
function could reasonably take to ensure the welfare of its staff and to support the wider 
business in navigating the CO(cid:57)ID-19 pandemic, whilst maintaining its effectiveness and 
delivering on its mandate. The Committee approved a revised Internal Audit plan, which involved 
postponing several non-critical reviews and introducing new audits specifically driven by the 
pandemic, including the remote working control environment. We reviewed the Internal Audit 
plan on a regular basis, to ensure it remained flexible and appropriate throughout the year given 
the fast-moving situation. 

In November 2020, the Committee approved a risk-based Internal Audit plan for 2021 focused 
on the most critical areas for the Quilter business and supporting the delivery of good customer 
outcomes. The Internal Audit plan was formulated to complement the second line of defence’s 
plan for 2021 and was reviewed in conjunction with the Board Risk Committee. The Chief 
Internal Auditor has confirmed that he has the necessary resources to deliver the 2021 Internal 
Audit plan, including having contingency resources in place to ensure that they can respond to 
unexpected demands. 

It had been Quilter’s intention to commission an external quality assessment of the Internal 
Audit function in 2020, however, in light of the pandemic, the Committee took the decision 
to defer the external quality assessment to 2021. Instead, the Committee commissioned an 
internal review of the effectiveness of the Internal Audit function, which sought views from 
key stakeholders across our businesses and central functions. The outputs of this review 
demonstrated that the Internal Audit function is operating effectively, is highly regarded by 
senior management and makes a strong contribution to the control environment across the 
Group. The function scored highly for independence, objectivity and integrity. The Internal Audit 
function was encouraged to continue to enhance its use of technology to maximise efficiency 
in delivery of its work.

It is crucial that Quilter benefits from a robust, high-quality external audit conducted by an 
independent and professional audit firm. To this end, the Committee has received regular and 
detailed reports from the external auditors throughout the period, covering all aspects of their 
work. The Committee has also assessed management’s response to the external auditors’ 
internal control findings. In advance of each (cid:37)oard Audit Committee meeting, the Chair of 
the Committee meets separately with PwC’s lead audit partner, Mark Pugh, to ensure the 
discussions at Committee meetings are appropriately focused, challenging the conclusions 
reached by management as well as the audit work performed thereon. 

Following the external audit tender conducted in 2019, PwC were formally appointed as 
the Group’s statutory auditors for the 2020 financial year by shareholders at the 2020 AGM. 
Mark Pugh has been the lead audit partner for Quilter plc since PwC’s appointment. Details 
of the auditor transition process are provided on page 115. 

The Company has complied with the Statutory Audit Services for Large Companies Market 
Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee 
Responsibilities) Order 2014 for the financial year ended 31 December 2020.

Quilter | Annual report 2020

113

 
 
 
 
Board Audit Committee report 
continued

Key areas of Committee focus (continued)

Report

Purpose

Auditors’ remuneration

Fees payable for audit services

(cid:581)Group and Parent Company

(cid:581)Subsidiaries

Additional fees payable to KPMG LLP related to the prior year audit of the Group

Total fees for audit services

Fees for audit-related assurance services

Total Group auditors’ remuneration – continuing operations

Total Group auditors’ remuneration – discontinued operations

Total Group auditors’ remuneration

Year ended 
31 December 
2020
£m

Year ended 
31 December 
2019
£m

1.8

2.8

0.7

5.3

1.(cid:25)

6.9

–

6.9

1.0

2.7

–

3.7

1.1

4.8

0.2

5.0

PwC partners and staff have attended all meetings of the Committee since their appointment, 
withdrawing only when their attendance would be inappropriate. PwC have contributed strongly 
to discussions on Quilter’s financial statements, the financial reporting processes and key 
accounting and reporting judgements. In November 2020 a survey was conducted by the 
Company Secretary of management’s initial assessment of PwC’s performance across a range 
of criteria including independence, effectiveness, ob(cid:77)ectivity, industry knowledge, efficiency and 
service quality. The results of that survey concluded that PwC had performed strongly and 
delivered an effective service overall for the Group since appointment, including managing the 
transition to taking on the audit in spite of the challenges of remote working. Accordingly, PwC 
are recommended for re-appointment by shareholders at Quilter’s AGM to be held in May 2021.

Committee governance

The Board Audit Committee currently comprises three independent Non-executive Directors. The Chair of the Committee has 
recent and relevant financial experience and the Committee as a whole has competence relevant to the business sectors that 
Quilter operates within. Details of the skills and experience of the Committee members can be found in their biographies on 
pages 8(cid:24) to 87.

Evaluation

Discharging our 
responsibilities

Attendance

Collaboration

As part of the 2019(cid:18)20 (cid:37)oard Effectiveness Review, the (cid:37)oard has assessed that the 
Committee membership is appropriate in providing challenge and oversight and that the 
Committee is operating effectively.

The Committee reviewed its activities over the previous 12 months against its terms of 
reference and confirmed that it had fully discharged its responsibilities in line with its remit. 
The terms of reference are available at quilter.com.

Other Non-executive Directors have attended certain meetings of the Committee throughout 
the year, in the interests of assisting with their own responsibilities and understanding the 
work of the Board Audit Committee.

The Chair briefs the Board on key discussions and provides a written report to the Board after 
each meeting. The papers and reports presented to the Committee are made available to all 
Quilter Non-executive Directors. The Committee has continued to work collaboratively and 
effectively with other (cid:37)oard Committees, particularly the (cid:37)oard Risk Committee and the (cid:37)oard 
Technology and Operations Committee, on matters such as the oversight of the Platform 
Transformation Programme and the approval of the Internal Audit plan. The Committee also 
relies on, and is supported by, the detailed work conducted by the Audit Committees and 
Governance, Audit and Risk Committees of Quilter’s significant subsidiaries.

114

Quilter | Annual report 2020
Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Auditor transition

PwC provided regular updates to the Committee on the status of the external auditor transition process throughout 2020. 
Despite some challenges presented by the COVID-19 pandemic which required most of the transition process to be 
completed remotely, all required work was completed on time with close collaboration from the outgoing auditors, KPMG.

Key elements of the transition process:

Independence

Shadowing

Walk-throughs

Audit planning

Controls Maturity Assessment

It was confirmed to the Committee that all non-audit assignments conducted by 
PwC in 2019 had been completed and PwC confirmed their independence with 
effect from 1 January 2020.

PwC started to attend the meetings of the Quilter Board Audit Committee 
alongside KPMG in December 2019 and once their independence was confirmed 
they commenced the review of KPMG’s audit files and working papers so they 
could effectively shadow KPMG through the 2019 year-end audit process. 

Full virtual walk-throughs of key business processes were conducted and meetings 
held with management to enable PwC to gain a full understanding of the Quilter 
business and its control environment in preparation for their first interim results 
review and statutory audit.

PwC presented their audit plan for the 2020 year-end statutory audit 
to the Committee, including the timetable, significant risks and the impact 
of the pandemic.

As was agreed as part of the Audit Tender process, PwC used the information 
gained through the audit transition process to provide the Committee with 
a benchmarking Controls Assessment across the Group. While overall this 
confirmed that the Group’s control environment is within PwC’s experience 
range for similar financial services firms, helpful guidance was provided 
on areas where improvements could be made. 

Quilter | Annual report 2020

115

 
 
 
 
Board Risk Committee report

Despite a challenging external environment, 
Quilter has continued to successfully deliver 
the internal changes necessary to bring our 
business to full maturity, although there is 
still more to do. Since Listing, our business 
has continued to evolve and we were able 
to capitalise on the growing maturity of the 
embedded Risk Framework to focus our 
time on key business risk issues, such as 
oversight of our advice business. At the 
request of the Board, this Committee 
has taken on additional scrutiny of how 
our advisers do business and, when 
appropriate, we will invite the Chairs 
of the Governance, Audit and Risk 
Committees of our Business Oversight 
Boards to join our meetings to ensure 
the Board Risk Committee is well informed 
and cognisant of their view of their risk 
profile. Our scrutiny will provide comfort 
to our stakeholders that we manage this 
business for our customers in a safe and 
controlled manner. 

We were pleased to welcome Tim Breedon 
to the Committee in June 2020. Tim brings 
great experience and highly relevant skills 
to our membership.

Rosie Harris
Chair

Dear Shareholder,
During 2020 the Committee maintained 
focus on the impact of macro-economic 
developments and geopolitical issues on 
the delivery of the Business Plan. This 
included the UK withdrawal from the EU 
and the US Presidential elections. However, 
the year was also dominated by the sudden 
and extreme impact of the global COVID-19 
pandemic. All of these factors created 
headwinds for net client cash flow, 
profitability and margins.

As you can read in more detail on the 
following pages, the pandemic rapidly 
changed the nature and scale of some 
of Quilter’s key risks, particularly our 
operational risks as colleagues moved to 
work remotely, the risks for our people of 
this new way of working, and capital and 
liquidity risks resulting from more volatile 
market conditions. 

The Group’s conservative risk appetite has 
been maintained and despite the stresses 
of market volatility and lack of consumer 
confidence there have been no breaches 
of targets. We continued close scrutiny of 
capital and liquidity appetites and no issues 
have arisen.

The growing maturity of the Risk 
Framework has helped minimise the risks 
of moving rapidly to a remote working 
environment. The emphasis given by 
management to staff and client safety, 
both physical and digital, was clear to the 
Committee. We were assured by the work 
of both the Risk function and Internal Audit 
that the risk and control framework 
remained robust through the year.

Unsurprisingly, as the scale and longevity 
of the pandemic became clear, we agreed 
changes to the plans of the Risk and 
Compliance teams to enable them to 
concentrate more effort on the most 
important risks. We postponed our plans to 
review the effectiveness and performance 
of the risk function to enable our colleagues 
to focus on the changing risk profile. I am 
pleased to confirm that despite only 
meeting once in person in 2020, and 
holding the rest of our meetings by 
telephone and video conference, the 
Committee has concluded as part of the 
2019(cid:18)20 (cid:37)oard effectiveness review that 
we discharged our responsibilities in full.

116

Quilter | Annual report 2020

Rosie Harris
Chair

Committee activity

Top risk oversight 54%
Risk appetite and profile, 
including capital and 
liquidity 20%
Change programmes 13%
Regulatory change 13%

Committee meetings 
attended/eligible to attend

Rosie Harris (C)

Tim Breedon

Moira Kilcoyne

Paul Matthews

George Reid

9/9

5/6

9/9

9/9

9/9

Number of meetings

9

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Key areas of Committee focus

Report

Purpose

Being operationally 
resilient and supporting 
our stakeholders during 
a global pandemic

Managing Quilter’s 
top risks

Since March 2020 when the far-reaching implications of the pandemic became clear, this 
Committee has focused on supporting management as they rapidly mobilised colleagues to 
work remotely whilst ensuring Quilter was open for business. This demanded a careful balance 
to manage colleague and adviser wellbeing, whilst ensuring that the necessary internal controls 
were operating effectively given the change in working practices and also to ensure the new 
risks arising from remote working were mitigated. I am pleased to report that there is no 
evidence of any degradation of controls during this period. Indeed, we have strongly encouraged 
management to capitalise on the efficiencies that remote working necessitated and embed 
improved business practices in a controlled manner. We challenged management through the 
year to consider any adverse impact on the risk profile.

As the external market conditions became more volatile, the Committee continued to monitor 
closely the Group’s capital and liquidity and I am pleased that we remained strongly capitalised, 
with liquidity remaining within risk appetite. 

A further important role of the Committee is to ensure that the control framework is strong and 
that the Group’s stress and scenario planning is comprehensive and robust. During the year, the 
Committee debated extensively the scenarios used for our stress testing and approved these 
on behalf of the Board. The parameters for the own risk and solvency assessment (“ORSA”) and 
internal capital adequacy assessment process (“ICAAP”) reports were scrutinised and adjusted 
in response to the tightening of market conditions during the year so that they were performed 
on a more prudent basis. 

In addition to the heightened risks for our people, we were mindful that our business is 
reliant on the services provided by other suppliers who were also likely to be impacted by the 
pandemic. To that end, we received regular updates on the performance of our third-party 
suppliers, in collaboration with the Board Technology and Operations Committee who monitor 
our most important technology suppliers, to ensure that our business was operationally resilient 
and secure.

Our Chief Executive Officer and Chief Risk Officer update us at least quarterly on their views of 
the top risks facing Quilter, how management are mitigating these risks and how this compares 
to agreed risk appetite. This enables us to commission further in-depth updates on topics of 
material interest. For our top risks we asked business leaders for their analysis of the key risk 
issues and invited comments from our second line risk team, colleagues in internal audit and our 
external auditors. (cid:58)here our risk profile was heightened, for example on operational resilience 
for our systems and controls or our people as a result of the pandemic, we received more 
frequent updates to keep pace with the fast-moving environment. 

The Board asked us to act on its behalf to apply additional scrutiny on Advice Risk in Quilter 
Financial Planning. We have asked to receive half yearly updates on the work to enhance the 
control environment in that business. (cid:58)e will also continue to oversee management’s efforts 
to embed the lessons learnt from recent acquisitions. 

The welfare and wellbeing of our people this year especially has been an area of increased focus 
and we were pleased to hear how the highly visible leadership provided by management during 
the pandemic was welcomed by colleagues, as evidenced in colleague engagement scores. We 
have kept a close watch on these scores and the reasons why people leave Quilter and have 
asked HR to keep this under scrutiny. 

In addition to the Chief Risk Officer’s report, we were further informed on conduct and risk 
culture by reports from the compliance team including their annual plan. We continue to receive 
regular updates on our engagement with UK and International regulators.

A key part of our role is ensuring as part of the annual planning process that our risk and 
compliance teams remain suitably resourced and independent from first line management and 
we remain confident that this is the case. In line with best practice, we have endorsed a new risk 
team charter which will be rolled out in 2021. 

Quilter | Annual report 2020

117

 
 
 
 
Board Risk Committee report 
continued

Key areas of Committee focus (continued)

Report

Purpose

Monitoring and 
assessing emerging 
risks 

An important part of the Committee’s work is monitoring new and emerging risks and ensuring 
management are clear on the potential timing, scale and impact of these risks and how they can 
be mitigated. During the year the Committee received regular reports on emerging risk issues, 
and any changes to actual and potential legal and regulatory risk. 

At the request of the Committee, management have analysed Quilter’s preparedness for 
a negative UK interest rate scenario and we continue to keep a watching brief on this matter. 
The reporting on emerging risks has been enhanced and the Committee has specifically 
identified managing the impact of climate change risk and ESG to our risk radar and asked 
management to update us on these topics in 2021. In addition, we are monitoring the impact 
for Quilter of the changes in the prudential regime for investment firms. 

Committee governance

The (cid:37)oard Risk Committee currently comprises five independent Non-executive Directors. Details of the skills and experience 
of the Committee members can be found in their biographies on pages 85 to 87.

Evaluation

Discharging our 
responsibilities

Attendance

Collaboration

As part of the 2019(cid:18)20 (cid:37)oard Effectiveness Review, the (cid:37)oard has assessed that the 
Committee membership is appropriate in providing challenge and oversight and that the 
Committee is operating effectively.

The Committee reviewed its activities over the previous 12 months against its terms of 
reference and confirmed that it had fully discharged its responsibilities in line with its remit. 
The terms of reference are available at quilter.com.

The Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Risk Officer 
and Chief Internal Auditor regularly attend Committee meetings. The Group Chairman and, on 
occasion, other Non-executive Directors attended Committee meetings for matters as desired.

The Chair briefs the Board on key discussions and provides a written report to the Board after 
each meeting. The papers and reports presented to the Committee are made available to 
all Quilter Non-executive Directors. The Chair continues to collaborate with other Committee 
Chairs to ensure that issues are given appropriate scrutiny. The collaboration is supported 
by the cross-committee membership with the Board Audit Committee, Board Technology 
and Operations Committee and the Board Remuneration Committee.

118

Quilter | Annual report 2020

Board Technology and 
Operations Committee report

Dear Shareholder,
When I wrote to you last year, I stated that 
our number one priority for 2020 was to 
deliver the new investment platform safely 
for our advisers and customers. At that 
time, no one predicted that 2020 would 
be dominated by the impacts of a global 
pandemic which has touched so many 
people in so many ways. Despite the 
additional challenges this brought to our 
migration programme, which are described 
in more detail overleaf, I am pleased to 
report that our new platform is in place 
and operating successfully. Since year end, 
and despite another national lockdown, 
remaining clients have been migrated 
successfully to the new investment 
platform. This is a significant step forward 
in enabling the delivery of our business 
strategy and delivered in a way that 
minimised disruption for our advisers 
and customers. (cid:58)e will, of course, reflect 
on what lessons from this programme we 
can apply to other projects and oversee 
management as they close down the 
legacy platform. 

As the impacts of the pandemic became 
clear during Spring and Summer 2020 the 
Committee adapted its areas of focus to 
support management during these 
unprecedented times. Our immediate 
priority shifted to ensuring that colleagues 
could work safely and securely, whilst 
continuing to support our customers. 
We ensured that appropriate controls were 
in place to give us comfort that this was 
indeed the case. I am, however, pleased 
to report that once the immediate impacts 
of COVID-19 were understood and Quilter’s 
people mobilised to work largely remotely, 
our Committee’s oversight continued as 
planned albeit with renewed focus on 
operational resilience and data security. 

Moving forwards, the Committee is focused 
on supporting management in delivering on 
the opportunities for Quilter that arise from 
the transformation of our technology base. 
During 2021, we expect that many of the 
planned improvement and change 
programmes will be delivered. This will 
transform Quilter’s technology estate to be 
more simple, modern, agile, resilient and a 
true enabler for our business and for our 
colleagues, customers and advisers. 

I would like to end by extending on behalf 
of the Committee and the Board my thanks 
for the unstinting effort and dedication of 
the many colleagues, in Quilter and at our 
external technology partners, in achieving 
so much during such a challenging year. 

Moira Kilcoyne
Chair

Moira Kilcoyne
Chair

Committee activity

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

IT security 12%
Operational resilience 11%
Platform Transformation 
Programme 49%
Other change 
programmes 10%
Technology and operations 
strategy 18%

Committee meetings 
attended/eligible to attend

Moira Kilcoyne (C)

Rosie Harris*

George Reid

14/14

12/14

14/14

*   The Committee meetings that Rosie 
Harris was unable to attend during 
the year were additional meetings 
arranged at short notice.

Number of meetings

14

Quilter | Annual report 2020

119

 
 
 
 
Board Technology and Operations Committee report 
continued

Key areas of Committee focus

Report

Purpose

Platform Transformation 
Programme

Cyber and IT security

Operational resilience

The Committee has spent much of its time providing oversight to the transformation 
programme to introduce our new platform for customers and advisers. Any technology change 
is challenging, and to deliver this during the extraordinary period of remote working is quite 
exceptional. Alongside business updates we heard from risk and internal audit who worked 
to challenge management and ensure that the best result for our advisers and customers was 
achieved. As in prior years, we worked collaboratively with our technology partner, FNZ, and 
were supported by Deloitte in managing this complex and challenging programme. 

Given the importance of this programme to Quilter, we were joined on occasions by other 
Board members, and the meetings were held jointly with our Quilter Investment Platform Board 
Non-executive Directors. We closely monitored progress and challenged management to ensure 
that the programme of change could be delivered safely. We were delighted when the second 
phase of advisers and customers migrated over the period of 26 to 29 November 2020, resulting 
in approximately 360,000 customers and around 80% of the total assets being administered on 
the new platform technology. The remainder of our clients and customers, including more than 
5,000 advisers holding around £14 billion of assets, were moved successfully over the period 
26 to 28 February 2021.

You can read more about the programme and the impacts for our business on pages 44 and 45 
of the Strategic Report. 

Underpinning our technology and operational strategy is the need to keep our systems secure 
and our data safe. Reflecting the extraordinary nature of 2020, many companies have seen an 
increase in the levels of attempted fraud, including phishing attempts for staff and cloned firms 
for customers. During the year, we received regular updates on our information security 
improvement programme and our infrastructure transformation programme. We welcomed 
management’s vigilance and continued focus on protecting our customers and our clients. 
The enhancements made to our control measures have included the issuing of new technology 
and tools to all staff to enable them to work securely whilst being remote, alongside enhanced 
guidance and training to colleagues to support remote working. We have also reviewed progress 
of the plans to further simplify our website domain strategy and will keep this under close 
scrutiny in 2021. Given the interdependency between operations and technology during the 
year, we asked management to ensure close co-ordination of these activities.

Given the ongoing external threat, IT and cyber security will remain one of Quilter’s top risks 
and require ongoing focus and attention. 

Another important area of focus was ensuring Quilter was operationally resilient. Following the 
UK Government’s “Stay at Home” advice, 98% of colleagues were working remotely from late 
March 2020. Colleagues were provided with technology to enable them to work effectively 
and where appropriate, offices were made CO(cid:57)ID-19 secure to enable work that needed to be 
performed in the office to continue to be delivered in that way. (cid:58)e ensured that management 
maintained focus on IT and data security, reminding colleagues of their new responsibilities 
during this unprecedented period. 

Managing our external technology partners effectively is a key part of our resilience strategy 
and during the year relationships were further strengthened and improved with technology 
incidents and outages reduced as a result. The Committee routinely received updates on our 
third-party suppliers, many of whom were also challenged by COVID-19 necessitating remote 
working in other countries, including South Africa and India, where the COVID-19 impact was 
experienced somewhat differently than the UK. 

120

Quilter | Annual report 2020

Key areas of Committee focus (continued)

Report

Purpose

Oversight of change 
programmes

IT risks and controls 
oversight

During the year, we provided oversight and scrutiny as management worked through other 
material transformation programmes, with execution timing carefully considered to prioritise 
the platform transformation. These programmes included enhancements to our payment 
systems in Quilter Financial Planning, a new General Ledger and other procurement systems 
and the client relationship management system in Quilter Cheviot. We keenly anticipate the 
formal lessons learnt process that businesses undertake as routine after such 
implementations so that future change programmes can benefit from these insights.

The Committee further scrutinised the plans for the return of colleagues to our new Head 
Office and how technology will enhance future working practices. 

The Committee routinely received independent reviews from the Risk and Internal Audit 
functions. These reviews complement the first line risk management by business areas. (cid:58)e 
welcomed improvements in processes and have been encouraged by the growing maturity 
in first line risk identification as they become more proactive in identifying and managing 
risks across the Group.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

Committee governance

The Board Technology and Operations Committee currently comprises three independent Non-executive Directors. 
Details of the skills and experience of the Committee members can be found in their biographies on pages 86 and 87. 

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Evaluation

Discharging our 
responsibilities

Attendance

Collaboration

As part of the 2019(cid:18)20 (cid:37)oard Effectiveness Review, the (cid:37)oard has assessed that the 
Committee membership is appropriate in providing challenge and oversight and that 
the Committee is operating effectively.

The Committee reviewed its activities over the previous 12 months against its terms of 
reference and confirmed that it had fully discharged its responsibilities in line with its remit. 
The terms of reference are available at quilter.com.

The Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Risk Officer 
and Chief Information Officer regularly attend Committee meetings. On occasion, the 
Group Chairman and other Non-executive Directors attended Committee meetings for 
matters of particular interest, such as the Platform Transformation Programme.

The Chair briefs the Board on key discussions and provides a written report to the Board, 
where feasible, after each meeting. The papers and reports presented to the Committee 
are made available to all Quilter Non-executive Directors. During the year, eight additional 
ad hoc meetings focusing on the Platform Transformation Programme were held jointly 
with the Quilter Investment Platform Board Non-executive Directors to scrutinise matters 
of common interest. Some of these additional meetings of the Committee and the Quilter 
Investment Platform Board were held at short notice to examine key decisions and the 
impact of COVID-19 on the migration plans.

Quilter | Annual report 2020

121

 
 
 
 
 
Board Remuneration 
Committee report

Dear Shareholder,
As Chair of the Board Remuneration 
Committee ((cid:522)Committee(cid:523)) for my first year, 
I am pleased to present on behalf of the 
Board the Remuneration Report in respect 
of the year ended 31 December 2020. This 
statement and the accompanying Report 
aims to ensure high levels of disclosure 
regarding pay policy and transparency of 
remuneration decision making.

Our current Remuneration Policy (“Policy”) 
was approved by shareholders at the 2019 
Annual General Meeting (“AGM”) with 97% 
of votes in favour. For information only, we 
have included a summary of our current 
Policy on pages 128 to 132. Our Report for 
2019 received 96% of votes in favour at the 
last AGM. The Committee’s decisions, which 
take into consideration the key drivers of 
our Policy (alignment to culture, clarity, 
simplicity, risk, predictability and 
proportionality) are summarised in this 
statement and set out in the Report.

(cid:58)e have explained the performance 
outcomes in respect of the 2020 financial 
year. Of particular note is that, on the 
recommendation of the Executive 
Directors, the Committee has exercised 
its discretion to reduce short-term incentive 
((cid:522)STI(cid:523)) outcomes to (cid:93)ero. (cid:58)e also set out 
how we intend to continue operating our 
Policy in 2021, and have added one 
measure to the STI performance metrics, 
as set out below.

As detailed in last year’s Report, Executive 
Directors’ pension allowances are already 
aligned with the wider Quilter workforce, 
and a post-cessation share ownership 
policy also applies, in accordance with the 
Investment Association’s latest guidelines.

Business context in 2020
The operating environment in 2020 
presented unprecedented challenges for 
the business, with macro geopolitical issues 
and the COVID-19 pandemic impacting 
investor confidence and creating market 
volatility throughout the year. 

The COVID-19 pandemic required the 
business to adapt quickly to ensure 
continuous support for customers and 
employees at a time of significant social 
and economic disruption. The business 
demonstrated strong operational resilience 
to maintain high levels of service for 
advisers and customers at the height of the 
crisis, whilst simultaneously transitioning 
98(cid:8) of our workforce to remote working. 

Our 2020 results demonstrate that we have 
a financially resilient business. (cid:58)e did not 
use support measures made available to 
companies by the UK Government, we did 
not furlough any employees and we paid an 
interim 2020 dividend to our shareholders. 
Nevertheless, the volatile markets over 
2020 coupled with a challenging 
environment for new business flows 
impacted revenue, mitigated in part by 
proactive management actions and strong 
expense discipline. Notwithstanding a 
strong set of results given the 
unprecedented market conditions, the 
impact to business performance caused by 
the external environment is such that 2020 
profit is below the threshold level we set 
ourselves at the start of the year. This is 
reflected in the remuneration outcomes 
set out in the Report.

122

Quilter | Annual report 2020

Ruth Markland
Chair

Committee activity

Group remuneration
policy 10%
Specific remuneration 
arrangements 27%
Remuneration schemes, 
including all-employee 
schemes 36%
Governance 27%

Committee meetings 
attended/eligible to attend

Ruth Markland (C)

Glyn Jones

Tim Breedon

Jon Little

Paul Matthews

Cathy Turner

8/8

8/8

3/3

5/7

4/4

4/4

Number of meetings

8

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Key performance highlights
 – IFRS profit before tax (excluding amortisation, policyholder 

Short-term incentive outcome
 – (cid:58)hilst business performance has been robust in difficult 

tax adjustments and other one-off items) was £87 million for 
2020, compared to £141 million in 2019. In 2019, profit from 
discontinued operations of £67 million was included, which 
related to the Quilter Life Assurance business that was sold 
on 31 December 2019. For remuneration purposes, the profit 
was £63 million for 2020, compared to £128 million in 2019. 
 – NCCF of £1.6 billion was a material increase from £0.3 billion 

in the previous year. 

circumstances, our 2020 IFRS profit result for STI purposes 
of £63 million was below the threshold STI level of £80 million. 
As a result, 60% of the Executive Directors’ STI award was zero.

 – (cid:58)hilst our risk appetite has been effectively embedded in 
decision making and the management of the business, in 
particular the prudent execution of the migration to our new 
UK Platform, there is further work required to bolster the 
overall control environment.

 – AuMA increased by 7% during the year to close at £117.8 

 – Customer performance was strong across our key metrics, 

billion, which includes (cid:101)(cid:24).8 billion of positive market 
movement as a consequence of the equity market rally 
late in the year.

 – Expenses were closely managed with the Optimisation 

programme delivering significant benefits.

including strong investment performance and service across 
our business areas, with Quilter awarded 5 Stars in the 
Financial Adviser Service Awards across investments, 
protection and pensions, platform and discretionary fund 
management.

 – Good progress was made with strategic priorities; 

 – The Company also made good strategic progress in 2020, 

Optimisation activity and operational improvements have 
been implemented and we safely and securely completed 
the largest transfer of advisers and assets in our phased 
migration plan to our new UK Platform, which is now in 
its final stage of delivery. 

 – (cid:58)e have increased customer focus across the business, 

particularly in response to the COVID-19 pandemic and have 
continued to make progress across our Customer Strategic 
Risk Appetite Principles covering governance, products and 
proposition, customer experience, suitability and servicing. 

Overall, 2020 has been a year of resilient business 
performance in a very challenging environment. 

notably on the UK Platform Transformation Programme with 
the successful phased migration of the majority of advisers 
and assets onto the new platform. 

 – The management team demonstrated strong leadership 

throughout 2020 to protect the interests of all stakeholders 
during the COVID-19 pandemic. 

 – Overall this would have generated an STI award of 24% 
of maximum for the Chief Executive Officer and 28% 
of maximum for the Chief Financial Officer, prior to 
consideration of risk-based ad(cid:77)ustments described below.
 – As part of its review of 2020 performance, the Committee 

considered the impact of any material risk events that arose 
during the year and decided that a downward adjustment of 
10% of maximum should be applied to the STI outcomes for 
both Executive Directors. This adjustment was to reflect the 
risks brought into Quilter relating to historic pension transfer 
advice provided by Lighthouse to British Steel Pension 
Scheme members prior to Quilter’s acquisition of Lighthouse 
plc, which resulted in a net provision of £24 million to cover 
redress costs and fees. 

 – The non-financial elements of the STI scorecard, which account 
for up to 40% of the award, would have generated outcomes 
after the risk-ad(cid:77)ustment referred to above of 14(cid:8) of maximum 
for the Chief Executive Officer and 18% of maximum for the 
Chief Financial Officer. However, having carefully considered 
the overall STI outcomes for the wider workforce, the 
Executive Directors recommended to the Committee that 
they do not take receipt of any STI award for 2020 and 
redirect the amounts that would have been payable toward 
a small discretionary pool for other employees to recognise 
their achievements in very challenging circumstances. 
The Committee approved their recommendation.

Long-term incentive outcome
 – The first long-term incentive (“LTI”) award was granted to 

Executive Directors following the Company’s Listing in June 
2018 (the “2018 LTI”). The performance conditions measure 
compound annual profit growth from 2017 to 2020, and TSR 
relative to the FTSE 250 (excluding investment trusts). The 
award will vest in March 2021 with an outcome of 48.7% of 
maximum for the Chief Executive and Chief Financial Officer, 
as detailed in the Report. 

Quilter | Annual report 2020

123

 
 
 
 
Board Remuneration Committee report 
continued

Adjustments and exercise of discretion
 – The Committee applied a risk-based downward STI 

adjustment for the historic Lighthouse pension transfer 
advice issues.

 – In consideration of the impact of COVID-19 and the need to 
appropriately target the available STI spend, the Committee 
also exercised its discretion, at the recommendation of the 
Executive Directors, to reduce their STI award to zero, and 
redirect the STI funding for 2020 towards other employees. 

 – The financial performance targets in the 2018 LTI were 
adjusted following the sale of Quilter Life Assurance. 
This comprised two changes: Quilter Life Assurance profits 
(adjusted for certain stranded costs) excluded from the 
base year to ensure a like-for-like comparison with the 
measurement year, and the target growth range was 
amended, including a substantial increase in the growth 
requirement for maximum vesting.

 – No other discretion was exercised to override performance 

or variable pay outcomes.

Considerations for the year ahead
(cid:58)e continue to monitor executive remuneration developments 
within the industry and the regulatory landscape, and to 
ensure that remuneration supports the alignment of executive 
and shareholder interests and is consistent with the prudent 
risk management of the business.

The Committee considered the overall remuneration 
arrangements for the Executive Directors for 2021 in 
accordance with the Policy. Key points are as follows:
 – there will be no increase to the Executive Directors’ salaries 
at the 1 April 2021 review date, and base salaries were also 
not increased at the April 2020 review;

 – the structure, non-financial performance metrics and 

maximum award level of the STI awards in respect of 2021 
will remain unchanged. However, the financial performance 
metrics will include NCCF as a percentage of opening AuMA, 
with a weighting of 20% of the overall scorecard, with the 
weighting applied to IFRS profit before tax (excluding 
amortisation, policyholder tax adjustments and other one-off 
items) reducing from 60% to 40%, such that the total financial 
performance weighting of the scorecard remains at 60%. 
NCCF is an important lead indicator of business performance 
and the Committee decided that it was the appropriate time 
to incorporate it into the annual scorecard. STI for on-target 
performance is set at 50% of maximum, which remains 
unchanged;

 – the structure, performance metrics and maximum award 

opportunity of the LTI grants in 2021, including the maximum 
level of awards, will also be unchanged; and

 – there will be no increase in fees for the Board Chairman for 
2021 and there will also be no increase to Non-executive 
Directors’ fees for 2021. 

124

Quilter | Annual report 2020

Consideration of shareholders’ views
The Committee actively engages with shareholders and 
investor bodies and welcomes the opportunity to engage with 
shareholders and discuss their views on remuneration issues 
in advance of the 2021 AGM. 

The current Policy was approved by shareholders at the 
Company’s first AGM in 2019 and will be due for renewal at the 
AGM in 2022. The Committee will undertake a review of the 
Policy during 2021 to take account of latest market 
developments, regulatory requirements and corporate 
governance best practice and to ensure the Policy continues 
to encourage and reward the growth of shareholder value, and 
promotes the long-term sustainable success of the Company. 

The Committee will consult with shareholders on any changes 
proposed to the Policy ahead of the 2022 AGM.

Inclusion, diversity and the gender pay gap
A key priority for the Company is the continued commitment 
to an inclusive culture and the equality and diversity of our 
workforce. The Inclusion and Diversity agenda is led by Paul 
Feeney. Further details can be found in the Responsible 
Business report on page 53. During 2020 we made progress 
across several areas, including:
 – appointing a Group Head of Inclusion (cid:9) (cid:58)ellbeing, a new role 
dedicated to our Inclusion, Diversity and (cid:58)ellbeing priorities 
and supported by a new Inclusion and Diversity Steering 
Committee, comprised of Quilter Executive Committee 
members; 

 – updating our talent programme to ensure we can identify, 

track and support individuals of under-represented 
ethnicities and gender in progressing their careers in Quilter;
 – refreshing our (cid:57)alues and leadership behaviour frameworks 
to further reinforce our Inclusion and Diversity goals within 
our culture; and

 – continuing to evolve our recruitment processes to ensure 

that we market roles, shortlist and select candidates on a fully 
diverse and inclusive basis. 

For 2020 we have reported a median gender pay gap of 30% 
and a median bonus gap of 39(cid:8). (cid:58)hilst our pay gaps have 
reduced since Gender Pay Gap Reporting was introduced 
four years ago, we still have much further to go. Further details 
regarding our gender pay gap figures can be found on page (cid:24)3 
of the Responsible Business report.

Employee voice
Paul Matthews, Independent Non-executive Director, 
member of the (cid:37)oard Remuneration and (cid:37)oard Risk 
Committees and a Non-executive Director of Quilter Financial 
Planning (cid:37)oard, took over responsibility for reflecting the 
employee voice in the Boardroom following Cathy Turner’s 
departure in May 2020. Paul engaged directly with our 
Employee Forum during 2020 to gain valuable insight on the 
matters pertaining to corporate strategy, change 
management and culture. Further details on the progress 
made during the year can be found in the Governance in 
action report on pages 100 to 101. 

The Committee is conscious of its heightened role during 
times of significant uncertainty and in navigating the 
unprecedented challenges caused by the COVID-19 pandemic 
to ensure that remuneration outcomes for the Executive 
Directors and wider workforce are appropriately aligned with 
performance and shareholders’ experience. (cid:58)e will continue 

Committee governance

to make careful decisions which balance the interests of all 
stakeholders. I appreciate the ongoing support and feedback 
from our shareholders. 

From 9 March 2021, we look forward to bringing a fresh 
perspective to the Committee with the appointment of a new 
independent Non-executive Director, Tazim Essani. 

I would also like to take this opportunity to thank my 
predecessor, Cathy Turner, for her excellent chairmanship 
prior to my appointment. 

Ruth Markland
Chair 

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

The (cid:37)oard Remuneration Committee currently comprises five independent Non-executive Directors. Details of the skills 
and experience of the Committee members can be found in their biographies on pages 84 to 86. 

Evaluation

Discharging our 
responsibilities

Attendance

Collaboration

As part of the 2019(cid:18)20 (cid:37)oard Effectiveness Review, the (cid:37)oard has assessed that the 
Committee membership is appropriate in providing challenge and oversight and that 
the Committee is operating effectively.

The Committee reviewed its activities over the previous 12 months against its terms of 
reference and confirmed that it had fully discharged its responsibilities in line with its remit. 
The terms of reference are available at quilter.com.

The Chief Executive Officer, HR Director, Reward Director and Jeremy Orbell, the 
Committee’s independent remuneration adviser, regularly attend Committee meetings, 
except when it would not be appropriate for them to do so.

The Chairman briefs the (cid:37)oard on key discussions and provides a written report to 
the Board, where feasible, after each meeting. The papers and reports presented to the 
Committee are made available to all Quilter Non-executive Directors. The members of 
the (cid:37)oard Risk Committee are invited to (cid:77)oin Committee meetings when risk-ad(cid:77)usted 
remuneration matters are being discussed.

Quilter | Annual report 2020

125

 
 
 
 
Remuneration at a glance

The following pages detail the remuneration paid to our Executive Directors and our Policy. 
These two pages summarise the key elements.

Components of remuneration (chart illustrates the weighting of target outcomes)

Fixed pay
Salary, benefits and pension

Short-term incentive (“STI”) 

+
Variable pay:

Total remuneration

 Long-term incentive (“LTI”)

How much our Executive Directors earned in 2020

Single total figure of remuneration – Executive Directors
The following chart sets out the aggregate emoluments earned by the Directors in the year ended 31 December 2020.

Paul Feeney

£750k

Mark Satchel

£501k

£1,487k

£737k

£739k

£238k

Link between remuneration and business strategy

Short-term incentive Performance indicators

Metrics in executive 
remuneration

2020
achievement

2020 weighted 
outcome

Profit

IFRS profit before tax1

60% of 2020 STI awards

0% of max 

0% of max

Non-financial

Risk management

10% of 2020 STI awards

50-70% of max

5-7% of max

Customer outcomes

10% of 2020 STI awards

65% of max

7% of max

Strategic personal
performance

20% of 2020 STI awards

60-70% of max

12-14% of max

Total before 
adjustment

Risk ad(cid:77)ustment

COVID-19 adjustment

Total after 
adjustment

24-28% of max

(10%) of max

(14-18%) of max

0% of max

Long-term incentive

Performance indicators

Metrics in executive 
remuneration

2020 achievement

EPS growth

EPS compound annual 
growth rate (“CAGR”)

70% of 2020 LTI award
EPS CAGR 2019-2022

Shareholder value

Total shareholder 
return (relative)

30% of 2020 LTI award
TSR (relative) 2020-2022

Results in 2023

Results in 2023

1  IFRS profit before tax (excluding amortisation, policyholder tax ad(cid:77)ustments and one-off items).
2  Includes, but not limited to, key measures of performance such as NCCF.

126

Quilter | Annual report 2020

Shareholding

Paul Feeney

Mark Satchel

Ownership as %
 2020 base salary1

291%

320%

Minimum 
shareholding 
required 
(after 5 years)2

300%

300%

1  Includes personal holdings and the estimated net of tax value of unvested share awards which are not subject to performance conditions as at 31 December 2020. 
2  Executive Directors have five years from the Company’s Listing date, or date of appointment, to meet the shareholding requirement.

Summary of the key elements of our Policy

The table below provides a high-level summary of the key remuneration elements under our Policy, which was approved at our 
2019 AGM. The key elements of the Policy are set out in pages 128 to 132.

2020

2021

2022

2023

2024

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

Base salary Performance 

period

Short-term 
incentive

Performance 
period

Vesting  
period

1/3

1/3

1/3

Normally reviewed annually with effect from 1 April.
Paul Feeney – £675,000
Mark Satchel – £450,000

Total incentive award in respect of Company and individual 
performance.

Key performance measures and weighting:
 – IFRS profit before tax (excluding amortisation, policyholder 

tax ad(cid:77)ustments and one-off items) ((cid:25)0(cid:8))

 – Customer(cid:18)Risk measures (20(cid:8))
 – Personal objectives (20%)

Paul Feeney 
Maximum opportunity 200% of salary 

Mark Satchel 
Maximum opportunity 200% of salary

 Cash element of incentive outcome (50% of the whole award) 
is paid in Q1 following the end of the performance year.

 Deferred element of incentive outcome (50% of the whole 
award) is granted in shares and vests in three equal tranches 
in Q1 2022, Q1 2023 and Q1 2024 subject to the plan rules.

Long-term 
incentive

Performance 
period

Additional 
holding period

Awards subject to three-year performance period ending 
31 December 2021.

Key performance measures and weighting:
 – EPS CAGR (70%)
 – Total shareholder return ((cid:522)TSR(cid:523)) ranking relative to FTSE-2(cid:24)0 

excluding investment trusts (30%)

Paul Feeney 
Maximum opportunity 200% of salary 

Mark Satchel 
Maximum opportunity 200% of salary

Award vests in Q1 following end of the performance period 
and subject to further two-year holding period.

Quilter | Annual report 2020

127

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

 
 
 
 
Directors’ Remuneration Policy 
(summary)

Remuneration Policy for Executive Directors
The following table summarises the key components of 
Executive Director remuneration arrangements, which form 
part of the Policy. The Policy originally came into effect when 
the business Listed in 2018 and was supported by 

shareholders in a vote at the 2019 AGM, details of which are 
provided on page 147 of this Report. The full Policy document 
is contained in the 2018 Annual Report, which is available on 
the Company website.

Remuneration element

Base salary

Purpose and link to strategy

Essential to attract and retain Executive Directors with the calibre, personal skills and attributes 
to develop, lead and deliver the Group’s strategy.

Operation

Base salaries are paid in 12 equal monthly instalments during the year and normally are 
reviewed annually with increases effective 1 April. In reviewing base salaries the Committee 
takes into account a number of factors, including:
 – Group and individual performance;
 – the skills, experience and level of responsibilities of the Executive Director and his/her 

market value;

 – the scope, nature and size of the role;
 – levels of increase across the wider employee population; and
 – affordability, economic factors, external market data, business and personal performance.

The Committee considers the direct and indirect impacts of any base salary increases 
on total remuneration.

Maximum opportunity

There are no prescribed maximum salary levels, but any salary increases will normally be in line 
with percentage increases across the wider employee population.

In specific circumstances, the Committee may award increases above this level, for example(cid:29)
 – where the base salary for a new recruit or promoted Executive Director has been set to allow 

the individual to progress into the role over time;

 – to reflect a material increase in the size or scope of an individual’s role or responsibilities;
 – where a change is deemed necessary to reflect changes in the regulatory environment; and
 – where the size, value or complexity of the Group warrants a higher salary positioning.

Performance metrics

Individual and Company performance will be taken into account in determining any salary 
increases.

Proposed changes to application for 2021
No change in approach.

128

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Remuneration element

(cid:37)(cid:72)(cid:81)(cid:72)(cid:564)(cid:87)(cid:86)

Purpose and link to strategy

(cid:37)enefits are provided to Executive Directors to attract and retain the best talent for the business
and to ensure that the total package is competitive in the market.

Operation

The Committee’s policy is to provide Executive Directors with a market competitive level 
of benefits taking into consideration benefits offered to other senior employees in the UK.

(cid:37)enefits currently provided to Executive Directors include(cid:29)
 – private medical insurance;
 – life assurance; and
 – income protection.

The approach for benefit provisions for Executive Directors is to be consistent and operated 
in line with the rest of the UK organisation. As such, from April 2020 personal accident insurance 
ceased to be provided as a core benefit. Specific benefit provisions are sub(cid:77)ect to regular review 
in line with market practice and may be sub(cid:77)ect to change from time to time.

In line with other Quilter employees, Executive Directors can access discounted Company 
products and are eligible to participate in the Company’s voluntary benefits which they fund 
themselves, sometimes through salary sacrifice. Executive Directors are eligible for other 
benefits that are introduced for the wider workforce on broadly similar terms.

They are eligible to participate in the UK all-employee share plans on the same terms as other 
employees, including the Company’s Share Incentive Plan and Sharesave Plan.

(cid:58)here the Committee considers it appropriate, other benefits may be provided on recruitment 
or relocation for a defined period.

Any reasonable business-related expenses (including tax thereon if determined to be a taxable 
benefit) can be reimbursed.

Maximum opportunity

In line with other UK employees, there is no maximum monetary level for benefits as this is 
dependent on the individual’s circumstances, market practice and the cost to the Company.

Performance metrics

There are no performance conditions.

Proposed changes to application for 2021
No change in approach.

Remuneration element

Pension

Purpose and link to strategy

To provide a market-competitive contribution towards retirement benefits that helps to attract 
and retain the best talent for the business.

Operation

Executive Directors are eligible to receive employer contributions to the Company’s pension plan 
(which is a defined contribution plan) or a cash allowance in lieu of pension benefits, or a 
combination. Contributions and(cid:18)or a cash alternative are paid monthly.

Maximum opportunity

10% of base salary per annum.
This is the same as the pension provision for the wider workforce.

Performance metrics

There are no performance conditions.

Proposed changes to application for 2021
No change in approach.

Quilter | Annual report 2020

129

 
 
 
 
 
Directors’ Remuneration Policy (summary) 
continued

Remuneration element

Short-Term Incentives (“STI”)

Purpose and link to strategy

The STI plan is designed to align remuneration with performance against financial and strategic 
business plan targets and personal pre-determined goals, within the Group’s risk appetite and 
taking into consideration the Company’s culture and values, on an annual basis.

A portion of any award is deferred and delivered in shares to aid retention, encourage long-term
shareholding, discourage excessive risk-taking and align the executive and shareholder interests.

Operation

Performance targets and weightings are reviewed and set annually by the Committee taking 
into account business plans and the Company’s risk appetite.

STI awards are funded from the overall Group bonus pool, which is approved each year 
by the Committee.

STI pay-out for on-target performance is set at (cid:24)0(cid:8) of maximum.

Overall pool funding is also sub(cid:77)ect to risk ad(cid:77)ustment after the Committee’s consideration of
a comprehensive report from the Chief Risk Officer and recommendations from the (cid:37)oard Risk 
Committee in relation to the nature and incidence of risk events and an overall assessment of 
risk management relative to the Board’s risk appetite.

(cid:24)0(cid:8) of any STI awarded to an Executive Director is normally deferred in the form of Conditional 
Awards under the Share Reward Plan ((cid:522)SRP(cid:523)), which vest annually in equal annual instalments 
over a three-year period sub(cid:77)ect to the rules of the SRP.

Dividend equivalents may accrue on deferred awards during the deferral period and are paid 
in the form of shares or, exceptionally, cash to the Executive Directors upon vesting.

Malus and clawback provisions apply to both cash and deferred portions of the STI awards 
as described in further detail in ‘Risk ad(cid:77)ustments, malus and clawback’ on pages 137 to 138.

Maximum opportunity

The maximum STI opportunity for Executive Directors is set at 200(cid:8) of base salary for 
stretch performance.

Performance metrics

The STI plan uses a balanced scorecard of Group and individual performance measures, which 
are aligned with the key strategic priorities of the Group and designed to deliver sustainable 
shareholder value.

Performance is measured based on a mix of financial, strategic and personal targets. The splits 
between the performance measures and relative weighting of the targets are reviewed by the 
Committee at the start of each year and set out in the Annual Report on Remuneration. The 
ma(cid:77)ority of any annual bonus is sub(cid:77)ect to challenging financial measures, with at least (cid:24)0(cid:8) 
of the scorecard reflecting financial performance.

(cid:58)hen determining the outcome of the performance measures, the Committee will seek the 
advice of the Chief Risk Officer and the (cid:37)oard Risk Committee to ensure all relevant risk factors 
are identified and the bonus pool and(cid:18)or individual awards ad(cid:77)usted accordingly.

Specific measures, targets and weightings will be set by the Committee annually and disclosed 
on a retrospective basis.

Proposed changes to application for 2021
In 2021, the financial aspect of the STI award will include Net Client Cash Flow ((cid:522)NCCF(cid:523)) as a percentage of opening AuMA, as a 
new measure on the scorecard. This metric will have a scorecard weighting of 20(cid:8), with the IFRS profit (excluding amortisation, 
policyholder tax ad(cid:77)ustments and one-off items) weighting reduced from (cid:25)0(cid:8) to 40(cid:8), which results in the total financial aspect 
of the scorecard remaining unchanged at a (cid:25)0(cid:8) weighting. There are no other proposed changes in approach. 

130

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Remuneration element

Long-Term Incentives (“LTI”)

Purpose and link to strategy

To incentivise and reward Executive Directors for achieving superior long-term business 
performance that creates shareholder value and maximises sustainable shareholder returns.

Operation

LTI awards are made under the Quilter plc Performance Share Plan ((cid:522)PSP(cid:523)). Awards are normally 
granted annually as nil cost options, which are sub(cid:77)ect to performance conditions. Awards 
normally vest after three years, sub(cid:77)ect to the achievement of performance conditions and 
continued employment.

Financial performance targets are set annually by the Committee prior to the beginning of 
the relevant performance period to provide alignment with the Company’s strategic priority 
of delivering sustainable returns to shareholders over the long term. The targets may be sub(cid:77)ect 
to review and possible amendment for future plan cycles.

Vested awards:
 – are sub(cid:77)ect to a post-vesting holding period of two years during which the net-of-tax number 

of shares may not normally be exercised or sold; and
 – must be exercised within ten years of the grant date.

Dividend equivalents accrue during the vesting period and are released on the vesting date, 
or date of exercise of the vested option. These will normally be delivered in the form of shares 
on an assumed reinvested basis.

LTI awards are sub(cid:77)ect to malus and clawback provisions as described in further detail in ‘Risk 
ad(cid:77)ustments, malus and clawback’ on page 139.

Maximum opportunity

The maximum annual value of a PSP award for any Executive Director is an award over Company 
shares with a face value of 200% of base salary at the date of grant.

If the Committee deems that there are exceptional circumstances, such as the recruitment 
of a key individual or a significant strategic initiative, the maximum PSP award may be increased 
up to 400% of the Executive’s base salary.

Performance metrics

Performance measures are selected by the Committee for the relevant plan cycle prior to the 
beginning of the relevant performance period. Measures are designed to align with the Group’s 
strategic priority of delivering sustainable returns to shareholders over the long term.

Performance measures currently include an ad(cid:77)usted EPS CAGR (pre-dividend excluding 
amortisation and goodwill) and TSR Ranking relative to the FTSE-2(cid:24)0 excluding investment trusts.

The Committee may introduce or re-weight performance measures so that they are directly 
aligned with the Company’s strategic ob(cid:77)ectives for the performance period.

For each performance metric, a threshold and stretch level of performance is set. At threshold, 
2(cid:24)(cid:8) of the relevant element vests rising on a straight-line basis to 100(cid:8) for attainment of levels 
of performance between threshold and maximum targets.

(cid:58)hen determining the outcome of the performance measures, the Committee will seek the 
advice of the Chief Risk Officer and the (cid:37)oard Risk Committee to ensure all relevant risk factors 
are identified and the award outcomes ad(cid:77)usted accordingly. The Committee also has discretion 
to reduce award outcomes to nil if required, via a risk management assessment based on a 
report of risk exposures(cid:30) or to reflect financial underperformance not adequately reflected 
in the financial measures.

Proposed changes to application for 2021
No change in approach.

Quilter | Annual report 2020

131

 
 
 
 
Directors’ Remuneration Policy (summary) 
continued

Remuneration element

Shareholding requirement, including post-cessation

Purpose and link to strategy

To align Executive Directors’ interests with those of shareholders.

Operation

The Group operates a mandatory shareholding policy under which Executive Directors are 
required to build up and maintain a shareholding in the Company with a value at least equal 
to 300(cid:8) of base salary. Executive Directors are expected to meet the requirement within 
five years of Admission or, for newly appointed Executive Directors, within five years of 
appointment if later.

At least (cid:24)0(cid:8) of any shares vesting under Quilter share plans (on a net-of-tax basis) are expected 
to be retained until the shareholding requirements are met.

In accordance with changes to the Code, the Committee has developed a post-cessation 
shareholding policy taking into account emerging market practice and shareholder guidelines. 
Executive Directors are required to hold shares for at least two years following cessation of their 
appointment at the lower of the minimum shareholding requirement of 300(cid:8) of base salary or 
the value of shares held at the point of departure (if the Executive Director is still in the five-year 
accumulation period).

Any shares purchased by an Executive Director from the open market (i.e. separate to shares 
originally awarded under a Company share plan) will be excluded from the post-cessation 
holding requirement. However, only 2(cid:24)(cid:8) of the value of such purchased shares will count 
towards the minimum shareholding requirement during employment. This will apply to shares 
purchased after the date the post-cessation policy came into effect, in January 2020.

For any good leaver, unvested share awards that may be permitted to be retained shall vest on 
their original vesting date(s) and remain sub(cid:77)ect to post-vesting holding periods post-termination.

The Committee has discretion to make ad(cid:77)ustments to the shareholding and post-cessation 
shareholding requirement in exceptional circumstances.

Proposed changes to application for 2021
No change in approach.

132

Quilter | Annual report 2020

Annual Report on Remuneration

Audited
Content within an ‘Audited’ tab indicates that all the 
information is audited.

Application of the Policy in 2021
Content within a shaded box indicates that the 
information is planned for implementation in 2021.

The Report sets out how the Policy of the Company has been applied in 2020 and how the Committee intends to apply the Policy 
going forward. An advisory shareholder resolution to approve this Report will be proposed at the AGM.

The table below sets out the single figure of remuneration for the full financial year 2020 together with 2019 comparator figures.

Audited

Executive Director

2020
Paul Feeney

Mark Satchel

2019

Paul Feeney

Mark Satchel – appointed to 
the (cid:37)oard 13 March 20191

Tim Tookey – stepped down 
from the (cid:37)oard 13 March 
20191

Base salary 
£’000

(cid:37)(cid:72)(cid:81)(cid:72)(cid:564)(cid:87)(cid:86)
£’000

Pension2
£’000

STI
£’000

LTI3
£’000

Other4
£’000

Total
£’000

Total 
Fixed
£’000

Total 
Variable
£’000

(cid:25)7(cid:24).0

4(cid:24)0.0

(cid:25)7(cid:24).0

3(cid:25)0.(cid:24)

7.(cid:24)

(cid:24).9

(cid:24).4

3.4

(cid:25)7.(cid:24)

4(cid:24).0

–

–

 737.3

237.(cid:25)

–

–

1,487.3

738.(cid:24)

7(cid:24)0.0

(cid:24)00.9

737.3

237.(cid:25)

(cid:25)7.(cid:24)

1,0(cid:25)(cid:24).0

81.(cid:25)

1.8

1,89(cid:25).3

747.9

1,148.4

3(cid:25).0

(cid:25)00.8

(cid:25)1.(cid:24)

1.4

1,0(cid:25)3.7

399.9

(cid:25)(cid:25)3.7

121.0

1.7

3(cid:25).3

200.0

–

– 

3(cid:24)9.0

1(cid:24)9.0

200.0

1  Mark Satchel and Tim Tookey’s 2019 remuneration is pro-rated for the period served as an Executive Director in 2019.
2  Pension includes contributions made under the Group defined contribution pension scheme plus, where applicable, amounts received as a pension allowance. 
3   LTI is a vesting value determined as a result of the achievement of performance measures or targets relating to the performance period ending on 31 December 

of the relevant financial years. These relate to the Performance Share Plan (see page 140). The value is calculated using the average share price over the final three 
month period of the year ending 31 December 2020, which is (cid:101)1.3943. The actual vesting date is 2(cid:25) March 2021 and the actual value will be reflected in next year’s 
Report. The amount of this figure attributable to share price depreciation is valued at ((cid:101)23,098) for Paul Feeney and ((cid:101)7,443) for Mark Satchel as at 31 December 
2020.

4  Other includes dividends received in 2019 on shares awarded under the legacy Joint Share Ownership Plan, further details can be found in the 2019 Report.

Components of the single figure
There were no increases to Executive Director base salaries at the 1 April 2020 review date, and no increases are planned for the 
1 April 2021 review date.

Audited

Executive Director

Paul Feeney

Mark Satchel 

Annual base salary 
as at 1 April 2020
£’000

Total base salary 
paid in 2020 for 
qualifying services
£’000

Total base salary 
(cid:72)(cid:909)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:20)(cid:3)(cid:36)(cid:83)(cid:85)(cid:76)(cid:79)(cid:3)(cid:21)(cid:19)(cid:21)(cid:20)
£’000

(cid:25)7(cid:24).0

4(cid:24)0.0

(cid:25)7(cid:24).0

4(cid:24)0.0

(cid:25)7(cid:24).0

4(cid:24)0.0

Quilter | Annual report 2020

133

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

 
 
 
 
Annual Report on Remuneration 
continued

Benefits
(cid:37)enefits include life assurance, private medical cover, income protection and personal accident insurance. Personal accident 
insurance ceased to be a core benefit from April 2020, therefore the 2020 amounts below are minimal and rounded to nil. 

Audited

Name

2020
Paul Feeney

Mark Satchel 

2019
Paul Feeney

Mark Satchel – appointed to the (cid:37)oard 13 March 2019

Tim Tookey – stepped down from the (cid:37)oard 13 March 2019

(cid:37)enefits for (cid:21)0(cid:21)(cid:20)
No changes to the approach.

Life 
assurance 
£’000

Medical 
£’000

Income 
protection 
£’000

Personal 
accident 
insurance 
£’000

3.1

2.2

2.3

1.4

0.9

1.4

1.1

1.3

1.1

0.2

3.0

2.(cid:25)

1.(cid:25)

0.8

0.(cid:25)

–

–

0.2

0.1

–

Pension
Pension includes contributions made under the Group defined contribution pension scheme and(cid:18)or amounts received as cash 
in lieu of pension contributions due to the impact of HMRC limits. The pension provisions of Executive Director appointments are 
aligned to the pension arrangements of the wider workforce, set at 10% of base salary. 

Audited

Name

2020
Paul Feeney

Mark Satchel 

2019
Paul Feeney

Mark Satchel – appointed to the (cid:37)oard 13 March 2019

Tim Tookey – stepped down from the (cid:37)oard 13 March 2019

(cid:37)enefits for (cid:21)0(cid:21)(cid:20)
No changes to the approach.

Cash in lieu 
of pension 
contribution 
£’000

 Contribution 
to pension 
scheme 
£’000

Total 
contribution 
£’000

(cid:25)7.(cid:24)

39.2

(cid:25)7.(cid:24)

28.0

3(cid:25).3

–

(cid:24).8

–

8.0

–

(cid:25)7.(cid:24)

4(cid:24).0

(cid:25)7.(cid:24)

3(cid:25).0

3(cid:25).3

134

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

2020 Short-Term Incentive (“STI”) Awards
For the purpose of determining the 2020 STI outcome, the Committee assessed the performance of the business and the 
individuals by reference to a balanced scorecard of Financial ((cid:25)0(cid:8)), Customer(cid:18)Risk (20(cid:8)) and Strategic Personal performance 
ob(cid:77)ectives (20(cid:8)) in line with the Policy.

The summary below reflects the Committee’s assessment of performance for the year ended 31 December 2020, before 
consideration of any ad(cid:77)ustment for material risk events. 

Group financial achievement

Audited

(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)

IFRS profit before tax (excluding amortisation, 
policyholder tax ad(cid:77)ustments and one-off items)

Weighting as 
% of total STI 
opportunity

Threshold
(25% of max)

Target
(50% of max)

Maximum
(100%)

Outcome

STI as 
% of max

(cid:25)0(cid:8)

(cid:101)80m

(cid:101)100m

(cid:101)120m

(cid:101)(cid:25)3m

0%

IFRS profit reconciliation
In determining the outcome of the Group financial metric shown above, the Committee considered the impact of key programme 
and acquisition costs on IFRS profit and approved a discretionary downward ad(cid:77)ustment to IFRS profit for STI purposes to ensure 
it reflected a fair and reasonable outcome for the overall performance achieved. The ad(cid:77)ustments are detailed in the schedule 
below, which provides a reconciliation between reported profit, the STI target and STI outcome.

Audited

(cid:21)(cid:19)(cid:21)(cid:19)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:81)(cid:70)(cid:76)(cid:79)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)

(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)

STI target

STI outcome

Ad(cid:77)usted profit (cid:69)efore tax (cid:11)(cid:69)efore financin(cid:74) costs(cid:12)

(cid:585)Debt financing costs

Ad(cid:77)usted profit (cid:69)efore tax (cid:11)after financin(cid:74) costs(cid:12)
(cid:585)UK Platform Transformation Programme ((cid:522)PTP(cid:523))1
(cid:585)Optimisation1

(cid:585)Quilter Life Assurance restructure

(cid:585)Quilter Investors’ build out costs2
(cid:585)One-off Managed Separation costs1

(cid:585)Customer remediation3

I(cid:41)(cid:53)(cid:54) profit (cid:69)efore tax (cid:11)excludin(cid:74) amortisation(cid:15) 
policyholder tax ad(cid:77)ustments and one-off items(cid:12)

£(cid:20)(cid:25)(cid:27)m

((cid:101)10m)

£(cid:20)(cid:24)(cid:27)m

((cid:101)38m)

((cid:101)33m)

((cid:101)1m)

(cid:101)1m

–

–

£(cid:21)0(cid:21)m 

((cid:101)10m)

£(cid:20)(cid:28)(cid:21)m

((cid:101)49m)

((cid:101)3(cid:25)m)

((cid:101)3m)

–

((cid:101)4m)

–

£(cid:20)(cid:25)(cid:27)m

((cid:101)10m)

£(cid:20)(cid:24)(cid:27)m

((cid:101)49m)

((cid:101)3(cid:25)m)

((cid:101)1m)

–

((cid:101)4m)

((cid:101)(cid:24)m)

£(cid:27)(cid:26)m

£(cid:20)00m

£(cid:25)(cid:22)m

1   The PTP and one-off Managed Separation costs relate to the rebrand of certain entities alongside the PTP programme. Although actual costs for these items 

were below the plan expectation for the year, some of this underspend relates to the extended timeline of PTP delivery communicated to the market during 2020. 
Optimisation costs were also lower than the plan expectation for the year due to the timing of delivery. All costs are still expected to be incurred at a later date. 
As such, the Committee approved an ad(cid:77)ustment to these amounts to remove the benefit of below-plan spend in the outcome.

2   A provision release of (cid:101)1 million has been recognised in relation to the build of Quilter Investors following the sale of the Single Strategy business. As these costs 

were a function of transaction and necessary for Quilter Investors to operate as a standalone business, the benefit of this credit has been excluded for 
remuneration purposes.

3   The customer remediation ad(cid:77)ustment relates to the impact of the post-acquisition market movements on the pension transfer advice complaints relating 

to Lighthouse.

Quilter | Annual report 2020

135

 
 
 
 
 
Annual Report on Remuneration 
continued

Group risk and customer performance achievement
Key Group non-financial ob(cid:77)ectives represented a maximum of 20(cid:8) of the total STI opportunity. The risk measure assesses 
the effectiveness of risk management at an overall corporate level for each of the Executive Directors. For the Customer element 
of the scorecard, performance was assessed against key risk and performance indicators covering customer strategy and 
governance, product and proposition, customer experience, advice, suitability and customer on-boarding and post-advice 
servicing as measured by the Company’s Customer Strategic Risk Appetite Principles ((cid:522)SRAP(cid:523)), as well as a qualitative assessment 
of broader customer focus. Performance commentary is given in the table below.

Audited

Customer and Risk
Performance measures

Risk Management 
Framework 
Effectiveness

Executive Director

Paul Feeney

Weighting as %
of total STI 
opportunity

10%

Risk Management 
Framework 
Effectiveness

Mark Satchel

10%

Outcome as
% of max

(cid:24)0(cid:8)

70%

Key achievements in the year

 – Strong tone from the top in setting an effective risk 
culture, with evidence of front-end consideration 
of risk in setting business strategy, embedding risk 
into decision making and the overall management 
of the business.

 – Safely delivered the ma(cid:77)or migration of advisers 

to our new UK Platform during a national lockdown, 
without bringing significant risks to the business, 
advisers or customers. 

 – Early action in response to CO(cid:57)ID-19, managing a 
rapidly changing risk environment and positioning 
Quilter well to manage through the crisis.

 – The control environment in the Quilter Financial 
Planning business required improvement and a 
programme has been established to address this.

 – Pro-active engagement and consideration of risk 
in key decisions, ensuring effective second line 
engagement.

 – Improvements to business planning process with 
clearer upfront articulation of strategic priorities, 
improved flow of strategy to business initiatives and 
operational activity with a greater focus on risks.

 – Early action taken in the wake of CO(cid:57)ID-19(cid:30) 

enhanced cash management, financial and capital 
position reviews and scenario modelling.

Customer Outcomes

Paul Feeney and 
Mark Satchel

10%

 – Enhanced customer care and support throughout 

(cid:25)(cid:24)(cid:8)

the pandemic across all business areas, whilst 
receiving unprecedented high call volumes over 
the tax year end.

 – Maintained customer service and mitigated risk of 

customer detriment during the PTP implementation 
of a prudent phased migration approach.

 – Strong investment performance following the Q1 

2020 sharp fall, particularly in Cirilium Active in the 
Quilter Investors business area. 

 – Commitment to customer and advisers recognised 

by receiving a (cid:24) Star award for service in the 
Financial Adviser’s Service Awards across 
investments, protection and pensions, platform 
and discretionary fund management.

136

Quilter | Annual report 2020

Strategic personal performance – achievement
Personal ob(cid:77)ectives represented a maximum of 20(cid:8) of total STI opportunity. A performance commentary is given in the table 
below.

Audited

Executive 
Director

Paul Feeney

Outcome as
% of max

(cid:25)0(cid:8)

Weighting as % 
of total STI 

opportunity Overview

Key achievements in the year

20% Ob(cid:77)ectives for 2020 were 
focused on the strategic 
development of the business 
to maximise future growth 
potential, whilst achieving 
strong core business 
performance and creating 
value for shareholders.

 – Strong leadership throughout the CO(cid:57)ID-19 

pandemic, ensuring uninterrupted support for 
customers, advisers and employees. Increased 
support for employees’ and advisers’ wellbeing as 
Quilter’s ‘Thrive’ programme sponsor. 

 – PTP prudently managed and poised for completion 

in early 2021, following the safe and secure 
execution of two migrations in 2020, despite the 
disruption and restrictions caused by CO(cid:57)ID-19. 

 – The business demonstrated strong resilience 
throughout the year, including financial and 
operational strength, with a rapid response to the 
unprecedented operating environment supported 
by accelerated digitalisation across the business.

 – Good progress made on important strategic 

initiatives, in particular PTP, as well as delivery of the 
workplace strategy on London property, progress 
on a new payments system for Quilter Financial 
Planning advisers and the Information Security 
Improvement Plan.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

Mark Satchel

20% Ob(cid:77)ectives were to support 

 – Robust cash and liquidity monitoring, proactively 

70%

our Optimisation goals, 
deliver strong cost 
management across the 
business, whilst achieving 
strong core business 
performance and creating 
value for shareholders.

managing risks and market volatility. 

 – Instilled strong cost discipline, delivering expenses 

ahead of expectations.

 – Oversaw management actions to realise cost 
savings in response to the CO(cid:57)ID-19 crisis, 
protecting shareholder interests.

 – Optimisation programme progressing well with 
(cid:101)4(cid:25) million in run-rate benefit delivered to date. 

 – Led the implementation of a new integrated 

General Ledger system which is a key development 
to the Optimisation programme. 

Risk adjustment
As part of the review, the Committee considered whether the overall STI outcomes were appropriate in the context of overall 
business performance and individual strategic(cid:18)personal ob(cid:77)ectives, and whether any exceptional risk events occurred which, in 
the Committee’s opinion, may have materially affected the STI outcome. The Committee also considered an annual risk report and 
the recommendations of the Chief Risk Officer and (cid:37)oard Risk Committee in respect of the incidence and materiality of any risk 
issues arising during the year and an overall assessment of risk management relative to the Board’s risk appetite and risk culture 
across the business. 

The Committee decided that a discretionary risk-based downward ad(cid:77)ustment should be applied to both Executive Directors’ 
STI outcomes. This is in respect of the risks brought into the business relating to historic pension transfer advice provided by 
Lighthouse to (cid:37)ritish Steel Pension Scheme members prior to Quilter’s acquisition of Lighthouse, which have resulted in a net 
provision of (cid:101)24 million to cover redress costs and fees. The Committee concluded this constituted a material risk event for the 
business and, given the Executive Directors have overall accountability for all business activity, decided that a downward 
ad(cid:77)ustment equal to 10(cid:8) of maximum STI should be applied to the outcomes above.

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

137

 
 
 
 
Annual Report on Remuneration 
continued

COVID-19 adjustment 
The Executive Directors considered the impact of the CO(cid:57)ID-19 pandemic on business performance and the interests of all 
stakeholders, and recommended to the Committee to receive (cid:93)ero STI award for 2020, and to instead direct any available funding 
towards a small discretionary bonus pool to recognise the contribution of the wider workforce. The Committee considered the 
post risk-ad(cid:77)usted STI outcomes in the context of the CO(cid:57)ID-19 pandemic, and that the wider employee base had done an 
excellent (cid:77)ob in very challenging and unprecedented circumstances to continue to support our customers and maintain progress 
with key strategic activity throughout this difficult period. On this basis, the Committee agreed with the Executive Directors and, 
consequently, exercised discretion to reduce the Executive Directors STI award to (cid:93)ero for 2020.

Executive Director

Paul Feeney

Mark Satchel

Financial 
performance

(cid:49)(cid:82)(cid:81)(cid:16)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)
performance

% of salary

% of salary

0%

0%

47%

(cid:24)(cid:24)(cid:8)

Risk 
adjustment

Reduction in 
% of salary

(20(cid:8))

(20(cid:8))

COVID-19
adjustment

Reduction in 
% of salary

(27(cid:8))

(3(cid:24)(cid:8))

Total STI

% of salary

0%

0%

Short-Term Incentive (“STI”) for 2021
In line with our Policy, both Executive Directors are eligible to receive up to 200(cid:8) of base salary. Performance will be based 
on a combination of Group financial performance targets as well as strategic (including customer and risk measures) and 
personal measures. 

In 2021, the financial aspect of the STI award will also include NCCF as a percentage of opening AuMA, with a scorecard 
weighting of 20(cid:8). The IFRS profit before tax (excluding amortisation, policyholder tax ad(cid:77)ustments and one-off items) 
weighting will be reduced from (cid:25)0(cid:8) to 40(cid:8), resulting in the total financial aspect of the scorecard remaining unchanged 
at (cid:25)0(cid:8). 

There are no other changes to the scorecard metrics or weightings.

Actual targets for 2021 have not been disclosed due to commercial sensitivity. These targets will be disclosed in the 2021 
Report.

138

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Vesting of Long-Term Incentive (“LTI”) Awards
On 31 December 2020, the awards granted on 2(cid:24) June 2018, the day the Company listed, under the PSP (which is an LTI plan) 
reached the end of their performance period. These awards will vest on 2(cid:25) March 2021, with the vested shares sub(cid:77)ect to a 
further two-year post-vesting holding period. The performance conditions which applied to the 2018 LTI and the performance 
achieved are set out below. 

Audited

Performance condition

EPS CAGR (2017-20)3

Relative TSR(cid:24)

Weighting

70%

30(cid:8)

Threshold1
(25% vesting)

Maximum1 

(100% vesting)

Performance
Achieved2

(cid:24)(cid:8)4

Median

1(cid:24)(cid:8)4

(cid:25).8(cid:8)

Upper 
quartile

(cid:25)4 out of 184 
companies

A(cid:90)ard (cid:50)utcome

Weighted 
Percentage of 
Award Vesting

2(cid:25).9(cid:8)

21.8%

(cid:23)(cid:27)(cid:17)(cid:26)(cid:8)

1  Straight-line interpolation between points.
2  The Committee ad(cid:77)usted the EPS CAGR performance condition to reflect the sale of Quilter Life Assurance. 
3  Ad(cid:77)usted Profit-based, pre-dividend excluding amortisation and goodwill.
4   The Committee ad(cid:77)usted the EPS CAGR threshold and maximum targets from (cid:25)-10(cid:8) to (cid:24)-1(cid:24)(cid:8) to reflect the sale of Quilter Life Assurance. This had the effect of 

increasing the level of challenge in the targets, and reducing the pay-out for the EPS metric for 2017-20 from 27.9(cid:8) to 2(cid:25).9(cid:8).

(cid:24)  Ranking relative to the constituents of the FTSE-2(cid:24)0 excluding Investment Trusts.

To ensure that performance could be fairly and consistently assessed against the performance conditions and the outcome 
appropriately reflective of performance achieved, the Committee, supported by independent expert advice, considered the 
impact of the sale of Quilter Life Assurance, which completed on 31 December 2019. The Committee decided to exclude Quilter 
Life Assurance profits ad(cid:77)usted for certain stranded costs from the base year of the Ad(cid:77)usted Profit-based EPS CAGR calculation 
to ensure the earnings growth was measured on a like-for-like basis between the end year and the base year. The Committee also 
revised the CAGR performance range from the original targets of (cid:25)(cid:8) at threshold and 10(cid:8) at maximum, to (cid:24)(cid:8) at threshold and 
1(cid:24)(cid:8) at maximum. This wider CAGR range aligns to the 2020 LTI award, the targets for which were set following the sale of Quilter 
Life Assurance and reflect the expectation for an increased rate of earnings growth for the business excluding Quilter Life 
Assurance. The Committee also considered the performance outcome against the original CAGR range of (cid:25)-10(cid:8) and decided the 
approach to apply the (cid:24)-1(cid:24)(cid:8) range, which provided the lesser of the two potential vesting outcomes was appropriate. A 
breakdown of the ad(cid:77)ustment is provided below(cid:29)

Audited

Performance condition

Ad(cid:77)usted Profit (cid:11)(cid:69)efore tax(cid:12)(cid:20)

(cid:585)less Quilter Life Assurance Profit

(cid:585)plus stranded costs

(cid:585)less finance costs(cid:21)

(cid:53)(cid:72)(cid:89)(cid:76)(cid:86)(cid:72)(cid:71)(cid:3)(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:47)(cid:55)(cid:918)(cid:3)(cid:83)(cid:88)(cid:85)(cid:83)(cid:82)(cid:86)(cid:72)(cid:86)
Ad(cid:77)usted Profit (cid:38)A(cid:42)(cid:53) (cid:11)(cid:21)0(cid:20)(cid:26)-(cid:21)0(cid:12)(cid:20)

2017
£m

(cid:21)0(cid:28)

((cid:25)(cid:25))

(13)

–

130

2020
£m

(cid:20)(cid:25)(cid:27)

–

–

(10)

158

Outcome

(cid:25)(cid:17)(cid:27)(cid:8)

1  Pre-dividend excluding amortisation and goodwill.
2   In 2017, finance costs related to loans from Old Mutual plc and are not comparable to finance costs since Listing in 2018. Therefore, finance costs are 

excluded from the base year, 2017, in the above calculation. 

The Committee also considered whether the performance had been achieved within the Company’s agreed risk appetite and the 
impact of any risk events during the performance period and concluded that no further discretionary ad(cid:77)ustment to the outcome 
was required.

Quilter | Annual report 2020

139

 
 
 
 
 
Annual Report on Remuneration 
continued

As a result of the 2018 LTI awards vesting at 48.7(cid:8), the Executive Director outcomes are as follows(cid:29)

Audited

Executive Director

Paul Feeney

Mark Satchel

Number of 
shares granted

931,034

300,000

Share-settled 
dividend 
equivalents

1(cid:24)(cid:24),848

(cid:24)0,21(cid:25)

% of Awards 
vesting

Number of 
shares vesting

Value of shares
vesting (£000)1

48.7%

48.7%

(cid:24)28,7(cid:25)8

170,380

737.3

237.(cid:25)

1   Deemed value based on the average share price of the final three month period ended 31 December 2020 of (cid:101)1.3943, the actual value will be based on the share 

price when the awards vest on 2(cid:25) March 2021.

Long-Term Incentive (“LTI”) Awards granted in 2020
Executive Directors are eligible to participate in the PSP, which is an LTI plan. The awards granted in 2020 are sub(cid:77)ect to the 
following performance conditions:

Audited

Performance condition

Ad(cid:77)usted EPS CAGR (2019-22)2

Relative TSR3

1  Straight-line interpolation between points.
2  Pre-dividend excluding amortisation and goodwill.
3  Ranking relative to the constituents of the FTSE-2(cid:24)0 excluding Investment Trusts.

Weighting

70%

30(cid:8)

Threshold1
(25% vesting)

Maximum1 

(100% vesting)

(cid:24)(cid:8)

1(cid:24)(cid:8)

Median

Upper quartile

At the end of the three-year performance period, the Committee will critically assess whether the formulaic vesting outcome 
produced by the criteria is (cid:77)ustified. To do this, the Committee will look at several factors, including whether the result is reflective 
of underlying performance and has been achieved within the Company’s agreed risk appetite. If such considerations mean that 
the formulaic outcome of the vesting schedule is not felt to be (cid:77)ustified, then the Committee can exercise downward discretion.

The following LTI awards were granted in respect of the 2020 performance year(cid:29)

Audited

Executive 
Director

Form of award

Date of award

Paul Feeney Nil cost options

Mark Satchel Nil cost options

27 March 
2020

27 March 
2020

Basis of award
(% of salary)

Share price 
at the date 
of grant

Nil cost 
options 
awarded

Face value
of award1

% vesting 
at
threshold

Performance

200%

(cid:101)1.232(cid:24)

1,09(cid:24),33(cid:24)

(cid:101)1,3(cid:24)0,000

2(cid:24)(cid:8) 2020–2022

200%

(cid:101)1.232(cid:24)

730,223

(cid:101)900,000

2(cid:24)(cid:8) 2020–2022

1   The face value of the award figure is calculated by multiplying the number of shares awarded by the closing share price on the day before the award was granted, of 

(cid:101)1.232(cid:24).

The Committee will consider the impact of the sale of Quilter Life Assurance and other material corporate events on all 
outstanding LTI awards at the respective vesting dates, as disclosed in the 2019 Remuneration Report. As with the 2018 LTI 
outcome, the details of any ad(cid:77)ustments applied by the Committee will be disclosed in the relevant Remuneration Report.

140

Quilter | Annual report 2020

Long-term Incentive Awards to be granted in 2021
The Committee intends to grant awards to the Executive Directors in March 2021 over nil cost options under the PSP with 
a face value of 200% of base salary. There is no change proposed to the metrics, their respective weightings or the threshold 
and maximum outcome performance targets. It should be noted that in setting the target EPS CAGR range the Committee 
has taken into account the anticipated impact of the Company’s current share buyback programme.

Performance condition

Ad(cid:77)usted EPS CAGR (2020-23)2

Weighting

Threshold1
(25% vesting)

Maximum1 
(100% vesting)

70%

8%

20%

Relative TSR3

30(cid:8)

Median Upper quartile

1  Straight-line interpolation between points.
2  Pre-dividend excluding amortisation and goodwill.
3  Ranking relative to the FTSE-2(cid:24)0 excluding Investment Trusts.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

141

 
 
 
 
Annual Report on Remuneration 
continued

Non-executive Director total remuneration
The total remuneration for the Non-executive Directors is set out in the table below. Non-executive Directors are not entitled to 
any benefits, pension or pension equivalents, or awards under any of the equity plans. All Non-executive Directors have a service 
contract with a three months’ notice period and an initial three-year term from appointment, sub(cid:77)ect to annual re-election at the 
AGM, as detailed in the Policy. For 2020, the regular fees were paid at the following rate(cid:29)

Annual fees (Quilter Board)

(cid:585)Chairman

(cid:585)(cid:37)asic annual fee

Additional fees(cid:29)

(cid:585)Senior Independent Director

(cid:585)Chairs of (cid:37)oard Audit, Risk, Remuneration and Technology and Operations Committee

(cid:585)Members of the above Committees

(cid:585)Members of the (cid:37)oard Corporate Governance and Nominations Committee

(cid:41)ees (cid:11)(cid:54)u(cid:69)sidiary (cid:37)oards(cid:12)(cid:29)

(cid:585)Chairman of Subsidiary (cid:37)oards

(cid:585)(cid:37)oard Member of Quilter Financial Planning ((cid:522)QFP(cid:523)), Quilter Investors ((cid:522)QI(cid:523)), Quilter Cheviot ((cid:522)QC(cid:523))

(cid:37)oard Member of Quilter International ((cid:522)International(cid:523))

(cid:585)Members of the Subsidiary (cid:37)oard Committees

2020 fee

(cid:101)37(cid:24),000

(cid:101)(cid:25)(cid:24),000

(cid:101)20,000

(cid:101)2(cid:24),000

(cid:101)10,(cid:24)00

(cid:101)(cid:24),(cid:24)00

(cid:101)80,000

(cid:101)4(cid:24),000

(cid:585)(cid:101)3(cid:24),000

(cid:101)(cid:24),000

Audited

Non-executive 
Director

Glyn Jones

Rosie Harris

Board & 
Committee 
membership

Subsidiary Board 
& Committee 
membership

 Chairman  
(cid:580)  (C)
(cid:580)  (C)(cid:580)
(cid:580)

QC (cid:37)oard and 
GARC member

Fees for 
2020
£’000

37(cid:24).0

Subsidiary 
Board fees
£’000

–

Total for
2020
£’000

37(cid:24).0

Fees for
2019
£’000

37(cid:24).0

Subsidiary
Board fees
£’000

–

Total for
2019
£’000

37(cid:24).0

111.0

(cid:24)0.0

1(cid:25)1.0

111.0

(cid:24)0.0

1(cid:25)1.0

Moira Kilcoyne

(cid:580)  (C)(cid:580)

George Reid1

Ruth Markland2

Paul Matthews3

Tim Breedon4

Cathy Turner(cid:24)

(cid:580)  (C)(cid:580)
(cid:580)
(cid:580)  (C)(cid:580)
(cid:580)
(cid:580) (cid:580)

(cid:580) (cid:580)
(cid:580)
(cid:580)  (C)(cid:580)

Suresh Kana(cid:24)

(cid:580) (cid:580)

QIP Chair

International (cid:37)oard 
member
QFP (cid:37)oard and 
GARC member
QI Chair

100.(cid:24)

111.0

120.7

82.1

(cid:24)3.3

QI (cid:37)oard member

3(cid:24).4

30.0

(cid:24)(cid:25).(cid:25)

Jon Little(cid:24)

(cid:580)

QI Chair

(cid:37)oard (cid:38)ommittee (cid:46)ey(cid:29)

 = Board
 (cid:32) (cid:37)oard Audit Committee
 (cid:32) (cid:37)oard Remuneration Committee 
 (cid:32) (cid:37)oard Risk Committee 

–

100.(cid:24)

100.(cid:24)

–

100.(cid:24)

81.7

3(cid:24).0

(cid:24)0.4

23.8

1(cid:25).7

–

192.7

1(cid:24)(cid:24).7

132.(cid:24)

77.1

(cid:24)2.1

30.0

(cid:25)0.0

11(cid:25).(cid:25)

111.8

111.(cid:24)

7(cid:24).(cid:24)

–

9(cid:24).(cid:24)

81.0

7(cid:24).(cid:24)

8(cid:24).0

19(cid:25).8

3(cid:24).0

14(cid:25).(cid:24)

4(cid:24).4

120.9

–

–

4(cid:24).0

140.(cid:24)

–

81.0

82.4

1(cid:24)7.9

  (cid:32) Senior Independent Non-executive Director 
  (cid:32) (cid:37)oard Technology and Operations Committee 
  (cid:32) (cid:37)oard Corporate Governance and Nominations

(C) (cid:32) Chair

1(cid:585) George Reid’s responsibilities reduced in 2020 following the sale of QLA on 31 December 2019 of which (cid:37)oard George Reid was Chair. Additionally George Reid 

stood down from the Quilter (cid:58)ealth Solutions GARC on 30 April 2020.

2(cid:585) Ruth Markland was appointed Chair of the (cid:37)oard Remuneration Committee 14 May 2020.
3(cid:585) Paul Matthews was appointed to the Quilter (cid:37)oard Remuneration Committee on 14 May 2020. Paul is a member of the Quilter Financial Planning Limited (cid:37)oard 
and, with effect from 1 January 2021, serves on its Audit Committee and Risk and Governance Committee, which has replaced its Governance Audit and Risk 
Committee. Paul is in receipt of a temporary uplift in his Quilter Financial Planning Limited fees with effect from 1 January 2021, which reflects the additional 
time commitment currently required in the business area.

4(cid:585) Tim (cid:37)reedon was appointed as an Independent Non-executive Director on 1 June 2020, QI (cid:37)oard member on 1 September 2020 and Chair on 1 October 2020.
(cid:24)(cid:585) Cathy Turner and Suresh Kana stood down from the Quilter (cid:37)oard and all Quilter-related appointments on 14 May 2020, Jon Little stood down from the Quilter 

(cid:37)oard and all Quilter-related appointments on 30 September 2020. 

142

Quilter | Annual report 2020

TSR performance graphic over the period since Admission
£
150

120

90

60

Jun 2018

Dec 2018

Jun 2019

Dec 2019

Jun 2020

Dec 2020

Quilter 

  FTSE-250 excluding Investment Trusts

The graph above shows the Company’s TSR performance versus the FTSE-2(cid:24)0 excluding Investment Trusts over the period ended 
31 December 2020. The FTSE-2(cid:24)0 has been chosen as the Company is a member of that index. 

Group Chief Executive Officer pay
The table below contains the Chief Executive Officer’s annual remuneration since the Company listed in 2018(cid:29)

Financial year

2020

2019

2018

Name

Paul Feeney

Paul Feeney

Paul Feeney

Total remuneration
£’000

Annual bonus as
% of maximum

LTIP vesting as
% of maximum

1,487.3

1,89(cid:25).3

2,778.9

0%

79%

93(cid:8)

48.7%

n/a

n/a

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

Percentage change in Directors remuneration compared to the average employee
The table below sets out the percentage change in salary or fee and STI between the Executive Directors and average employee 
from 2019 to 2020. The annual change in salary is based on the salary of permanent UK employees as at 31 December 2019 and 
31 December 2020, and the annual change in STI excludes employees that are not eligible for bonus. The annual increase in the 
average employee salary is impacted by the inclusion of a high number of operational employees in the Quilter Life Assurance 
business area in 2019, who are no longer employed by Quilter in 2020. This has led to an increase in average salary per employee 
in 2020. As Executive Directors’ benefits have been aligned to other UK employees, the analysis of movement in average benefits 
was not considered practical or meaningful and therefore not included in the below comparison. Further detail of Executive 
Directors’ benefits can be found on page 134 of this Remuneration Report.

Executive Directors

Independent Non-executive Directors

Remuneration 
outcome

Salary/fees

STI

Average 
employee

Chief 
Executive 
(cid:50)(cid:605)(cid:70)(cid:72)(cid:85)

Chief 
Financial 
(cid:50)(cid:605)(cid:70)(cid:72)(cid:85)

Glyn 
Jones

Ruth 
Markland

Rosie 
Harris

George 
Reid

Moira 
Kilcoyne

Paul 
Matthews

Tim 
Breedon

(cid:24)(cid:8)

0%

0%

(49(cid:8))

(100(cid:8))

(100(cid:8))

0%

n/a

0%

n/a

0%

n/a

0%

n/a

0%

n/a

0%

n/a

0%

n/a

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

143

 
 
 
 
 
Annual Report on Remuneration 
continued

Chief Executive Officer pay ratio
The table below sets out the ratio between the Chief Executive Officer’s total remuneration and the median, 2(cid:24)th and 7(cid:24)th 
percentile of the total remuneration of full-time equivalent UK employees.

Total remuneration

Year

2020

2019

Salary

Year

2020

2019

Method

25th percentile

Median

75th percentile

25th percentile

Median

75th percentile

Option A

Option B

(cid:24)0(cid:29)1

(cid:25)2(cid:29)1

33(cid:29)1

39(cid:29)1

19:1

27:1

29,(cid:25)(cid:25)3

30,478

4(cid:24),349

48,48(cid:25)

78,3(cid:25)8

(cid:25)9,114

Pay ratio

All employees £

Method

25th percentile

Median

75th percentile

25th percentile

Median

75th percentile

Option A

Option B

28:1

28:1

19:1

18:1

11:1

14:1

24,000

24,333

3(cid:25),3(cid:24)0

37,001

(cid:25)1,000

48,(cid:25)(cid:25)7

Pay ratio

All employees £

Total remuneration includes salary, benefits, pension, short-term incentives and any value vested from long-term incentives 
during the year. As some 2020 STI amounts across the wider workforce are sub(cid:77)ect to change until after the publication of this 
report, the total remuneration may not be exact. However, any STI changes are expected to be minimal and it is unlikely the pay 
ratios will change significantly once the STI amounts are determined. Our Chief Executive Officer has a higher proportion of 
variable pay in total remuneration, which is the main factor driving the difference in the ratios between salary and total 
remuneration.

From the three options disclosed in the regulations regarding the methodology to identify the employees at median, 2(cid:24)th and 
7(cid:24)th percentiles for comparison between those and the Chief Executive Officer, we recognise that the most precise method, and 
therefore often referred to as the preferred method, is Option A, which calculates the single figure for each UK employee. (cid:58)hilst 
in 2019 we adopted Option B, which uses the Gender Pay Gap Reporting methodology to identify the employees at each quartile, 
we have adopted Option A for 2020 and intend to continue reporting under this method in future years.

(cid:58)hilst adopting Option A has had a slight impact on the 2020 ratios when compared to 2019, the year-on-year variances at each 
quartile, in particular the 7(cid:24)th percentile, reflect the reduction and change in profile of our workforce following the sale of Quilter 
Life Assurance at the end of 2019, and the recommendation of the Chief Executive Officer to receive (cid:93)ero STI for 2020.

Gender pay gap
The Company reported a median gender pay gap of 30(cid:8) and a median bonus gap of 39(cid:8) for 2020. The results reflect the 
under-representation of women in senior roles, which we recognise is a systemic issue facing the wealth management industry 
and will require ongoing, multi-year efforts to resolve. Further details regarding our gender pay gap figures can be found on page 
(cid:24)3 of the Responsible (cid:37)usiness report.

Relative importance of spend on pay
The following table sets out the profit, dividends and overall spend on pay in the years ended 31 December 2020 and 
31 December 2019(cid:29)

Ad(cid:77)usted profit before tax ((cid:101)m)

Dividends1 ((cid:101)m)

Employee remuneration costs2 ((cid:101)m)

2020

1(cid:25)8

78

291

2019 % Change

23(cid:24)

9(cid:24)

31(cid:25)

(29(cid:8))

(18(cid:8))

(8(cid:8))

1   In 2019, the Company paid an interim dividend of 1.7 pence and a final dividend of 3.(cid:24) pence, with total dividends of (cid:101)9(cid:25) million estimated in the 2019 Report. 

However, based on the final share count for 2019, the total dividends paid came to (cid:101)9(cid:24) million. For the 2020 financial year, the Company paid an interim dividend 
of 1.0 pence and recommend a final dividend of 3.(cid:25) pence.

2   Employee remuneration costs represent the underlying employee costs within the ad(cid:77)usted profit view for Quilter, excluding the impact of one-off items. 2019 includes 

(cid:101)22 million of costs relating to Quilter Life Assurance(cid:30) excluding these, 2019 costs were (cid:101)294 million, and the annual reduction is (cid:101)3 million, a 1(cid:8) change. 

144

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Executive Directors’ shareholding and interests in Quilter Share Schemes
The table below shows the Executive Directors’ interests in Company share plans which will vest in future years sub(cid:77)ect to 
performance and(cid:18)or continued service at 31 December 2020 together with any additional interests in shares held beneficially 
by the Executive Directors outside of Group share schemes. The share price at 31 December 2020 was (cid:101)1.(cid:24)3(cid:25)0.

During the period 31 December 2020 to 10 March 2021, there were no exercises or dealings in the Company’s share awards 
by the Directors.

Audited

Scheme interests at 31 December 2020

Performance condition

Paul Feeney

Mark Satchel 

Legally owned
(shares)

Subject to SIP
(shares)

Subject to SAYE
(options)

Deferred STI and 
other awards not 
subject to 
performance
conditions
(shares)

Subject to 
performance 
conditions under
the LTIP (shares)

(cid:25)(cid:24)0,340

(cid:25)(cid:24)(cid:24),392

1,(cid:24)33

1,(cid:24)33

24,000

14,400

1,182,877

(cid:24)27,073

3,24(cid:25),37(cid:24)

1,789,881

Executive Directors’ shareholding requirements 
In line with the Remuneration Policy, each Executive Director is required to acquire and maintain a shareholding equivalent to 
300(cid:8) of base salary (including shares beneficially held by the individual or his(cid:18)her spouse, the net of tax value of unvested share 
interests within Company share plans which are not sub(cid:77)ect to performance conditions and 2(cid:24)(cid:8) of the value of beneficially held 
shares purchased by the individual or his(cid:18)her spouse since the post-cessation shareholding policy came into effect).

As of 31 December 2020, Paul Feeney had not yet satisfied the minimum shareholding requirement but has up to five years from 
the date of Admission or appointment (2(cid:24) June 2023 for Paul Feeney and 13 March 2024 for Mark Satchel) to achieve the 
minimum. 

Audited

Name

Paul Feeney

Mark Satchel 

Value1
£’000

1,9(cid:25)4.3

1,438.1

Multiple of 
base salary

291%

320(cid:8)

1   Includes the estimated net value of unvested share awards which are not sub(cid:77)ect to performance conditions. The calculation is based on the average share price of 

the final three month period ended 31 December 2020 of (cid:101)1.3943, the actual value will be based on the share price when the awards vest on 2(cid:25) March 2021.

Quilter | Annual report 2020

145

 
 
 
 
Annual Report on Remuneration 
continued

Directors’ personal holding and beneficial share interests
As at 31 December 2019 and 31 December 2020, the Executive and Non-executive Directors held the following legal and 
beneficial interests in Ordinary Shares(cid:29)

Audited

Name

Paul Feeney

Mark Satchel

Glyn Jones

Rosie Harris

Moira Kilcoyne

George Reid

Ruth Markland

Paul Matthews

Tim Breedon
Cathy Turner1
Suresh Kana1

Jon Little1

31 December 
2020

31 December 
2019

(cid:25)(cid:24)0,340

(cid:25)(cid:24)(cid:24),392

800,000

17,241

34,482

20,(cid:25)89

20,(cid:25)89

30,000

–

(cid:25)8,98(cid:24)

–

20,(cid:25)89

(cid:24)80,(cid:24)44

377,(cid:24)7(cid:25)

800,000

17,241

34,482

20,(cid:25)89

20,(cid:25)89

30,000

n/a

(cid:25)8,9(cid:25)(cid:24)

–

20,(cid:25)89

1   Shareholding is as at the date of standing down as Independent Non-executive Directors, on 14 May 2020 for Cathy Turner and Suresh Kana, and 30 September 

2020 for Jon Little. 

During the period 31 December 2020 to 10 March 2021, there were no other changes to the interests in shares held by the 
Directors as set out in the table above. 

Legacy arrangements
In 2017, prior to the managed separation of Quilter from Old Mutual plc, a retention award was granted to Mark Satchel to 
recognise the criticality of his role during and beyond the demerger and Listing of Quilter in 2018. The award was not sub(cid:77)ect to 
any performance conditions and vested on 31 August 2020 on the third anniversary of the grant date. As the award was granted 
prior to the Listing of the Company, and it was not a long-term incentive, it does not form part of his remuneration for qualifying 
services as a Director of the Company and is not included within his aggregate emoluments for 2020. In accordance with our 
principles of open and transparent disclosure, details of the award are set out below: 

Audited

Executive Director

Date of vesting

Share price at
date of vesting1

Number of
shares vesting2

Value of shares 
vesting (£000)

Cash-settled 
dividend 
equivalents 
(£000)

Total value of 
shares (£000)

Mark Satchel

31 August 2020

(cid:101)1.430(cid:24)

347,437

497.0

88.2

(cid:24)8(cid:24).2

1   Share price as at 28 August 2020 due to the date of vesting being a public holiday. 
2  The award was originally granted over notional Old Mutual plc shares and converted to Quilter plc shares at Listing. 

Payments within the year to past Directors 
During 2020, Tim Tookey, the former Chief Financial Officer who stood down from the (cid:37)oard on 13 March 2019, received the 
vesting of the one-off LTI award linked to the business preparation and execution of Listing in June 2018. The vesting outcome was 
100(cid:8) of maximum on a pro-rata basis for the time Tim Tookey served as an Executive Director. The amount received upon vesting 
on 1 May 2020 was (cid:101)1,(cid:25)9(cid:24),429 from 1,41(cid:24),21(cid:25) shares with a share price of (cid:101)1.1980. 

146

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Payment for loss of office 
During 2020, there were no payments made to any Directors for loss of office.

External directorships
The table below sets out external directorships held by the Executive Directors.

Executive Directors

External directorships held

Paul Feeney

Mark Satchel

None

None

Fees received 
and retained

–

–

External advisers
On 1 August 2020, Alvare(cid:93) (cid:9) Marsal ((cid:522)A(cid:9)M(cid:523)) acquired Aon’s Executive Compensation team, resulting in A(cid:9)M becoming the 
Committee’s new independent remuneration adviser. The individual providing independent advice to the Committee has 
remained unchanged. During 2020, both firms provided advice covering annual remuneration report and policy disclosures, 
market practice and incentive design. Apart from the above, A(cid:9)M or Aon have no other connection with the Company.

The Committee is satisfied that the advice received from A(cid:9)M is ob(cid:77)ective and independent, and the firm is a member of the 
Remuneration Consultants Group, whose voluntary code of conduct is designed to ensure ob(cid:77)ective and independent advice 
is given to Committees. The total fees paid in respect of remuneration advice during 2020 are as follows(cid:29)

Name

Alvare(cid:93) (cid:9) Marsal

Aon

Key areas of advice received

Annual remuneration report and policy disclosure, market practice, 
incentive design

Annual remuneration report and policy disclosure, market practice, 
incentive design

Total fees 2020

(cid:101)30,21(cid:24)

(cid:101)33,(cid:25)98

Statement of shareholder voting
During the Company’s AGM in May 2020, a resolution to approve the Directors’ Remuneration Report was moved and the votes 
from shareholders cast For was 9(cid:25)(cid:8), and 4(cid:8) Against. Total votes (cid:58)ithheld were 2,(cid:25)31,(cid:24)2(cid:24), which is 0.14(cid:8) of issued share capital. 

A resolution to approve the Directors’ Remuneration Policy was moved during the Company’s first AGM in May 2019(cid:30) the votes 
from shareholders cast For was 97(cid:8), and 3(cid:8) Against. Total votes (cid:58)ithheld were 7,803,013, which is 0.41(cid:8) of issued share capital. 
The next resolution to approve the Directors’ Remuneration Policy will be in 2022 following the upcoming Policy review. 

The Company did not receive a significant percentage of votes against either resolution at the 2020 or the 2019 AGM.

Quilter | Annual report 2020

147

 
 
 
 
Our approach 
to governance

UK Corporate Governance Code 2018 (the “Code”)
Quilter is subject to the Code and complied with all of its provisions during the year. Details of our Corporate Governance 
Framework are available on our website at quilter.com(cid:18)corporategovernance. The Code is publicly available at 
www.frc.org.uk.

Disclosure Guidance and Transparency Rules (“DTRs”)
By virtue of the information included in this Governance section of the Annual Report including our Directors’ Report 
(pages 80 to 1(cid:24)(cid:24)) we comply with the corporate governance requirements of the FCA’s DTRs.

Johannesburg Stock Exchange (the “JSE”)
Quilter has a secondary listing on the Johannesburg Stock Exchange and is permitted by the JSE Listings Requirements 
to follow the corporate governance practices of its primary listing market. Quilter is, however, mindful of the provisions 
of the King I(cid:57) Governance principles and the expectations of our South African shareholders.

1.  Board leadership and 
Company purpose

The Chairman’s introduction on corporate governance on page 81 and the Board Governance 
section on pages 90 to 101 set out how the Board has met its leadership and oversight 
responsibilities under the Code during the year, including its role in promoting the success 
of the Company, monitoring culture across the business and understanding the views of our 
shareholders and other stakeholders. Details of our approach to workforce engagement and 
the key themes arising from the employee feedback received during the year are set out on 
pages 100 and 101.

Responsibility for monitoring the Group’s whistleblowing arrangements, which provide a means 
for our workforce to raise concerns in confidence or anonymously, has been delegated to the 
Board Audit Committee. Details of how this responsibility has been discharged during the year 
can be found in the Board Audit Committee Chair’s report on page 112. Further information 
on the Group’s whistleblowing arrangements can be found in the Responsible Business report 
on page 59.

In accordance with the Companies Act 2006 and the Company’s Articles of Association, 
the (cid:37)oard may authorise Conflicts of Interest. Directors are required to declare any potential 
or actual Conflicts of Interest that could interfere with their ability to act in the best interests 
of Quilter. The Company Secretary maintains a Conflicts of Interest register which is reviewed 
by the Board and the Board Corporate Governance and Nominations Committee. Noting the 
recommendations of the Code, the Board Corporate Governance and Nominations Committee 
is required to pre-approve, on behalf of the (cid:37)oard, any new external appointments that a 
Director wishes to adopt. During the year, the Board Corporate Governance and Nominations 
Committee carefully reviewed requests to approve new external appointments for a number 
of our Non-executive Directors, and concluded that these additional responsibilities would not 
impact their time commitment or cause any potential conflicts of interest for Quilter. In addition, 
the Committee further reviewed the impact for Quilter of Paul Feeney assuming the role of 
Chair of the FCA Practitioner Panel and concluded that this was an appropriate appointment 
for Paul to assume.

148

Quilter | Annual report 2020

 
i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

2. Division of responsibilities

The (cid:37)oard is made up of a ma(cid:77)ority of independent Non-executive Directors and comprises 
the Chairman, who was independent on appointment, two Executive Directors and seven 
independent Non-executive Directors, including the Senior Independent Director. The 
independence of each Non-executive Director is assessed on an annual basis against the 
criteria set out in the Code. 

It is a principle of UK company law that Executive and Non-executive Directors all have the 
same duties and are sub(cid:77)ect to the same constraints. However, in line with the requirements 
of the Code, there is a clear division of responsibilities at the head of Quilter between the 
running of the (cid:37)oard and the executive responsibility for managing Quilter’s business. Our 
Chairman is responsible for the leadership of the Board and managing the business of the 
Board through setting its agenda and taking full account of the issues and concerns of Board 
members. Our Chief Executive Officer is responsible for the day-to-day management of our 
business and the leadership of the Quilter Executive Committee. Further information on the 
Quilter Executive Committee can be found on pages 88 and 89.

The accountabilities, competencies and expectations required of each role on the (cid:37)oard, 
including those required by the Code, have been documented in our (cid:37)oard Charter. This 
includes the responsibilities of the Directors as a whole, including their responsibilities under 
section 172(1) of the Companies Act 200(cid:25), and the role profiles of the Chairman, Senior 
Independent Director, Committee Chairs, Non-executive Directors and Executive Directors. 
Performance against these expectations was assessed in the 2019(cid:18)20 (cid:37)oard Effectiveness 
Review, detailed in the report from our Senior Independent Director on page 105, and it was 
confirmed that all Directors were discharging their roles effectively. The time commitment 
expected of the Non-executive Directors is set out in the (cid:37)oard Charter and their letters of 
appointment. The Board Corporate Governance and Nominations Committee reviews the 
Board Charter annually to ensure it remains relevant and up to date. The Board Charter is 
published on our website at quilter.com(cid:18)corporategovernance to ensure complete 
transparency of the standards we set for ourselves.

As set out in the Board Charter, the Chairman is responsible for ensuring that the Board 
receives accurate, timely and high-quality supporting information. This covers the Company’s 
performance to enable the (cid:37)oard to take sound decisions, monitor effectively and provide 
advice to promote the success of the Company. Working in collaboration with the Chairman, 
the Company Secretary is responsible for ensuring good corporate governance and consults 
with Directors to ensure that good information flows exist and that the (cid:37)oard receives the 
information it requires to be effective.

The (cid:37)oard is the decision-making body for all matters of such importance as to be of 
significance to Quilter as a whole because of their strategic, financial or reputational 
implications or consequences. A summary of the matters that are reserved for the (cid:37)oard’s 
decision, which includes (cid:37)oard appointments, Quilter’s strategy, financial statements, capital 
expenditure and any ma(cid:77)or acquisitions, mergers or disposals, and the appointment and 
removal of the Company Secretary, can be found at quilter.com(cid:18)corporategovernance.

Quilter | Annual report 2020

149

 
 
 
 
Our approach to governance 
continued

3.  Composition, succession 

and evaluation

4.  Audit, risk and 
internal control

150

Quilter | Annual report 2020

The Board Corporate Governance and Nominations Committee is responsible for overseeing the 
composition of the Board and its Committees and ensuring that it is an appropriate size and that 
there is an appropriate balance of diversity in skills, experience, independence and knowledge. 
It is also responsible for reviewing and making recommendations to the Board on succession 
planning for the Board and key leadership positions within Quilter. Details of the composition of 
the Board Corporate Governance and Nominations Committee, how it has discharged its duties 
during the year and the 2019(cid:18)20 (cid:37)oard Effectiveness Review, including the resulting action plan, 
can be found on pages 102 to 107.

The Chairman and all the Non-executive Directors have served on the (cid:37)oard for less than 
five years. All the Directors are sub(cid:77)ect to annual re-election by shareholders and the specific 
reasons why each Director’s contribution is, and continues to be, important to the Company’s 
long-term sustainable success are set out in their biographies on pages 84 to 87.

Risk management and internal control
The Directors are responsible for ensuring that management maintains an effective system 
of risk management and internal control and for assessing its effectiveness. Such a system is 
designed to identify, evaluate and manage, rather than eliminate, the risk of failure to achieve 
business objectives and can only provide reasonable and not absolute assurance against 
material misstatement or loss.

Quilter is committed to operating within a strong system of internal control that enables 
business to be transacted and risk taken without exposing itself to unacceptable potential losses 
or reputational damage. The Quilter Group Governance Manual sets out the Group’s approach 
to internal governance and establishes the mechanisms and processes by which management 
implements the strategy set by the Board to direct the organisation, through setting the tone 
and expectations from the top, delegating its authority and assessing compliance.

Quilter’s principles of internal control (covering financial, operational and compliance areas) 
are to maintain:
 – clearly defined delegated authorities;
 – clearly defined lines of responsibility;
 – robust recording and reporting of transactions to support the financial statements;
 – financial reporting controls procedures and systems which are regularly reviewed;
 – protection of assets; and
 – financial crime prevention and detection.

The Enterprise Risk Management Framework is overseen by the Board Risk Committee and aims 
to align strategy, capital, processes, people, technology and knowledge in order to evaluate and 
manage business opportunities and threats in a structured, disciplined manner. The Group’s 
principal risks and uncertainties are set out on pages 73 to 76.

The Board Audit Committee and the Board Risk Committee have a joint responsibility for the 
oversight of the effectiveness of the internal control framework across Quilter. In addition, 
the (cid:37)oard Technology and Operations Committee has oversight of operational matters more 
broadly, with the (cid:37)oard Risk Committee having responsibility for oversight of Operational Risk. 
The Board Audit Committee regularly reviews the system of internal control on behalf of the 
Board and receives regular reports from management, Internal Audit and the Finance function 
covering, in particular, financial controls. The chairs of the (cid:37)oard Audit Committee, the (cid:37)oard 
Risk Committee and the (cid:37)oard Technology and Operations Committee regularly brief the (cid:37)oard 
on the key matters discussed by these Committees. Throughout the year ended 31 December 
2020 and to date, the Group has operated a system of internal control that provides reasonable 
assurance of effective operations covering all controls, including financial and operational 
controls and compliance with laws and regulations. Processes are in place for identifying, 
evaluating and managing the principal risks facing the Group in accordance with the ‘Guidance 
on Risk Management, Internal Control and Related Financial and Business Reporting’ published 
by the Financial Reporting Council.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Internal control over financial reporting
Management are also responsible for establishing and maintaining adequate internal control 
over financial reporting. This is a process designed to provide reasonable assurance regarding 
the reliability of financial reporting and the preparation of financial statements for external 
reporting purposes in accordance with International Financial Reporting Standards (“IFRS”) 
adopted pursuant to Regulation (EC) No 1(cid:25)0(cid:25)(cid:18)2002 as it applies in the European Union and 
as issued by the International Accounting Standards Board (“IASB”). Internal control over 
financial reporting includes policies and procedures that pertain to the maintenance of 
records that, in reasonable detail:
 – accurately and fairly reflect transactions and dispositions of assets;
 – provide reasonable assurances that transactions are recorded as necessary to permit 
the preparation of financial statements in accordance with IFRS and that receipts and 
expenditures are being made only in accordance with authorisations of management 
and the respective Directors; and

 – provide reasonable assurance regarding prevention or timely detection of unauthorised 
acquisition, use or disposition of assets that could have a material effect on the financial 
statements.

Assurance that these controls are adequate and operating effectively is obtained through 
monthly control self assessments and regular independent assurance activity undertaken by 
first line management and Internal Audit, respectively. Conclusions are reported to the (cid:37)oard 
Audit Committee which examines these and provides further challenge. Finally, the (cid:37)oard 
scrutinises and approves results announcements and the Annual Report and ensures that 
appropriate disclosures have been made. This governance process ensures that both 
management and the (cid:37)oard are given sufficient opportunity to debate and challenge the 
Group’s financial statements and other significant disclosures before they are made public.

Management have assessed the internal controls over financial reporting as of 
31 December 2020 and concluded that, based on their assessment, they were effective. 
The Board Audit Committee has reviewed this assessment as part of its review of the internal 
controls over financial reporting. The Chair of the (cid:37)oard Audit Committee reports on the 
review of controls over financial reporting and how the (cid:37)oard Audit Committee has 
monitored the independence and effectiveness of the internal and external auditors 
on pages 108 to 115. 

The composition of the Board Audit Committee, the Board Risk Committee and the Board 
Technology and Operations Committee is set out on pages 108, 11(cid:25) and 119, respectively.

The Board has delegated responsibility to the Board Remuneration Committee for the 
consideration and approval of the remuneration arrangements for the Chairman, Executive 
Directors and other senior executives. Fees paid to the Non-executive Directors are 
considered regularly by the (cid:37)oard as a whole, with Non-executive Directors not participating. 
The Board Remuneration Committee is also responsible for setting and recommending to the 
Board for approval, the overarching objectives, principles and parameters of remuneration 
policy across the Group, ensuring that Quilter is adopting a coherent approach to 
remuneration in respect of all employees. Information on the composition of the Board 
Remuneration Committee and its activities in 2020 can be found in the Board Remuneration 
Committee Report on pages 122 to 147.

5. Remuneration

Quilter | Annual report 2020

151

 
 
 
 
Directors’ report 

The Directors present their report for the 
financial year ended 31 December 2020

Cautionary statement
This Annual Report has been prepared for, and only for, the 
members of the Company, as a body, and no other persons. 
The Company, its Directors, employees, agents or advisers 
do not accept or assume responsibility to any other person 
to whom this document is shown or into whose hands it may 
come and any such responsibility or liability is expressly 
disclaimed. By their nature, the statements concerning the 
risks and uncertainties facing the Group in this Annual Report 
involve uncertainty since future events and circumstances can 
cause results and developments to differ materially from those 
anticipated. The forward-looking statements reflect knowledge 
and information available at the date of preparation of this 
Annual Report and the Company undertakes no obligation 
to update these forward-looking statements. Nothing in this 
Annual Report should be construed as a profit forecast.

Corporate governance statement
The information that fulfils the requirements of the corporate 
governance statement for the purposes of the FCA’s Disclosure 
Guidance and Transparency Rules ((cid:522)DTRs(cid:523)) can be found in the 
Governance Section of the Annual Report on pages 80 to 1(cid:24)1 
(all of which forms part of this Directors’ Report) and in this 
Directors’ Report.

Information included in the Strategic Report
The Company’s Strategic Report is on pages 1 to 79 and 
includes the following information that would otherwise 
be required to be disclosed in this Directors’ Report(cid:29)

(cid:54)(cid:88)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:3)(cid:80)(cid:68)(cid:87)(cid:87)(cid:72)(cid:85)

(cid:51)(cid:68)(cid:74)(cid:72)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)

Likely future developments in the business

Engagement with employees

Engagement with suppliers, customers and others

Greenhouse gas emissions, energy consumption and 
energy efficiency action 

Financial risks

2(cid:25)

(cid:24)2 and (cid:24)3

(cid:24)0 to (cid:24)9

(cid:24)(cid:25) and (cid:24)7

73

Information to be disclosed under Listing Rule 9.8.4R

(cid:54)(cid:88)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:3)(cid:80)(cid:68)(cid:87)(cid:87)(cid:72)(cid:85)

Details of long-term incentive schemes

Director waivers of emoluments

Shareholder waivers of dividends

Shareholder waivers of future dividends

(cid:51)(cid:68)(cid:74)(cid:72)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)

122 to 147

138

1(cid:24)2

1(cid:24)2

Financial instruments and risk management
Information relating to financial instruments and financial risk 
management ob(cid:77)ectives and policies can be found on pages 
182 to 18(cid:24), 21(cid:24) and 21(cid:25), and 241 to 248.

Branches
During 2020, the Group has operated branches in Hong Kong, 
Ireland, Jersey, Singapore, the United Arab Emirates and the 
United Kingdom.

Profit and dividends
Statutory profit after tax for 2020 was (cid:101)88 million 
(2019(cid:29) (cid:101)14(cid:25) million). 

The Directors have recommended a final dividend for the 
financial year ended 31 December 2020 of 3.(cid:25) pence per 
Ordinary Share which will be paid out of distributable reserves, 
subject to approval by shareholders at the 2021 Annual 
General Meeting. Further information regarding the dividend, 
including key dates, can be found at quilter.com(cid:18)dividends. 
On 11 August 2020 the (cid:37)oard declared an interim dividend of 
1.0 pence per Ordinary Share. The interim dividend was paid 
on 21 September 2020 to shareholders on the UK and South 
African share registers on 4 September 2020.

Shares are held in the Quilter employee benefit trust ((cid:522)E(cid:37)T(cid:523)) 
and the Equiniti Share Plans Trust ((cid:522)ESPT(cid:523)) in connection with 
the operation of the Company’s share plans. Dividend waivers 
are in place for those shares that have not been allocated to 
employees.

Directors
The names of the current Directors of the Company, along with 
their biographical details, are set out on pages 84 to 87 and are 
incorporated into this report by reference. Changes to 
Directors during the year are set out below(cid:29)

Name

Role

(cid:40)(cid:909)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:68)(cid:83)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:18)(cid:85)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)

Suresh Kana

Non-executive Director

Resigned 14 May 2020

Cathy Turner

Non-executive Director

Resigned 14 May 2020

Tim Breedon

Non-executive Director

Appointed 1 June 2020

Jon Little

Non-executive Director

Resigned 30 September 2020

Tazim Essani

Non-executive Director 

Appointed 9 March 2021

Details of the Directors’ interests in the share capital of the 
Company are set out in the Annual Report on Remuneration 
on page 14(cid:25).

The powers given to the Directors are contained in the 
Company’s Articles of Association and are sub(cid:77)ect to relevant 
legislation and, in certain circumstances, including in relation 
to the issuing or buying back by the Company of its shares, 
subject to authority being given to the Directors by 
shareholders in general meeting. The Articles of Association 
also govern the appointment and replacement of Directors. 
The (cid:37)oard has the power to appoint additional Directors or to 
fill a casual vacancy amongst Directors. Any such Director only 
holds office until the next Annual General Meeting ((cid:522)AGM(cid:523)) and 
may offer themselves for re-election. The 2018 UK Corporate 
Governance Code recommends that all directors should be 
sub(cid:77)ect to annual re-election and all Directors will stand for 
re-election at the 2021 AGM.

152

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Articles of Association
The Articles of Association may be amended in accordance 
with the provisions of the Companies Act 200(cid:25) by way of 
a special resolution of the Company’s shareholders. 
Information below sets out the provisions in the Articles 
of Association in force as at the date of this report.

Share capital and control
The Company has Ordinary Shares in issue, representing 
100(cid:8) of the total issued share capital as at 31 December 
2020 and as at 2 March 2021 (the latest practicable date 
for inclusion in this report). Details regarding changes in 
the Company’s share capital can be found in note 2(cid:24) of the 
financial statements on page 22(cid:25). The rights attaching to the 
shares are set out in the Articles of Association and are 
summarised below.

Voting rights of members
On a show of hands, every member or authorised corporate 
representative present has one vote and every proxy present 
has one vote except if the proxy has been duly appointed 
by more than one member and has been instructed by 
(or exercises his discretion given by) one or more of those 
members to vote for the resolution and has been instructed 
by (or exercises his discretion given by) one or more other of 
those members to vote against it, in which case a proxy has 
one vote for and one vote against the resolution. On a poll, 
every member present in person or by proxy has one vote 
for every share of which he is a holder. In the case of (cid:77)oint 
holders, the vote of the person whose name stands first 
in the register of members and who tenders a vote is 
accepted to the exclusion of any votes tendered by any 
other joint holders.

Unless the (cid:37)oard decides otherwise, a member shall not be 
entitled to vote, either in person or by proxy, at any general 
meeting of the Company in respect of any share held by him 
unless all calls and other sums presently payable by him in 
respect of that share have been paid.

Transfers
Save as described below, the Ordinary Shares are freely 
transferable.

A member may transfer all or any of his shares in any manner 
which is permitted by any applicable statutory provision and 
is from time to time approved by the (cid:37)oard. The Company 
shall maintain a record of uncertificated shares in accordance 
with the relevant statutory provisions.

A member may transfer all or any of his certificated shares 
by an instrument of transfer in any usual form, or in such 
other form as the (cid:37)oard may approve. The instrument of 
transfer shall be signed by or on behalf of the transferor and, 
except in the case of a fully paid share, by or on behalf of the 
transferee. The (cid:37)oard may, in its absolute discretion, refuse 
to register any instrument of transfer of any certificated share 
which is not fully paid up (but not so as to prevent dealings in 
listed shares from taking place on an open and proper basis) 
or on which the Company has a lien. The (cid:37)oard may also 

refuse to register any instrument of transfer of a certificated 
share unless it is left at the registered office, or such other 
place as the (cid:37)oard may decide, for registration, accompanied 
by the certificate for the shares to be transferred and such 
other evidence (if any) as the (cid:37)oard may reasonably require 
to prove title of the intending transferor or his right to transfer 
shares(cid:30) and it is in respect of only one class of shares. If the 
(cid:37)oard refuses to register a transfer of a certificated share it 
shall, as soon as practicable and in any event within two 
months after the date on which the instrument was lodged, 
give to the transferee notice of the refusal together with its 
reasons for refusal. The (cid:37)oard must provide the transferee 
with such further information about the reasons for the 
refusal as the transferee may reasonably request. Unless 
otherwise agreed by the (cid:37)oard in any particular case, the 
maximum number of persons who may be entered on the 
register as (cid:77)oint holders of a share is four.

Variation of rights
If at any time the share capital is divided into different classes 
of shares, the rights attached to any class (unless otherwise 
provided by the terms of issue) may, whether or not the 
Company is being wound up, be varied with the consent in 
writing of the holders of three-fourths in nominal value of the 
issued shares of that class or with the sanction of a special 
resolution of the holders of the shares of that class.

Exercisability of rights under an employee share scheme
An E(cid:37)T operates in connection with certain of the Group’s 
employee share plans ((cid:522)Plans(cid:523)). The Trustees of the E(cid:37)T may 
exercise all rights attaching to the shares in accordance with 
their fiduciary duties other than as specifically restricted in 
the relevant Plan governing documents. The Trustee of the 
E(cid:37)T has informed the Company that their normal policy is 
to abstain from voting in respect of the Quilter shares held 
in trust. The Trustee of the Quilter Share Incentive Plan ((cid:522)SIP(cid:523)) 
will vote as directed by SIP participants in respect of the 
allocated shares but the Trustee will not otherwise vote 
in respect of the unallocated shares held in the SIP Trust.

Purchase of own shares
At the AGM held on 14 May 2020, shareholders passed 
resolutions to authorise the Company to purchase a 
maximum of 189,981,04(cid:24) Ordinary Shares of 7 pence each, 
representing 10(cid:8) of the Company’s issued Ordinary Share 
capital at that time. The share buyback programme (the 
(cid:522)(cid:37)uyback(cid:523)), first announced on 11 March 2020 and currently 
using the authority granted by shareholders at last year’s 
AGM, continues. The purpose of the (cid:37)uyback is to distribute 
the net surplus proceeds arising from the sale of Quilter Life 
Assurance to shareholders. As at 31 December 2020, the 
Company had acquired 118,282,047 of its Ordinary Shares 
of 7 pence each, representing (cid:25).(cid:25)3(cid:8) of the Company’s issued 
share capital on the London Stock Exchange ((cid:522)LSE(cid:523)) and the 
Johannesburg Stock Exchange ((cid:522)JSE(cid:523)), at an average price of 
129.32 pence per share. The aggregate amount of 
consideration paid for the Shares acquired under the 
(cid:37)uyback was (cid:101)1(cid:24)2,9(cid:25)3,992. Shares bought back on the JSE 
were purchased pursuant to contingent purchase contracts 
with each of (a) J.P. Morgan Equities South Africa Proprietary 

Quilter | Annual report 2020

153

 
 
 
 
Directors’ report 
continued

Limited and (b) Goldman Sachs International, which were 
approved by shareholders at the 2020 AGM. The contracts 
enable the Company to buy back its shares on the JSE in similar 
fashion and sub(cid:77)ect to the same overall limits as on-market 
purchases on the LSE. The shares acquired under the (cid:37)uyback 
were cancelled upon acquisition. Continuation of the (cid:37)uyback 
is dependent on phased regulatory approvals and continuing 
authority from our shareholders. The Directors are therefore, 
in accordance with institutional guidelines, seeking renewal of 
the share purchase authorities at the 2021 AGM. Further 
information on the (cid:37)uyback can be found on pages 41, (cid:25)(cid:24) and 99.

The Odd-lot Offer, which was approved by shareholders 
at the 2019 AGM, was launched on 11 March 2020 and closed 
on 1(cid:24) May 2020. On 29 May 2020, the Odd-lot Offer was 
implemented and the Company purchased a total of 
1(cid:25),2(cid:25)3,3(cid:25)4 of its own Ordinary Shares of 7 pence each, 
representing 0.87(cid:8) of the Company’s issued share capital 
as at that date. The Odd-lot Offer was conducted across the 
Company’s UK and South African share registers. The Company 
purchased 1(cid:25)9,2(cid:25)4 Shares on the UK register at a price of 
120.24 pence per Share and 1(cid:25),094,100 Shares on the South 
African register at 2,812.(cid:25)3 South African cents per share. 
The aggregate amount of the consideration paid was (cid:101)203,(cid:24)23 
and 4(cid:24)2,(cid:25)(cid:25)7,484.83 South African Rand, respectively. The 
shares purchased as part of the Odd-lot Offer were initially 
held as treasury shares and were then transferred to the E(cid:37)T 
on 1 June 2020. For more information on the Odd-lot Offer 
please refer to pages 1(cid:24) and 2(cid:25)7.

Employment of disabled persons
Providing an environment where employees are safe and 
there is equality of opportunity is a key element in enabling 
our people to succeed and deliver the business strategy. 
Using our diversity and our relationships to learn from one 
another enables us to create one business that provides better 
opportunities for our people and better outcomes for our 
customers. We are committed to creating an inclusive culture 
which embraces diversity. (cid:58)e therefore promote equal 
opportunities and ensure that no applicant or colleague is 
sub(cid:77)ect to less favourable treatment on the grounds of gender, 
marital status, nationality, ethnicity, age, sexual orientation, 
responsibilities for dependents, or physical or mental disability. 
(cid:58)e are committed to continuing the employment of, and for 
arranging training for, employees who have become disabled 
while employed by Quilter. (cid:58)e select candidates for interview, 
career development and promotion based on their skills, 
qualifications, experience and potential.

Significant agreements (change of control)
All the Company’s Share Plans contain provisions relating 
to a change of control. In the event of a change of control, 
outstanding awards and options may be lapsed and replaced 
with equivalent awards over shares in the new company, 
sub(cid:77)ect to the (cid:37)oard Remuneration Committee’s discretion. 
Alternatively, outstanding awards and options may vest and 
become exercisable on a change of control sub(cid:77)ect, where 
appropriate, to the assessment of performance at that time 
and time pro-rating of awards. The (cid:37)oard Remuneration 
Committee has discretion to waive time pro-rating to an extent.

Short-term incentive ((cid:522)STI(cid:523)) awards may continue to be paid in 
respect of the full financial year pre and post change of control, 
or a pro-rated STI award may be paid in respect of the portion 
of the year that has elapsed at the point of change of control. 
Exceptionally, the (cid:37)oard Remuneration Committee may 
exercise its discretion to waive pro-rating.

On a change of control, including following a takeover bid, the 
Company is required to enter into negotiations in good faith with 
the lenders under the Group’s Revolving Credit Facility in respect 
of any changes to its terms. If after such negotiations no 
agreement has been reached, the Revolving Credit Facility would 
be cancelled and existing drawdowns would become repayable.

The Group is also party to a number of supplier agreements that 
may be terminated upon a change of control of the Company, 
including following a takeover bid. In many cases, whether this 
may apply depends on the identity or characteristics of the new 
controller. This may result in the provision of certain services and 
software licences being terminated early.

Directors’ indemnities
Qualifying third-party indemnity provisions (as defined by 
section 234 of the Companies Act 200(cid:25)) were in force during 
the course of the financial year ended 31 December 2020 for 
the benefit of the then Directors and, at the date of this report, 
are in force for the benefit of the Directors in relation to certain 
losses and liabilities which they may incur (or have incurred) in 
connection with their duties, powers and office. In addition, the 
Company maintains Directors’ and Officers’ Liability Insurance 
which gives appropriate cover for legal action brought against 
its Directors.

Major shareholders
As at 31 December 2020, the Company had been notified, 
in accordance with Rule (cid:24) of the FCA’s DTRs, of the following 
holdings of voting rights in its Ordinary Share capital(cid:29)

(cid:49)(cid:68)(cid:80)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)

Allan Gray Unit Trust 
Management (RF) 
Proprietary Limited

Coronation Asset
Management (Pty) Ltd

Equiniti Trust (Jersey) 
Limited2

Norges Bank

Prudential Portfolio 
Managers (South 
Africa) (PT(cid:60)) Ltd

Public Investment 
Corporation of the 
Republic of South 
Africa

(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:89)(cid:82)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:3)
(cid:68)(cid:87)(cid:87)(cid:68)(cid:70)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)
(cid:52)(cid:88)(cid:76)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)

(cid:8)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)
(cid:89)(cid:82)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:3)
(cid:68)(cid:87)(cid:87)(cid:68)(cid:70)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)
(cid:52)(cid:88)(cid:76)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)1

(cid:49)(cid:68)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:75)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:81)(cid:82)(cid:87)(cid:76)(cid:564)(cid:72)(cid:71)

(cid:25)8,880,114

304,072,00(cid:25)

8(cid:24),403,2(cid:24)0

92,(cid:24)81,(cid:24)(cid:25)1

3.(cid:25)2

17.03

4.(cid:24)8

4.98

Direct

Direct

Direct

Direct

91,942,798

4.83

Indirect

179,47(cid:25),894

10.04

Direct

1The percentage of voting rights detailed above was calculated at the time of the 
relevant disclosures made in accordance with Rule (cid:24) of the FCA’s DTRs.
2These shares are held by Equiniti Trust ( Jersey) Limited in its capacity as Trustee 
of the Quilter Employee (cid:37)enefit Trust.

154

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

i

F
n
a
n
c
a

i

l

s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

As at 2 March 2021, the latest practicable date for inclusion 
in this report, the following voting rights had been notified, 
in accordance with Rule (cid:24) of the FCA’s DTRs(cid:29)

(cid:49)(cid:68)(cid:80)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:3)
(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)

Allan Gray Unit Trust 
Management (RF) 
Proprietary Limited

Coronation Asset 
Management (Pty) Ltd

Equiniti Trust (Jersey) 
Limited2

Norges Bank

Prudential Portfolio 
Managers (South 
Africa) (PT(cid:60)) Ltd

Public Investment 
Corporation of the 
Republic of South 
Africa

(cid:49)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:89)(cid:82)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:3)
(cid:68)(cid:87)(cid:87)(cid:68)(cid:70)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)
(cid:52)(cid:88)(cid:76)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)

(cid:8)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)
(cid:89)(cid:82)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:3)
(cid:68)(cid:87)(cid:87)(cid:68)(cid:70)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)
(cid:52)(cid:88)(cid:76)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)1

(cid:49)(cid:68)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:75)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:81)(cid:82)(cid:87)(cid:76)(cid:564)(cid:72)(cid:71)

(cid:25)8,880,114

304,072,00(cid:25)

8(cid:24),403,2(cid:24)0

70,9(cid:24)2,7(cid:24)2

3.(cid:25)2

17.03

4.(cid:24)8

3.99

Direct

Direct

Direct

Direct 

91,942,798

4.83

Indirect

179,47(cid:25),894

10.04

Direct

1The percentage of voting rights detailed above was calculated at the time of the 
relevant disclosures made in accordance with Rule (cid:24) of the FCA’s DTRs.
2These shares are held by Equiniti Trust ( Jersey) Limited in its capacity as Trustee 
of the Quilter Employee (cid:37)enefit Trust.

Information provided to the Company by ma(cid:77)or shareholders 
pursuant to the FCA’s DTRs is published via a Regulatory 
Information Service and is available at quilter.com(cid:18)investor-
relations.

Donations
Quilter does not make monetary donations or gifts in kind 
to political parties, elected officials or election candidates. 
Accordingly, no such donations were made in 2020. However, 
the Directors are seeking to renew the Company’s and its 
subsidiaries’ authority to make donations not exceeding 
(cid:101)(cid:24)0,000 in aggregate at the 2021 AGM. This is for the 
purposes of ensuring that neither the Company nor its 
subsidiaries inadvertently breach Part 14 of the Companies 
Act 200(cid:25) by virtue of the relevant definitions being widely 
drafted. Further information is available in the 2021 
Notice of AGM.

Directors’ responsibility statements
The Directors are responsible for preparing the Annual 
Report and the Parent Company and consolidated financial 
statements in accordance with applicable law and regulations.

The Directors consider that the Annual Report, taken as 
a whole, is fair, balanced and understandable and provides 
the information necessary for shareholders to assess the 
Company’s and the Group’s position, performance, business 
model and strategy.

Each of the Directors in office as at the date of this report, 
whose names are listed on pages 84 to 87, confirms that, 
to the best of his or her knowledge(cid:29)
 – the consolidated financial statements, which have been 
prepared in accordance with International Financial 
Reporting Standards adopted pursuant to Regulation (EC) 
No 1(cid:25)0(cid:25)(cid:18)2002 as it applies in the European Union, give a 
true and fair view of the assets, liabilities, financial position 
and profit or loss of the Company and the Group(cid:30) and
 – the Strategic Report and Directors’ Report include a fair 
review of the development and performance of the 
business and the position of the Company and the Group, 
together with a description of the principal risks and 
uncertainties that they face.

For further information on the comprehensive process 
followed by the (cid:37)oard in order to reach these conclusions 
please refer to the (cid:37)oard Audit Committee report on pages 
108 to 11(cid:24).

Disclosure of information to Auditors
Each person who is a Director of the Company as at the date 
of approval of this report confirms that(cid:29)
a)  so far as the Director is aware, there is no relevant audit 

information of which the Company’s Auditors are unaware(cid:30) 
and

b) the Director has taken all the steps that he or she ought 
to have taken as a Director in order to make him(cid:18)herself 
aware of any relevant audit information and to establish 
that the Company’s Auditors are aware of that information.

Auditors
The Directors are recommending the reappointment of 
PricewaterhouseCoopers LLP as the Company’s statutory 
auditors at the 2021 AGM.

AGM
The 2021 AGM of Quilter plc will be held at Senator House, 
8(cid:24) Queen (cid:57)ictoria Street, London EC4(cid:57) 4A(cid:37) on Thursday 
13 May 2021 at 11(cid:29)00am (UK time). Details of the business to 
be transacted at the 2021 AGM are included in the Quilter plc 
2021 Notice of AGM which can be found on our AGM Hub at 
quilter.com(cid:18)agm. Under current UK Government guidance, 
it is possible that shareholders may be unable to attend the 
AGM in person. However, we will continue to review the 
arrangements for holding the meeting in the light of the UK 
Government Advice, and will provide up to date information 
for shareholders, including the impact of any legal restrictions 
the UK Government may impose, on our AGM Hub.

(cid:37)y order of the (cid:37)oard 

Patrick Gonsalves 
Company Secretary 
10 March 2021

Quilter | Annual report 2020

155

 
 
 
 
 
Index to the consolidated financial statements

For the year ended 31 December 2020

Group Consolidated Financial Statements 
157  Statement of Directors’ responsibilities
158  Auditors’ report
167   Consolidated income statement 
168  Consolidated statement of comprehensive income
169  Consolidated statement of changes in equity
170   Consolidated statement of financial position
171  Consolidated statement of cash flows

Basis of Preparation and Significant Accounting Policies
172  1: Basis of preparation
173  2(cid:29)  New standards and amendments to standards, 
and interpretations adopted by the Group

174  3(cid:29)  Future standards, amendments to standards, 
and interpretations not early-adopted in these 
financial statements
174  4(cid:29) Significant changes in the year
177  (cid:24)(cid:29) Significant accounting policies

Notes to the Consolidated Financial Statements
189   (cid:25)(cid:29) Acquisitions, disposals and discontinued operations
192   7: Alternative performance measures (“APMs”)
197   8: Segmental information
202   9: Details of revenue
203  10: Details of expenses
206   11: Tax
209   12: Earnings per share 
210  13: Dividends
211  14(cid:29) Goodwill and intangible assets
213   1(cid:24)(cid:29) Property, plant and equipment
214  16: Loans and advances
214  17: Financial investments

215   18(cid:29) Derivative financial instruments – assets and liabilities
215   19(cid:29) Categories of financial instruments
216   20: Fair value methodology
222   21: Structured entities
223   22(cid:29) Trade, other receivables and other assets
223   23: Deferred acquisition costs and contract costs
224   24: Cash and cash equivalents
226   2(cid:24)(cid:29)  Share capital, capital redemption reserve  

and merger reserve

226   26: Share-based payments
229   27: Investment contract liabilities
230   28: Provisions
233   29: Tax assets and liabilities
235   30(cid:29) (cid:37)orrowings and lease liabilities
237   31(cid:29) Trade, other payables and other liabilities
237   32: Contract liabilities
238   33(cid:29) Post-employment benefits
240   34: Master netting or similar arrangements
241   35: Contingent liabilities
241   36: Commitments
241   37(cid:29) Capital and financial risk management
248   38: Fiduciary activities
248   39: Related party transactions

Appendices
250   A: Other accounting policies 
252   (cid:37)(cid:29) Related undertakings 

Financial Statements of the Company
256   Financial statements 
259   Notes to the Company financial statements 

156

Quilter | Annual report 2020

Statement of Directors’ responsibilities 

in respect of the Annual Report and the financial statements

Responsibility statement of the Directors in respect 
of the Annual Report and Accounts
(cid:58)e confirm that to the best of our knowledge(cid:29)
 – the financial statements, prepared in accordance with the applicable 
set of accounting standards, give a true and fair view of the assets, 
liabilities, financial position and profit or loss of the Company and the 
undertakings included in the consolidation taken as a whole(cid:30) and
 – the strategic report includes a fair review of the development and 
performance of the business and the position of the issuer and 
the undertakings included in the consolidation taken as a whole, 
together with a description of the principal risks and uncertainties 
that they face.

(cid:58)e consider the Annual Report, taken as a whole, is fair, balanced 
and understandable and provides the information necessary 
for shareholders to assess the Group’s position and performance, 
business model and strategy.

Signed on behalf of the Board

Paul Feeney 
Chief Executive Officer 
10 March 2021

Mark Satchel
Chief Financial Officer

The Directors are responsible for preparing the Annual Report and the 
Group and parent Company financial statements in accordance with 
applicable law and regulations. 

Company law requires the Directors to prepare Group and parent 
Company financial statements for each financial year. Under that law 
the Directors have prepared the Group and parent Company financial 
statements in accordance with international financial reporting 
standards in conformity with the requirements of the Companies Act 
200(cid:25). Additionally, the Financial Conduct Authority’s Disclosure 
Guidance and Transparency Rules require the directors to prepare the 
Group financial statements in accordance with international financial 
reporting standards adopted pursuant to Regulation (EC) No 1606/2002 
as it applies in the European Union. 

Under company law, Directors must not approve the financial 
statements unless they are satisfied that they give a true and fair view of 
the state of affairs of the Group and parent Company and of the profit or 
loss of the Group for that period. In preparing the financial statements, 
the Directors are required to: 
 – select suitable accounting policies and then apply them consistently;
 – state whether, for the Group and Company, international accounting 
standards in conformity with the requirements of the Companies Act 
200(cid:25) and, for the group, international financial reporting standards 
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the 
European Union(cid:30)

 – make (cid:77)udgements and estimates that are reasonable and prudent(cid:30) 

and

 – prepare the financial statements on the going concern basis unless 
it is inappropriate to presume that the Group and parent Company 
will continue in business. 

The Directors are also responsible for safeguarding the assets of the 
Group and parent Company and hence for taking reasonable steps for 
the prevention and detection of fraud and irregularities.

The Directors are responsible for keeping adequate accounting records 
that are sufficient to show and explain the Group’s and the parent 
Company’s transactions and disclose with reasonable accuracy at any 
time the financial position of the Group and parent Company and enable 
them to ensure that its financial statements and the Directors’ 
Remuneration Report comply with the Companies Act 200(cid:25).

The Directors are responsible for the maintenance and integrity of the 
parent Company’s website. Legislation in the United Kingdom governing 
the preparation and dissemination of financial statements may differ 
from legislation in other (cid:77)urisdictions. 

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

157

 
 
 
 
 
 
Independent auditors’ report to the members of Quilter plc

Report on the audit of the financial statements

Opinion
In our opinion, Quilter plc’s Group financial statements and parent 
Company financial statements (the (cid:522)financial statements(cid:523))(cid:29)
 – give a true and fair view of the state of the Group’s and of the parent 
Company’s affairs as at 31 December 2020 and of the Group’s profit 
and the Group’s and parent Company’s cash flows for the year 
then ended;

 – have been properly prepared in accordance with international 

accounting standards in conformity with the requirements of the 
Companies Act 2006; and

 – have been prepared in accordance with the requirements of the 

Companies Act 200(cid:25).

(cid:58)e have audited the financial statements, included within the Annual 
Report, which comprise(cid:29) the Consolidated statement of financial position 
and Company statement of financial position as at 31 December 2020(cid:30) 
the Consolidated income statement, Consolidated statement of 
comprehensive income, Consolidated statement of changes in equity, 
Consolidated statement of cash flows, Company statement of cash flows 
and Company statement of changes in equity for the year then ended; 
and the notes to the financial statements, which include a description 
of the significant accounting policies.

Our opinion is consistent with our reporting to the (cid:37)oard Audit 
Committee.

Separate opinion in relation to international financial 
reporting standards adopted pursuant to Regulation (EC) 
No 1606/2002 as it applies in the European Union

As explained in note 1 to the Group financial statements, the Group, in 
addition to applying international accounting standards in conformity 
with the requirements of the Companies Act 200(cid:25), has also applied 
international financial reporting standards adopted pursuant to 
Regulation (EC) No 1(cid:25)0(cid:25)(cid:18)2002 as it applies in the European Union.

In our opinion, the Group financial statements have been properly 
prepared in accordance with international financial reporting standards 
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the 
European Union.

Basis for opinion
(cid:58)e conducted our audit in accordance with International Standards on 
Auditing (UK) ((cid:522)ISAs (UK)(cid:523)) and applicable law. Our responsibilities under 
ISAs (UK) are further described in the Auditors’ responsibilities for the 
audit of the financial statements section of our report. (cid:58)e believe that 
the audit evidence we have obtained is sufficient and appropriate to 
provide a basis for our opinion.

Independence
(cid:58)e remained independent of the Group in accordance with the ethical 
requirements that are relevant to our audit of the financial statements in 
the UK, which includes the FRC’s Ethical Standard, as applicable to listed 
public interest entities, and we have fulfilled our other ethical 
responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit 
services prohibited by the FRC’s Ethical Standard were not provided 
to the Group.

Other than those disclosed in note 10 to the financial statements, 
we have provided no non-audit services to the Group in the period 
under audit.

Our audit approach
Context
(cid:58)e were appointed as auditors by the Directors on 19 May 2020. In 
planning for our first year audit of Quilter plc ((cid:522)the Group(cid:523)), we met with 
the Board Audit Committee and members of management across the 
business, to discuss and understand significant changes during the year, 
and to understand their perspectives on associated business risks. (cid:58)e 
used this insight, in addition to our assessment of the previous auditor’s 
approach, when forming our own views regarding the business, as part 
of developing our audit plan and when scoping and performing our audit 
procedures. Due to the volatility of global equity markets during the 
period under audit, we consider that the valuation of level 3 financial 
assets has become inherently more sub(cid:77)ective and therefore this has 
been included as a key audit matter for the current year. Over the year 
further progress has been made in relation to the skilled person review 
for the Lighthouse pension transfer advice provision resulting in a 
revision to the provision recognised. As the review remains ongoing 
there is a high degree of estimation involved in calculating this provision 
and as such we consider this to also be an additional key audit matter this 
year. The audit for the year ended 31 December 2020 has been carried 
out fully remotely as a result of the CO(cid:57)ID-19 pandemic(cid:30) we have utilised 
virtual technologies and collaborative workflow tools to obtain sufficient, 
appropriate audit documentation whilst working in this environment. 

Overview
Audit scope
 – The Group, during the year to 31 December 2020, was structured 

along two operating segments in addition to the head office activities, 
each of which contain several reporting components. (cid:58)e conducted 
audit testing over eleven components in total, which we selected 
based on their financial significance to the consolidated results. 
 – Six components were sub(cid:77)ect to an audit of their complete financial 

information. 

 – Specific audit procedures were also performed on certain balances 

and transactions in respect of a further five components.
 – Taken together, the procedures we performed over the six 

components provided us with coverage of over 4(cid:25)(cid:8) of ad(cid:77)usted profit 
before tax on an absolute basis, 82(cid:8) of total revenue and 81(cid:8) of the 
total assets. 

Key audit matters
 – Goodwill impairment assessment (Group)
 – Valuation of level 3 assets (Group)
 – Lighthouse pension transfer advice provision (Group)
 – Impairment assessment of investments in subsidiaries (parent)
 – Impact of COVID-19 (Group and parent)

158

Quilter | Annual report 2020

Materiality
 – Overall Group materiality(cid:29) (cid:101)7,918,000 based on (cid:24)(cid:8) of Ad(cid:77)usted profit 

before tax from continuing operations.

 – Overall parent Company materiality(cid:29) (cid:101)31,000,000 based on 1(cid:8) of total 

assets.

 – Challenging assumptions made by management in accounting 

estimates and (cid:77)udgements, in particular in relation to the impairment 
assessments of goodwill and investments in subsidiaries, valuation of 
the Lighthouse pension transfer advice provision, and the valuation of 
level 3 assets as described in the related key audit matters below.

 – Performance materiality(cid:29) (cid:101)(cid:24),938,(cid:24)00 (Group) and (cid:101)23,2(cid:24)0,000 (parent 

 – Identifying and testing (cid:77)ournal entries, in particular any (cid:77)ournal entries 

posted with unusual account combinations, such as a credit to 
revenue and a debit to the statement of financial position (other than 
to expected accounts), which may be indicative of the overstatement 
or manipulation of revenue.

 – Designing audit procedures to incorporate unpredictability around 

the nature, timing or extent of our testing.

 – Detailed testing over the classification of costs allocated to business 
transformation costs, which are considered as one-off and added 
back to calculate the ad(cid:77)usted profit measure, in order to identify any 
inappropriate classification which could be indicative of a material 
manipulation of the ad(cid:77)usted profit measure.

There are inherent limitations in the audit procedures described above. 
(cid:58)e are less likely to become aware of instances of non-compliance with 
laws and regulations that are not closely related to events and 
transactions reflected in the financial statements. Also, the risk of not 
detecting a material misstatement due to fraud is higher than the risk 
of not detecting one resulting from error, as fraud may involve deliberate 
concealment by, for example, forgery or intentional misrepresentations, 
or through collusion.

Key audit matters
Key audit matters are those matters that, in the auditors’ professional 
(cid:77)udgement, were of most significance in the audit of the financial 
statements of the current period and include the most significant 
assessed risks of material misstatement (whether or not due to fraud) 
identified by the auditors, including those which had the greatest effect 
on: the overall audit strategy; the allocation of resources in the audit; and 
directing the efforts of the engagement team. These matters, and any 
comments we make on the results of our procedures thereon, were 
addressed in the context of our audit of the financial statements as 
a whole, and in forming our opinion thereon, and we do not provide 
a separate opinion on these matters.

This is not a complete list of all risks identified by our audit.

Company). 

The scope of our audit
As part of designing our audit, we determined materiality and assessed 
the risks of material misstatement in the financial statements.

Capability of the audit in detecting irregularities, 
including fraud
Irregularities, including fraud, are instances of non-compliance with laws 
and regulations. (cid:58)e design procedures in line with our responsibilities, 
outlined in the Auditors’ responsibilities for the audit of the financial 
statements section, to detect material misstatements in respect of 
irregularities, including fraud. The extent to which our procedures are 
capable of detecting irregularities, including fraud, is detailed below.

(cid:37)ased on our understanding of the Group and industry, we identified 
that the principal risks of non-compliance with laws and regulations 
related to breaches of UK and European regulatory principles, such as 
those governed by the Prudential Regulation Authority (PRA) and the 
Financial Conduct Authority (FCA), and unsuitable or prohibited business 
practices, and we considered the extent to which non-compliance might 
have a material effect on the financial statements. (cid:58)e also considered 
those laws and regulations that have a direct impact on the preparation 
of the financial statements such as the Companies Act 200(cid:25). (cid:58)e 
evaluated management’s incentives and opportunities for fraudulent 
manipulation of the financial statements (including the risk of override of 
controls), and determined that the principal risks were related to posting 
inappropriate (cid:77)ournal entries to either inflate revenue or reduce 
expenditure of the Group and the Company, and management bias in 
accounting estimates and (cid:77)udgemental areas of the financial statements, 
such as provisions. The Group engagement team shared this risk 
assessment with the component auditors so that they could include 
appropriate audit procedures in response to such risks in their work. 
Audit procedures performed by the Group engagement team and/or 
component auditors included:
 – Discussions with the (cid:37)oard, management, internal audit, management 

involved in the risk and compliance functions and the Group and 
Company’s legal function, including consideration of known or 
suspected instances of non-compliance with laws and regulation 
and fraud.

 – Reviewing correspondence between the Group and the PRA and FCA 

in relation to compliance with laws and regulations.

 – Assessment of matters reported on the Group’s whistleblowing 

register including the quality and results of management’s 
investigation of such matters.

 – Reviewing (cid:37)oard minutes as well as relevant meeting minutes, 

including those of the (cid:37)oard Audit Committee, (cid:37)oard Remuneration 
Committee, the (cid:37)oard Technology and Operations Committee and 
the (cid:37)oard Risk Committee.

 – Reviewing data regarding policyholder complaints, the Group’s and 
Company’s register of litigation and claims, internal audit reports, 
compliance reports in so far as they related to non-compliance with 
laws and regulations and fraud.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

159

 
 
 
 
Independent auditors’ report to the members of Quilter plc

Report on the audit of the financial statements continued

Key audit matter

How our audit addressed the key audit matter

Goodwill impairment assessment (Group)
Refer to page 110 of the (cid:37)oard Audit Committee Report and note 14 to the financial 
statements.

The goodwill balance of (cid:101)3(cid:24)(cid:25)m (2019(cid:29) (cid:101)3(cid:24)0m) is sub(cid:77)ect to an annual impairment 
review. No impairment charge has been recorded by management against the 
goodwill balance in the current year.

Management analyse discounted cash flows at the operating segment level to 
calculate the value in use for each operating segment. Judgement is used to 
determine the appropriate level at which to perform the impairment assessment. 

Cash flow forecasts are an area of particular focus given the (cid:77)udgements relating 
to future ad(cid:77)usted profit growth and discount rate assumptions.

This has not been determined to be a significant audit risk due to the large amount 
of headroom available in the model. However, this has been an area of audit focus 
due to the inherent sub(cid:77)ectivity in the assumptions used within the model, 
particularly forecasting the impact of CO(cid:57)ID-19 in the future cash flows.

Valuation of level 3 assets (Group)
Refer to notes 19 and 20 of the financial statements.

Level 3 assets have a higher degree of sub(cid:77)ectivity to the valuation process due to 
the lack of an active market to base prices on. The level 3 asset balance as at 31 
December 2020 is (cid:101)1,822m (2019(cid:29) (cid:101)1,717m) of which (cid:101)1,820m (2019(cid:29) (cid:101)1,717m) is 
held within linked policyholder funds where all of the investment risk is borne by 
policyholders and the value of the assets is exactly matched by a corresponding 
liability to policyholders. The ma(cid:77)ority of the assets held are stale priced assets, 
suspended funds and private equity investments. 

The value in the financial statements reflects the year end price received from the 
relevant external party. In the absence of an active market there is an inherently 
higher estimation uncertainty involved in considering the appropriateness of the 
valuation, particularly where these funds invest in higher risk assets such as 
property. Due to the increased level of market volatility seen in the current financial 
year as a result of CO(cid:57)ID-19, combined with the materiality of these assets, we have 
determined this to be a significant audit risk.

(cid:58)e checked that the cash flow forecasts used by management in the assessment 
of goodwill impairment were consistent with the approved three year business 
plan. (cid:58)e evaluated the historical accuracy of the cash flow forecasts, including a 
comparison of the current year actual results with the F(cid:60)20 figures included in the 
prior year forecast. For certain key assumptions which underpinned the forecast 
performance, such as growth of assets under management and the expected 
impact of CO(cid:57)ID-19 in the business plan period, we corroborated these against 
external market data where available. (cid:58)e challenged management on the inclusion 
of certain cash flows where these looked to include future enhancements (such as 
revenues from new products) or future restructuring activity. (cid:58)e found that the 
forecasts have been completed on a basis consistent with prior years and were 
an appropriate basis upon which management could base their conclusions.

We considered the appropriateness of performing the impairment assessment 
at the operating segment level. This included consideration of whether any 
impairment indicators existed at a more disaggregated level, of which none 
were identified. 

We engaged our internal valuation specialists to independently calculate a 
reasonable range for both the discount rate and long term growth rate 
assumptions. (cid:58)e found both of these assumptions to be more conservative than 
our expected range, which is consistent with management’s conclusion that no 
impairment is required. 

We obtained and understood management’s sensitivity calculations over the 
impairment assessment, as well as performing further sensitivity scenarios 
ourselves. (cid:58)e determined that the impairment assessment was not highly 
sensitive to any of the key assumptions, being the discount rate and the forecast 
growth (including the long term growth rate) of cash flows. For each operating 
segment we calculated the degree to which these assumptions would need to 
move before an impairment was triggered. (cid:58)e discussed the likelihood of such 
a movement with management and agreed with their conclusion that there was 
no reasonable possible change that would give rise to an impairment.

The ma(cid:77)ority of level 3 assets are held within linked policyholder funds, as such 
they have been tested using a specific overall materiality level of (cid:101)(cid:24)34m which we 
have determined based on the guidance set out in Practice Note 20 issued by the 
Financial Reporting Council ((cid:522)FRC(cid:523)) for audits of insurers. Our work to address the 
valuation of the level 3 assets included the following procedures.

For those level 3 investments where publically available prices can be obtained we 
have utilised our internal specialist pricing team to reprice these investments as at 
31 December 2020 and investigated any differences identified.

(cid:58)e have confirmed the valuation of a sample of level 3 assets, based on targeting 
the largest fund values, directly with the relevant external party (such as the fund 
administrator or private Company). (cid:58)here confirmations were not returned we 
performed alternative procedures, these procedures included obtaining the 
custodian statements which were sent from the private companies to the Group 
and confirming the value per these custodian statements to the value held by the 
Group.

For a sample of level 3 assets, obtained the most recent audited financial 
statements for the fund ensuring that there have been no adverse opinions and 
agreeing the price held as at the audited financial statement date to the price 
available in the fund audited financial statements. Movements between the prices 
as at the audited financial statements date and the year end date of 31 December 
2020 were reviewed against market movements to ensure that these were in line 
with expectation.

Obtained the ISAE 3402 controls reports for each fund administrator 
(where possible) and reviewed any exceptions which may impact our audit 
of the level 3 assets.

(cid:37)ased on the audit procedures performed and evidence obtained, we concluded 
that the valuation of level 3 assets was appropriate.

160

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Key audit matter

How our audit addressed the key audit matter

Lighthouse pension transfer advice provision (Group)
Refer to page 110 of the (cid:37)oard Audit Committee Report and note 28 to the financial 
statements.

We have assessed and challenged the Group’s methodology and the assumptions 
applied in arriving at the provisions. In demonstrating professional scepticism we 
independently estimated the Lighthouse British Steel redress provision and 
compared our calculation to management’s.

The Group holds a number of provisions, including relating to customer redress. 
The most significant redress provision relates to unsuitable advice provided to 
(cid:37)ritish Steel Pension Scheme members who transferred from that scheme to 
a Defined Contribution scheme.

As at 31 December 2020, the total provision in respect of the (cid:37)ritish Steel members 
was c.(cid:101)28m. This represented c.(cid:101)2(cid:24)m for redress and c.(cid:101)3m for professional fees.

The estimation of provision in relation to unsuitable advice for Defined (cid:37)enefit 
to Defined Contribution pension scheme transfer cases requires detailed 
information on individual members as well as significant (cid:77)udgement and 
sub(cid:77)ectivity to be applied in relation to key assumptions, especially where data is 
not fully available and actual patterns of behaviour are unknown. 

Material assumptions include(cid:29) Actuarial valuations of defined benefit obligations 
under prospective and actual loss scenarios; estimation of the current value of 
assets held by members(cid:30) estimating the likelihood of complaints to arise as well as 
the proportion of complaints that are likely to be upheld(cid:30) and estimating the 
proportion of customers within the population who are eligible for drawing down 
on their pension who may have drawn down on or prior to 31 December 2020.

(cid:58)e estimated potential defined benefit valuations as at 31 December 2020 with 
the support of our internal actuarial experts. They used data from (cid:37)ritish Steel 
Pension Scheme Transfer Packs to provide indicative valuations of members 
interests. These outputs were compared with management’s expert’s calculations 
to understand any material differences. 

Furthermore we obtained evidence from management’s expert in relation to 
actual asset performance and used this to rebase transfer values of scheme 
members assets.

(cid:58)e also obtained data in relation to the split between prospective and actual loss 
cases observed from management’s experts and used this as an indication of how 
members may have behaved in the wider population. Our redress calculation 
output was therefore weighted on a similar basis to experience to date.

We applied reasonable sensitivities (estimated return on assets and proportion 
of customers that may have drawn down) to key assumptions within the provision 
calculation to understand their impact.

We read management’s disclosure in relation to this provision in the context of the 
requirements of IAS 37 and considered the suitability of the sensitivities disclosed.

Although not material to the calculation, further ad(cid:77)ustments were made in 
arriving at individual redress estimates for advisor charges, personal tax and 
interest. 

In relation to the completeness of such defined benefit to defined contribution 
redress provisions, we(cid:29) Considered management’s accounting policy and 
recognition criteria in the context of the requirements of IAS 37(cid:30) reviewed the 
listing of complaints as at year end for any evidence of material omissions of similar 
cases(cid:30) read the output of internal reviews over suitability performed by 
management(cid:30) read any relevant correspondence with regulators in relation to 
unsuitable advice for D(cid:37) to DC transfers(cid:30) checked the population of cases 
identified by management’s expert where a redress calculation had been 
performed against our own listing(cid:30) and where cases of potentially unsuitable 
advice for D(cid:37) to DC schemes had been internally identified, discussed with 
management and considered whether a provision should be recognised in the 
context of IAS 37 and our materiality. 

The calculation of redress is a complex and market sensitive calculation. As noted 
by management the appointed Skilled Person (and management’s expert for the 
purposes of our audit) will be calculating the actual redress payable to individual 
members. Therefore the final redress payable may be materially different to the 
amount recognised as at 31 December 2020 as a result of market movements 
and changes in actual behaviour of drawdown as more data emerges. 

(cid:58)e are satisfied that the methodology applied by management in the context 
of IAS 37 in estimating redress provisions did not result in a material difference 
to our independent estimate. 

Quilter | Annual report 2020

161

 
 
 
 
Independent auditors’ report to the members of Quilter plc

Report on the audit of the financial statements continued

Key audit matter

How our audit addressed the key audit matter

Impairment assessment of investments in subsidiaries (parent)
Refer to note 4 of the parent Company financial statements.

The Company holds investments in subsidiaries of (cid:101)2,2(cid:24)4m (2019(cid:29) (cid:101)2,23(cid:24)m). 
(cid:58)hilst these eliminate on consolidation in the Group financial statements, 
they are recorded in the Company financial statements. 

We have determined the impairment assessment over the investments in 
subsidiaries to be a significant risk in light of the Group market capitalisation being 
lower than the Company equity value at the balance sheet date. Management have 
concluded that no impairment was required.

Impact of COVID-19 (Group and parent)
Refer to the disclosures in the Strategic report and notes 4 and 37 of the financial 
statements.

The emergence of CO(cid:57)ID-19 in 2020 resulted in a significant change to the 
business environment and impacted the value of assets under management/
administration during the year with adverse impact being seen on equity market 
levels whereby there has been significant volatility in the financial markets.

Management has considered the impact of CO(cid:57)ID-19 on the financial statements, 
including specifically looking at the impact on going concern for the Group. The 
Directors have concluded that the Group and its active subsidiaries are, and will 
continue to be for the foreseeable future, a going concern. In reaching this 
conclusion the Directors have performed impairment assessments of goodwill 
and the Company’s investment in subsidiaries, and conducted stress testing 
against emerging risks, concluding that the Group can withstand a severe but 
plausible downside scenario for at least the next 12 months.

The impairment assessment leveraged management’s calculations for the Group 
goodwill impairment assessment referred to above. The key (cid:77)udgement used by 
management in their impairment assessment is the underlying assumption that 
the Company’s investments in Old Mutual (cid:58)ealth Holdings and Quilter Investors 
represents the lowest level at which largely independent cash inflows are 
generated. This assumption allows headroom to be transferred between 
subsidiary entities.

We challenged management over this assumption on the basis that the business 
plan is prepared at a more disaggregated level and requested management to 
provide us with further analyses to demonstrate the significant degree of 
integration between the businesses included in their defined cash generating unit. 

(cid:58)e have corroborated the explanations we received through discussion with the 
relevant component audit teams and review of relevant correspondence with the 
regulator identifying some of the interdependencies.

Overall we are satisfied that there is enough evidence to support the basis of 
management’s impairment assessment and therefore agree with the conclusion 
that no impairment is required.

In assessing management’s consideration of the impact of CO(cid:57)ID-19 on the Quilter 
plc Group and its subsidiaries we have performed the following procedures.

Obtained management’s updated going concern assessment and challenged the 
rationale for assumptions on growth of assets under management(cid:18)administration 
as well as asset returns. (cid:58)e used our knowledge of Quilter’s business 
performance, and corroborated to external market evidence where available. 
Our assessment included reviewing management’s stress testing as described 
in the Viability Statement on pages 78 and 79 and ensuring that appropriate 
consideration had been given to the potential impacts of CO(cid:57)ID-19.

Inquired and understood the actions taken by management to mitigate the 
impacts of CO(cid:57)ID-19, including review of (cid:37)oard Risk Committee and (cid:37)oard Audit 
Committee minutes.

Obtained management’s estimated Solvency capital position and evaluated these 
for consistency of available information and against managements own target 
capital ratios. (cid:58)e found that the Group maintained internal targets for its Group 
Solvency Capital Requirement (SCR) ratio and remained compliant with all external 
regulatory capital requirements as at the date of reporting.

Assessed the impact of remote working on the design and operating effectiveness 
of key controls impacting the preparation of financial information, including 
obtaining and reading relevant internal audit reports.

Assessed the disclosures performed by management in the financial statements 
and checked the consistency of the disclosures with our knowledge of the Group 
and markets based on our audit and other procedures.

(cid:37)ased on the audit procedures performed and evidence obtained, nothing has 
come to our attention that suggests the use of the going concern basis of 
preparation is inappropriate.

162

Quilter | Annual report 2020

How we tailored the audit scope
(cid:58)e tailored the scope of our audit to ensure that we performed enough 
work to be able to give an opinion on the financial statements as a whole, 
taking into account the structure of the Group and the parent Company, 
the accounting processes and controls, and the industry in which they 
operate.

Quilter plc has two operating segments. (cid:58)ithin these segments there 
are around 70 reporting units, of which six are considered financially 
significant due to their contribution to Group ad(cid:77)usted profit before tax, 
and were sub(cid:77)ect to an audit of their complete financial information. In 
addition, a further five reporting entities were in scope for specific audit 
procedures, as these components contributed a significant proportion 
of certain financial statement line items. Our scoping ensured that all six 
of the Group’s business units had reporting components that were 
sub(cid:77)ect to audit procedures over their financial information. Together 
with the procedures performed at the Group level, including auditing the 
consolidation and financial statement disclosures, taxation, and goodwill 
impairment assessment, gave us the evidence we needed for our 
opinion on the financial statements as a whole.

A significant proportion of the Group’s trading is based in the UK 
resulting in the ma(cid:77)ority of the audit procedures being performed locally 
by the UK audit team. Of the eleven components we have performed 
audit procedures over, one of these components was based outside 
the UK, in the Isle of Man, and therefore we receive inter-firm reporting 
over the complete financial information of this component from 
PwC Isle of Man.

(cid:58)e applied materiality of (cid:101)(cid:24)34 million to the classification of unit-linked 
assets and liabilities in the consolidated statement of financial position, 
the related line items in the consolidated income statement and related 
notes, determined with reference to a benchmark of total assets, of 
which it represents 1(cid:8). This materiality was applied solely for our work 
on matters for which a misstatement is likely only to lead to a 
reclassification between line items, in accordance with FRC Practice Note 
20 The audit of Insurers in the United Kingdom.

The Group contains several regulated trading entities and is a regulated 
insurance Group itself. Some activities are outsourced to third party 
providers across the Group, such as investment administration. In 
respect of the outsourced service providers we were able to gain 
appropriate audit evidence through a combination of evaluating the 
providers’ published assurance reports on internal control and 
performing substantive procedures.

Materiality
The scope of our audit was influenced by our application of materiality. 
(cid:58)e set certain quantitative thresholds for materiality. These, together 
with qualitative considerations, helped us to determine the scope of our 
audit and the nature, timing and extent of our audit procedures on the 
individual financial statement line items and disclosures and in evaluating 
the effect of misstatements, both individually and in aggregate on the 
financial statements as a whole.

(cid:37)ased on our professional (cid:77)udgement, we determined materiality for the 
financial statements as a whole as follows(cid:29)

Key audit matter

Overall materiality

Financial statements – Group

(cid:101)7,918,000.

How we determined it

(cid:24)(cid:8) of Ad(cid:77)usted profit before tax from continuing operations

Rationale for 
benchmark applied

(cid:37)ased on the benchmarks used in the annual report, ad(cid:77)usted profit before tax is 
the primary measure used by shareholders in assessing the performance of the 
Group, and is a generally accepted auditing benchmark where the exclusions in 
arriving at the measure are non-recurring in nature. (cid:58)e have reviewed the items 
excluded in calculating ad(cid:77)usted profit before tax and have confirmed that all 
significant reconciling items are either one-off in nature or introduce volatility to 
the income statement (namely policyholder tax ad(cid:77)ustments). However, a small 
number appear to be recurring in nature (namely finance costs) and therefore we 
have not excluded these when arriving at our ad(cid:77)usted profit benchmark for the 
purposes of calculating materiality. 

Financial statements – parent Company

(cid:101)31,000,000.

1(cid:8) of total assets

A benchmark of total assets has been 
used as the Company’s primary 
purpose is to act as a holding Company 
with investments in the Group’s 
subsidiaries, not to generate operating 
profits and therefore a profit based 
measure was not considered 
appropriate.

For each component in the scope of our Group audit, we allocated a 
materiality that is less than our overall Group materiality. The range of 
materiality allocated across components was (cid:101)1,842,000 to (cid:101)7,000,000. 
Certain components were audited to a local statutory audit materiality 
that was also less than our overall Group materiality.

(cid:58)e use performance materiality to reduce to an appropriately low level 
the probability that the aggregate of uncorrected and undetected 
misstatements exceeds overall materiality. Specifically, we use 
performance materiality in determining the scope of our audit and 
the nature and extent of our testing of account balances, classes of 
transactions and disclosures, for example in determining sample si(cid:93)es. 
Our performance materiality was 7(cid:24)(cid:8) of overall materiality, amounting 
to (cid:101)(cid:24),938,(cid:24)00 for the Group financial statements and (cid:101)23,2(cid:24)0,000 for 
the parent Company financial statements.

In determining the performance materiality, we considered a number of 
factors – the history of misstatements, risk assessment and aggregation 
risk and the effectiveness of controls – and concluded that an amount at 
the upper end of our normal range was appropriate.

(cid:58)e agreed with the (cid:37)oard Audit Committee that we would report to 
them misstatements identified during our audit above (cid:101)(cid:24)00,000 (Group 
audit) and (cid:101)1,(cid:24)(cid:24)0,000 (parent Company audit) as well as misstatements 
below those amounts that, in our view, warranted reporting for 
qualitative reasons.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

163

 
 
 
 
Independent auditors’ report to the members of Quilter plc

Report on the audit of the financial statements continued

Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s and the 
parent Company’s ability to continue to adopt the going concern basis 
of accounting included:
 – Obtained the Directors’ updated going concern assessment and 

challenged the rationale for assumptions on growth of assets under 
management(cid:18)administration and asset returns using our knowledge 
of Quilter’s business performance, and corroborating to external 
market evidence where available. Our assessment included reviewing 
management’s stress testing and scenario analyses. 

 – Consideration of the impact of COVID-19 on the Directors’ assessment 
to continue to adopt the going concern basis of accounting as set out 
in the key audit matters of this report.

 – Obtained management’s estimated Solvency capital position and 

evaluated these for consistency of available information and against 
management’s own target capital ratios. (cid:58)e found that the Group 
maintained internal targets for its Group Solvency Capital 
Requirement (SCR) ratio, and is forecast to remain compliant with all 
external regulatory capital requirements for the period covered by the 
going concern assessment; and

 – Confirmed compliance with the debt covenants of the Groups’ 

borrowings, and the forecast continued compliance for the duration 
of the period covered by the going concern assessment.

(cid:37)ased on the work we have performed, we have not identified any 
material uncertainties relating to events or conditions that, individually 
or collectively, may cast significant doubt on the Group’s and the parent 
Company’s ability to continue as a going concern for a period of at least 
twelve months from when the financial statements are authorised 
for issue.

In auditing the financial statements, we have concluded that the 
Directors’ use of the going concern basis of accounting in the preparation 
of the financial statements is appropriate.

However, because not all future events or conditions can be predicted, 
this conclusion is not a guarantee as to the Group’s and the parent 
Company’s ability to continue as a going concern.

In relation to the parent Company’s reporting on how they have applied 
the UK Corporate Governance Code, we have nothing material to add or 
draw attention to in relation to the Directors’ statement in the financial 
statements about whether the Directors considered it appropriate to 
adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect 
to going concern are described in the relevant sections of this report.

Reporting on other information
The other information comprises all of the information in the Annual 
Report other than the financial statements and our auditors’ report 
thereon. The Directors are responsible for the other information. Our 
opinion on the financial statements does not cover the other information 
and, accordingly, we do not express an audit opinion or, except to the 
extent otherwise explicitly stated in this report, any form of assurance 
thereon.

In connection with our audit of the financial statements, our 
responsibility is to read the other information and, in doing so, consider 
whether the other information is materially inconsistent with the financial 
statements or our knowledge obtained in the audit, or otherwise 
appears to be materially misstated. If we identify an apparent material 
inconsistency or material misstatement, we are required to perform 
procedures to conclude whether there is a material misstatement of the 
financial statements or a material misstatement of the other information. 
If, based on the work we have performed, we conclude that there is a 
material misstatement of this other information, we are required to 
report that fact. (cid:58)e have nothing to report based on these 
responsibilities.

(cid:58)ith respect to the Strategic report and Directors’ Report, we also 
considered whether the disclosures required by the UK Companies 
Act 200(cid:25) have been included.

(cid:37)ased on our work undertaken in the course of the audit, the Companies 
Act 2006 requires us also to report certain opinions and matters as 
described below.

Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, 
the information given in the Strategic report and Directors’ Report for 
the year ended 31 December 2020 is consistent with the financial 
statements and has been prepared in accordance with applicable legal 
requirements.

In light of the knowledge and understanding of the Group and parent 
Company and their environment obtained in the course of the audit, 
we did not identify any material misstatements in the Strategic report 
and Directors’ Report.

Directors’ Remuneration
In our opinion, the part of the Annual Report on Remuneration to be 
audited has been properly prepared in accordance with the Companies 
Act 200(cid:25).

164

Quilter | Annual report 2020

Corporate governance statement
The Listing Rules require us to review the Directors’ statements in 
relation to going concern, longer-term viability and that part of the 
corporate governance statement relating to the parent Company’s 
compliance with the provisions of the UK Corporate Governance Code 
specified for our review. Our additional responsibilities with respect to 
the corporate governance statement as other information are described 
in the Reporting on other information section of this report.

(cid:37)ased on the work undertaken as part of our audit, we have concluded 
that each of the following elements of the corporate governance 
statement, included within the Governance Report is materially 
consistent with the financial statements and our knowledge obtained 
during the audit, and we have nothing material to add or draw attention 
to in relation to:
 – The Directors’ confirmation that they have carried out a robust 

assessment of the emerging and principal risks(cid:30)

 – The disclosures in the Annual Report that describe those principal 

risks, what procedures are in place to identify emerging risks and an 
explanation of how these are being managed or mitigated(cid:30)

 – The Directors’ statement in the financial statements about whether 
they considered it appropriate to adopt the going concern basis of 
accounting in preparing them, and their identification of any material 
uncertainties to the Group’s and parent Company’s ability to continue 
to do so over a period of at least twelve months from the date of 
approval of the financial statements(cid:30)

 – The Directors’ explanation as to their assessment of the Group’s and 
parent Company’s prospects, the period this assessment covers and 
why the period is appropriate(cid:30) and

 – The Directors’ statement as to whether they have a reasonable 
expectation that the parent Company will be able to continue in 
operation and meet its liabilities as they fall due over the period of its 
assessment, including any related disclosures drawing attention to any 
necessary qualifications or assumptions.

Our review of the Directors’ statement regarding the longer-term viability 
of the Group was substantially less in scope than an audit and only 
consisted of making inquiries and considering the Directors’ process 
supporting their statement(cid:30) checking that the statement is in alignment 
with the relevant provisions of the UK Corporate Governance Code(cid:30) and 
considering whether the statement is consistent with the financial 
statements and our knowledge and understanding of the Group and 
parent Company and their environment obtained in the course of 
the audit.

In addition, based on the work undertaken as part of our audit, 
we have concluded that each of the following elements of the corporate 
governance statement is materially consistent with the financial 
statements and our knowledge obtained during the audit(cid:29)
 – The Directors’ statement that they consider the Annual Report, taken 
as a whole, is fair, balanced and understandable, and provides the 
information necessary for the members to assess the Group’s and 
parent Company’s position, performance, business model and 
strategy;

 – The section of the Annual Report that describes the review of 

effectiveness of risk management and internal control systems(cid:30) and
 – The section of the Annual Report describing the work of the (cid:37)oard 

Audit Committee.

(cid:58)e have nothing to report in respect of our responsibility to report when 
the Directors’ statement relating to the parent Company’s compliance 
with the Code does not properly disclose a departure from a relevant 
provision of the Code specified under the Listing Rules for review by the 
auditors.

Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in 
respect of the Annual Report and the financial statements, the Directors 
are responsible for the preparation of the financial statements in 
accordance with the applicable framework and for being satisfied that 
they give a true and fair view. The Directors are also responsible for such 
internal control as they determine is necessary to enable the preparation 
of financial statements that are free from material misstatement, 
whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for 
assessing the Group’s and the parent Company’s ability to continue as a 
going concern, disclosing, as applicable, matters related to going concern 
and using the going concern basis of accounting unless the Directors 
either intend to liquidate the Group or the parent Company or to cease 
operations, or have no realistic alternative but to do so.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

165

 
 
 
 
Independent auditors’ report to the members of Quilter plc

Report on the audit of the financial statements continued

Auditors’ responsibilities for the audit of the financial 
statements
Our ob(cid:77)ectives are to obtain reasonable assurance about whether the 
financial statements as a whole are free from material misstatement, 
whether due to fraud or error, and to issue an auditors’ report that 
includes our opinion. Reasonable assurance is a high level of assurance, 
but is not a guarantee that an audit conducted in accordance with ISAs 
(UK) will always detect a material misstatement when it exists. 
Misstatements can arise from fraud or error and are considered material 
if, individually or in the aggregate, they could reasonably be expected to 
influence the economic decisions of users taken on the basis of these 
financial statements.

Our audit testing might include testing complete populations of certain 
transactions and balances, possibly using data auditing techniques. 
However, it typically involves selecting a limited number of items for 
testing, rather than testing complete populations. (cid:58)e will often seek 
to target particular items for testing based on their si(cid:93)e or risk 
characteristics. In other cases, we will use audit sampling to enable 
us to draw a conclusion about the population from which the sample 
is selected.

A further description of our responsibilities for the audit 
of the financial statements is located on the FRC’s website at(cid:29) 
www.frc.org.uk(cid:18)auditorsresponsibilities. This description forms 
part of our auditors’ report.

Use of this report
This report, including the opinions, has been prepared for and only for 
the parent Company’s members as a body in accordance with Chapter 3 
of Part 1(cid:25) of the Companies Act 200(cid:25) and for no other purpose. (cid:58)e do 
not, in giving these opinions, accept or assume responsibility for any 
other purpose or to any other person to whom this report is shown or 
into whose hands it may come save where expressly agreed by our prior 
consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 200(cid:25) we are required to report to you if, 
in our opinion:
 – we have not obtained all the information and explanations we require 

for our audit; or

 – adequate accounting records have not been kept by the parent 

Company, or returns adequate for our audit have not been received 
from branches not visited by us; or

 – certain disclosures of Directors’ remuneration specified by law are not 

made; or

 – the parent Company financial statements and the part of the Annual 
Report on Remuneration to be audited are not in agreement with the 
accounting records and returns.

(cid:58)e have no exceptions to report arising from this responsibility.

Appointment
Following the recommendation of the (cid:37)oard Audit Committee, we were 
appointed by the Directors on 14 May 2020 to audit the financial 
statements for the year ended 31 December 2020 and subsequent 
financial periods. This is therefore our first year of uninterrupted 
engagement.

Mark Pugh 
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
10 March 2021

166

Quilter | Annual report 2020

Consolidated income statement

For the year ended 31 December 2020

Income
Fee income and other income from service activities
Investment return
Other income

Total income

Expenses
Insurance contract claims and changes in liabilities
Change in investment contract liabilities
Fee and commission expenses, and other acquisition costs
Change in third-party interest in consolidated funds
Other operating and administrative expenses
Finance costs

Total expenses

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
Tax expense attributable to policyholder returns

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)

Income tax credit/(expense)
Less: tax expense attributable to policyholder returns

Tax credit attributable to equity holders

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)
(Loss)(cid:18)profit after tax from discontinued operations

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)

Attributable to:
(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:52)(cid:88)(cid:76)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:83)(cid:79)(cid:70)

Notes

9(a)

9(b)

27

10(a)

10(b)

10(e)

11(a)

11(a)

6(c)

(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:50)(cid:85)(cid:71)(cid:76)(cid:81)(cid:68)(cid:85)(cid:92)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:50)(cid:85)(cid:71)(cid:76)(cid:81)(cid:68)(cid:85)(cid:92)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:52)(cid:88)(cid:76)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:83)(cid:79)(cid:70)
Basic
From continuing operations (pence)
From discontinued operations (pence)

12(b)

6(c)

Basic earnings per Ordinary Share (pence)

Diluted
From continuing operations (pence)
From discontinued operations (pence)

Diluted earnings per Ordinary Share (pence)
1See note 4(b) for details of changes to comparative amounts.

12(b)

12(b)

6(c)

12(b)

Year ended 
31 December 
 2020
£m

Year ended 
31 December
2019 restated¹
£m

795
3,89(cid:25)
20

4,711

(1)
(3,328)
(147)
(440)
(692)
(17)

837
(cid:25),(cid:24)(cid:25)(cid:25)
16

7,419

(1)
((cid:24),810)
(167)
(634)
(745)
(17)

(4,625)

(7,374)

86
(36)

50

3
36

39

89
(1)

88

45
(98)

(53)

(66)
98

32

(21)
167

146

88

146

(cid:24).1
(0.1)

5.0

(cid:24).0
(0.1)

4.9

(1.1)
9.1

8.0

(1.1)
8.9

7.8

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

The notes on pages 172 to 2(cid:24)(cid:24) form an integral part of these consolidated financial statements.

Quilter | Annual report 2020

167

 
 
 
 
Consolidated statement of comprehensive income

For the year ended 31 December 2020

Profit after tax
Exchange losses on translation of foreign operations

Items that may be reclassified subsequently to income statement

Measurement movements on defined benefit plans
Tax on amounts related to defined benefit pension plans

Items that will not be reclassified subsequently to income statement

Total other comprehensive expense, net of tax

Total comprehensive income

Attributable to:
Continuing operations
Discontinued operations

(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:52)(cid:88)(cid:76)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:83)(cid:79)(cid:70)

Notes

33

6(d)

Year ended
31 December
2020
£m
88
–

Year ended 
31 December
2019
£m
146
(1)

–

–
–

–

–

88

89
(1)

88

(1)

(7)
1

(6)

(7)

139

(28)
167

139

The notes on pages 172 to 2(cid:24)(cid:24) form an integral part of these consolidated financial statements.

168

Quilter | Annual report 2020

Consolidated statement of changes in equity

For the year ended 31 December 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

31 December 2020
Balance at 1 January 2020
Profit for the year
Total comprehensive income
Dividends
Shares repurchased in 
the(cid:98)buyback(cid:98)programme1
Movement in own shares2
Equity share–based 
payment(cid:98)transactions
Dividend equivalents 
paid(cid:98)on(cid:98)vested(cid:98)shares

Total transactions with the 
(cid:82)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:98)(cid:82)(cid:73)(cid:98)(cid:87)(cid:75)(cid:72)(cid:98)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)

Balance at 31 December 2020

Notes

13

25

26(e)

Share 
capital
£m
133
–
–
–

(8)
–

–

–

(8)

125

Share 
premium
£m
58
–
–
–

Capital 
redemption 
reserve
£m
–
–
–
–

Merger 
reserve
£m
149
–
–
–

Share-based 
payments 
reserve
£m
45
–
–
–

Other 
reserves
£m
1
–
–
–

Retained 
earnings
£m
1,685
88
88
(81)

–
–

–

–

–

58

8
–

–

–

8

8

–
–

–

–

–

149

–
–

(3)

–

(3)

42

–
–

–

–

–

1

(179)
(44)

28

(2)

Total 
share-
holders’
(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
£m
2,071
88
88
(81)

(179)
(44)

25

(2)

(278)

1,495

(281)

1,878

Retained 
earnings
£m
1,191
(5)

1,186
146
(7)
139
(92)
439
(2)

Total 
share-
holders’
(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
£m
2,005
(5)

2,000
146
(7)
139
(92)
–
(2)

15

26

360

(68)

31 December 2019
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:519)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:87)(cid:3)(cid:69)(cid:72)(cid:74)(cid:76)(cid:81)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)
Ad(cid:77)ustment on initial application of IFRS 1(cid:25) (net of tax)

Notes

Share 
capital
£m
133
–

Share 
premium
£m
58
–

Merger 
reserve
£m
588
–

Share-based 
payments 
reserve
£m
34
–

Other 
reserves
£m
1
–

Balance at 1 January 2019
Profit for the year
Other comprehensive expense
Total comprehensive income
Dividends
Release of merger reserve
Movement in own shares

Equity share-based  
payment transactions

Total transactions with the  
owners of the Company

133
–
–
–
–
–
–

–

–

58
–
–
–
–
–
–

–

–

588
–
–
–
–
(439)
–

–

(439)

34
–
–
–
–
–
–

11

11

13

26(e)

1
–
–
–
–
–
–

–

–

2,071
Balance at 31 December 2019
1On 11 March 2020 the Company announced a share buyback programme to purchase shares up to a maximum value of (cid:101)37(cid:24) million, in order to reduce the share capital of the 
Company. The programme commenced on 11 March 2020 and will continue into 2021. During the year ended 31 December 2020, the Company acquired 118.3 million shares for 
a total consideration of (cid:101)1(cid:24)3 million and incurred additional costs of (cid:101)4 million. The shares, which have a nominal value of (cid:101)8 million, have subsequently been cancelled, giving 
rise to a capital redemption reserve of the same value as required by the Companies Act 200(cid:25). In December 2020, the committed remaining share buyback for which 
irrevocable instruction had been provided by the (cid:37)oard, of (cid:101)22 million, was accrued as a liability against retained earnings.
2Movement in own shares includes 1(cid:25).3 million shares repurchased for total consideration of (cid:101)21 million in respect of the previously announced Odd-lot Offer.

1,685

133

149

45

58

1

The notes on pages 172 to 2(cid:24)(cid:24) form an integral part of these consolidated financial statements.

Quilter | Annual report 2020

169

 
 
 
 
Consolidated statement of financial position

At 31 December 2020

Assets
Goodwill and intangible assets
Property, plant and equipment
Investments in associated undertakings
Deferred acquisition costs2
Contract costs
Loans and advances
Financial investments
Reinsurers’ share of insurance policyholder liabilities2
Deferred tax assets
Current tax receivable
Trade, other receivables and other assets
Derivative assets
Cash and cash equivalents

Total assets

(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)

Ordinary Share capital
Ordinary Share premium reserve
Capital redemption reserve
Merger reserve
Share-based payments reserve
Other reserves
Retained earnings

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)

Liabilities
Insurance contract liabilities2
Investment contract liabilities
Third-party interests in consolidated funds
Provisions
Deferred tax liabilities
Current tax payable
(cid:37)orrowings and lease liabilities
Trade, other payables and other liabilities
Contract liabilities
Derivative liabilities

Total liabilities

At 
31 December
2020
£m

At 
31 December
2019 
restated¹
£m

556
142
1
–
413
219
(cid:25)3,274
–
78
24
701
43
1,921

592
143
1
–
455
217
(cid:24)7,207
–
43
13
605
22
2,2(cid:24)3

67,372

61,551

125
58
8
149
42
1
1,49(cid:24)

1,878

–
(cid:24)7,407
(cid:25),(cid:24)13
77
106
1
319
672
379
20

133
58
–
149
45
1
1,(cid:25)8(cid:24)

2,071

–
(cid:24)2,4(cid:24)(cid:24)
(cid:24),318
64
88
6
335
801
403
10

65,494

59,480

Notes

14

15

23

16

17

29(a)

29(c)

22

18

24

25(a)

25(a)

25(a)

25(b)

26(e)

27

28

29(b)

29(c)

30

31

32

18

At 
1 January
2019 
restated¹
£m

550
17
2
11
551
222
(cid:24)8,0(cid:24)4
2,1(cid:25)2
38
47
718
34
2,30(cid:24)

64,711

133
58
–
588
34
1
1,191

2,005

602
(cid:24)(cid:25),4(cid:24)0
3,833
94
59
5
197
979
456
31

62,706

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
1See note 4(b) for details of changes to comparative amounts. 
2The consolidated statement of financial position at 1 January 2019 includes balances for Deferred acquisition costs, Reinsurers’ share of insurance policyholder liabilities 
and Insurance contract liabilities relating to the Quilter Life Assurance ((cid:522)QLA(cid:523)) business that was sold on 31 December 2019.

67,372

61,551

64,711

The consolidated financial statements on pages 1(cid:25)7 to 2(cid:24)(cid:24) were approved by the (cid:37)oard of Directors and authorised for issue on 10 March 2021 and 
signed on its behalf:

Paul Feeney 
Chief Executive Officer 

Mark Satchel
Chief Financial Officer

The notes on pages 172 to 2(cid:24)(cid:24) form an integral part of these consolidated financial statements.

170

Quilter | Annual report 2020

Consolidated statement of cash flows

For the year ended 31 December 2020

The cash flows presented in this statement cover all the Group’s activities (including cash flows within the Group’s discontinued operations) and 
includes flows from both policyholder and shareholder activities. All cash and cash equivalents are available for use by the Group except for cash and 
cash equivalents in consolidated funds (as shown in note 24(a)).

(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:565)(cid:82)(cid:90)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
Cash flows from(cid:18)(used in) operating activities
Taxation paid

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:18)(cid:11)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:12)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)

(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:565)(cid:82)(cid:90)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
Net (acquisitions)(cid:18)disposals of financial investments
Acquisition of property, plant and equipment
Acquisition of intangible assets
Acquisition of interests in subsidiaries2
Net (payments)/proceeds from the disposal of interests in subsidiaries

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:11)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:12)(cid:18)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)

(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:565)(cid:82)(cid:90)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
Dividends paid to ordinary equity holders of the Company
Finance costs on external borrowings
Payment of interest on lease liabilities
Payment of principal lease liabilities
Repurchase of shares3
Repurchase and cancellation of shares4

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)

Net decrease in cash and cash equivalents 
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents

Year ended 
 31 December 
2020
£m

Notes

Year ended 
31 December 
2019
restated1
£m

24(b)

15

14(a)

6(a)

13

10(e)

30(b)

24(c)

1,473
(28)

1,445

(1,419)
(28)
(4)
(20)
(3)

(1,474)

(81)
(10)
(2)
(14)
(41)
(157)

(305)

(334)
2,2(cid:24)3
2

(2,03(cid:24))
(37)

(2,072)

2,1(cid:24)9
(8)
(5)
(87)
78

2,137

(92)
(10)
(3)
(13)
–
–

(118)

(53)
2,30(cid:24)
1

(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:72)(cid:81)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)
1See note 4(b) for details of changes to comparative amounts.
2The acquisition of interests in subsidiaries balance includes (cid:101)20 million of contingent consideration payments relating to historical acquisitions (31 December 2019(cid:29) (cid:101)21 million).
3Repurchase of shares includes shares acquired under the Odd-lot Offer as explained in the consolidated statement of changes in equity, together with other shares acquired 
for use within the Group’s employee share schemes. 
4Repurchase and cancellation of shares are in respect of cash movements associated with the share buyback programme. Further details are included within the consolidated 
statement of changes in equity.

2,253

1,921

24(a)

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

The notes on pages 172 to 2(cid:24)(cid:24) form an integral part of these consolidated financial statements. 

Quilter | Annual report 2020

171

 
 
 
 
Basis of preparation and significant accounting policies

For the year ended 31 December 2020

General information
Quilter plc (the (cid:522)Company(cid:523)), a public limited company incorporated and domiciled in the United Kingdom ((cid:522)UK(cid:523)), together with its subsidiaries 
(collectively, the (cid:522)Group(cid:523)) offers investment and wealth management services, long-term savings and financial advice through its subsidiaries and 
associates primarily in the UK with a presence in a number of cross-border markets.

The address of the registered office is Senator House, 8(cid:24) Queen (cid:57)ictoria Street, London, EC4(cid:57) 4A(cid:37).

1: Basis of preparation
The consolidated financial statements of Quilter plc for the year ended 31 December 2020 have been prepared in accordance with international 
accounting standards in conformity with the requirements of the Companies Act 200(cid:25) ((cid:522)IFRS(cid:523)) and the applicable legal requirements of the 
Companies Act 200(cid:25). In addition to complying with international accounting standards in conformity with the requirements of the Companies Act 
200(cid:25), the consolidated financial statements also comply with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 
1606/2002 as it applies in the European Union.

These consolidated financial statements have been prepared on a historical cost basis, except for the revaluation of certain financial instruments, 
and(cid:98)are presented in pounds sterling, which is the currency of the primary economic environment in which the Group operates.

The separate financial statements of the Company are on pages 2(cid:24)(cid:25) to 2(cid:25)(cid:24). The Company financial statements are prepared in accordance with the 
Group’s accounting policies, other than for investments in subsidiaries, which are stated at cost less impairments in accordance with IAS 27 Separate 
Financial Statements.

Going concern
The Directors have considered the resilience of the Group, taking into account its current financial position, the principal risks facing the business 
and the effectiveness of the mitigating strategies which are or could be applied. This included an assessment of capital, liquidity and solvency over a 
three-year planning period, which considered the impact of CO(cid:57)ID-19, and concluded that the Group can withstand a severe but plausible downside 
scenario for at least the next 12 months after the date of signing the 2020 financial statements. This assessment incorporated a number of stress 
tests covering a broad range of scenarios, including economic and market shocks, new business growth scenarios, severe business interruption, and 
a progression of the CO(cid:57)ID-19 pandemic, equivalent to 1-200 year events. As a result, the Directors believe that the Group is well placed to manage its 
business risks in the context of the current economic outlook and have sufficient financial resources to continue in business for a period of at least 
12 months from the date of approval of these consolidated financial statements, and continue to adopt the going concern basis in preparing the 
consolidated financial statements. 

Basis of consolidation
The Group’s consolidated financial statements incorporate the assets, liabilities and the results of the Company and its subsidiaries. Subsidiaries are 
those entities, including investment funds, controlled by the Group. More information on how the Group assesses whether it has control over an 
entity is provided in accounting policy (cid:24)(a). Subsidiaries are consolidated from the date the Group obtains control and are excluded from consolidation 
from the date the Group loses control.

(cid:58)here necessary, ad(cid:77)ustments are made to financial statements of subsidiaries to bring the accounting policies used in line with Group policies. 
All(cid:98)intercompany transactions, balances and unrealised surpluses and deficits on transactions between Group companies are eliminated 
on(cid:98)consolidation.

Liquidity analysis of the statement of financial position
The Group’s statement of financial position is in order of liquidity as is permitted by IAS 1 Presentation of Financial Statements. For each asset and liability 
line item, those amounts expected to be recovered or settled after more than twelve 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 (cid:77)udgement in applying the Group’s significant accounting policies and make 
estimates and assumptions that affect the reported amounts of net assets and liabilities at the date of the financial statements. The (cid:37)oard Audit 
Committee reviews these areas of (cid:77)udgement and estimates and the appropriateness of significant accounting policies adopted in the preparation 
of these financial statements.

The Group’s critical accounting (cid:77)udgements are detailed below and are those that management makes when applying its significant accounting 
policies and that have the most effect on the net profit and net assets recognised in the Group’s financial statements.

172

Quilter | Annual report 2020

 
1: Basis of preparation continued
Critical accounting estimates and judgements continued

Area

Critical accounting judgements 

Related notes

Recognition of insurance 
recovery asset in respect 
of (cid:47)i(cid:74)hthouse defined 
(cid:69)enefit pension ad(cid:89)ice

For Lighthouse D(cid:37) pension transfer advice provided, management have applied (cid:77)udgement in order to determine whether an 
asset can be reasonably estimated, and the measurement of such asset, in relation to an insurance recovery under Lighthouse’s 
professional indemnity policies ((cid:522)PI Policies(cid:523)). Under the PI Policies, Lighthouse is entitled to be indemnified for a (cid:522)Claim(cid:523) (and 
defence costs) in respect of legal liabilities arising in connection with Lighthouse’s D(cid:37) pension transfer advice activities(cid:30) however, 
at the current time the insurers have not confirmed coverage for legal liabilities.

28

The Group’s critical accounting estimates are shown below and involve the most complex or sub(cid:77)ective assessments and assumptions, which have a 
significant risk of resulting in material ad(cid:77)ustment to the net carrying amounts of assets and liabilities within the next financial year. Management uses 
its knowledge of current facts and circumstances and applies estimation and assumption setting techniques that are aligned with relevant actuarial 
and accounting guidance to make predictions about future actions and events. Actual results may differ from those estimates.

Area

Critical accounting estimates

Related notes

Provision for cost of 
(cid:47)i(cid:74)hthouse defined 
(cid:69)enefit pension ad(cid:89)ice

An estimation of the provision required for the (cid:37)ritish Steel D(cid:37) pension transfer redress was determined based upon 
calculations performed as part of the skilled person review, which was considered representative of the broader population to 
form a reasonable estimate. The estimation per case is based upon FCA guidelines and modelling performed, and factors 
including pension transfer value, date of retirement, discount rate and retail price indexation. The calculations were then 
extrapolated to the entire population of (cid:37)ritish Steel D(cid:37) cases that were advised on by Lighthouse advisers. The proportion of 
cases to be upheld, and therefore which requires redress payments to be made, was estimated based upon the current position 
of the review performed by the skilled person of the Lighthouse D(cid:37) pension transfers.

Insurance recovery 
asset in respect of 
(cid:47)i(cid:74)hthouse defined 
(cid:69)enefit pension ad(cid:89)ice

For Lighthouse D(cid:37) pension transfer advice provided, management have determined its best estimate of the insurance recovery 
asset under Lighthouse’s professional indemnity policies. Under the PI Policies, Lighthouse is entitled to be indemnified for a 
(cid:522)Claim(cid:523) (and defence costs) in respect of legal liabilities arising in connection with Lighthouse’s D(cid:37) pension transfer advice 
activities(cid:30) however, at the current time the insurers have not confirmed coverage for legal liabilities.

Measurement of 
deferred(cid:98)tax 

The estimation of future taxable profits is performed as part of the annual business planning process, and is based on estimated 
levels of AuMA, which are sub(cid:77)ect to a large number of factors including global stock market movements, related movements in 
foreign exchange rates and net client cash flow, together with estimates of expenses and other charges. The business plan, 
ad(cid:77)usted for known and estimated tax sensitivities, is used to determine the extent to which deferred tax assets are recognised. 
In general the Group assesses recoverability based on estimated taxable profits over a three-year planning hori(cid:93)on. (cid:58)here 
credible longer-term profit forecasts are available, the specific entity may assess recoverability over a longer period, sub(cid:77)ect to a 
higher level of sensitivity testing. Following the impact that CO(cid:57)ID-19 has had on global markets and, in particular, on the Group’s 
expected future levels of AuMA, management have reassessed the sensitivity on the recoverability of deferred tax assets based 
on the latest forecast cash flows.

28

28

29

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 flow, revenue margins, and future expenses and discount rates (see note 14). Management do not believe that the use of these 
estimates have a significant risk of causing a material ad(cid:77)ustment to the carrying amount of the assets within the next financial year.

2: New standards, amendments to standards, and interpretations adopted by the Group
There were no new standards or interpretations which became effective from 1 January 2020.

Amendments to standards:
The following amendments to the accounting standards, issued by the International Accounting Standards (cid:37)oard ((cid:522)IAS(cid:37)(cid:523)) and in conformity with the 
requirements of the Companies Act 200(cid:25) and, for the Group, international financial reporting standards adopted pursuant to Regulation (EC) No 
1(cid:25)0(cid:25)(cid:18)2002 as it applies in the European Union, have been adopted by the Group from 1 January 2020 with no material impact on the Group’s 
consolidated results, financial position or disclosures(cid:29)
 – Amendments to References to the Conceptual Framework in IFRS Standards
 – Amendments to IFRS 3 Business Combinations (cid:514) (cid:39)efinition of a Business
 – Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (cid:514) (cid:39)efinition of 

Material

 – Amendments to IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures 

– Interest Rate Benchmark Reform

 – Amendments to IFRS 16 Leases – COVID-19-Related Rent Concessions

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

173

 
 
 
 
Basis of preparation and significant accounting policies

For the year ended 31 December 2020 continued

3: Future standards, amendments to standards, and interpretations not early-adopted in these financial statements
Certain new standards, interpretations and amendments to existing standards have been published by the IAS(cid:37) that are mandatory for the Group’s 
annual accounting periods beginning on or after 1 January 2021. The Group has not early adopted these standards, interpretations and amendments, 
nor does the Group expect these to have a material impact on the Group’s consolidated financial statements. 

 – IFRS 17 Insurance contracts

The IASB issued IFRS 17 Insurance Contracts in May 2017, and Amendments to IFRS 17 in June 2020. (cid:58)hen IFRS 17 is endorsed in conformity with 
the requirements of the Companies Act 200(cid:25) and, for the Group, international financial reporting standards adopted pursuant to Regulation (EC) 
No 1(cid:25)0(cid:25)(cid:18)2002 as it applies in the European Union, it will replace its interim predecessor, IFRS 4 Insurance Contracts. IFRS 17 is a comprehensive 
standard which provides a single accounting model for all insurance contracts. IFRS 17 will replace a wide range of different accounting practices 
previously permitted, improving transparency and enabling investors and regulators to understand and compare the financial position and 
performance of an insurer, irrespective of where they are based geographically.

The Group completed the sale of QLA to ReAssure on 31 December 2019. Following the sale, the impact of IFRS 17 is significantly reduced for the 
Group with only a small number of insurance contracts remaining in the Quilter International business. Therefore, the impact of IFRS 17 is not 
expected to be material. 

The measurement model
The use of current estimates at each reporting date and an explicit risk ad(cid:77)ustment to measure obligations created by insurance contracts, provides 
up to date information about cash flows and associated risk and timing. (cid:522)Day one(cid:523) profits are deferred and recognised in the income statement 
through the release of the contractual service margin ((cid:522)CSM(cid:523)), which has the effect of recognising revenue as services are provided. This principle 
is consistent with the treatment in IFRS 1(cid:24).

Presentation and disclosure
Insurers’ financial statements will be presented differently under IFRS 17. Insurers will be required to provide information about sources of profit 
or losses from insurance and investment related services, comprising insurance revenue and insurance service expenses (underwriting activity), 
as well as finance income or expense (investing activity). New performance metrics and KPIs will be required to explain business results to the 
investment community. Disclosure requirements focus on amounts recognised in the financial statements, significant (cid:77)udgements and changes 
in those (cid:77)udgements, as well as information about the nature and extent of risks that arise from insurance contracts.

Effective date
The IAS(cid:37) issued Amendments to IFRS 17 in June 2020, which defers the effective date of IFRS 17, such that it applies to entities with annual reporting 
periods beginning on or after 1 January 2023. The standard is yet to be endorsed by the EU (draft endorsement issued in September 2020).

4: Significant changes in the year
4(a): Impacts of COVID-19
The Group’s focus in managing the response to CO(cid:57)ID-19 has been to ensure colleagues’ health and safety, maintain operational resilience with high 
levels of client service and provide good outcomes for shareholders. (cid:58)hen the scale of the CO(cid:57)ID-19 pandemic became apparent, the Group 
responded quickly to the challenges faced, with 98(cid:8) of the Group’s colleagues working remotely from late March 2020 and the accelerated delivery 
of(cid:98)IT and remote telephony solutions allowing Quilter to maintain high client service levels and to support customers and advisers.

The Group reviewed its financial budgets and operating plans in response to the challenges arising from CO(cid:57)ID-19 and the unpredictable operating 
outlook. The Group is operationally resilient and remains focused on completing its principal strategic pro(cid:77)ects. The continued volatility in financial 
markets and the impact of more limited face-to-face contact within the advice segment is creating a challenging revenue environment and the Group 
has updated its future cash flows accordingly. Against this backdrop, the Group has undertaken a number of management actions to reduce 
expenses but has acknowledged that future operating margin outcomes will likely be below previous target guidance provided by management. 
The(cid:98)Group did not use the support measures made available to companies by the UK Government.

An impairment assessment of the Group’s goodwill was performed at 30 June 2020, as the impact of CO(cid:57)ID-19 was deemed to be an indicator of 
impairment, and again at 31 December 2020 as part of the annual impairment assessment. The assessments were carried out using the most recent 
(cid:37)oard approved forecasts which incorporated market levels and future assumptions considered relevant in the current market conditions. The 
assessment concluded that no impairment was required. A sensitivity analysis demonstrated that further significant changes to key assumptions 
would be necessary before an impairment is required. Full details are included in note 14.

The Group has assessed the recoverable amount of deferred tax assets based on the taxable profits contained in the most recent (cid:37)oard approved 
three-year forecasts which, as noted above, incorporate market levels and assumptions that reflect the impact of CO(cid:57)ID-19 and concluded that the 
Group has sufficient future taxable profits and reversal of taxable temporary differences to support the (cid:101)78 million deferred tax asset recognised at 
31 December 2020. Further details are included in note 29.

There have been no ma(cid:77)or changes to the Group’s capital and financial risk management as a result of CO(cid:57)ID-19. Full capital and financial risk 
management disclosures are included within note 37.

Detailed discussion of the Group’s performance and financial position to 31 December 2020 are included in the Financial Review.

174

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

4: Significant changes in the year continued

4(b): Changes to comparative amounts
Changes to comparative amounts have been made in respect of consolidated investment funds and fee income receivable. The changes are 
explained in detail in notes 4(b)(i) and 4(b)(ii) respectively, with no impact to the Group’s profit, equity or alternative performance measures. The 
changes to the statement of financial position for the prior periods presented are shown below(cid:29)

Consolidated statement of financial position (extract)

Financial investments

Trade, other receivables and(cid:98)other(cid:98)assets

Derivative assets

Cash and cash equivalents
Other1

Total assets

31 December 2019

1 January 2019

As 
reported
£m
(cid:24)9,34(cid:24)

Consolidated 
funds 
Note 4(b)(i)
£m
(2,138)

Fee income
receivable
Note 4(b)(ii)
£m
–

424

32

2,473

1,4(cid:25)4

(31)

(10)

(220)

–

212

–

–

–

Restated
£m
(cid:24)7,207

605

22

2,2(cid:24)3

1,4(cid:25)4

As 
reported
£m
(cid:24)9,219

Consolidated 
funds
Note 4(b)(i) 
£m
(1,1(cid:25)(cid:24))

530

46

2,39(cid:24)

3,(cid:25)00

(42)

(12)

(90)

–

Fee income
receivable
Note 4(b)(ii)
£m
–

230

–

–

–

Restated
£m
(cid:24)8,0(cid:24)4

718

34

2,30(cid:24)

3,(cid:25)00

63,738

(2,399)

212

61,551

65,790

(1,309)

230

64,711

Third-party interests in consolidated funds

7,(cid:25)7(cid:24)

(2,3(cid:24)7)

(cid:24),318

(cid:24),11(cid:25)

(1,283)

Trade, other payables and other liabilities

Contract liabilities

Derivative liabilities
Other1

Total liabilities

836

191

17

(cid:24)2,948

61,667

(35)

–

(7)

–

–

–

212

–

–

801

403

10

999

226

37

(cid:24)2,948

59,480

(cid:24)7,407

63,785

(20)

–

(6)

–

–

–

230

–

–

3,833

979

456

31

(cid:24)7,407

(2,399)

212

(1,309)

230

62,706

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
1’Other’ represents remaining assets and liabilities not impacted by the changes to comparative amounts.

2,071

–

–

2,071

2,005

–

–

2,005

Changes in respect of consolidated investment funds have also impacted the Group’s consolidated income statement in the prior year. There are no 
prior year income statement impacts arising from the fee income receivable reclassification.

Consolidated income statement (extract)

Year ended 31 December 2019

Fee income and other income from service activities

Investment return

Other income

Total income

Fee and commission expenses and other acquisition costs

Change in third-party interest in consolidated funds

Other operating and administrative expenses
Other1

Total expenses

As 
Reported
£m
936

Consolidated
funds
Note 4(b)(i)
£m
(99)

Restated
£m
837

(cid:25),(cid:24)(cid:25)(cid:25)

16

(300)

(6)

(405)

7,419

127

283

(5)

–

405

(167)

(634)

(745)

((cid:24),828)

(7,374)

(cid:25),8(cid:25)(cid:25)

22

7,824

(294)

(917)

(740)

((cid:24),828)

(7,779)

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)

45

–

45

1’Other’ represents remaining expenses not impacted by the changes to comparative amounts.

Quilter | Annual report 2020

175

 
 
 
 
 
Basis of preparation and significant accounting policies

For the year ended 31 December 2020 continued

4: Significant changes in the year continued
4(b): Changes to comparative amounts continued

The impact to the Group’s consolidated statement of cash flows in respect of changes in consolidated investment funds in the prior year is shown 
below. There are no prior year cash flow statement impacts arising from the fee income receivable reclassification.

Consolidated statement of cash flows (extract)

Cash flows from(cid:18)(used in) operating activities

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:18)(cid:11)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:12)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86) 

Net (acquisitions)(cid:18)disposals of financial investments

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:11)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:12)(cid:18)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:72)(cid:81)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)

Year ended 31 December 2019

As 
Reported
£m
(2,00(cid:25))

(2,043)

2,2(cid:25)0

2,238

77

2,39(cid:24)

2,473

Consolidated
funds
Note 4(b)(i)
£m
(29)

(29)

(101)

(101)

(130)

(90)

(220)

Restated
£m
(2,03(cid:24))

(2,072)

2,1(cid:24)9

2,137

(53)

2,30(cid:24)

2,253

4(b)(i): Consolidated funds
Following a review of the Group’s consolidated investment funds methodology, corrections to previously reported values have been made on the 
consolidated statement of financial position and consolidated income statement (with corresponding impacts on the consolidated statement of cash 
flows). There has been no impact on profit or equity for any of the periods presented. The nature of the changes is as follows(cid:29)

(cid:54)tatement of financial position impacts(cid:29)
 – Changes to the calculation of minority ownership of certain fund investments have been made, reflecting a re-evaluation of the status of nominee 

holdings, held by the Group on behalf of its clients, that had historically been included in the control assessment. This has resulted in a restatement 
of fund assets and liabilities attributable to the Group, and an ad(cid:77)ustment to de-consolidate a number of investment funds where the Group was 
incorrectly deemed to have been the controlling entity in previous periods.

Income statement impacts:
 – The changes to the calculation of minority ownership described above have resulted in changes to a number of line items in the Group’s 

consolidated income statement for the year ending 31 December 2019, as shown in the table above. 

 – In addition, fund management fee income received from consolidated funds and previously included within ‘Fee income and other income from 

service activities’ has been eliminated on consolidation, resulting in it being re-presented primarily as investment return.

 – A correction has been made in respect of realised and unrealised gains and losses on investments within a limited number of funds being 

previously presented within the Group’s fee and commission expenses rather than investment return.

4(b)(ii): Fee income receivable
Fee Income Receivable ((cid:522)FIR(cid:523)) relates to premium based establishment fee income, where income is taken over an initial period of the contract. (cid:58)hen 
a policy is written, future income is capitalised, and the resulting asset is subsequently amortised as the cash proceeds are received.

Deferred Fee Income ((cid:522)DFI(cid:523)) is the initial fee income, including FIR, which is deferred over the expected life of the contract as the services are provided. 
DFI is recognised as a contract liability.

In the prior year, the Group’s FIR (all written within investment contracts in the Group’s International business which is part of the Group’s (cid:58)ealth 
Platforms segment) and DFI were reported net within the statement of financial position within contract liabilities. This interpretation was made as 
both balances arise within individual contracts and FIR was assumed to represent a contract asset (which are permitted to be presented net with 
contract liabilities) rather than an unconditional receivable.

Following a review performed during the year, these FIR balances have been reclassified from a contract asset (previously netted within contract 
liabilities) to a receivable, as consideration is only conditional upon the passage of time. The prior year balance has been restated accordingly. 
This has no impact on reported profits or equity at the beginning or end of the prior year.

The impact of the changes to the consolidated statement of financial position is summarised in the table above.

176

Quilter | Annual report 2020

5: Significant accounting policies
The Group’s significant accounting policies are described below. There have been no changes to the Group’s significant accounting policies as a result 
of changes in accounting standards during the year.

5(a): Group accounting
Subsidiaries
Subsidiary undertakings are those entities (investees) controlled by the Group. The Group controls an investee if, and only if, the Group has all of the 
following three elements of control(cid:29)
 – power over the investee(cid:30)
 – exposure or rights to variable returns from its involvement with the investee(cid:30) and
 – the ability to affect those returns through its power over the investee.

For operating entities this usually arises with a shareholding in the entity of (cid:24)0(cid:8) or more. The Group also consolidates certain of its interests in 
open-ended investment companies ((cid:522)OEICs(cid:523)), unit trusts, mutual funds and similar investment vehicles (collectively (cid:522)investment funds(cid:523)). (cid:58)here, as is 
often the case with investment funds, voting or similar rights are not the dominant factor in deciding who controls the investee, other factors are 
considered in the control assessment. These are described in more detail below.

The Group continually assesses any changes to facts and circumstances to determine, in the context of the three elements of control listed above, 
whether it still controls investees and is required to consolidate them. 

Associates
Associates are entities in which the Group holds an interest and over which it has significant influence but not control, and are accounted for using the 
equity method. Significant influence is the power to participate in the financial and operating policy decisions of the investee.

The Group has classified one entity, 3(cid:25)0 Dot Net Limited, as an associate company in the prior and current year.

Investment funds
The Group invests in a wide range of investment funds such as OEICs and unit trusts generally in respect of its unit-linked investment contracts where 
investments are made to match clients’ investment choices. For some of these funds it also acts as fund manager. These funds invest predominantly 
in equities, bonds, cash and cash equivalents. The Group holds interests in these investment funds mainly through the receipt of fund management 
fees, in the case where the Group acts as fund manager, which provide a variable return based on the value of the funds under management and 
other criteria, and in the case of third-party funds where fund performance has an impact on fund based fees within unit-linked investment contracts 
and other similar client investment products. (cid:58)here the Group acts as fund manager it may also hold investments in the underlying funds, through 
acquiring units or shares. (cid:58)here these investments are held in unit-linked funds, the Group has a secondary exposure to variable returns through the 
management fees that it deducts from unit-linked policyholders’ account balances. The Group’s percentage ownership can fluctuate from day to day 
according to the Group’s participation in them as clients’ underlying investment choices change. 

(cid:58)hen assessing control of investment funds, the Group considers the purpose and design of the fund, scope of its decision making authority, 
including its ability to direct relevant activities and to govern the operations of a fund so as to obtain variable returns from that fund and its ability to 
use its power to affect these returns, both from the perspective of an investor and an asset manager. In addition, the Group assesses rights held by 
other parties including substantive removal ((cid:522)kick-out(cid:523)) rights that may affect the Group’s ability to direct relevant activities.

On consolidation, the interests of parties other than the Group are classified as a liability in the Group’s statement of financial position and are 
described as (cid:522)Third-party interests in consolidated funds(cid:523). Such interests are not recorded as non-controlling interests ((cid:522)NCIs(cid:523)) as they meet the 
liability classification requirement set out in IAS 32 Financial Instruments: Presentation. These liabilities are regarded as current, as they are repayable 
on demand, although it is not expected that they will be settled in a short time period. 

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

177

 
 
 
 
 
Basis of preparation and significant accounting policies

For the year ended 31 December 2020 continued

5: Significant accounting policies continued
5(a): Group accounting continued

Business combinations
The Group is required to use the acquisition method of accounting for business combinations. (cid:37)usiness combinations are accounted for at the 
date that control is achieved (the acquisition date). The cost of a business combination is measured as the aggregate of the fair values (at the date 
of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business Combinations 
are recognised at their fair value at the acquisition date.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group 
reports provisional amounts. (cid:58)here provisional amounts are reported these are ad(cid:77)usted during the measurement period which extends up to 
a(cid:98)maximum of 12 months from the acquisition date. Additional assets or liabilities may also be recognised during this period, to reflect any new 
information obtained about the facts and circumstances that existed at the date of acquisition that, if known, would have affected the amounts 
recognised as on that date.

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable net assets of the acquired entity 
at the date of acquisition. Acquisition related costs are expensed as incurred. 

Upon disposal, the Group derecognises a subsidiary or disposal group on the date on which control passes. The consolidated income statement 
includes the results of a subsidiary or disposal group up to the date of disposal. The difference between the proceeds from the disposal of a subsidiary 
undertaking and its carrying amount as at the date of disposal, including the cumulative amount of any related exchange differences that are 
recognised in the foreign currency translation reserve, is recognised in the consolidated income statement as the gain or loss on disposal of the 
subsidiary undertaking.

Common control combinations
Merger accounting is used by the Group for common control combinations, which are transactions between entities that are ultimately controlled by 
the same party or parties. This method treats the merged entities as if they had been combined throughout the current and comparative accounting 
periods. Merger accounting principles for these combinations result in the recognition of a merger reserve in the consolidated statement of financial 
position, being the difference between the nominal value of any new shares issued by the parent Company for the acquisition of the shares of the 
subsidiary and the subsidiary’s Net Asset (cid:57)alue ((cid:522)NA(cid:57)(cid:523)). Such transactions attract merger relief under section (cid:25)12 of the Companies Act 200(cid:25). 

5(b): Fair value measurement
The Group uses fair value to measure the ma(cid:77)ority of its assets and liabilities. Fair value is a market-based measure and is the price that would be 
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. For a financial 
instrument, the best evidence of fair value at initial recognition is normally the transaction price, which represents the fair value of the consideration 
given or received. 

(cid:58)here observable market prices in an active market, such as bid or offer (ask) prices are unavailable, fair value is measured using valuation techniques 
based on the assumptions that market participants would use when pricing the asset or liability. If an asset or a liability measured at fair value has a 
bid or an offer price, the price within the bid-offer spread that is most representative of fair value is used as the basis of the fair value measurement.

The quality of the fair value measurement for financial instruments is disclosed by way of the fair value hierarchy, whereby Level 1 represents a quoted 
market price for identical financial assets and liabilities, Level 2 financial assets and liabilities are valued using inputs other than quoted prices in active 
markets included in Level 1, either directly or indirectly, and Level 3 whereby financial assets and liabilities are valued using valuation techniques where 
one or more significant inputs are unobservable. 

Classifying financial instruments into the three levels outlined above provides an indication about the reliability of inputs used in determining fair 
value. More information is provided in note 20.

178

Quilter | Annual report 2020

 
5: Significant accounting policies continued

5(c): Product classification
The Group’s life assurance contracts included in the (cid:58)ealth Platforms segment are categorised as either insurance contracts or investment contracts, 
in accordance with the classification criteria set out in the paragraphs below. 

Insurance contracts
The Group’s insurance contracts include traditional life and health insurance contracts including for the latter stand-alone critical illness and 
long-term care policies (all within the disposed QLA business until its disposal at 31 December 2019), as well as the unbundled insurance component 
of unit-linked contracts (described in more detail below in the (cid:522)Hybrid insurance and investment contracts – unbundling(cid:523) section). Life assurance 
contracts are categorised as insurance contracts at the inception of the contract only if the contract transfers significant insurance risk. Insurance risk 
is significant if, and only if, an insured event could cause the Group to make significant additional payments in any scenario, excluding scenarios that 
lack commercial substance. Such contracts remain insurance contracts until all rights and obligations are extinguished or expire. It is possible to 
reclassify contracts as insurance contracts after inception if insurance risk becomes significant. 

IFRS accounting for insurance contracts in UK companies was (cid:522)grandfathered(cid:523) at the date of transition to IFRS and determined in accordance with the 
Statement of Recommended Practice on Accounting for Insurance Business (issued by the Association of British Insurers and subsequently 
withdrawn from 1 January 201(cid:24)), which ad(cid:77)usted Solvency I balances to remove certain regulatory reserves and margins in assumptions.

Investment contracts
Investment contracts do not meet the definition of an insurance contract as they do not transfer significant insurance risk from the policyholder to the 
insurer. Unit-linked investment contracts are separated into two components, being an investment management services component and a financial 
liability. The financial liability component is designated at fair value through profit or loss ((cid:522)F(cid:57)TPL(cid:523)) as it is managed on a fair value basis, and its value is 
directly linked to the market value of the underlying portfolio of assets. The Group does not directly benefit economically from returns from the assets 
held to match policyholder liabilities, apart from secondary exposure to future annual management fees that the Group expects to receive over the 
life of the policy.

“Hybrid” insurance and investment contracts – unbundling
Generally, life and pensions contracts allow for a single classification at product class level. For those contracts containing both an insurance 
component and an investment component, the Group has elected to unbundle these contracts and account for each component separately. This 
approach has been applied to a number of the Group’s unit-linked assurance business contract types where a significant component of insurance risk 
exists. 

5(d): Fee income and other income from service activities
Fee income and other income from service activities represent the fair value of services provided, net of value added tax. (cid:58)ithin Quilter, all businesses 
act as a principal with the only exception to this being in Quilter Investors, where the management of certain funds is outsourced to external fund 
managers.

Premium based fees
This relates to non-refundable fees taken on receipt of clients’ investments and recognised on receipt over the life of the contract, in line with the 
performance obligation associated with the contract in respect of the administration of the underlying client records and client benefits. (cid:58)here fees 
are received, either at inception or over an initial period for services not yet provided, the income is deferred and recognised as contract liabilities on 
the statement of financial position and released to the income statement as services are provided over the lifetime of the contract (see note 32 for 
further information).

In addition this also includes fees in respect of advice provided to clients, when the advice has been provided to the client and the financial adviser’s 
performance obligation has been fully delivered. Accordingly, fee income is recognised at the inception of the financial product sold.

Fund based fees
This is periodic fee income based on the market valuation of the Group’s investment contracts. It is calculated and recognised on a daily basis in line 
with the provision of investment management services. 

Fixed fees
This is periodic fee income which is fixed in value according to underlying contract terms and relates to the provision of services and transactional 
dealing fees. It is recognised on provision of the transaction or service.

Surrender fees
Surrender fee income relates to client charges received on the surrender of an investment contract or insurance contract, which is based on the value 
of the policy and recognised on surrender of the policy.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

179

 
 
 
 
 
Basis of preparation and significant accounting policies

For the year ended 31 December 2020 continued

5: Significant accounting policies continued
5(d): Fee income and other income from service activities continued

Other fee and commission income
This includes charges taken from unit-linked funds to meet future policyholder tax liabilities. Depending on the nature of the tax liability, the charges 
are either recognised at the point a transaction occurs on the unit-linked fund, or annually. This also includes fee and commission income within 
consolidated funds’ income statements.

5(e): Investment return
Investment return comprises two elements(cid:29) (a) investment income and (b) realised and unrealised gains and losses on investments held at F(cid:57)TPL. 

Investment income
Investment income includes dividends on equity securities which are recorded as revenue on the ex-dividend date and interest income which is 
recognised using the effective interest rate method which allocates interest and other finance costs at a constant rate over the expected life of the 
financial instrument. 

Realised and unrealised gains and losses
A gain or loss on a financial investment is only realised on disposal or transfer and represents the difference between the proceeds received, net 
of(cid:98)transaction costs, and its original cost (or amortised cost). Unrealised gains or losses, arising on investments which have not been disposed or 
transferred, represent the difference between carrying value at the year end and the carrying value at the previous year end or purchase value 
(if(cid:98)this(cid:98)occurs during the year), less the reversal of previously recognised unrealised gains or losses in respect of disposals made during the year. 

Gains and losses resulting from changes in both market value and foreign exchange on investments classified at F(cid:57)TPL are recognised in the 
consolidated income statement in the period in which they occur. 

5(f): Premiums
Premiums receivable under insurance contracts are shown in the income statement gross of commission and exclude sales-based taxes and levies. 
For regular (and recurring) premium contracts, receivables are recognised when payments are due. Premiums in respect of other insurance contracts 
are recognised in the income statement when receivable, apart from premiums received in respect of unit-linked insurance contracts (see below). 
(cid:58)here policies lapse due to non-receipt of premiums, then all the related premium income accrued but not received from the date they are deemed 
to have lapsed is offset against premiums.

Premiums received in respect of unit-linked insurance contracts are recognised when the corresponding liability to the policyholder is established. 
For(cid:98)single premium business, this is the date from which the policy is effective. 

5(g): Deferred acquisition costs and contract costs
Investment contracts
Incremental costs, including fee and commission expenses, that are directly attributable to securing either unit-linked investment contracts or other 
asset management services are deferred and recognised as contract costs. Contract costs are linked to the contractual right to benefit from providing 
investment management services(cid:30) they are therefore amortised through the income statement consistent with the transfer to the customer of the 
services to which the contract relates. 

Insurance contracts 
Incremental costs directly attributable to securing an insurance contract, such as initial commission and the costs of obtaining and processing such 
business are deferred and a deferred acquisition cost ((cid:522)DAC(cid:523)) asset recognised, to the extent that they are expected to be recovered out of future 
margins. 

Insurance DAC is amortised as an expense on a straight line basis, ad(cid:77)usted for expected persistency, over the expected life of the contract, as the 
services are provided (equal service provision assumed) but sub(cid:77)ect to a restriction whereby it is no longer than the period in which such costs are 
expected to be recoverable out of future margins.

At the end of each reporting period, contract costs and DAC are reviewed for recoverability, by category of business, against future margins from the 
related contracts. They are impaired in the income statement when they are no longer considered to be recoverable.

180

Quilter | Annual report 2020

 
5: Significant accounting policies continued

5(h): Investment contract liabilities
The ma(cid:77)ority of the Group’s investment contracts are unit-linked contracts. At inception, investment contract liabilities for unit-linked business are 
classified as financial liabilities and measured at F(cid:57)TPL. For these contracts, the fair value liability is equal to the total value of units allocated to the 
policyholders, based on the bid price of the underlying assets in the fund. The F(cid:57)TPL classification reflects the fact that the matching investment 
portfolio, that backs the unit-linked liabilities, is managed, and its performance evaluated, on a fair value basis.

Contributions received on investment contracts are treated as policyholder deposits and credited directly to investment contract liabilities on the 
statement of financial position, as opposed to being reported as revenue in the consolidated income statement. This practice is known as deposit 
accounting. (cid:58)ithdrawals paid out to policyholders on investment contracts are treated as a reduction to policyholder deposits, reducing the 
investment contract liabilities on the statement of financial position, as opposed to being recognised as expenses in the consolidated income 
statement.

5(i): Insurance contract liabilities
Following the disposal of the Group’s QLA business (see note (cid:25)(b) for further details), insurance contract liabilities within the Group are (cid:101)nil at year 
ended 31 December 2019 and year ended 31 December 2020, with only the Group’s income statement for year end 31 December 2019 impacted.

Claims 
Insurance business claims reflect the cost of all claims arising during the year and include payments for maturities, annuities, surrender, death and 
disability claims, as well as claims handling costs, incurred in connection with the negotiation and settlement of claims. They are recognised as 
expenses in the income statement. Maturity and annuity claims are recorded as they fall due for payment. Death and disability claims and surrenders 
are accounted for when notified. Reinsurance recoveries, in respect of these claims, are accounted for in the same period as the related claim.

Insurance contract liabilities
The Group calculates its long-term insurance contract liabilities, based on local regulatory requirements and actuarial principles consistent with those 
applied in the local market. Liabilities are calculated using the gross premium valuation method, which is based on the amount of contractual 
premiums receivable and includes explicit assumptions for interest and discount rates, as well as for mortality, morbidity, persistency and future 
expenses. These assumptions are based on market data, internal experience data and also external data where either no internal experience data 
exists or where internal data is too sparse to give credible estimates of the true expectation of experience. Anticipated future trends have been 
allowed for in deriving mortality and morbidity assumptions. The liability for contractual benefits that are expected to be paid in the future is 
determined as the discounted value of the excess of future expected outgoings over future expected income. Future expected outgoings include 
claim costs, direct expenses and commissions. Future expected income includes premiums payable by policyholders. For anticipated future claims 
that have been incurred but not yet paid, the Group establishes a provision for outstanding claims. 

The method used to determine these liabilities makes allowance for the level of risk and uncertainty inherent in the business by the use of margins for 
caution within the assumptions used to pro(cid:77)ect future income and outgoings. The portion of premiums received that relates to unexpired risks as at 
the reporting period end is reported within the long-term insurance liabilities. The change in insurance contract liabilities, comprising the full 
movement in the corresponding liabilities during the period, is recognised in the income statement.

Liability adequacy test
At each reporting date, the Group assesses whether the recognised insurance contract liabilities are adequate in light of current estimates of future 
cash flows. This liability adequacy test is performed by comparing the carrying value of the insurance contract liabilities and the discounted 
pro(cid:77)ections of future cash flows. If the carrying value is less than the future expected cash flows, the deficiency is initially recognised by writing down 
the DAC asset. The recoverability of the DAC asset is tested against present value of in-force ((cid:522)P(cid:57)IF(cid:523)) business, determined on a best estimate basis, 
with any deficit written off the DAC asset immediately. Any required write down in excess of the value of the DAC asset is recognised in the income 
statement with a corresponding additional provision in the statement of financial position.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

181

 
 
 
 
 
 
 
Basis of preparation and significant accounting policies

For the year ended 31 December 2020 continued

5: Significant accounting policies continued

5(j): Reinsurance
Following the disposal of the QLA business on 31 December 2019 (see note (cid:25)(b) for further details), the Group’s reinsurance arrangements are 
immaterial. As a result, the accounting policy below refers to the impacts of such reinsurance arrangements within the Group’s 2019 comparative 
results.

Insurance contracts
The Group cedes reinsurance in the normal course of business for the purpose of limiting its claims costs. Ceded reinsurance contracts include 
arrangements where regular risk premiums are paid by the Group to the reinsurer and an agreed share of claims are paid by the reinsurer to the 
Group. These arrangements are in respect of underlying policies that are classified as insurance contracts. Accordingly, contracts with reinsurers are 
assessed to establish whether they contain significant insurance risk to (cid:77)ustify such a classification. Only rights under contracts that give rise to a 
transfer of significant insurance risk are accounted for as reinsurers’ share of policyholder liabilities.

Reinsurance premiums for ceded reinsurance are recognised as an expense on a basis that is consistent with the recognition basis for the premiums 
on the related insurance contracts. Reinsurance recoveries are recognised in the income statement in the same period as the related claim.

Reinsurance recoveries due from reinsurers and reinsurance premiums due to reinsurers under reinsurance contracts that are contractually due at 
the reporting date are separately recognised in other receivables and other payables respectively unless a right of offset exists, in which case the net 
amount is reported on the consolidated statement of financial position. Assets, liabilities, income and expenses arising from ceded reinsurance 
contracts are presented separately from the related assets, liabilities, income and expenses from the underlying insurance contracts because the 
reinsurance arrangements do not relieve the Group from its direct obligations to its policyholders.

The value of the benefits that the Group is entitled to under the ceded reinsurance arrangements are reported as (cid:522)reinsurers’ share of policyholder 
liabilities(cid:523) in the statement of financial position. This is calculated as the difference between the insurance contract liability assuming no reinsurance 
arrangement exists (the gross basis) and the liability with explicit allowance for all cash flows relating to the reinsurance arrangement (the net basis). 
Insurance contract liabilities are calculated quarterly on the gross and net bases taking into account all relevant experience effects. The reinsurers’ 
share of insurance provisions is updated consistently with these calculations. Any resulting movement in the reinsurers’ share of insurance provisions 
is recognised in the income statement.

Reinsurance assets are assessed for impairment at each reporting date. A reinsurance asset is impaired if there is ob(cid:77)ective evidence, as a result of an 
event that occurred after its initial recognition, that the Group may not recover all amounts due to it under the terms of the contract and that the event 
has an impact that can be measured reliably in respect of amounts expected to be received from the reinsurer. The reinsurers’ share of policyholder 
liabilities is updated for any impairment. Any resulting movement in the reinsurers’ share of policyholder liabilities is recognised in the income 
statement.

Investment contracts
Investments held on behalf of policyholders recognised by the Group that are fully managed by a third-party reinsurer are shown on the statement of 
financial position within reinsurers’ share of investment contract liabilities, with the corresponding liability to the policyholder included within liabilities 
for linked investment contracts.

5(k): Financial instruments (other than derivatives)
Financial instruments cover a wide range of financial assets, including financial investments, trade receivables and cash and cash equivalents and 
certain financial liabilities, including investment contract liabilities, trade payables, and borrowings. Derivatives, which are also financial instruments, 
are covered by accounting policy (cid:24)(m). Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the 
Group becomes party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to receive 
cash flows have expired or been forfeited by the Group. A financial liability is derecognised when the liability is extinguished.

The Group assesses the ob(cid:77)ective of a business model in which an asset is held at a portfolio level because this best represents the way the business 
is managed and information is reported to management. The assessment considers the stated portfolio policies and ob(cid:77)ectives. The Group 
determines its strategy in holding the financial asset, particularly considering whether the Group earns contractual interest revenue, for example to 
match the duration of financial assets to the duration of liabilities that are funding those assets or to realise cash flows through the sale of the assets. 
The frequency, volume and timing of sales in prior periods may be reviewed, along with the reasons for such sales and expectations about future 
sales activity. These factors enable management to determine which financial assets should be measured at F(cid:57)TPL.

Initial measurement
A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is initially 
measured at fair value plus, for an item not at F(cid:57)TPL, transaction costs that are directly attributable to its acquisition.

182

Quilter | Annual report 2020

 
5: Significant accounting policies continued
5(k): Financial instruments (other than derivatives) continued

Subsequent measurement
The classification of financial assets depends on (i) the purpose for which they were acquired, (ii) the business model in which a financial asset is 
managed, and (iii) its contractual cash flow characteristics. Two categories are applicable to the Group’s financial assets(cid:29) F(cid:57)TPL and(cid:98)amortised cost. 
This classification determines the subsequent measurement basis. The following accounting policies apply to the subsequent measurement of 
financial assets.

Measurement basis

Accounting policies

Financial assets at FVTPL

These financial assets are subsequently measured at fair value. Net gains and losses, including interest and dividend income, are recognised 
in profit or loss.

Amortised cost

These financial assets are subsequently measured at amortised cost using the effective interest rate method. The amortised cost is reduced 
by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on 
de-recognition is recognised in profit or loss.

Amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and unless recognised as F(cid:57)TPL on initial recognition 
applying the Fair (cid:57)alue Option (see below)(cid:29)
 – the asset is held within a business model whose ob(cid:77)ective is to hold assets to collect contractual cash flows(cid:30) and
 – the contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest on the principal amount 

outstanding on specified dates.

For the purposes of this assessment, principal is defined as the fair value of the financial asset on initial recognition. Interest is defined as 
consideration of the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time 
and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.

All other financial assets that are not measured at amortised cost are classified and measured at F(cid:57)TPL.

Financial investments
Derivative financial assets (the ma(cid:77)ority of which are as a result of the consolidated funds, as described in note (cid:24)(a)) are classified and measured at 
F(cid:57)TPL. In addition, on initial recognition, the Group may irrevocably designate a financial asset at F(cid:57)TPL that otherwise meets the requirements to be 
measured at amortised cost, if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise (the Fair (cid:57)alue Option).

The Group’s interests in pooled investment funds, equity securities and debt securities are mandatorily at F(cid:57)TPL, as they are part of groups of 
financial assets which are managed and whose performance is evaluated on a fair value basis. These investments are recognised at fair value initially 
and subsequently, with changes in fair value recognised in investment return in the consolidated income statement.

Fixed term deposits with a maturity profile exceeding three months are categorised as financial investments and are measured at amortised cost. 

The Group recognises purchases and sales of financial investments on trade date, which is the date that the Group commits to purchase or sell the 
assets. The costs associated with investment transactions are included within expenses in the consolidated income statement.

Loans and advances
Loans with fixed maturities, including policyholder loans, are recognised when cash is advanced to borrowers or policyholders. Policyholder loans 
are interest free and are mandatorily at F(cid:57)TPL since they are taken from the policyholder’s unit-linked account and thereby matched to underlying 
unit-linked liabilities held at F(cid:57)TPL, which are unaffected by the transaction. Other loans and advances are carried at amortised cost using the 
effective interest rate method. These assets are sub(cid:77)ect to the impairment requirements outlined below.

Cash and cash equivalents
Cash and cash equivalents comprise cash balances, call deposits, money market collective investment funds and other short-term deposits with 
an original maturity of three months or less.

Cash and cash equivalents held within money market collective investment funds are classified as F(cid:57)TPL. All other cash and cash equivalents are 
classified as amortised cost which means they are initially recognised at fair value and subsequently carried at amortised cost using the effective 
interest method and are sub(cid:77)ect to the impairment requirements outlined below. The carrying amount of cash and cash equivalents, other than 
money market collective investment funds which are measured at fair value, approximates to their fair value. 

Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. At inception, 
investment contract liabilities for unit-linked business are recognised as financial liabilities and measured at F(cid:57)TPL. Other financial liabilities, including 
the Group’s borrowings and trade payables, are measured at amortised cost using the effective interest method.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

183

 
 
 
 
Basis of preparation and significant accounting policies

For the year ended 31 December 2020 continued

5: Significant accounting policies continued
5(k): Financial instruments (other than derivatives) continued

Trade payables and receivables
Trade payables and receivables are classified at amortised cost. Due to their short-term nature, their carrying amount is considered to be the same 
as their fair value.

Investments in subsidiaries
Parent Company investments in subsidiary undertakings are initially stated at cost. Subsequently, investments in subsidiary undertakings are stated 
at cost less any provision for impairment. An investment in a subsidiary is deemed to be impaired when its carrying amount is greater than its 
estimated recoverable amount, and there is evidence to suggest that the impairment occurred subsequent to the initial recognition of the asset in the 
financial statements. All impairments are recognised in the parent Company income statement as they occur.

Impairment of financial assets 
The expected loss accounting model for credit losses applies to financial assets measured at amortised cost, but not to financial assets at F(cid:57)TPL. 
Financial assets at amortised cost include trade receivables, cash and cash equivalents (excluding money market collective investment funds which 
are measured at fair value), fixed term deposits and loans and advances.

Credit loss allowances are measured on each reporting date according to a three stage expected credit loss ((cid:522)ECL(cid:523)) impairment model(cid:29)

Performing financial assets:
Stage 1
From initial recognition of a financial asset to the date on which an asset has experienced a significant increase in credit risk relative to its initial 
recognition, a stage 1 loss allowance is recognised equal to the credit losses expected to result from its default occurring over the earlier of the next 
12(cid:98)months or its maturity date ((cid:522)12-month ECL(cid:523)).

Stage 2
Following a significant increase in credit risk relative to the initial recognition of the financial asset, a stage 2 loss allowance is recognised equal to the 
credit losses expected from all possible default events over the remaining lifetime of the asset ((cid:522)Lifetime ECL(cid:523)). 

The assessment of whether there has been a significant increase in credit risk requires considerable (cid:77)udgement, based on the lifetime probability of 
default ((cid:522)PD(cid:523)). Stage 1 and 2 allowances are held against performing loans(cid:30) the main difference between stage 1 and stage 2 allowances is the time 
hori(cid:93)on. Stage 1 allowances are estimated using the PD with a maximum period of 12 months, while stage 2 allowances are estimated using the PD 
over the remaining lifetime of the asset.

Impaired financial assets:
Stage 3
(cid:58)hen a financial asset is considered to be credit-impaired, the allowance for credit losses ((cid:522)ACL(cid:523)) continues to represent lifetime expected credit 
losses. However, interest income is calculated based on the amortised cost of the asset, net of the loss allowance, rather than its gross 
carrying(cid:98)amount.

Application of the impairment model
The Group applies the ECL model to all financial assets that are measured at amortised cost(cid:29)
 – Trade receivables, to which the simplified approach prescribed by IFRS 9 is applied. This approach requires the recognition of a Lifetime ECL 

allowance on day one and thereafter.

 – Loans, cash and cash equivalents, and fixed term deposits at amortised cost, to which the general three stage model (described above) is applied, 
whereby a 12 month ECL is recognised initially and the balance is monitored for significant increases in credit risk which triggers the recognition 
of a Lifetime ECL allowance.

ECLs are a probability-weighted estimate of credit losses. ECLs for financial assets that are not credit-impaired at the reporting date are measured 
as the present value of all cash shortfalls (i.e. the difference between the cash flows due in accordance with the contract and the cash flows that the 
Group expects to receive). ECLs for financial assets that are credit-impaired at the reporting date are measured as the difference between the gross 
carrying amount and the present value of estimated future cash flows. ECLs are discounted at the effective interest rate of the financial asset. 
The(cid:98)maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

The measurement of ECLs considers information about past events and current conditions, as well as supportable information about future events 
and economic conditions. The Group has implemented its impairment methodology for estimating the ACL, taking into account forward-looking 
information in determining the appropriate level of allowance. In addition, it has identified indicators and set up procedures for monitoring for 
significant increases in credit risk.

184

Quilter | Annual report 2020

5: Significant accounting policies continued
5(k): Financial instruments (other than derivatives) continued 

Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is credit-impaired 
when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a 
financial asset is credit-impaired includes events such as significant financial difficulty of the borrower or issuer, a breach of contract such as a default 
or past due event or the restructuring of a loan or advance by the Group on terms that the Group would not otherwise consider. The assumption that 
the credit risk for balances over 30 days significantly increases has been rebutted on the basis that some balances will exceed 30 days in the normal 
course of the settlement cycle and, therefore, there is no increase in the credit risk.

Presentation of impairment
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

Write-offs
Loans and debt securities are written off (either partially or in full) when there is no realistic prospect of the amount being recovered. This is generally 
the case when the Group concludes that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay 
the amounts sub(cid:77)ect to the write-off.

5(l): Contract assets
Contract assets are classified as non-financial. Due to their short-term nature, their carrying amount is considered to be the same as their fair value.

The expected loss accounting model for credit losses applies to contract assets, The Group applies the ECL model to contract assets, which are 
measured at amortised cost. The simplified approach prescribed by IFRS 9 is applied to contract assets. This approach requires the recognition of 
a(cid:98)Lifetime ECL allowance on day one and thereafter.

5(m): Derivatives
The Group uses derivative financial instruments to manage well-defined foreign exchange risks arising out of the normal course of business and has 
used forward foreign exchange contracts to reduce the currency risk on certain US Dollar, Euro and Swedish Krona denominated future revenues and 
accounts receivables. Management determines the classification of derivatives at initial recognition and classifies derivatives as mandatorily at F(cid:57)TPL. 
All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative.

The only other derivatives recognised in the Group’s statement of financial position are as a result of the consolidation of funds (described in note (cid:24)(a)).

5(n): Employee benefits
Pension obligations
The Group operates two types of pension plans which have been established for eligible employees of the Group(cid:29)

Defined contribution schemes where the Group makes contributions to members’ pension plans but has no further payment obligations once the 
contributions have been paid.

Defined benefit plans which provide pension payments upon retirement to members as defined by the plan rules. The Group has funded these 
liabilities by ring-fencing assets in trustee-administered funds. 

Defined contribution pension obligation
Under a defined contribution plan, the Group’s legal or constructive obligation is limited to the amount it agrees to contribute to a pension fund 
and there is no obligation to pay further contributions if the fund does not hold sufficient assets to pay benefits. Contributions in respect of defined 
contribution schemes for current service are expensed in the income statement as staff costs and other employee-related costs when incurred.

Defined benefit pension obligation
A defined benefit pension plan typically defines the amount of pension benefit that an employee will receive on retirement. For these plans, the 
Group’s defined benefit obligation is calculated by independent actuaries using the pro(cid:77)ected unit credit method, which measures the pension 
obligation as the present value of estimated future cash outflows. The discount rate used is determined based on the yields for investment grade 
corporate bonds that have maturity dates approximating to the terms of the Group’s obligations. Plan assets are measured at their fair value at the 
reporting date. The net surplus or deficit of the defined benefit plan is recognised as an asset or liability in the statement of financial position and 
represents the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets.

An asset is recognised only where there is an unconditional right to future benefits. The current and past service cost curtailments and settlements 
are charged to other expenses in the income statement.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

185

 
 
 
 
Basis of preparation and significant accounting policies

For the year ended 31 December 2020 continued

5: Significant accounting policies continued
5(n): Employee benefits continued

Remeasurements which comprise gains and losses as a result of experience ad(cid:77)ustments and changes in actuarial assumptions, the actual return on 
plan assets (excluding interest) and the effect of the asset ceiling are recognised immediately in other comprehensive income in the period in which 
they occur. Remeasurements are not reclassified to the income statement in subsequent periods. Administration costs (other than the costs of 
managing plan assets) are recognised in the income statement when the service is provided.

(cid:58)hen the benefits of a plan are changed, or when a plan is curtailed, the portion of the changed benefit related to past service by employees, or the
gain or loss on curtailment, is recognised immediately in the income statement when the plan amendment or curtailment occurs.

Employee share-based payments 
The Group operates a number of share incentive plans for its employees. These involve an award of shares or options in the Group (equity-settled 
share-based payments).

The Group’s incentive plans have conditions attached before the employee becomes entitled to the award. These can be performance and(cid:18)or service 
conditions (vesting conditions) or conditions that are often wholly within the control of the employee, for example where the employee has to provide 
funding during the vesting period, which is then used to exercise share options (non-vesting condition).

Performance conditions may be market-based or non-market based. Market performance conditions are those related to an entity’s equity, such as 
achieving a specified share price or target based on a comparison of the entity’s share price with an index of share prices. Non-market performance 
conditions are those related to an entity’s profit or revenue targets, an example of which would be Earnings per Share ((cid:522)EPS(cid:523)). Market-based 
performance conditions and non-vesting conditions are taken into account when estimating the fair value of the share or option awards at the 
measurement date. The fair value of the share awards or options is not ad(cid:77)usted to take into account non-market performance features. These are 
taken into consideration by ad(cid:77)usting the number of equity instruments in the share-based payment measurement and this ad(cid:77)ustment is made each 
period until the equity instruments vest.

The fair value of share-based payment awards granted is recognised as an expense in the income statement over the vesting period which accords 
with the period for which related services are provided by the employee. A corresponding increase in equity is recognised for equity-settled plans and 
a corresponding financial liability for cash-settled plans.

For equity-settled plans, the fair value is determined at grant date and not subsequently re-measured. For cash-settled plans, the fair value is 
re-measured at each reporting date and the date of settlement, with any changes in fair value recognised in the profit or loss for the period and the 
liability ad(cid:77)usted accordingly.

At each period end the Group reassesses the number of equity instruments expected to vest and recognises any difference between the revised and 
original estimate in the income statement with a corresponding ad(cid:77)ustment to the share-based payments reserve in equity.

At the time the equity instruments vest, the amount recognised in the share-based payments reserve in respect of those equity instruments is 
transferred to retained earnings.

5(o): Tax
Current tax
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date and 
any ad(cid:77)ustment to income tax payable in respect of previous years. Current tax is charged or credited to the income statement, except when it relates 
to items recognised directly in equity or in other comprehensive income.

Deferred tax
Deferred taxes are calculated according to the statement of financial position method, based on temporary differences between the tax base of 
assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is calculated at the tax rates that are expected 
to apply in the period when the liability is settled or the asset is realised.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary 
differences can be utilised.

Deferred tax is charged or credited to the income statement, except when it relates to items recognised directly in equity or in other comprehensive 
income. In certain circumstances, as permitted by accounting guidance, deferred tax balances are not recognised. In particular, where the liability 
relates to the initial recognition of goodwill, or transactions that are not a business combination and at the time of their occurrence affect neither 
accounting nor taxable profit. Note 29(b) includes further detail of circumstances in which the Group does not recognise temporary differences.

186

Quilter | Annual report 2020

 
5: Significant accounting policies continued
5(o): Tax continued
Policyholder tax
Certain products are sub(cid:77)ect to tax on the policyholder investment returns. This ‘policyholder tax’ is an element of the Group’s total tax expense. 
To(cid:98)make the tax expense more meaningful, tax attributable to policyholder returns and tax attributable to equity holders’ profits is shown separately.

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 shareholders as tax attributable to equity holders’ profits.

5(p): Goodwill and intangible assets
The recognition of goodwill arises on the acquisition of a business and represents the premium paid over the fair value of the Group’s share of the 
identifiable assets and liabilities acquired at the date of acquisition. Intangible assets include intangible assets initially recognised as part of a business 
combination, purchased assets and internally generated assets, such as software development costs related to amounts recognised for in-house 
systems development.

Goodwill and goodwill impairment
Goodwill arising on the Group’s investments in subsidiaries is shown as a separate asset, while that on associates, where it arises, is included within 
the carrying value of those investments. Goodwill is recognised as an asset at cost at the date when control is achieved (the acquisition date) and is 
subsequently measured at cost less any accumulated impairment losses. Goodwill is not amortised but is sub(cid:77)ect to annual impairment reviews.

Goodwill is allocated to one or more cash-generating units ((cid:522)CGUs(cid:523)) expected to benefit from the synergies of the combination, where the CGU 
represents the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or 
group of assets. Goodwill is reviewed for impairment at least once annually, as a matter of course even if there is no indication of impairment, and 
whenever an event or change in circumstances occurs which indicates a potential impairment. For impairment testing, the carrying value of goodwill 
is(cid:98)compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment loss is recognised 
immediately in profit or loss and is not subsequently reversed.

On disposal of an operation within a group of CGUs to which goodwill has been allocated, the goodwill associated with that operation is included in the 
carrying amount of the operation when determining the gain or loss on disposal. It is measured based on the relative values of the operation disposed 
of and the portion of the CGU retained. 

Intangible assets acquired as part of a business combination
Intangible assets acquired as part of a business combination are recognised where they are separately identifiable and can be measured reliably. 
Acquired intangible assets consist primarily of contractual relationships such as customer relationships and distribution channels. Such items are 
capitalised at their fair value, represented by the estimated net present value of the future cash flows from the relevant relationships acquired at the 
date of acquisition. (cid:37)rands and similar items acquired as part of a business combination are capitalised at their fair value based on a ‘relief from 
royalty’ valuation methodology.

Subsequent to initial recognition, acquired intangible assets are measured at cost less amortisation and any recognised impairment losses. 
Amortisation is recognised at rates calculated to write off the cost or valuation less estimated residual value, using a straight-line method over their 
estimated useful lives as set out below(cid:29)
8 years
 – Distribution channels 
7-10 years
 – Customer relationships 
5 years
 – Brands  

The economic lives are determined by considering relevant factors such as usage of the asset, product life cycles, potential obsolescence, competitive 
position and stability of the industry. The amortisation period is re-evaluated at the end of each financial year end.

Internally developed software
There are a number of factors taken into account when considering whether internally developed software meets the recognition criteria in IAS 38 
Intangible Assets. (cid:58)here, for example, a third-party provider retains ownership of the software, this will not meet the control criterion in the standard 
(i.e. the power to obtain benefits from the asset) and the costs will be expensed as incurred. 

(cid:58)here it is capitalised, internally developed software is held at cost less accumulated amortisation and impairment losses. Such software is 
recognised in the statement of financial position if, and only if, it is probable that the relevant future economic benefits attributable to the software will 
flow to the Group and its cost can be measured reliably.

Costs incurred in the research phase are expensed, whereas costs incurred in the development phase are capitalised, sub(cid:77)ect to meeting specific 
criteria, as set out in the relevant accounting guidance, the main one being that future economic benefits can be identified as a result of the 
development expenditure. Amortisation is charged to profit or loss on a straight-line basis over the estimated useful lives of the relevant software, 
which range between three and five years, depending on the nature and use of the software.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

187

 
 
 
 
 
 
Basis of preparation and significant accounting policies

For the year ended 31 December 2020 continued

5: Significant accounting policies continued
5(p): Goodwill and intangible assets continued 
Subsequent expenditure
Subsequent expenditure on intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset 
to which it relates. All other expenditure is expensed as incurred.

Impairment testing for intangible assets
For intangible assets with finite lives, impairment charges are recognised where evidence of impairment is observed. Indicators of impairment can be 
based on external factors, such as significant adverse changes to the asset as part of the overall business environment and internal factors, such as 
worse than expected performance reflected in the Group’s three-year (cid:37)usiness Plan. If an indication of impairment exists, the recoverable amount of 
the asset is estimated in order to determine the extent of the impairment loss (if any). The recoverable amount is calculated as the higher of fair value 
less costs to sell and value in use. If the recoverable amount of an intangible asset is estimated to be less than its carrying amount, the carrying 
amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense in the income statement immediately, 
unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. (cid:58)here an intangible 
asset is not yet available for use, it is sub(cid:77)ect to an annual impairment test by comparing the carrying value with the recoverable amount. The 
recoverable amount is estimated by considering the ability of the asset to generate sufficient future economic benefits to recover the carrying value.

5(q): Assets and liabilities held for sale and discontinued operations
Assets (and disposal groups) are classified as held for sale if their carrying amount is expected to be recovered through a sales transaction rather 
than(cid:98)through continuing use. This condition is regarded as having been met only when the sale is highly probable and the asset (or disposal group) is 
available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition 
as a completed sale within one year of the date of classification. Assets and liabilities held for sale are presented separately in the consolidated 
statement of financial position.

Assets and liabilities (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and their fair value less costs 
to sell. No depreciation or amortisation is charged on a non-current asset while classified as held for sale or while part of a disposal group once it has 
been classified as held for sale.

The Group classifies areas of the business as discontinued operations where they have been disposed of, or are classified as held for sale at the year 
end, which either represent a separate ma(cid:77)or line of business or geographical area, or are part of a plan to dispose of one, or are subsidiaries acquired 
exclusively with a view to resale.

(cid:58)hen an asset (or disposal group) ceases to be classified as held for sale, the individual assets and liabilities cease to be shown separately in the 
statement of financial position at the end of the year in which the classification changes. Comparatives are not restated. If the line of business was 
previously presented as a discontinued operation and subsequently ceases to be classified as held for sale, profit and loss and cash flows of the 
comparative period are restated to show that line of business as a continuing operation. Further information can be found in note (cid:25).

5(r): Provisions and contingent liabilities
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more probable than not that an 
outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Provisions 
are measured at management’s best estimate of the expenditure required to settle the obligation at the reporting date. (cid:58)here the effect of the time 
value of money is material, provisions are discounted and represent the present value of the expected expenditure. Provisions are not recognised for 
future operating costs or losses.

The Group recognises specific provisions where they arise for the situations outlined below(cid:29)
 – Client compensation and related costs, when the Group compensates clients in the context of providing fair customer outcomes.
 – Onerous contracts, when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting the 

obligations under the contract.

 – Corporate restructuring, only if the Group has approved a detailed formal plan and raised a valid expectation among those parties directly affected, 
that the plan will be carried out either by having commenced implementation or by publicly announcing the plan’s main features. Such provisions 
include the direct expenditure arising from the restructuring, such as employee termination payments but not those costs associated with the 
ongoing activities of the Group.

 – Legal uncertainties and the settlement of other claims.

Contingent liabilities are possible obligations of the Group of which the timing and amount are sub(cid:77)ect to significant uncertainty. Contingent liabilities 
are not recognised in the consolidated statement of financial position, unless they are assumed by the Group as part of a business combination. They 
are however disclosed, unless they are considered to be remote. If a contingent liability becomes probable and the amount can be reliably measured 
it(cid:98)is no longer treated as contingent and recognised as a liability.

Contingent assets, which are possible benefits to the Group, are only disclosed if it is probable that the Group will receive the benefit. If such a benefit 
becomes virtually certain, it is no longer considered contingent and is recognised on the consolidated statement of financial position as an asset.

188

Quilter | Annual report 2020

Notes to the consolidated financial statements

For the year ended 31 December 2020

6: Acquisitions, disposals and discontinued operations

6(a): Business acquisitions
Business acquisitions completed during the year ended 31 December 2020
There have been no material acquisitions during the year ended 31 December 2020.

Business acquisitions completed during the year ended 31 December 2019
Charles Derby Group Limited (“CDG”) acquisition on 14 February 2019

The purchase price of (cid:101)31 million was allocated based on the fair value of net assets acquired at the date of acquisition, determined in accordance 
with IFRS 3 Business Combinations. These allocations are now final and the Group recognised goodwill of (cid:101)23 million in relation to this acquisition.

Lighthouse Group plc (“Lighthouse”) acquisition on 12 June 2019
The estimated fair value of net assets acquired in Lighthouse of (cid:101)13 million, included a provision of (cid:101)12 million in respect of pension transfer advice 
provided to certain Lighthouse clients between 201(cid:25) and 2018, prior to the Group’s acquisition of Lighthouse in June 2019.

As a result of an investigation by the FCA into defined benefit ((cid:522)D(cid:37)(cid:523)) pension transfer advice, including advice provided to (cid:37)ritish Steel employees by 
Lighthouse, and an additional number of complaints received during 2020, the Group increased its scope for the provision to include all (cid:37)ritish Steel 
customers, rather than only those who have raised a complaint, and performed a detailed case review (further details of which are included in note 
28). This resulted in an increase to the provision at acquisition of a further (cid:101)12 million, which brought the provision balance to (cid:101)24 million. An insurance 
recovery asset of (cid:101)3 million related to the provision was recognised at 30 June 2020, representing management’s assessment of the fair value on a 
best estimate basis. Discussions with Lighthouse’s insurers remain ongoing. A further review of the tax treatment resulted in the recognition of a 
deferred tax asset of (cid:101)2 million. The impact upon the fair value of net assets acquired as a result of the (cid:37)ritish Steel D(cid:37) pension transfer advice 
provision, insurance recovery asset and deferred tax asset at acquisition is a net liability of (cid:101)19 million, which is an increase in the net liability of (cid:101)7 
million from the (cid:101)12 million estimated balance reported recognised at 31 December 2019. 

The final determination of the fair value of net assets acquired in Lighthouse is assessed as (cid:101)(cid:25) million, and the Group has recognised goodwill of 
(cid:101)40 million in relation to this acquisition, which is an increase in goodwill of (cid:101)7 million from the estimated balance recognised at 31 December 2019. 
No further ad(cid:77)ustments can be made to the fair value of net assets acquired as the Group is now beyond the 12-month post-acquisition period 
permitted for such entries under IFRS 3 Business Combinations.

Contingent consideration arising from business combinations
The table below details the movements in the contingent consideration balance (see note 31) during the current and prior year arising from the 
business acquisitions in earlier years detailed above.

Opening balance
Acquisitions during the year
Payments
Financing interest charge
Other movements

Closing balance

31 December 
2020
£m
39
–
(20)
2
(5)

31 December 
2019
£m
37
22
(21)
3
(2)

16

39

Contingent consideration represents management’s best estimate of the amount payable in relation to each acquisition discounted to net present 
value. The basis of each acquisition varies but includes payments based upon a percentage of the level of assets under administration, funds under 
management and levels of ongoing fee income at future dates. Management estimate that a 20(cid:8) increase(cid:18)(decrease) in these key underlying 
assumptions would have resulted in a (cid:101)3 million(cid:18)(cid:101)(4) million movement in the year-end contingent consideration balance.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

189

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

6: Acquisitions, disposals and discontinued operations continued

6(b): Business disposals
Year ended 31 December 2020
There have been no disposals during the year ended 31 December 2020.

Year ended 31 December 2019
On 31 December 2019, the Group completed the sale of the Quilter Life Assurance ((cid:522)QLA(cid:523)) business (consisting of two of the Group’s subsidiary 
undertakings(cid:29) Old Mutual (cid:58)ealth Life Assurance Limited and Old Mutual (cid:58)ealth Pensions Trustee Limited) to ReAssure Group for total consideration 
of (cid:101)44(cid:25) million. The Group recognised a profit on the disposal of QLA of (cid:101)103 million. Provisions established in respect of this disposal are shown in 
note 28.

(Loss)/profit on sale of operations

Consideration received
Less: transaction and separation costs1

Net (costs)/proceeds from sale
Carrying value of net assets disposed
Goodwill allocated and disposed

Year ended
31 December
2020
£m

(cid:52)(cid:88)(cid:76)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:47)(cid:76)(cid:73)(cid:72)
Assurance and
Single Strategy
business
£m
–
(1)

(1)
–
–

Year ended
31 December
2019
£m

Quilter Life
Assurance
£m
446
(19)

427
(294)
(30)

(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)(cid:18)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)
1An additional (cid:101)1 million of transaction and separation costs relating to the historical sales of the QLA and Single Strategy businesses have been recognised in the year ended 31 
December 2020.

103

(1)

190

Quilter | Annual report 2020

6: Acquisitions, disposals and discontinued operations continued

6(c): Discontinued operations – income statement
The Group’s discontinued operations principally relate to the QLA business that was disposed of on 31 December 2019 and the associated profit on sale.

Year ended 
31 December
2020
£m

Year ended
31 December
2019
£m

Notes

Income
Gross earned premiums
Premiums ceded to reinsurers

Net earned premiums
Fee income and other income from service activities
Investment return

Total income
Expenses
Claims and benefits paid
Reinsurance recoveries

Net insurance claims and benefits incurred
Change in reinsurance assets and liabilities
Change in insurance contract liabilities
Change in investment contract liabilities
Fee and commission expenses, and other acquisition costs
Other operating and administrative expenses

Total expenses
(Loss)(cid:18)profit on sale of operations before tax

(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)(cid:18)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
Tax expense attributable to policyholder returns

(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)(cid:18)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)

Income tax expense
Less: tax expense attributable to policyholder returns

Tax expense attributable to equity holders

(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)(cid:18)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)

Attributable to:
(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:52)(cid:88)(cid:76)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:83)(cid:79)(cid:70)

9(a)

9(b)

27

10(a)

10(b)

6(b)

11(a)

11(a)

(cid:40)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:50)(cid:85)(cid:71)(cid:76)(cid:81)(cid:68)(cid:85)(cid:92)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:50)(cid:85)(cid:71)(cid:76)(cid:81)(cid:68)(cid:85)(cid:92)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:52)(cid:88)(cid:76)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:83)(cid:79)(cid:70)
Basic – from discontinued operations (pence)
Diluted – from discontinued operations (pence)

12(b)

12(b)

–
–

–
–
–

–

–
–

–
–
–
–
–
–

–
(1)

(1)
–

(1)

–
–

–

(1)

(1)

(0.1)

(0.1)

145
(86)

59
164
1,38(cid:25)

1,609

(98)
72

(26)
121
(134)
(1,3(cid:25)4)
(45)
(8)

(1,456)
103

256
(76)

180

(89)
76

(13)

167

167

9.1

8.9

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

191

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

6: Acquisitions, disposals and discontinued operations continued

6(d): Discontinued operations – Statement of comprehensive income

(Loss)(cid:18)profit after tax

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:11)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:12)(cid:18)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)

6(e): Discontinued operations – Net cash flows

Total net cash flows used in operating activities 
Total net cash (used in)/from investing activities
Total net cash used in financing activities

(cid:49)(cid:72)(cid:87)(cid:3)(cid:71)(cid:72)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)

7: Alternative performance measures (“APMs”)

7(a): Adjusted profit and reconciliation to profit after tax 

Year ended
31 December
2020
£m
(1)

Year ended
31 December
2019
£m
167

(1)

167

Year ended
31 December
2020
£m
–
(10)
–

Year ended
31 December
2019
£m
(3,789)
3,7(cid:25)(cid:24)
(130)

(10)

(154)

Basis of preparation of adjusted profit
Ad(cid:77)usted profit is one of the Group’s Alternative Performance Measures and reflects the Directors’ view of the underlying performance of the Group. 
It is used for management decision making and internal performance management and is the profit measure presented in the Group’s segmental 
reporting. Ad(cid:77)usted profit is a non-GAAP measure which ad(cid:77)usts the Group’s IFRS profit for specified items as detailed in note 7(b). The definition 
of ad(cid:77)usted profit is unchanged from the last annual financial statements.

Year ended 31 December 2020

Year ended 31 December 2019

Notes

Continuing 
operations
£m
90
114
(36)

Discontinued 
operations
£m
–
–
–

Continuing 
operations
£m
103
112
(33)

Discontinued 
operations¹
£m
–
53
–

Total
£m
90
114
(36)

168
–

168

(42)
(1)
(70)
–
(10)
9
(5)

182
(26)

156

(54)
–
(77)
(6)
(10)
(62)
–

53
26

79

–
103
–
–
–
(12)
10

101

180
76
(89)

167

(119)

(209)

49
36
3

88

(53)
98
(66)

(21)

Total
£m
103
165
(33)

235
–

235

(54)
103
(77)
(6)
(10)
(74)
10

(108)

127
174
(155)

146

–
–

–

–
(1)
–
–
–
–
–

(1)

(1)
–
–

(1)

Advice and Wealth Management
Wealth Platforms
Head Office

(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)
Reallocation of QLA costs

168
–

168

(42)
–
(70)
–
(10)
9
(5)

(118)

50
36
3

(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)

Ad(cid:77)usting items(cid:29)
Impact of acquisition and disposal related accounting
(Loss)(cid:18)profit on business disposals
Business transformation costs
Managed Separation costs
Finance costs
Policyholder tax ad(cid:77)ustments
Customer remediation

Total adjusting items before tax

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)
Tax attributable to policyholder returns
Income tax credit/(expense)

8(b)

7(b)(i)

6(b)

7(b)(ii)

7(b)(iii)

7(b)(iv)

7(b)(v)

7(b)(vi)

11(a)

11(a),(b)

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)2
89
1Discontinued operations includes the results of the Quilter Life Assurance ((cid:522)QLA(cid:523)) business in 2019.
2IFRS profit(cid:18)(loss) after tax.

192

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

7: Alternative performance measures (“APMs”) continued

7(b): Adjusting items 
In determining ad(cid:77)usted profit before tax, certain ad(cid:77)ustments are made to IFRS profit before tax to reflect the underlying performance of the Group. 
These are detailed below.

7(b)(i): Impact of acquisition and disposal related accounting
The recognition of goodwill and other acquired intangibles is created on the acquisition of a business and represents the premium paid over the fair 
value of the Group’s share of the identifiable assets and liabilities acquired at the date of acquisition (as recognised under IFRS 3 Business 
Combinations). The Group excludes any impairment of goodwill from ad(cid:77)usted profit as well as the amortisation and impairment of acquired other 
intangible assets, any acquisition costs, finance costs related to the discounting of contingent consideration and incidental items relating to 
past(cid:98)disposals.

The effect of these ad(cid:77)ustments to determine ad(cid:77)usted profit are summarised below. All ad(cid:77)ustments are in respect of continuing operations.

Amortisation of other acquired intangible assets
Fair value gains on revaluation of contingent consideration
Acquisition and disposal related (income)/costs1
Unwinding of discount on contingent consideration

Note

14(a)

Year ended
31 December
2020
£m
45
(4)
(1)
2

Year ended
31 December
2019
£m
45
–
6
3

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:76)(cid:86)(cid:83)(cid:82)(cid:86)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)
1Acquisition and disposal related (income)(cid:18)costs in the year ended 31 December 2020 includes a (cid:101)(1) million acceleration of discounting unwind following the settlement of a 
loan receivable from TA Associates that related to deferred consideration arising from the sale of the Single Strategy Asset Management business. Other acquisition and 
disposal related (income)(cid:18)costs include items such as transaction costs or deferred incentives arising on the acquisition of businesses.

42

54

7(b)(ii): Business transformation costs
(cid:37)usiness transformation costs include four items(cid:29) costs associated with the UK Platform Transformation Programme, build out costs incurred within 
Quilter Investors as a result of the sale of the Single Strategy business, Optimisation Programme costs, and restructuring costs incurred as a result of 
the sale of Quilter Life Assurance. All items are within the Group’s continuing operations. For the year ended 31 December 2020, these costs totalled 
(cid:101)70 million (31 December 2019(cid:29) (cid:101)77 million) in aggregate, the principal components of which are described below(cid:29)

UK Platform Transformation Programme – 31 December 2020: £38 million, 31 December 2019: £57 million 
The second ma(cid:77)or migration of client assets completed in November 2020 and the final migration completed successfully in February 2021 with all 
Quilter Investment Platform assets now live on the new platform. The total costs of the programme are expected to be approximately (cid:101)200 million, 
in line with previous guidance.

Optimisation Programme costs – 31 December 2020: £33 million, 31 December 2019: £18 million
The Optimisation programme has delivered notable efficiencies and improvements in operational performance for the Group through greater 
technology utilisation and integration activity. Technology enabled transformation over 2020 included successful deployment of new finance and 
procurement modules as part of our general ledger consolidation and modernisation activity effective from January 2021, with (cid:101)33 million of total 
costs for the Optimisation programme incurred for the year ended 31 December 2020. The Group also continued to leverage support function 
centres of excellence to achieve cost savings and reduce spend across the business by introducing tighter supplier management practices, insourcing 
capabilities and rationalising and consolidating technology and other suppliers across the Group.

Quilter Investors’ build out costs – 31 December 2020: £(1) million, 31 December 2019: £(1) million
As part of the Group’s strategy to separate from Old Mutual plc in 2018, the Group incurred build out costs to develop Quilter Investors as a separate 
business distinct from the Single Strategy business, which was subsequently sold on 29 June 2018. The build was substantially completed in 2019, 
resulting in the release of (cid:101)1 million of the provision established to complete the build in 2019, with a further (cid:101)1 million release in 2020. 

Restructuring costs following disposal of Quilter Life Assurance – 31 December 2020: £nil, 31 December 2019: £3 million
As a result of the disposal of QLA on 31 December 2019, the Group recognised (cid:101)3 million as an ad(cid:77)usting item principally in respect of redundancy 
costs. The Group expects to incur further restructuring costs during the following 12 months, including the cost of decommissioning IT systems, as 
the Transitional Service Agreement with ReAssure (the acquirer) runs off during 2021 and the remaining Quilter business is restructured following 
the(cid:98)disposal.

Quilter | Annual report 2020

193

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

7: Alternative performance measures (“APMs”) continued
7(b): Adjusting items continued

7(b)(iii): Managed Separation costs
One-off costs related to the Managed Separation from Old Mutual plc have been excluded from ad(cid:77)usted profit on the basis that they relate 
to a(cid:98)fundamental restructuring of the Group and are therefore not representative of the operating activity of the Group. For the year ended 
31 December 2020 these costs were (cid:101)0.1 million (31 December 2019(cid:29) (cid:101)(cid:25) million). The costs incurred in 2020 were in respect of rebranding 
and further rebranding costs are expected to be incurred in 2021.

7(b)(iv): 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 ad(cid:77)usted profit. For the period ended 31 December 2020 finance costs were 
(cid:101)10 million (31 December 2019(cid:29) (cid:101)10 million). See note 10(e) for further details of the Group’s finance costs.

7(b)(v): Policyholder tax adjustments
For the year ended 31 December 2020 the total policyholder tax ad(cid:77)ustments to ad(cid:77)usted profit is (cid:101)9 million (31 December 2019(cid:29) (cid:101)(74) million) relating 
to both continuing and discontinued operations, as shown in note 11(c). Ad(cid:77)ustments to policyholder tax are made to remove distortions arising from 
market volatility that can, in turn, lead to volatility in the policyholder tax charge between periods. The recognition of the income received from 
policyholders (which is included within the Group’s income) to fund the policyholder tax liability can vary in timing to the recognition of the 
corresponding tax expense, creating volatility to the Group’s IFRS profit(cid:18)(loss) before tax attributable to equity holders. For a further explanation of 
the impact of markets on the policyholder tax charge see note 11(a). Ad(cid:77)ustments are also made to remove policyholder tax distortions from other 
non-operating ad(cid:77)usting items.

7(b)(vi): Customer remediation
Lighthouse pension transfer advice provision – 31 December 2020 £5 million, 31 December 2019 £nil
(cid:58)ith regard to the provision for redress payable and related costs established within the fair value of the Lighthouse assets and liabilities acquired 
in June 2019 in relation to advice provided to (cid:37)ritish Steel Pension Scheme members, a further (cid:101)(cid:24) million (31 December 2019(cid:29) (cid:101)nil) increase in the 
provision has been recognised in the income statement in the year ended 31 December 2020, reflecting the impact of post-acquisition market and 
discount rate movements. This has been excluded from ad(cid:77)usted profit on the basis that the costs are not representative of the operating activity 
of the Group. Further details of the provision are provided in note 28.

QLA voluntary client remediation provision – 31 December 2020 £nil, 31 December 2019 £10 million
(cid:58)ithin QLA (disposed of on 31 December 2019), a voluntary customer remediation provision was established in 2017 following product 
reviews and consistent with recommendations from the Financial Conduct Authority’s ((cid:522)FCA(cid:523)) thematic review and the FCA’s guidance 
FG16/8 Fair treatment of long-standing customers in the life assurance sector. During 2019, (cid:101)10 million of the provision was released 
(as detailed in note 28).

7(c): IFRS profit before tax (excluding amortisation, policyholder tax adjustments and other one-off items)
For remuneration purposes, the Group uses IFRS profit before tax ad(cid:77)usted to exclude agreed non-operating, one-off items as shown below. 
For further details please refer to the Remuneration Report (page 122) and KPIs (page 41).

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:514)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
(cid:11)(cid:47)(cid:82)(cid:86)(cid:86)(cid:12)(cid:18)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:514)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
Ad(cid:77)usted for the following(cid:29)
Loss(cid:18)(profit) on business disposals
Impact of acquisition and disposal related accounting
Policyholder tax ad(cid:77)ustments
Customer remediation
Quilter Investors’ build out costs

Notes

6(c)

6(b)

7(b)(i)

7(b)(v)

7(b)(vi)

7(b)(ii)

(cid:918)(cid:41)(cid:53)(cid:54)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:11)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:92)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:98)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:98)(cid:82)(cid:81)(cid:72)(cid:16)(cid:82)(cid:909)(cid:3)(cid:76)(cid:87)(cid:72)(cid:80)(cid:86)(cid:12)

Year ended
31 December
2020
£m
50
(1)

Year ended
31 December
2019
£m
(53)
180

1
42
(9)
5
(1)

87

(103)
54
74
(10)
(1)

141

194

Quilter | Annual report 2020

 
7: Alternative performance measures (“APMs”) continued

7(d): Reconciliation of IFRS income and expenses to “Total net fee revenue” and “Operating expenses” within adjusted profit
This reconciliation shows how each line of the Group’s consolidated IFRS income statement is allocated to the Group’s APMs(cid:29) Net management fees, 
Total net fee revenue and Operating expenses, which are all defined on page 271 and form the Group’s ad(cid:77)usted profit for continuing operations. 
The IFRS(cid:98)income statement column in the table below, down to (cid:522)Profit(cid:18)(loss) before tax attributable to equity holders from continuing operations(cid:523), 
reconciles to each line of the Group’s consolidated income statement. Allocations are determined by management and aim to show the Group’s 
sources of profit (net of relevant directly attributable expenses). These allocations remain consistent from period to period to ensure comparability, 
unless otherwise stated.

Net mgmt 
fees1
£m

Other 
revenue1
£m

Total net fee 
revenue1
£m

Operating 
expenses1
£m

Adjusted
(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)
before tax
£m

Consol.
of funds2
£m

IFRS income 
statement
£m

Year ended 31 December 2020
Income
Fee income and other income from service activities
Investment return
Other income

Total income
Expenses
Insurance contract claims and changes in liabilities
Change in investment contract liabilities
Fee and commission expenses, and other acquisition costs
Change in third-party interest in consolidated funds
Other operating and administrative expenses
Finance costs4

Total expenses
Tax expense attributable to policyholder returns

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)
from continuing operations 
Ad(cid:77)usting items(cid:29)
Impact of acquisition and disposal related accounting
Business transformation costs
Finance costs
Customer remediation
Policyholder tax ad(cid:77)ustments

Adjusting items

680
–
–

680

–
–
(70)
–
(13)
–

(83)
(36)

195
3,340
1

3,536

(1)
(3,328)
(74)
–
(2)
(1)

(3,406)
–

875
3,340
1

4,216

(1)
(3,328)
(144)
–
(15)
(1)

(3,489)
(36)

–
–
15

15

–
–
–
–
(640)
(16)

(656)
–

561

130

691

(641)

–
–
–
–
(9)

(9)

–
–
–
–
–

–

–
–
–
–
(9)

(9)

42
70
10
5
–

127

(514)

Total Group – continuing operations

552

130

682

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

(80)
556
4

480

–
–
(3)
(440)
(37)
–

(480)
–

795
3,89(cid:25)
20

4,711

(1)
(3,328)
(147)
(440)
(692)
(17)

(4,625)
(36)

–

50

875
3,340
16

4,231

(1)
(3,328)
(144)
–
(655)
(17)

(4,145)
(36)

50

42
70
10
5
(9)

118

168

Quilter | Annual report 2020

195

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

7: Alternative performance measures (“APMs”) continued
7(d): Reconciliation of IFRS income and expenses to ‘Total net fee revenue’ and ‘Operating expenses’ within adjusted profit continued
In the Group’s 2019 Annual Report, the reconciliation for year ended 31 December 2019 included the results of the QLA business within ad(cid:77)usted 
profit before tax. QLA is now excluded from this reconciliation for comparability with the current period following its disposal on 31 December 2019, 
which now presents continuing operations only.

Year ended 31 December 2019 (restated)3
Income
Fee income and other income from service activities
Investment return
Other income

Total income
Expenses
Insurance contract claims and changes in liabilities
Change in investment contract liabilities
Fee and commission expenses, and other acquisition costs
Change in third-party interest in consolidated funds
Other operating and administrative expenses
Finance costs4

Total expenses

Tax expense attributable to policyholder returns

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)
from continuing operations 
Ad(cid:77)usting items(cid:29)
Impact of acquisition and disposal related accounting
Business transformation costs
Managed Separation costs
Finance costs
Policyholder tax ad(cid:77)ustments

Adjusting items

Ad(cid:77)usted profit before tax after reallocation
Reallocation of QLA costs

Net mgmt 
fees1
£m

Other 
revenue1
£m

Total net fee 
revenue1
£m

Operating 
expenses1
£m

Adjusted
profit
(cid:69)efore tax
£m

Consol.
of funds2,3
£m

IFRS income 
statement3
£m

689
40
 – 

729

–
–
(100)
–
(14)
–

(114)

(98)

230
(cid:24),79(cid:24)
1

6,026

(1)
((cid:24),810)
(77)
–
(1)
(4)

919
(cid:24),83(cid:24)
1

6,755

(1)
((cid:24),810)
(177)
 – 
(15)
(4)

–
–
–

–

–
–
–
–
(690)
(13)

919
(cid:24),83(cid:24)
1

6,755

(1)
((cid:24),810)
(177)
 – 
(705)
(17)

(82)
731
15

664

–
–
10
(634)
(40)
–

837
(cid:25),(cid:24)(cid:25)(cid:25)
16

7,419

(1)
((cid:24),810)
(167)
(634)
(745)
(17)

(5,893)

(6,007)

(703)

(6,710)

(664)

(7,374)

–

(98)

–

(98)

–

–

(98)

(53)

517

133

650

(703)

(53)

–
–
–
–
62

62

579
–

–
–
–
–
–

–

133
–

–
–
–
–
62

62

712
–

54
77
6
10
 – 

147

(556)
26

54
77
6
10
62

209

156
26

Total Group – continuing operations
1The APMs (cid:522)Net Management Fees(cid:523), (cid:522)Other revenue(cid:523), (cid:522)Total net fee revenue(cid:523) and (cid:522)Operating expenses(cid:523) are commented on within the Financial Review and defined on page 271.
2Consolidation of funds shows the grossing up impact to the Group’s consolidated income statement as a result of the consolidation of funds requirements, as described within 
note (cid:24)(a). This grossing up is excluded from the Group’s ad(cid:77)usted profit. 
3See note 4(b) for details of changes to comparative amounts.
4During the year ended 31 December 2020, management reassessed the presentation of lease interest expenses within the ad(cid:77)usted profit analysis in the table above. These 
expenses have historically been reported within (cid:522)Other revenue(cid:523) and are now reported within (cid:522)Operating expenses(cid:523) for ad(cid:77)usted profit. 

(530)

579

182

133

712

196

Quilter | Annual report 2020

8: Segmental information

8(a): Segmental presentation
The Group’s operating segments comprise Advice and (cid:58)ealth Management and (cid:58)ealth Platforms, which is consistent with the manner in which the 
Group is structured and managed. For all reporting periods, these segments have been classified as continuing operations in the income statement. 
Head Office includes certain revenues and central costs that are not allocated to the segments. There have been no changes to the basis of 
segmentation for the periods presented within these consolidated financial statements.

Ad(cid:77)usted profit is an Alternative Performance Measure ((cid:522)APM(cid:523)) reported to the Group’s management and (cid:37)oard. Management and the (cid:37)oard use 
additional APMs to assess the performance of each of the segments, including net client cash flows, assets under management and administration, 
revenue and operating margin.

Consistent with internal reporting, assets, liabilities, 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(cid:98)current market prices. Intra-group recharges in respect of operating and administration expenses within businesses disclosed as discontinued 
operations are not ad(cid:77)usted for potential future changes to the level of remaining costs following the disposal of those businesses.

The segmental information in this note reflects the ad(cid:77)usted and IFRS profit measures and the assets and liabilities for each operating segment 
as(cid:98)provided to management and the (cid:37)oard. Income is further segmented into the geographic location of the businesses in note 9(a).

Continuing operations:
Advice and Wealth Management
This segment comprises Quilter Investors, Quilter Cheviot and Quilter Financial Planning.

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.

Quilter Cheviot provides discretionary investment management predominantly in the United Kingdom with bespoke investment portfolios tailored to 
the individual needs of a(cid:606)uent and high-net worth customers, 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 the Republic of Ireland.

Quilter Financial Planning is a restricted and independent financial adviser network including Quilter Private Client Advisors ((cid:522)QPCA(cid:523)), Quilter Financial 
Advisers ((cid:522)QFA(cid:523)) and Lighthouse, 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.

Wealth Platforms
This segment comprises Quilter Investment Platform ((cid:522)QIP(cid:523)) and Quilter International.

Quilter Investment Platform is a leading investment platform provider of advice-based wealth management products and services in the UK, which 
serves a largely a(cid:606)uent customer base through advised multi-channel distribution. 

Quilter International is a cross-border business, focusing on high net worth and a(cid:606)uent local customers and expatriates in the UK, Asia, the Middle 
East, Europe and Latin America.

Head Office
In addition to the 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 in the segmental statement of financial position.

Discontinued operations:
The disposal of Quilter Life Assurance ((cid:522)QLA(cid:523)) on 31 December 2019, previously part of the (cid:58)ealth Platforms operating segment, resulted in that 
business being classified as a discontinued operation. The results of that business, along with the profit on disposal, have been presented as 
discontinued operations. See note (cid:25) for further information.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

197

 
 
 
 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

8: Segmental information continued

8(b)(i): Adjusted profit statement – segmental information for the year ended 31 December 2020
The table below presents the Group’s continuing operations split by operating segment, reconciling the segmented IFRS income statement  
(to (cid:522)Profit(cid:18)(loss) before tax attributable to equity holders from continuing operations(cid:523)) to ad(cid:77)usted profit before tax.

Income
Fee income and other income from service activities 
Investment return
Other income

Segmental income

Expenses
Insurance contract claims and changes in liabilities
Change in investment contract liabilities
Fee and commission expenses, and other acquisition costs
Change in third-party interest in consolidated funds
Other operating and administrative expenses
Finance costs

Segmental expenses

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
Tax attributable to policyholder returns

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)
(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:98)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:98)(cid:73)(cid:85)(cid:82)(cid:80)(cid:98)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:98)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)

Adjusted for non-operating items:
Impact of acquisition and disposal related accounting
Business transformation costs
Finance costs
Policyholder tax ad(cid:77)ustments 
Customer remediation

Ad(cid:77)usting items before tax

(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:514)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)

Notes

9(a)

9(b)

27

10(a)

10(b)

10(e)

7(b)(i)

7(b)(ii)

7(b)(iv)

7(b)(v)

7(b)(vi)

Operating segments

Advice and 
Wealth 
Management
£m

Wealth 
Platforms
£m

Head 
(cid:50)(cid:605)ce
£m

Consolidation 
adjustments1
£m

Consolidated 
income 
statement
£m

456
4
4

464

–
–
(50)
–
(370)
(3)

426
3,33(cid:24)
117

3,878

(1)
(3,328)
(101)
–
(324)
(4)

(423)

(3,758)

41
–

41

44
–
–
–
5

49

90

120
(36)

84

–
39
–
(9)
–

30

–
1
5

6

–
–
–
–
(71)
(10)

(81)

(75)
–

(75)

(2)
31
10
–
–

39

(87)
556
(106)

363

–
–
4
(440)
73
–

795
3,89(cid:25)
20

4,711

(1)
(3,328)
(147)
(440)
(692)
(17)

(363)

(4,625)

–
–

–

–
–
–
–
–

–

–

86
(36)

50

42
70
10
(9)
5

118

168

114

(36)

1Consolidation ad(cid:77)ustments comprise the elimination of inter-segment transactions and the consolidation of investment funds.

198

Quilter | Annual report 2020

8: Segmental information continued

8(b)(ii): Adjusted profit statement – segmental information for the year ended 31 December 2019 restated3

Consolidation 
adjustments
2,3

£m

(87)
730
(151)

492

–
–
16
(634)
126
–

Consolidated 
income 
statement3
£m

837
(cid:25),(cid:24)(cid:25)(cid:25)
16

7,419

(1)
((cid:24),810)
(167)
(634)
(745)
(17)

(492)

(7,374)

–

–

–

–
–
–
–
–

–

–

–

45

(98)

(53)

54
77
6
10
62

209

156

26

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Income

Fee income and other income from service activities 
Investment return
Other income

Segmental income

Expenses
Insurance contract claims and changes in liabilities
Change in investment contract liabilities
Fee and commission expenses, and other acquisition costs
Change in third-party interest in consolidated funds
Other operating and administrative expenses
Finance costs

Notes

9(a)

9(b)

27

10(a)

10(b)

10(e)

Operating segments

Advice and 
Wealth 
Management
£m

Wealth 
Platforms
£m

Head 
(cid:50)(cid:605)ce
£m

Reallocation 
of QLA costs1
£m

486
10
1

497

–
–
(73)
–
(368)
(4)

438
(cid:24),823
160

6,421

(1)
((cid:24),810)
(110)
–
(409)
(3)

88

(98)

–
3
6

9

–
–
–
–
(68)
(10)

(78)

(69)

–

–
–
–

–

–
–
–
–
(26)
–

(26)

(26)

–

Segmental expenses

(445)

(6,333)

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)

Tax attributable to policyholder returns

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)
continuing operations

Adjusted for non-operating items:
Impact of acquisition and disposal related accounting
Business transformation costs
Managed Separation costs
Finance costs
Policyholder tax ad(cid:77)ustments 

Ad(cid:77)usting items before tax

(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)1

Reallocation of QLA costs1

7(b)(i)

7(b)(ii)

7(b)(iii)

7(b)(iv)

7(b)(v)

52

–

52

52
(1)
–
–
–

51

103

–

(10)

(69)

(26)

1
58
1
–
62

122

112

–

1
20
5
10
–

36

(33)

–

–
–
–
–
–

–

(26)

26

182
(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:18)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:514)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
1As disclosed in the Group’s 2019 Annual Report, Reallocation of QLA costs includes (cid:101)2(cid:25) million of costs previously reported as part of the QLA business which was reclassified 
from discontinued to continuing operations as these costs did not transfer to ReAssure on disposal at 31 December 2019.
2Consolidation ad(cid:77)ustments comprise the elimination of inter-segment transactions and the consolidation of funds. 
3See note 4(b) for details of changes to comparative amounts.

(33)

103

112

–

–

Quilter | Annual report 2020

199

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

8: Segmental information continued

8(c)(i): Statement of financial position – segmental information at 31 December 2020

Assets
Goodwill and intangible assets
Property, plant and equipment
Investments in associated undertakings
Contract costs
Loans and advances
Financial investments
Deferred tax assets
Current tax receivable
Trade, other receivables and other assets
Derivative assets
Cash and cash equivalents

Inter-segment funding – assets

Total assets

Liabilities
Investment contract liabilities
Third-party interests in consolidated funds
Provisions
Deferred tax liabilities
Current tax payable/(receivable)2
(cid:37)orrowings and lease liabilities
Trade, other payables and other liabilities
Contract liabilities
Derivative liabilities

Inter-segment funding – liabilities

Total liabilities

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)

Advice & Wealth 
Management
£m

Notes

Wealth 
Platforms
£m

Head 
(cid:50)(cid:605)(cid:70)(cid:72)
£m

Consolidation 
Adjustments1
£m

14

15

23

16

17

29(a)

29(c)

22

18

24

27

28

29(b)

29(c)

30

31

32

18

423
13
–
–
33
–
10
–
228
–
310

63

133
129
–
413
186
(cid:24)7,1(cid:25)2
25
10
430
–
690

34

1,080

59,212

–
–
53
36
21
15
268
–
–

–

393

(cid:24)7,407
–
15
70
(12)
105
396
379
–

20

58,380

–
–
1
–
–
–
43
14
2
–
614

20

694

–
–
9
–
(8)
199
34
–
–

97

331

–
–
–
–
–
(cid:25),112
–
–
41
43
307

(117)

6,386

–
(cid:25),(cid:24)13
–
–
–
–
(26)
–
20

(117)

6,390

Total
£m

556
142
1
413
219
(cid:25)3,274
78
24
701
43
1,921

–

67,372

(cid:24)7,407
(cid:25),(cid:24)13
77
106
1
319
672
379
20

–

65,494

1,878

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
1Consolidation ad(cid:77)ustments comprise the elimination of inter-segment transactions and the consolidation of funds.
2Current tax payable(cid:18)(receivable) includes Group relief payable and receivable that net to (cid:101)nil on a consolidated basis but may appear as a receivable within individual segments.

67,372

200

Quilter | Annual report 2020

8: Segmental information continued

8(c)(ii): Statement of financial position – segmental information at 31 December 2019 restated3

Assets
Goodwill and intangible assets
Property, plant and equipment
Investments in associated undertakings
Contract costs
Loans and advances
Financial investments
Deferred tax assets
Current tax receivable
Trade, other receivables and other assets
Derivative assets
Cash and cash equivalents

Inter-segment funding – assets

Total assets

Liabilities
Investment contract liabilities
Third-party interests in consolidated funds
Provisions
Deferred tax liabilities
Current tax payable/(receivable)2
(cid:37)orrowings
Trade, other payables and other liabilities
Contract liabilities
Derivative liabilities

Inter-segment funding – liabilities

Total liabilities

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)

Advice & 
Wealth 
Management
£m

Wealth 
Platforms 
restated3
£m

Notes

Consolidation 
Adjustments
1,3

£m

Head 
(cid:50)(cid:605)ce
£m

Total 
restated3
£m

14

15

23

16

17

29(a)

29(c)

22

18

24

27

28

29(b)

29(c)

30

31

32

18

458
30
–
–
31
1
11
–
207
–
383

–

134
111
–
455
180
(cid:24)2,249
22
–
389
–
725

12

1,121

54,277

–
–
28
38
1
26
322
1
–

–

(cid:24)2,4(cid:24)(cid:24)
–
26
50
(7)
108
477
402
–

–

–
2
1
–
6
–
10
13
3
–
838

–

873

–
–
10
–
12
201
37
–
–

12

–
–
–
–
–
4,9(cid:24)7
–
–
6
22
307

592
143
1
455
217
(cid:24)7,207
43
13
605
22
2,2(cid:24)3

(12)

–

5,280

61,551

–
(cid:24),318
–
–
–
–
(35)
–
10

(12)

(cid:24)2,4(cid:24)(cid:24)
(cid:24),318
64
88
6
335
801
403
10

–

416

53,511

272

5,281

59,480

2,071

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
1Consolidation ad(cid:77)ustments comprise the elimination of inter-segment transactions and the consolidation of funds.
2Current tax payable(cid:18)(receivable) includes Group relief payable and receivable that net to (cid:101)nil on a consolidated basis but may appear as a receivable within individual segments.
3See note 4(b) for details of changes to comparative amounts.

61,551

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

201

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

9: Details of revenue
This note gives further detail on the items appearing in the revenue section of the consolidated income statement.

9(a): Geographic segmental information 
This note analyses the Group’s total income, split by geographic location of our businesses (UK and International) and further analyses the Group’s fee 
income and other income from service activities, based on the type of fees earned. The Group also earns an immaterial amount of income through 
operations based in the Republic of Ireland and the Channel Islands.

Year ended 31 December 2020
Premium based fees
Fund based fees1
Retrocessions received, intragroup 
Fixed fees
Exit fees
Other fee and commission income

Advice and 
Wealth 
Management
£m
113
343
–
–
–
–

Fee income and other income from service activities

456

Investment return
Other income

Total income

4
4

464

UK

International

UK

Wealth 
Platforms
£m
–
168
2
2
–
48

220

2,273
143

2,636

(cid:43)(cid:72)(cid:68)(cid:71)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)
£m
–
–
–
–
–
–

Wealth 
Platforms
£m
70
88
6
29
13
–

Consolidation 
adjustments
£m
–
(93)
(8)
–
–
14

–

2
5

7

206

1,0(cid:25)2
–

1,268

(87)

555
(132)

336

Total 
continuing 
operations
£m
183
506
–
31
13
62

795

3,89(cid:25)
20

4,711

UK

International

Discontinued 
operations
£m
–
–
–
–
–
–

–

–
–

–

UK

Year ended 31 December 2019 (restated)2
Gross earned premiums
Premiums ceded to reinsurers

Net earned premiums

Premium based fees
Fund based fees1
Retrocessions received, intragroup
Fixed fees
Exit fees
Other fee and commission income

Fee income and other income from service activities

Investment return
Other income

Total income
1Income from fiduciary activities is included within fund based fees.
2See note 4(b) for details of changes to comparative amounts.

Advice and 
Wealth 
Management
£m
–
–

Wealth 
Platforms
£m
–
–

(cid:43)ead (cid:50)(cid:605)ce
£m
–
–

Wealth 
Platforms
£m
1
(1)

Consolidation 
adjustments2
£m
–
–

Total 
continuing 
operations2
£m
1
(1)

Discontinued 
operations
£m
145
(86)

–

103
383
–
–
–
–

486

10
1

497

–

–
175
2
3
–
39

219

3,82(cid:24)
161

4,205

–

–
–
–
–
–
–

–

3
6

9

–

72
101
2
28
16
–

219

1,998
(1)

2,216

–

–
(95)
(4)
–
–
12

(87)

730
(151)

492

–

175
564
–
31
16
51

837

(cid:25),(cid:24)(cid:25)(cid:25)
16

7,419

59

11
65
10
2
1
75

164

1,38(cid:25)
–

1,609

202

Quilter | Annual report 2020

9: Details of revenue continued

9(b): Investment return
This note analyses the investment return from the Group’s investing activities.

Year ended 
31 December 
2020
£m

Year ended 
31 December 
2019 
restated2
£m

Interest and similar income

Loans and advances
Investments and securities
Cash and cash equivalents1

Total interest and similar income

Dividend income
Foreign currency gains and losses
Total gains on financial instruments mandatorily recognised at fair value through profit or loss2

Net investment income – continuing operations
Net investment income – discontinued operations

1
90
9

100

99
–
3,(cid:25)97

3,896
–

Total net investment income
1Included within cash and cash equivalents is (cid:101)1 million of interest arising from assets held at amortised cost (2019(cid:29) (cid:101)2 million). The remainder is from assets at F(cid:57)TPL.
2See note 4(b) for details of changes to comparative amounts.

3,896

10: Details of expenses
This note provides further details in respect of the items appearing in the expenses section of the consolidated income statement.

10(a): Fee and commission expenses, and other acquisition costs
This note analyses the fee and commission expenses and other acquisition costs.

–
54
23

77

116
(1)
(cid:25),374

6,566
1,386

7,952

Fee and commission expense1
Acquisition commission costs – investment contracts
Renewal commission – investment contracts
Retrocessions paid
Changes in contract costs

(cid:41)(cid:72)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:3)(cid:514)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
(cid:41)(cid:72)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:3)(cid:514)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:73)(cid:72)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)
1See note 4(b) for details of changes to comparative amounts.

Note

23

Year ended 
31 December 
2020
£m
3
30
45
25
44

147
–

147

Year ended 
31 December 
2019 
restated¹
£m
1
36
71
19
40

167
45

212

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

203

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

10: Details of expenses continued

10(b): Other operating and administrative expenses
This note provides further details in respect of the items included within other operating and administrative expenses section of the consolidated 
income statement.

Staff costs
Depreciation charge on right-of-use assets
Depreciation on other plant and equipment
Impairment of right-of-use assets
Amortisation of purchased software
Amortisation of other acquired intangibles
Administration and other expenses

Other operating and administrative expenses – continuing operations

Other operating and administrative expenses – discontinued operations

Total other operating and administrative expenses

2See note 4(b) for details of changes to comparative amounts.

Notes

10(c)(i)

15

15

15

14(a)

14(a)

Year ended 
31 December 
2020
£m
361
15
5
3
2
45
261

692

–

692

Year ended 
31 December 
2019
restated1
£m
399
13
6
–
2
45
280

745

8

753

Administration and other expenses include business transformation costs for the year ended 31 December 2020 of £38 million (2019: £57 million) 
in relation to the UK Platform Transformation Programme and (cid:101)33 million (2019(cid:29) (cid:101)18 million) in relation to Optimisation pro(cid:77)ect costs as well as general 
operating expenses such as IT related costs, premises and marketing. Discontinued operations includes (cid:101)10 million provision release for the year 
ended 31 December 2019 in relation to the voluntary customer remediation provision.

10(c): Staff costs and other employee-related costs
10(c)(i): Staff costs

Salaries
Bonus and incentive remuneration
Social security costs
Retirement obligations – Defined contribution plans
Share-based payments – Equity-settled
Other

Staff costs – continuing operations
Staff costs – discontinued operations

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:909)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)

10(c)(ii): Employee numbers

The average number of persons employed by the Group was:
Advice and Wealth Management1
Wealth Platforms
Head Office

Continuing operations
Discontinued operations

Note

26(e)

Year ended 
31 December 
2020
£m
250
33
26
15
25
12

361
–

361

Year ended 
31 December 
2019
£m
250
57
29
14
25
24

399
13

412

Year ended 
31 December 
2020
Number

Year ended 
31 December
 2019
Number

1,799
2,441
85

4,325
–

1,(cid:25)48
2,47(cid:25)
79

4,203
299

Total average number of employees during the year
1The 2019 monthly average for Advice and (cid:58)ealth Management has been restated (previously reported as 1,(cid:24)1(cid:25)) following the inclusion of all staff attributable to acquisitions 
during that year.

4,325

4,502

The monthly average number of persons employed by the Group is based on permanent employees and fixed term contractors.

204

Quilter | Annual report 2020

10: Details of expenses continued

10(d): Auditors’ remuneration
Included in other operating and administrative expenses are fees paid to the Group’s auditors. These can be categorised as follows(cid:29)

Fees payable for audit services
Group and parent Company
Subsidiaries

Additional fees payable to KPMG LLP related to the prior year audit of the Group

Total fees for audit services
Fees for audit-related assurance services

Total Group auditors’ remuneration – continuing operations
Total Group auditors’ remuneration – discontinued operations

Total Group auditors’ remuneration 

Year ended 
31 December
2020
£m

Year ended
31 December
2019
£m

1.8
2.8
0.7

(cid:24).3
1.(cid:25)

6.9
–

6.9

1.0
2.7
–

3.7
1.1

4.8
0.2

5.0

10(e): Finance costs
This note analyses the interest costs on our borrowings and similar charges, all of which are valued at amortised cost. Finance costs comprise(cid:29)

Term loans and other external debt
Subordinated debt securities (Tier 2 bond)

Interest payable on borrowed funds
Interest expense on lease liabilities
Other

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)

Year ended
31 December
2020
£m
1
9

Year ended
31 December
2019
£m
1
9

10
4
3

17

10
3
4

17

Finance costs represent the cost of interest and finance charges on the Group’s borrowings from a number of relationship banks. More details 
regarding borrowed funds, including the interest rates payable, are shown in note 30. These costs are excluded from ad(cid:77)usted profit within the 
(cid:522)Finance costs(cid:523) ad(cid:77)usting item. 

(cid:58)ithin other finance costs above is (cid:101)2 million (2019(cid:29) (cid:101)3 million) relating to the impact of unwinding the discount rate on contingent consideration 
payable as a result of various acquisitions. These costs are excluded from ad(cid:77)usted profit within the (cid:522)Impact of acquisition and disposal related 
accounting(cid:523) ad(cid:77)usting item as shown in note 7(b)(i).

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

205

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

11: Tax

11(a): Tax charged to the income statement

Current tax
United Kingdom
International
Adjustments to current tax in respect of prior years

Total current tax charge

Deferred tax
Origination and reversal of temporary differences
Effect on deferred tax of changes in tax rates
Adjustments to deferred tax in respect of prior years

Total deferred tax (credit)/charge

Total tax (credited)/charged to income statement – continuing operations
Total tax charged to income statement – discontinued operations

Total tax (credited)/charged to income statement

Attributable to policyholder returns – continuing operations
Attributable to equity holders – continuing operations

Total tax (credited)/charged to income statement – continuing operations

Attributable to policyholder returns – discontinued operations
Attributable to equity holders – discontinued operations

Total tax charged to income statement – discontinued operations

Total tax (credited)/charged to income statement

Year ended
31 December
2020
£m

Year ended
31 December
2019
£m

Note

18
2
(7)

13

(20)
–
4

(16)

(3)
–

(3)

36
(39)

(3)

–
–

–

(3)

33
5
(11)

27

40
2
(3)

39

66
89

155

98
(32)

66

76
13

89

155

6(c)

6(c)

Policyholder tax
Certain products are sub(cid:77)ect to tax on policyholders’ investment returns. This (cid:522)policyholder tax(cid:523) is an element of total tax expense. To make the tax 
expense more meaningful, tax attributable to policyholder returns and tax attributable to equity holders’ profits are shown separately in the income 
statement. 

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 shareholders as tax attributable to equity holders.

The Group’s income tax credit on continuing operations was (cid:101)(3) million for the year ended 31 December 2020, compared to an expense of (cid:101)(cid:25)(cid:25) 
million for the prior year. This income tax (credit)(cid:18)expense can vary significantly period on period as a result of market volatility and the impact this has 
on policyholder tax. The recognition of the income received from policyholders (which is included within the Group’s income) to fund the policyholder 
tax liability can vary in timing to the recognition of the corresponding policyholder tax expense, creating volatility to the Group’s IFRS profit before tax 
attributable to equity holders. An ad(cid:77)ustment is made to ad(cid:77)usted profit to remove these distortions, as explained further in note 7(b)(v).

Market movements during the year ended 31 December 2020 resulted in investment gains of (cid:101)170 million on products sub(cid:77)ect to policyholder tax. 
The gain is a component of the total (cid:522)investment return(cid:523) gain of (cid:101)3,89(cid:25) million shown in the income statement. The impact of the (cid:101)3,89(cid:25) million 
investment return gain is the primary reason for the (cid:101)3(cid:25) million tax expense attributable to policyholder returns in respect of the continuing 
operations for the year ended 31 December 2020 (31 December 2019(cid:29) (cid:101)98 million expense in respect of continuing operations and (cid:101)7(cid:25) million 
expense in respect of discontinued operations).

First time recognition of deferred tax asset on accrued interest expense
(cid:58)ithin the (cid:101)(1(cid:25)) million total deferred tax credit and the (cid:101)(39) million tax credit attributable to equity holders (continuing operations) above, the Group 
has recognised a (cid:101)(39) million deferred tax credit for the first time in respect of accrued interest expense. At 31 December 2019, acknowledging the 
fact that the tax authorities may challenge the Group’s tax treatment, management exercised (cid:77)udgement concluding that the tax treatment of the 
accrued interest expense was an uncertain tax position. Following full disclosure to the tax authorities and after assessing recoverability against 
forecast future profits the Group reassessed the accounting tax position at 31 December 2020 and recognised a deferred tax asset.

206

Quilter | Annual report 2020

11: Tax continued

11(b): Reconciliation of total income tax expense
The income tax charged(cid:18)credited to profit or loss differs from the amount that would apply if all of the Group’s profits from the different tax 
(cid:77)urisdictions had been taxed at the UK standard corporation tax rate. The difference in the effective rate is explained below(cid:29)

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
Tax at UK standard rate of 19(cid:8) (2019(cid:29) 19(cid:8))
Different tax rate or basis on overseas operations
Untaxed and low taxed income
Expenses not deductible for tax
Adjustments to current tax in respect of prior years
Net movements on unrecognised deferred tax assets1
Effect on deferred tax of changes in tax rates
Adjustments to deferred tax in respect of prior years
Income tax attributable to policyholder returns (net of tax relief)

Total tax (credited)/charged to income statement – continuing operations
Total tax charged to income statement – discontinued operations

Total tax (credited)/charged to income statement
1Includes first time recognition of accrued interest expense as explained in note 11(a).

Note

6(c)

Year ended 
31 December
2020
£m
86
16
(8)
(1)
2
(7)
(39)
–
4
30

(3)
–

(3)

Year ended 
31 December
2019
£m
45
9
(6)
1
3
(11)
(11)
2
(3)
82

66
89

155

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

207

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

11: Tax continued

11(c): Reconciliation of income tax expense in the income statement to income tax on adjusted profit

Income tax (credit)/expense on continuing operations1
Reversal of income tax credit on the reallocation of QLA costs

Income tax (credit)/expense on continuing operations before the reallocation of QLA costs
Tax on adjusting items

Impact of acquisition and disposal related accounting
Business transformation costs
Managed Separation costs
Finance costs
Customer remediation

Tax adjusting items

Policyholder tax ad(cid:77)ustments 
Other shareholder tax ad(cid:77)ustments2

Tax on adjusting items – continuing operations
Less(cid:29) tax attributable to policyholder returns within ad(cid:77)usted profit – continuing operations3

(cid:55)(cid:68)(cid:91)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:514)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
Income tax credit on the reallocation of QLA costs

(cid:55)(cid:68)(cid:91)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:514)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:52)(cid:47)(cid:36)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)

Income tax expense on discontinued operations1
Reversal of income tax expense on the reallocation of QLA costs

Income tax expense on discontinued operations before the reallocation of QLA costs
Tax on adjusting items
Customer remediation

Tax adjusting items

Policyholder tax ad(cid:77)ustments 
Other shareholder tax ad(cid:77)ustments2

Tax on adjusting items – discontinued operations
Less(cid:29) Tax attributable to policyholder returns within ad(cid:77)usted profit – discontinued operations3

(cid:55)(cid:68)(cid:91)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:514)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
Income tax expense on the reallocation of QLA costs

(cid:55)(cid:68)(cid:91)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:514)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:52)(cid:47)(cid:36)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)

Notes

Year ended 
31 December
2020
£m
(3)
–

Year ended 
31 December
2019
£m
66
5

(3)

3
13
–
2
1

9
36

64
(45)

16
–

16

–
–

–

–

–
–

–
–

–
–

–

71

8
14
1
2
–

(62)
24

(13)
(36)

22
(5)

17

89
(5)

84

(2)

(12)
(3)

(17)
(64)

3
5

8

7(b)(v)

6(c)

7(b)(v)

(cid:55)(cid:68)(cid:91)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)
1Includes both tax attributable to policyholders and shareholders, in compliance with IFRS reporting.
2Other shareholder tax ad(cid:77)ustments comprise the reallocation of ad(cid:77)ustments from policyholder tax as explained in note 7(b)(v) and shareholder tax ad(cid:77)ustments for one-off 
items in line with the Group’s ad(cid:77)usted profit policy.
3Ad(cid:77)usted profit treats policyholder tax as a pre-tax charge (this includes policyholder tax under IFRS and the policyholder tax ad(cid:77)ustments) and is therefore removed from tax 
charge on ad(cid:77)usted profit.

16

25

208

Quilter | Annual report 2020

12: Earnings per share
The Group calculates earnings per share ((cid:522)EPS(cid:523)) on a number of different bases. IFRS requires the calculation of basic and diluted EPS. Ad(cid:77)usted EPS 
reflects earnings that are consistent with the Group’s ad(cid:77)usted profit measure before and after the reallocation of QLA costs, and Headline earnings 
per share ((cid:522)HEPS(cid:523)) is a requirement of the Johannesburg Stock Exchange. The Group’s EPS (in aggregate, including both continuing and discontinued 
operations) on these different bases are summarised below.

(cid:37)asic EPS is calculated by dividing profit after tax attributable to ordinary equity shareholders of the parent by the weighted average number of 
Ordinary Shares in issue during the year. The weighted average number of shares excludes Quilter plc shares held within Employee (cid:37)enefit Trusts 
((cid:522)E(cid:37)Ts(cid:523)) to satisfy the Group’s obligations under employee share awards, and Quilter plc shares held in consolidated funds ((cid:522)Own shares(cid:523)). Own shares 
are deducted for the purpose of calculating both basic and diluted EPS. 

Diluted EPS recognises the dilutive impact of shares awarded and options granted to employees under share-based payment arrangements, 
to the extent they have value, in the calculation of the weighted average number of shares, as if the relevant shares were in issue for the full year.

The Group is also required to calculate HEPS in accordance with the Johannesburg Stock Exchange ((cid:522)JSE(cid:523)) Listing Requirements, determined by 
reference to the South African Institute of Chartered Accountants’ circular 1(cid:18)2019 Headline Earnings. Disclosure of HEPS is not a requirement of IFRS, 
but it is a commonly used measure of earnings in South Africa.

(cid:37)asic earnings per share
Diluted basic earnings per share
Ad(cid:77)usted basic earnings per share
Ad(cid:77)usted diluted earnings per share

Headline basic earnings per share (net of tax)
Headline diluted earnings per share (net of tax)

Source of guidance
IFRS
IFRS
Group policy
Group policy

JSE Listing Requirements
JSE Listing Requirements

Year ended 
31 December
2020
Pence
(cid:24).0
4.9
8.(cid:25)
8.(cid:24)

Year ended 
31 December
2019
Pence
8.0
7.8
11.4
11.3

(cid:24).2
(cid:24).1

2.3
2.3

Notes

12(b)

12(b)

12(b)

12(b)

12(c)

12(c)

12(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, ad(cid:77)usted and headline profit)(cid:29)

(cid:58)eighted average number of Ordinary Shares
Treasury shares including those held in E(cid:37)Ts

Basic weighted average number of Ordinary Shares
Ad(cid:77)ustment for dilutive share awards and options 

Diluted weighted average number of Ordinary Shares

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

Year ended 
31 December
2020
Millions
1,842
(82)

Year ended 
31 December
2019
Millions
1,902
(67)

1,760
37

1,797

1,835
28

1,863

Profit after tax
Total ad(cid:77)usting items before tax
Tax on ad(cid:77)usting items
Less(cid:29) Policyholder tax ad(cid:77)ustments

(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)

Reversal of(cid:29)
Reallocation of QLA costs1
Income tax on reallocation of QLA costs

Year ended 31 December 2020

Year ended 31 December 2019

Continuing 
operations
£m
89
118
(64)
9

Discontinued 
operations
£m
(1)
1
–
–

152

–
–

–

–
–

Notes 

7(a)

11(c)

11(c)

11(c)

Total
£m
88
119
(64)
9

152

–
–

Continuing 
operations
£m
(21)
209
13
(62)

Discontinued 
operations
£m
167
(101)
17
(12)

139

26
(5)

71

(26)
5

Total
£m
146
108
30
(74)

210

–
–

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

210
(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)
1Reallocation of QLA costs included (cid:101)2(cid:25) million of costs previously reported as part of the QLA business which were reclassified from discontinued to continuing operations in 
2019 as these costs did not transfer to ReAssure (the acquirer) on disposal at 31 December 2019.

160

152

152

50

–

Quilter | Annual report 2020

209

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

12: Earnings per share continued
12(b): Basic and diluted EPS (IFRS and adjusted profit) continued

(cid:37)asic EPS
Diluted EPS
Ad(cid:77)usted basic EPS
Ad(cid:77)usted diluted EPS

Ad(cid:77)usted basic EPS after reallocation1

Post-tax profit measure used
IFRS profit
IFRS profit
Ad(cid:77)usted profit
Ad(cid:77)usted profit
Ad(cid:77)usted profit after 
reallocation
Ad(cid:77)usted profit after 
reallocation

Year ended 31 December 2020

Year ended 31 December 2019

Continuing 
operations
Pence
(cid:24).1
(cid:24).0
8.(cid:25)
8.(cid:24)

Discontinued 
operations
Pence
(0.1)
(0.1)
–
–

Total
Pence
(cid:24).0
4.9
8.(cid:25)
8.(cid:24)

Continuing 
operations
Pence
(1.1)
(1.1)
8.7
8.(cid:25)

Discontinued 
operations
Pence
9.1
8.9
2.7
2.7

Total
Pence
8.0
7.8
11.4
11.3

N(cid:18)A

N(cid:18)A

N(cid:18)A

7.(cid:24)

3.9

11.4

Ad(cid:77)usted diluted EPS after reallocation1
1Reallocation of QLA costs included (cid:101)2(cid:25) million of costs previously reported as part of the QLA business which were reclassified from discontinued to continuing operations in 
2019 as these costs did not transfer to ReAssure (the acquirer) on disposal at 31 December 2019.

N(cid:18)A

N(cid:18)A

N(cid:18)A

3.8

7.(cid:24)

11.3

12(c): Headline earnings per share

(cid:51)(cid:85)(cid:82)(cid:564)(cid:87)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:82)(cid:85)(cid:71)(cid:76)(cid:81)(cid:68)(cid:85)(cid:92)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)
Ad(cid:77)usted for(cid:29)
Loss(cid:18)(profit) on business disposals

Impairment loss on right-of-use assets

Headline earnings

Headline basic EPS (pence)
Headline diluted EPS (pence)

13: Dividends

2018 Final dividend paid – 3.3p per Ordinary Share
2019 Interim dividend paid – 1.7p per Ordinary Share
2019 Final dividend paid – 3.(cid:24)p per Ordinary Share
2020 Interim dividend paid – 1.0p per Ordinary Share

Dividends paid to Ordinary Shareholders

Notes

Gross

6(b)

15

1

3

Year ended 
31 December 
2020 
£m

Net of tax
88

1

2

91

5.2
5.1

Gross

(103)

–

Year ended 
31 December 
2019 
£m

Net of tax
146

(103)

–

43

2.3
2.3

Payment 
date
20 May 2019
20 September 2019
18 May 2020
21 September 2020

Year ended 
31 December 
2020 
£m
–
–
64
17

Year ended 
31 December
2019 
£m
61
31
–
–

81

92

Subsequent to year ended 31 December 2020, the Directors proposed a final dividend for 2020 of 3.(cid:25) pence per Ordinary Share amounting to 
(cid:101)(cid:25)1 million in total. Sub(cid:77)ect to approval by shareholders at the AGM, the dividend will be paid on 17 May 2021. In compliance with the rules issued by 
the Prudential Regulation Authority ((cid:522)PRA(cid:523)) in relation to the implementation of the Solvency II regime and other regulatory requirements to which the 
Group is sub(cid:77)ect, the dividend is required to remain cancellable at any point prior to it becoming due and payable on 17 May 2021 and to be cancelled 
if, prior to payment, the Group ceases to hold capital resources equal to or in excess of its Solvency Capital Requirement, or if that would be the case 
if the dividend was paid. The Directors have no intention of exercising this cancellation right, other than where required to do so by the PRA or for 
regulatory capital purposes. Final and interim dividends paid to Ordinary Shareholders are calculated using the number of shares in issue at the 
record date less own shares held in Employee (cid:37)enefit Trusts.

210

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

14: Goodwill and intangible assets

14(a): Analysis of goodwill and intangible assets
The table below shows the movements in cost and amortisation of goodwill and intangible assets.

Gross amount
1 January 2019
Acquisitions through business combinations
Additions
Disposals
Other movements1

31 December 2019
Acquisitions through business combinations2
Additions

31 December 2020

Accumulated amortisation and impairment losses
1 January 2019
Amortisation charge for the year
Disposals
Other movements1

31 December 2019
Amortisation charge for the year

31 December 2020

Carrying amount

31 December 2019

Software 
development 
costs
£m

Other 
intangible 
assets
£m

Goodwill
£m

314
68
–
(30)
(2)

350
6
–

356

–
–
–
–

–
–

–

100
–
5
(4)
–

101
–
4

105

(95)
(2)
4
–

(93)
(2)

(95)

380
49
–
(4)
3

428
1
–

429

(149)
(45)
4
(4)

(194)
(45)

(239)

Total
£m

794
117
5
(38)
1

879
7
4

890

(244)
(47)
8
(4)

(287)
(47)

(334)

350

8

234

592

31 December 2020
1During 2019, there was a gross up of fully amortised intangible assets in the Quilter Financial Planning and Quilter Cheviot businesses arising from previous business 
combinations.
2During 2020, there have been fair value ad(cid:77)ustments of (cid:101)7 million made to the net assets acquired in Lighthouse, with corresponding movements in goodwill of (cid:101)7 million, other 
intangible assets of (cid:101)1 million and associated deferred tax liabilities of (cid:101)(1) million. Refer to note (cid:25)(a) for further details. Other fair value ad(cid:77)ustments of (cid:101)(1) million have been 
made to goodwill in relation to acquisitions within the Quilter Private Client Adviser business.

356

556

190

10

14(b): Analysis of other intangible assets

Net carrying value
Distribution channels – Quilter Financial Planning
Customer relationships

Quilter Cheviot
Quilter Financial Planning
Other

(cid:37)rand – Quilter Cheviot

Total other intangible assets

At 31 December 
2020 
£m

At 31 December 
2019 
£m

Average 
estimated 
useful life

Average 
period 
remaining

15

114
54
7
–

190

22

8 years

3 years

141
61
9
1

234

10 years
8 years
8 years
n(cid:18)a

4 years
6 years
4 years
n(cid:18)a

Quilter | Annual report 2020

211

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

14: Goodwill and intangible assets continued

14(c): Allocation of goodwill to cash generating units (“CGUs”) and impairment testing
The Group considers that there are two groups of CGUs for goodwill impairment testing purposes. Goodwill is allocated to these groups of CGUs 
as follows(cid:29)

Goodwill (net carrying amount)
Advice and (cid:58)ealth Management
(cid:58)ealth Platforms

Total goodwill

At 31 December
2020 
£m

At 31 December 
2019
 £m

225
131

356

219
131

350

Impairment review
In accordance with the requirements of IAS 3(cid:25) Impairment of Assets, goodwill in both the Advice and (cid:58)ealth Management and (cid:58)ealth Platforms CGUs 
is tested for impairment annually, or earlier if an indicator of impairment exists, by comparing the carrying value of the CGU to which the goodwill 
relates to the recoverable value of that CGU, being the higher of that CGU’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 Net Client Cash Flows ((cid:522)NCCF(cid:523)), significant falls in profits and an increase in the discount rate.

The significant volatility in global financial markets resulting from the CO(cid:57)ID-19 pandemic and the effect this has on the Group’s AuMA and revenue, 
provided an indicator of impairment at 30 June 2020 and consequently the goodwill balance was assessed, concluding that, whilst there was a 
reduction in the surplus of the recoverable amount over the carrying value since 31 December 2019, no impairment was required.

At 31 December 2020, the annual impairment assessment was performed, using the latest cash flow forecasts from the Group’s three-year business 
plan, approved by the (cid:37)oard. The Group’s business plan takes into consideration the partial recovery in equity markets experienced in H2 2020, which 
has resulted in an increase in the Group’s AuMA and revenue. As a result, the surplus of the recoverable amount of the CGUs over the carrying 
amount has increased since the previous impairment test was carried out at 30 June 2020.

The following table details the separate percentage change required in each key assumption before the carrying value would exceed the recoverable 
amount, assuming all other variables remain the same. There has been an increase in the percentage changes required since 30 June 2020, reflecting 
the impact of the partial recovery in equity markets. The table continues to demonstrate that further adverse movements to the key assumptions 
used in the CGU value-in-use calculation would be required before impairment is indicated.

Reduction in forecast cash flows
Increase in discount rate required

Advice and 
Wealth Management
4(cid:25)(cid:8)
21(cid:8) 
(from 9(cid:8) to 30(cid:8))

Wealth 
Platforms
(cid:25)9(cid:8)
27(cid:8) 
(from 9(cid:8) to 3(cid:25)(cid:8))

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, as demonstrated by the recent volatility resulting from CO(cid:57)ID-19. The most significant impact is seen within the Advice and (cid:58)ealth 
Management segment, where AuMA is more correlated to equity market levels and is the key driver for future cash flows. 

The principal sensitivity within equity market level assumptions relates to the estimated growth in equity market indices included in the three-year 
revenue forecasts. Management forecast equity market growth for each business using estimated asset specific growth rates that are supported 
by internal research, historical performance, (cid:37)ank of England forecasts and other external estimates.

Value-in-use methodology
The value-in-use calculations for life assurance operations are determined as the sum of net tangible assets, the expected future cash flows arising 
from the in-force business, together with the expected cash flows from future new business derived from the business plans. Future cash flow 
elements allow for the cost of capital needed to support the business. 

The net tangible assets and future cash flows arising from the in-force business are derived from Solvency II ((cid:522)SII(cid:523)) calculations. The value of in-force 
((cid:522)(cid:57)IF(cid:523)) is calculated as the prospective value of future expected cash flows on all in-force policies at the valuation date on a policy-by-policy basis 
allowing for surrender or transfer payments, death claims, income withdrawals, maintenance expenses, fund-based fees, mortality charge and other 
policy charges. The underlying assumptions are based on the best estimate view for the future, which is largely based on recent business experience 
and any emerging trends. The unit fund growth rates (gross of investment charges) and the risk discount rates are set using the prescribed SII 
term-dependent risk-free interest rates. The SII calculations are ad(cid:77)usted for a risk margin using the prescribed SII rules. 

The value-in-use calculations for asset management operations are determined as the sum of net tangible assets and the expected cash flows from 
existing and expected future new business.

212

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

14: Goodwill and intangible assets continued
14(c): Allocation of goodwill to cash generating units (“CGUs”) and impairment testing continued

The cash flows that have been used to determine the value-in-use of the CGUs are based on the most recent management approved three-year profit 
forecasts, which incorporate the impact of CO(cid:57)ID-19 and anticipated equity market growth on the Group’s future cash flows. These cash flows change 
at different rates because of the different strategies of the CGUs. In cases where the CGUs have made significant acquisitions in the recent past, the 
cash flows are forecast to grow faster than the more mature businesses. Post the three-year forecasts, the growth rate used to determine the 
terminal value of the CGUs in the annual assessment approximates to the UK long-term growth rate of 0.(cid:25)(cid:8) (2019(cid:29) 1.7(cid:8)). Market share and market 
growth information are also used to inform the expected volumes of future new business.

IAS 3(cid:25) does not permit any cost savings linked to future restructuring activity to be included within the value-in-use calculation unless an associated 
restructuring provision has also been recognised. Consequently, for the purpose of the value-in-use calculation, a number of planned cost savings 
(and the related implementation costs), primarily in relation to the Optimisation programme, have been removed from the future cash flows.

The Group uses a single cost of capital of 9.0(cid:8) (2019(cid:29) 10.0(cid:8)) to discount future expected business plan cash flows across its two groups of CGUs 
because they are perceived to present a similar level of risk and are integrated. Capital is provided to the Group predominantly by shareholders with 
a small amount of debt. The cost of capital is the weighted average of the cost of equity (return required by shareholders) and the cost of debt (return 
required by bond and property lease holders). (cid:58)hen assessing the systematic risk (i.e. beta value) within the calculation of the cost of equity, a 
triangulation approach is used that combines beta values obtained from historical data, a forward-looking view on the progression of beta values and 
the external views of investors.

15: Property, plant and equipment

Gross amount
1 January 2019
Implementation of IFRS 1(cid:25)
Acquisitions through business combinations
Additions1

31 December 2019
Additions1
Disposals

31 December 2020

Accumulated amortisation and impairment losses
1 January 2019
Implementation of IFRS 1(cid:25)
Acquisitions through business combinations
Depreciation charge for the year

31 December 2019
Depreciation charge for the year
Impairment loss
Disposals

31 December 2020

Carrying amount
31 December 2019

Right-of-use
 assets
£m

Leasehold 
improvements
£m

Plant and 
equipment
£m

–
143
1
60

204
6
(44)

166

–
(67)
–
(13)

(80)
(15)
(3)
33

(65)

124

13
(3)
1
–

11
–
(3)

8

(8)
2
–
(1)

(7)
(1)
–
3

(5)

4

3

79
–
1
8

88
28
(4)

112

(67)
–
(1)
(5)

(73)
(4)
–
3

(74)

15

38

Total
£m

92
140
3
68

303
34
(51)

286

(75)
(65)
(1)
(19)

(160)
(20)
(3)
39

(144)

143

142

31 December 2020
1The ma(cid:77)ority of additions in both the current and prior year relate to the lease for Senator House, the Group’s new London property.

101

The carrying value of right-of-use assets at 31 December 2020 relate to (cid:101)101 million of property leases (31 December 2019(cid:29) (cid:101)123 million). 2019 also 
included (cid:101)1 million of motor vehicle leases (31 December 2020(cid:29) (cid:101)nil).

Quilter | Annual report 2020

213

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

16: Loans and advances
This note analyses the loans and advances the Group has made. The carrying amounts of loans and advances were as follows(cid:29)

Loans to policyholders
Loans to brokers, advisers and other loans to clients
Other loans

Total net loans and advances

To be recovered within 12 months
To be recovered after 12 months

Total net loans and advances

31 December 
2020
£m
186
33
–

31 December 
2019
£m
180
31
6

219

195
24

219

217

190
27

217

Policyholder loans are amounts taken from an individual policyholder’s unit-linked accounts and loaned to the same policyholder. Policyholder 
loans are non-interest bearing and are considered to be risk free from a shareholder perspective as the policyholder retains all associated risks. 
Policyholder loans are considered to be recoverable within 12 months as they have no repayment schedule. Policyholder loans are measured 
at fair value.

Loans to advisers are made on individual commercial terms. The loan agreement with the adviser details the dates on which the repayments of the 
loan are to be made. (cid:58)here an adviser is due commission payments from Quilter, these commission payments are offset against the loan repayments 
due from the adviser. In certain circumstances, the loan agreement period may be extended where agreed by both Quilter and the adviser. Should 
the adviser terminate their terms of business agreement with Quilter, the loan balance becomes immediately repayable in full. Loans to advisers are 
measured at amortised cost. The carrying amount of loans to advisers approximates to their fair value which is measured as the principal amounts 
receivable under the loan agreements.

Other loans in 2019 represent a loan to TA Associates in respect of the deferred consideration receivable arising from the sale of the Single Strategy 
Asset Management business. The loan was repaid in June 2020.

17: 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).

Government and government-guaranteed securities
Other debt securities, preference shares and debentures
Equity securities
Pooled investments
Short-term funds and securities treated as investments

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)

Recoverable within 12 months
Recoverable after 12 months

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)

1See note 4(b) for details of changes to comparative amounts.

31 December 
2020 
£m
632
1,952
14,163
46,518
9

31 December 
2019
restated¹
£m
558
1,897
8,560
46,177
15

63,274

57,207

63,274
–

63,274

57,206
1

57,207

The financial investments recoverability profile is based on the intention with which the financial assets are held. These assets are held to cover the 
liabilities for linked investment contracts, all of which can be withdrawn by policyholders on demand.

214

Quilter | Annual report 2020

 
18: Derivative financial instruments – assets and liabilities
The Group has limited involvement with derivative instruments and does not use them for speculation purposes. Derivative instruments have been 
used to manage well-defined foreign exchange risks arising out of the normal course of business. The Group enters into forward foreign exchange 
contracts to reduce currency risk on accounts receivable and future revenues. The Group does not anticipate any material adverse effect on its 
financial position resulting from its involvement in these types of contracts, nor does it anticipate non-performance by counterparties. The Group 
only deals with highly rated counterparties.

The ma(cid:77)ority of derivatives included within the statement of financial position relate to instruments included as a consequence of the consolidation 
of investment funds. These are detailed within the segmented statement of financial position (note 8(c)).

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

For information about the methods and assumptions used in determining fair value, please refer to note 20. The Group’s exposure to various risks 
associated with financial instruments is discussed in note 37.

31 December 2020

Measurement basis
Assets
Investments in associated undertakings1
Loans and advances
Financial investments
Trade, other receivables and other assets
Derivative assets
Cash and cash equivalents

Total assets that include financial instruments
Total other non-financial assets

Total assets

Liabilities
Investment contract liabilities
Third-party interests in consolidation of funds
(cid:37)orrowings and lease liabilities
Trade, other payables and other liabilities
Derivative liabilities

Total liabilities that include financial instruments
Total other non-financial liabilities

Fair value

Mandatorily 
at FVTPL
£m

Designated at 
FVTPL
£m

Amortised 
cost
£m

Non-financial 
assets and 
liabilities
£m

–
186
63,248
–
43
1,064

64,541
–

64,541

–
6,513
–
–
20

6,533
–

–
–
1
–
–
–

1
–

1

57,407
–
–
–
–

57,407
–

57,407

–
33
25
444
–
857

1,359
–

1,359

–
–
319
590
–

909
–

909

1
–
–
257
–
–

258
1,213

1,471

–
–
–
82
–

82
563

645

Total
£m

1
219
63,274
701
43
1,921

66,159
1,213

67,372

57,407
6,513
319
672
20

64,931
563

65,494

Total liabilities
1Investments in associated undertakings classified as non-financial assets and liabilities are equity accounted.

6,533

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

215

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

19: Categories of financial instruments continued

31 December 2019 (restated)3

Measurement basis
Assets
Investments in associated undertakings1
Loans and advances
Financial investments
Trade, other receivables and other assets2
Derivative assets
Cash and cash equivalents

Total assets that include financial instruments
Total other non-financial assets

Total assets

Liabilities
Investment contract liabilities2
Third-party interests in consolidation of funds
(cid:37)orrowings and lease liabilities
Trade, other payables and other liabilities
Derivative liabilities

Total liabilities that include financial instruments
Total other non-financial liabilities

Fair value

Mandatorily 
at FVTPL3
£m

Designated at 
FVTPL2
£m

Amortised 
cost
£m

Non-financial 
assets and 
liabilities
£m

–
180
57,205
–
22
1,159

58,566
–

58,566

–
5,318
–
–
10

5,328
–

–
–
2
–
–
–

2
–

2

52,455
–
–
–
–

52,455
–

–
37
–
342
–
1,094

1,473
–

1,473

–
–
335
695
–

1,030
–

1
–
–
263
–
–

264
1,246

1,510

–
–
–
106
–

106
561

Total
£m

1
217
57,207
605
22
2,253

60,305
1,246

61,551

52,455
5,318
335
801
10

58,919
561

Total liabilities
1Investments in associated undertakings classified as non-financial assets and liabilities are equity accounted.
2Following a review of the Group’s presentation of financial liabilities held at F(cid:57)TPL, comparative amounts have been restated from those previously reported. The review 
identified amounts presented within mandatorily at F(cid:57)TPL that are now presented as designated at F(cid:57)TPL in the table above. These liabilities were previously shown as 
mandatorily at fair value through profit or loss ((cid:522)F(cid:57)TPL(cid:523)) as they form part of the Group’s unit-linked business model. These liabilities are now classified as designated at F(cid:57)TPL 
as they are managed on a fair value basis (in that their value is directly linked to the market value of the matching portfolio of unit-linked assets) therefore avoiding an accounting 
mismatch. There is no change to the underlying calculation of the fair value of these liabilities.
3See note 4(b) for details of changes to comparative amounts.

52,455

59,480

5,328

1,030

667

20: Fair value methodology
This section explains the (cid:77)udgements 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 fair value hierarchy (see note 20(b)), prescribed under 
IFRS, provides an indication about the reliability of inputs used in determining fair value.

20(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(cid:29)
 – 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(cid:30) 

 – 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(cid:30)

 – 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(cid:30) and 

 – where the assets are private company shares or within consolidated investment funds, the valuation is based on the latest available set of audited 

financial statements where available, or if more recent, a statement of valuation provided by the private company’s management.

There have been no significant changes in the valuation techniques applied when valuing financial instruments. (cid:58)here assets are valued by the 
Group, the general principles applied to those instruments measured at fair value are outlined below(cid:29)

Loans and advances
Loans and advances include loans to policyholders, loans to brokers, and other secured and unsecured loans. Loans and advances to policyholders 
of investment-linked contracts are measured at fair value. All other loans are stated at their amortised cost.

216

Quilter | Annual report 2020

20: Fair value methodology continued
20(a): Determination of fair value continued

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(cid:18)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 utilising various approaches including discounted cash flows, the application of an earnings before 
interest, tax, depreciation and amortisation multiple or any other relevant technique.

Derivatives
The fair value of derivatives is determined with reference to the exchange traded prices of the specific instruments. The fair value of the Group’s 
over-the-counter forward foreign exchange contracts is determined by the underlying foreign currency 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 interest in consolidated funds
Third-party interests in consolidated funds are measured at the attributable net asset value of each fund.

Borrowings and lease liabilities
(cid:37)orrowings and lease liabilities are stated at amortised cost.

20(b): Fair value hierarchy
Fair values are determined according to the following hierarchy(cid:29)

Description of hierarchy

(cid:55)(cid:92)(cid:83)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:86)(cid:87)(cid:85)(cid:88)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:70)(cid:79)(cid:68)(cid:86)(cid:86)(cid:76)(cid:564)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:79)(cid:86)

Level 1 – quoted market prices(cid:29) financial assets and liabilities with quoted prices 
for identical instruments in active markets.

Level 2 – valuation techniques using observable inputs(cid:29) 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.

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, policyholder loans (where they form 
part of a policyholder’s unit-linked policy) and investment contract liabilities directly 
linked to other Level 1 financial assets.

Unlisted equity and debt securities where the valuation is based on models involving 
no significant unobservable data.
Over-the-counter ((cid:522)OTC(cid:523)) 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(cid:29) 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 (cid:77)udgement 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 si(cid:93)e of bid(cid:18)offer spreads. In inactive markets, obtaining assurance that the transaction price provides evidence 
of fair value or determining the ad(cid:77)ustments to transaction prices that are necessary to measure the fair value of the asset or liability requires 
additional work during the valuation process.

The ma(cid:77)ority of valuation techniques employ only observable data and so the reliability of the fair value measurement is high. However, 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 (cid:77)udgemental. 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 for 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 ma(cid:77)ority of the fair value derived from a valuation technique with significant unobservable data may be 
attributable to observable inputs. Consequently, the effect of uncertainty in determining unobservable inputs will generally be restricted to 
uncertainty about the overall fair value of the asset or liability being measured. 

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

217

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

20: Fair value methodology continued
20(b): Fair value hierarchy continued

(cid:58)hen allocating investments within consolidated investment funds to the fair value hierarchy, management have adopted a simplified approach 
whereby investments (outside of those identified as Level 3) in listed equities and securities are allocated to fair value Level 1, and investments 
in unlisted equity and debt securities are allocated to Level 2, to align to the classifications set out in the table above.

20(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 active, traded primary market ceases to exist for that 
financial instrument. A transfer between Level 2 and Level 3 occurs when the ma(cid:77)ority of the significant inputs used to determine 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 transfers of financial investments of (cid:101)9 million from Level 1 to Level 2 during the year (31 December 2019(cid:29) (cid:101)139 million). There were 
transfers of financial investments of (cid:101)3 million from Level 2 to Level 1 during the year (31 December 2019(cid:29) (cid:101)7(cid:25) million). These movements are matched 
exactly by transfers of investment contract liabilities. See note 20(e) for the reconciliation of Level 3 financial instruments.

20(d): Financial assets and liabilities measured at fair value, classified according to fair value hierarchy
The ma(cid:77)ority 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 (net of reinsurance). The difference between linked assets and linked 
liabilities is principally 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 table below presents a summary of the Group’s financial assets and liabilities that are measured at fair value in the consolidated statement 
of financial position according to their IFRS 9 classification (see note 19 for full details).

Financial assets measured at fair value
Level 1
Level 2
Level 3

Total

Financial liabilities measured at fair value
Level 1
Level 2
Level 3

Total

1See note 4(b) for details of changes to comparative amounts.

31 December 2020

31 December 2019
restated¹

£m

%

£m

%

56,927
5,793
1,822

88.2(cid:8)
9.0(cid:8)
2.8(cid:8)

48,009
8,842
1,717

82.0(cid:8)
1(cid:24).1(cid:8)
2.9(cid:8)

64,542

100.0%

58,568

100.0%

55,135
6,985
1,820

8(cid:25).3(cid:8)
10.9(cid:8)
2.8(cid:8)

50,315
5,751
1,717

87.0(cid:8)
10.0(cid:8)
3.0(cid:8)

63,940

100.0%

57,783

100.0%

218

Quilter | Annual report 2020

 
20: Fair value methodology continued
20(d): Financial assets and liabilities measured at fair value, classified according to fair value hierarchy continued
The tables below further analyse the Group’s financial assets and liabilities measured at fair value by the fair value hierarchy described in note 20(b)(cid:29)

31 December 2020
Financial assets measured at fair value
Mandatorily (fair value through profit or loss)

Loans and advances2
Financial investments 
Cash and cash equivalents
Derivative assets

Designated (fair value through profit or loss)

Financial investments

Level 1
£m

Level 2
£m

Level 3
£m

Total
£m

56,926
186
55,676
1,064
–

1
1

5,793
–
5,750
–
43

–
–

1,822
–
1,822
–
–

–
–

64,541
186
63,248
1,064
43

1
1

Total assets measured at fair value

56,927

5,793

1,822

64,542

Financial liabilities measured at fair value
Mandatorily (fair value through profit or loss)
Third-party interests in consolidated funds
Derivative liabilities

Designated (fair value through profit or loss)

Investment contract liabilities

–
–
–

6,533
6,513
20

–
–
–

6,533
6,513
20

55,135
55,135

452
452

1,820
1,820

57,407
57,407

Total liabilities measured at fair value

55,135

6,985

1,820

63,940

31 December 2019 (restated)¹
Financial assets measured at fair value
Mandatorily (fair value through profit or loss)

Loans and advances2
Financial investments
Cash and cash equivalents
Derivative assets

Designated (fair value through profit or loss)

Financial investments

Level 1
£m

Level 2
£m

48,007
180
46,668
1,159
–

2
2

8,842
–
8,820
–
22

–
–

Level 3
£m

1,717
–
1,717
–
–

–
–

Total
£m

58,566
180
57,205
1,159
22

2
2

Total assets measured at fair value

48,009

8,842

1,717

58,568

Financial liabilities measured at fair value
Mandatorily (fair value through profit or loss)
Third-party interests in consolidated funds
Derivative liabilities

Designated (fair value through profit or loss)

Investment contract liabilities3

–
–
–

50,315

50,315

5,328
5,318
10

423

423

–
–
–

5,328
5,318
10

1,717

1,717

52,455

52,455

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Total liabilities measured at fair value
1See note 4(b) for details of changes to comparative amounts.
2Loans and advances mandatorily at fair value through profit or loss, included within fair value Level 1, solely relate to policyholder loans. See note 1(cid:25) for further details.
3Following a review of the Group’s presentation of financial liabilities held at F(cid:57)TPL, comparative amounts have been restated from those previously reported. The review 
identified amounts presented within mandatorily at F(cid:57)TPL that are now presented as designated at F(cid:57)TPL in the table above. 

50,315

5,751

1,717

57,783

Quilter | Annual report 2020

219

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

20: Fair value methodology continued

20(e): Level 3 fair value hierarchy disclosure
The ma(cid:77)ority of the assets classified as Level 3 are held within linked policyholder funds. (cid:58)here 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. 

During the year ended 31 December 2020, Level 3 assets also include a shareholder investment in suspended funds to the value of (cid:101)2 million 
(31 December 2019(cid:29) (cid:101)nil)(cid:30) this is not matched by a corresponding liability and therefore any changes in market value are recognised in the Group’s 
consolidated income statement.

The table below reconciles the opening balance of Level 3 financial assets to the closing balance at each year end(cid:29)

At beginning of the year1
Fair value losses charged to income statement
Purchases
Sales
Transfers in
Transfers out
Foreign exchange and other

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:47)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:22)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)

Unrealised fair value losses charged to income statement relating to assets held at the year end

31 December
 2020
£m
1,717
(121)
16
(8)
930
(714)
2

1,822

(110)

31 December 
2019
£m
1,154
(20)
314
(24)
369
(71)
(5)

1,717

(20)

1The opening balance for 2019 includes a (cid:101)3 million shareholder investment in an unlisted equity, the Charles Derby Group(cid:30) this was not matched by a corresponding liability 
and therefore any changes in market value were recognised in the Group’s income statement. Following the acquisition of the Charles Derby Group in 2019, the Group’s 
investment is no longer held as a Level 3 financial investment, but instead as an investment in subsidiary which is eliminated on consolidation.

Amounts shown as sales arise principally from the sale of private company shares, unlisted pooled investments and from distributions received in 
respect of holdings in property funds.

Transfers into Level 3 assets in the current year total (cid:101)930 million (31 December 2019(cid:29) (cid:101)3(cid:25)9 million). This is due to a combination of stale priced assets 
that were previously shown within Level 2 and for which price updates have not been received for more than six months, and a significant increase in 
suspended funds previously shown within Level 1, predominantly due to the CO(cid:57)ID-19 pandemic resulting in a number of property fund suspensions. 
Suspended funds are valued based on external valuation reports received from fund managers. Transfers out of Level 3 assets in the current year of 
(cid:101)714 million (31 December 2019(cid:29) (cid:101)71 million) result from a transfer to Level 2 assets relating to assets that are now being actively repriced (that were 
previously stale) and where fund suspensions have been lifted following the market recovery during the second half of the year. During 2020 a 
suspended fund with a value of (cid:101)8(cid:24) million has been wound up and cash returned to policyholders, resulting in the cash being placed in a cash 
fund within Level 1 assets.

The table below analyses the type of Level 3 financial assets held(cid:29)

Pooled investments

Unlisted and stale price pooled investments
Suspended funds

Private equity investments

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:47)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:22)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)

31 December
 2020
£m
522
87
435
1,300

31 December 
2019
£m
361
133
228
1,356

1,822

1,717

All of the liabilities that are classified as Level 3 are investment contract liabilities which exactly match against the Level 3 assets held in linked 
policyholder funds.

220

Quilter | Annual report 2020

20: Fair value methodology continued
20(e): Level 3 fair value hierarchy disclosure continued

The table below reconciles the opening balance of Level 3 financial liabilities to the closing balance at each year end(cid:29)

At beginning of the year
Fair value losses charged to income statement 
Purchases
Sales
Transfers in
Transfers out
Foreign exchange and other

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:47)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:22)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)

Unrealised fair value losses charged to income statement relating to liabilities held at the year end

31 December 
2020
£m
1,717
(120)
16
(8)
927
(714)
2

1,820

(110)

31 December 
2019
£m
1,151
(20)
314
(24)
369
(71)
(2)

1,717

(20)

20(f): Effect of changes in significant unobservable assumptions to reasonable possible alternatives
Details of the valuation techniques applied to the different categories of financial instruments can be found in note 20(a) above, including the valuation 
techniques applied when significant unobservable assumptions are used to value Level 3 assets.

The ma(cid:77)ority of the Group’s Level 3 assets are held within private equity investments, where the valuation of these assets is performed on an 
asset-by-asset basis using a valuation methodology appropriate to the specific investment and in line with industry guidelines. Private equity 
investments are valued at the value disclosed in the latest available set of audited financial statements or, if more recent information is available, 
from investment managers or professional valuation experts at the value of the underlying assets of the private equity investment. For this reason, 
no reasonable alternative assumptions are applicable and management therefore performs a sensitivity test of an aggregate 10(cid:8) change in the value 
of the financial asset or liability (31 December 2019(cid:29) 10(cid:8)), representing a reasonable possible alternative (cid:77)udgement in the context of the current 
macro-economic environment in which the Group operates. It is therefore considered that the impact of this sensitivity will be in the range of (cid:101)182 
million to the reported fair value of Level 3 assets, both favourable and unfavourable (31 December 2019(cid:29) (cid:101)172 million). As described in note 20(e), 
changes in the value of Level 3 assets held within linked policyholder funds are exactly matched by corresponding changes in the value of liabilities 
due to policyholders and therefore have no impact on the Group’s net asset value or profit or loss, except to the extent that it has an impact on 
management fees earned.

20(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. Their classification within the 
fair value hierarchy would be as follows(cid:29)

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

Level 3
Level 3

Cash and cash equivalents (excluding money market funds) are held at amortised cost and therefore not carried at fair value. The cash and cash 
equivalents that are held at amortised cost would be classified as Level 1 in the fair value hierarchy.

Fixed term deposits, which are included within Financial investments, are held at amortised cost and therefore not carried at fair value. The fixed term 
deposits that are held at amortised cost would be classified as Level 1 in the fair value hierarchy.

Loans and advances are financial assets held at amortised cost and therefore not carried at fair value, with the exception of policyholder loans which 
are categorised as F(cid:57)TPL. The loans and advances that are held at amortised cost would be classified as Level 3 in the fair value hierarchy.

(cid:37)orrowed funds are financial liabilities held at amortised cost and therefore not carried at fair value. (cid:37)orrowed funds relate to subordinated liabilities 
and would be classified as Level 2 in the fair value hierarchy.

Lease liabilities valued under IFRS 1(cid:25) are held at amortised cost and therefore not carried at fair value. They would be classified as Level 3 in the fair 
value hierarchy.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

221

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

21: Structured entities
21(a): Group’s involvement in structured entities
Some investment vehicles are classified as structured entities because they have a narrow and well-defined purpose. In structured entities, voting 
rights are not the predominant factor in deciding who controls the entity but rather it is the Group’s exposure to the variability of returns from 
these(cid:98)entities. 

The Group invests in collective investment vehicles, including open-ended investment companies ((cid:522)OEICs(cid:523)) and unit trusts, in order to match 
unit-linked investment contract liabilities. This means that all of the investment risk associated with these assets is borne by policyholders and that the 
value of these assets is closely 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.

Shareholder funds are also invested in collective investment vehicles, principally in respect of money market funds as an alternative to bank deposits. 
These structured entities are not consolidated where the Group determines that it does not have control.

The Group’s holdings in collective investment vehicles are sub(cid:77)ect to the terms and conditions of the respective investment vehicles’ offering 
documentation and are susceptible to market price risk arising from uncertainties about future values of those investment vehicles. All of the 
investment vehicles in the investment portfolios are managed by portfolio managers who are compensated by the respective investment vehicles for 
their services. Such compensation generally consists of an asset-based fee and a performance-based incentive fee, and is reflected in the valuation of 
the investment vehicles.

21(b): Interests in unconsolidated structured entities
The Group invests in unconsolidated structured entities as part of its normal investment and trading activities. The Group’s total interest in 
unconsolidated structured entities is classified as financial investments mandatorily at fair value through profit or loss. The table below provides a 
summary of the carrying value of the Group’s interests in unconsolidated structured entities(cid:29)

Financial investments
Cash and cash equivalents

Total Group interest in unconsolidated structured entities

1See note 4(b) for details of changes to comparative amounts.

31 December 
2020
£m
43,737
1,064

31 December 
2019
restated1
£m
41,004
1,159

44,801

42,163

The Group’s maximum exposure to loss with regard to the interests presented above is the carrying amount of the Group’s investments. Once the 
Group has disposed of its shares or units in a fund, it ceases to be exposed to any risk from that fund. The Group’s holdings in the above 
unconsolidated structured entities are mostly less than (cid:24)0(cid:8) and as such the net asset value of these structured entities is likely to be significantly 
higher than their carrying value.

21(c): Consolidation considerations for structured entities managed by the Group
The Group acts as fund manager to a number of investment funds. Determining whether the Group controls such an investment fund usually focuses 
on the assessment of decision-making rights as fund manager, the investor’s rights to remove the fund manager and the aggregate economic 
interests of the Group in the fund in the form of interest held and exposure to variable returns. 

In most instances the Group’s decision-making authority, in its capacity as fund manager, with regard to these funds is regarded to be well-defined. 
Discretion is exercised when decisions regarding the relevant activities of these funds are being made. For funds managed by the Group where the 
investors have the right to remove the Group as fund manager without cause, the fees earned by the Group are considered to be market related. 
These agreements include only terms, conditions or amounts that are customarily present in arrangements for similar services and level of skills 
negotiated on an arm’s length basis. The Group has concluded that it acts as agent on behalf of the investors in all instances.

The Group is considered to be acting as principal where the Group is the fund manager and is able to make the investment decisions on behalf of the 
unit holders and earn a variable fee, and there are no kick out rights that would remove the Group as fund manager. 

There have been no changes in facts or circumstances which have changed the Group’s conclusion on the consolidation of funds. The Group has not 
provided any non-contractual support to any consolidated or unconsolidated structured entities.

21(d): Other interests in unconsolidated structured entities
There are no investments at the current or prior reporting date managed by the Group in which it has no holding.

222

Quilter | Annual report 2020

 
 
22: Trade, other receivables and other assets
This note analyses total trade, other receivables and other assets.

Outstanding settlements
Other receivables
Accrued interest
Accrued income
Fee income receivable
Other accruals and prepayments
Contract assets
Management fees

Total trade, other receivables and other assets

To be settled within 12 months
To be settled after 12 months

Total trade, other receivables and other assets
1See note 4(b) for details of changes to comparative amounts.

31 December 
2020
£m
277
120
4
31
192
49
12
16

701

555
146

701

31 December 
2019 
restated¹
£m
245
47
2
34
212
30
19
16

605

444
161

605

Other receivables mainly relate to trade debtors, tax debtors and other debtors.

There have been no non-performing receivables or material impairments in the financial year that require disclosure. Information about the Group’s 
expected credit losses on trade receivables is included in note 37(b). None of the receivables reflected above have been sub(cid:77)ect to the renegotiation 
of terms.

23: Deferred acquisition costs and contract costs 
Deferred acquisition costs (on insurance contracts) and contract costs (on investment contracts and asset management contracts) relate to costs that 
the Group incurs to obtain new business. These acquisition costs are capitalised in the statement of financial position and are amortised in profit or 
loss over the life of the contracts. The table below analyses the movements in these balances relating to insurance, investment and asset 
management contracts. 

1 January 2019
New business

Amortisation

Continuing operations movement
Foreign exchange
Discontinued operations movement
Disposal of subsidiaries

31 December 2019
New business

Amortisation

Continuing operations movement
Foreign exchange

31 December 2020

Deferred acquisition costs

Insurance 
contracts
£m
11
–
–

–
–
(3)

(8)
–

–
–

–
–

–

Investment
 contracts
£m
547
36
(75)

Contract costs

Asset
 management
£m
4
–
(1)

(39)
(3)
(14)

(39)
452

30
(73)

(43)
2

411

(1)
–
–

–
3

–
(1)

(1)
–

2

Total
£m
562
36
(76)

(40)
(3)
(17)

(47)
455

30
(74)

(44)
2

413

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

223

 
 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

24: Cash and cash equivalents

24(a): Analysis of cash and cash equivalents

Cash at bank
Money market funds
Cash and cash equivalents in consolidated funds

31 December
2020
£m
550
1,064
307

31 December
2019
restated¹
£m
787
1,159
307

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)

1,921

2,253

1See note 4(b) for details of changes to comparative amounts.

Except for cash and cash equivalents sub(cid:77)ect to consolidation of funds of (cid:101)307 million (2019(cid:29) (cid:101)307 million), management do not consider that there 
are any material amounts of cash and cash equivalents which are not available for use in the Group’s day-to-day operations.

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

(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:565)(cid:82)(cid:90)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
Profit before tax from continuing operations
(Loss)(cid:18)profit before tax from discontinued operations

Adjustments for 
Depreciation and impairment of property, plant and equipment
Movement on deferred acquisition and contract costs
Movement on contract liabilities and fee income receivable
Amortisation and impairment of intangibles
Fair value and other movements in financial assets
Fair value movements in investment contract liabilities
Other change in investment contract liabilities
Loss(cid:18)(profit) on sale of subsidiaries 
Other movements

Net changes in working capital
Increase in derivatives
(Increase)(cid:18)decrease in loans and advances
Increase(cid:18)(decrease) in provisions
Movement in other assets(cid:18)liabilities2

Taxation paid

31 December 
2020
 £m

Notes

31 December 
2019
restated¹
 £m

6(c)

15

23

32

14

27

6(b)

16

28

86
(1)
85

23
44
(7)
47
(3,319)
2,632
2,187
1
40
1,648

(11)
(5)
1
(245)
(260)
(28)

45
256
301

19
57
(13)
48
(7,650)
6,518
(1,209)
(103)
65
(2,268)

(10)
5
(28)
(35)
(68)
(37)

(cid:49)(cid:72)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:565)(cid:82)(cid:90)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:18)(cid:11)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:12)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)
1See note 4(b) for details of changes to comparative amounts.
2(cid:58)orking capital changes in respect of other assets and liabilities primarily relate to consolidated funds.

1,445

(2,072)

224

Quilter | Annual report 2020

24: Cash and cash equivalents continued

24(c): Cash flows from financing activities is further analysed below:

31 December 2020

Opening balance at 1 January 2020
Cash flows from financing activities
Liability related(cid:29)

Finance costs on external borrowings

Equity related(cid:29)

Dividends paid to ordinary equity holders of the Company
Repurchase of own shares

Payment of lease liabilities

(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:565)(cid:82)(cid:90)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
Other changes
External debt interest accrual
Changes in lease liabilities
Other changes in liabilities

Liability related
Equity related

31 December 2020

31 December 2019

Opening balance at 1 January 2019
Cash flows from financing activities
Liability related(cid:29)

Finance costs on external borrowings

Equity related(cid:29)

Dividends paid to ordinary equity holders of the Company

Payment of lease liabilities

(cid:38)(cid:68)(cid:86)(cid:75)(cid:3)(cid:565)(cid:82)(cid:90)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)
Other changes
External debt interest accrual
Changes in lease liabilities
Other changes in liabilities

Liability related
Equity related

31 December 2019

1Full details of changes in equity are shown in the consolidated statement of changes in equity.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Liabilities

(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)1

Borrowings 
and lease 
liabilities
£m

Note 30

335

Deposits
 from reinsurers
£m

Changes in
(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
£m

Total
£m

Note 31

16

2,071

2,422

(9)

–
–
(16)

(25)

9
(1)
1

9
–

319

(1)

–
–
–

(1)

–
–
(15)

(15)
–

–

–

(81)
(198)
–

(279)

–
–
–

–
86

(10)

(81)
(198)
(16)

(305)

9
(1)
(14)

(6)
86

1,878

2,197

Liabilities

Equity1

Borrowings 
and lease 
liabilities
£m

Note 30

197

Deposits
 from reinsurers
£m

Note 31

16

Changes in
equity
£m

Total
£m

2,005

2,218

(9)

–
(16)

(25)

4
64
6

74
89

335

(1)

–
–

(1)

–
–
1

1
–

16

–

(92)
–

(92)

–
–
–

–
158

2,071

(10)

(92)
(16)

(118)

4
64
7

75
247

2,422

Quilter | Annual report 2020

225

 
 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

25: Share capital, capital redemption reserve and merger reserve

25(a): Share capital
Financial instruments issued are classified as equity when there is no contractual obligation to transfer cash, other financial assets or issue a variable 
number of own equity instruments. Incremental costs directly attributable to the issue of equity instruments are shown in equity as a deduction from 
the proceeds, net of tax. The parent Company’s equity capital currently comprises 1,783,9(cid:25)9,0(cid:24)1 Ordinary Shares of 7p each with an aggregated 
nominal value of (cid:101)124,877,834 (31 December 2019(cid:29) 1,902,2(cid:24)1,098 Ordinary Shares of 7p each with an aggregated nominal value of (cid:101)133,1(cid:24)7,(cid:24)77).

This note gives details of the Company’s Ordinary Share capital and shows the movements during the year(cid:29)

At 1 January 2019

At 31 December 2019

Shares cancelled through share buyback programme

At 31 December 2020

Number of shares

1,902,251,098

1,902,251,098

(118,282,047)

1,783,969,051

Nominal value
£m
133

Share premium
£m
58

133

(8)

125

58

–

58

On 11 March 2020 the Company announced a share buyback programme to purchase shares up to a maximum value of (cid:101)37(cid:24) million, in order to 
reduce the share capital of the Company. The programme commenced on 11 March 2020 and will continue into 2021. During the year ended 31 
December 2020, the Company acquired 118.3 million shares for a total consideration of (cid:101)1(cid:24)3 million and incurred additional costs of (cid:101)4 million. The 
shares, which have a nominal value of (cid:101)8 million, have subsequently been cancelled, giving rise to a capital redemption reserve of the same value as 
required by the Companies Act 200(cid:25). In December 2020, the committed remainder of (cid:101)22 million was accrued as a liability against retained earnings.

25(b): Merger reserve
On 31 January 2018, the Group acquired the Skandia UK Limited group of entities from its then parent company Old Mutual plc. This comprised of 
seven Old Mutual plc group entities with a net asset value of (cid:101)(cid:24)91 million. The transfer was effected by the issue of one share and with the balance 
giving rise to a merger reserve of (cid:101)(cid:24)91 million in the consolidated statement of financial position, being the difference between the nominal value of 
the share issued by the parent company for the acquisition of the shares of the subsidiaries and the subsidiaries’ net asset value. No debt was taken 
on as a result of this transaction. The most significant asset within these entities was a (cid:101)(cid:24)(cid:25)(cid:25) million receivable which corresponded to an equivalent 
payable within the Group’s consolidated statement of financial position. The net effect of this transaction for the Group was to replace a payable due 
to Old Mutual plc with equity.

Following the acquisition the Company allotted 31(cid:24),731,88(cid:25) bonus Ordinary Shares of (cid:101)0.01 each to the existing shareholders of the Company 
(with any fractional entitlements arising to be aggregated and allotted to Old Mutual plc), with a total nominal value of (cid:101)3 million. This had the effect 
of reducing the merger reserve by (cid:101)3 million to (cid:101)(cid:24)88 million at 31 December 2018.

This transaction attracted merger relief under section (cid:25)12 of the Companies Act 200(cid:25).

During the year ended 31 December 2019, there was a partial repayment of the receivable and a subsequent dividend paid by Skandia UK Limited 
up to its parent Quilter plc. The resulting decrease in Skandia UK Limited’s net asset value gave rise to a (cid:101)439 million impairment of Quilter plc’s 
investment in Skandia UK Limited and an associated release of the merger reserve reducing it to (cid:101)149 million.

26: Share-based payments
During the year ended 31 December 2020, the Group participated in a number of share-based payment arrangements. This note describes the 
nature of the plans and how the share options and awards are valued.

26(a): Description of share-based payment arrangements
The Group operates the following share-based payment schemes with awards over Quilter plc shares(cid:29) the Quilter plc Performance Share Plan, 
the Quilter plc Share Reward Plan, the Quilter plc Share Incentive Plan, and the Quilter plc Sharesave Plan.

The Old Mutual (cid:58)ealth Phantom Share Reward Plan originally with awards over notional Old Mutual plc shares was transferred to awards over 
Quilter plc shares on 2(cid:24) June 2018 and continues to the original vesting dates.

226

Quilter | Annual report 2020

26: Share-based payments continued
26(a): Description of share-based payment arrangements continued

Description of award

Vesting conditions

Scheme

Restricted
shares

Conditional 
shares

Options

Other

Dividend 
entitlement1

Contractual
life
(years)

Typical 
service
(years)

Quilter plc Performance Share Plan 

Quilter plc Performance Share Plan 

Quilter plc Share Reward Plan

Quilter plc Share Incentive Plan
Quilter plc Sharesave Plan3

Old Mutual (cid:58)ealth Phantom 
Share(cid:98)Reward Plan4

Charles Derby Group 
Performance(cid:98)Share Plan

–

–

–



–

–

–

–





–

–



–



–

–

–


–



–

–

–

–


–

–









–





Up to 10

Not less 
than 3

Typically 3

Not less 
than 3

3½ – 5½

Typically 3

Up to 10

3

3

3

2

3 (cid:9) (cid:24)

3

5

Performance
(measure)
AP EPS CAGR2
and Relative Total 
Shareholder Return

Conduct, Risk (cid:9) 
Compliance 
Underpins

–

–

–

–

AP EPS CAGR

1Participants are entitled to actual dividends for the Share Incentive Plan. For all other schemes, participants are entitled to dividend equivalents.
2Ad(cid:77)usted Profit compound annual growth rate ((cid:522)CAGR(cid:523)).
3The Quilter plc Sharesave Plan is linked to a savings plan.
4Awards granted under the Phantom Share Reward Plan prior to the demerger of Quilter plc were made over notional Ordinary Shares in Old Mutual plc that were settled in 
cash on the vesting date. Upon the demerger and listing of Quilter plc, all unvested notional share awards were converted to conditional awards over Ordinary Shares in Quilter 
plc, which will be settled in Quilter plc shares on the normal vesting dates.

26(b): Reconciliation of movements in options
The movement in options outstanding under the Performance Share Plans and Sharesave Plan arrangements during the year is detailed below(cid:29)

Options over Shares 
(London Stock Exchange)
Outstanding at beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Cancelled during the year

Outstanding at end of the year

Exercisable at end of the year

Year ended 
31 December 2020

Weighted average 
exercise 
price
(cid:101)0.(cid:25)(cid:24)
(cid:101)0.00
(cid:101)0.8(cid:24)
(cid:101)0.(cid:24)1
(cid:101)1.2(cid:24)
(cid:101)1.2(cid:24)

Number of 
options
24,707,734
3,016,429
(976,874)
(620,349)
(287,816)
(941,029)

Number of 
options
2,468,964
23,632,437
(624,694)
(175,789)
(39,120)
(554,064)

24,898,095

£0.54

24,707,734

–

–

–

Year ended 
31 December 2019

Weighted average 
exercise 
price
(cid:101)0.00
(cid:101)0.73
(cid:101)0.30
(cid:101)0.00
(cid:101)1.2(cid:24)
(cid:101)1.2(cid:24)

£0.65

–

The weighted average fair value of options at the measurement date for options granted during the year ended 31 December 2020 is (cid:101)0.9(cid:24), and for 
the year ended 31 December 2019 was (cid:101)0.73.

The options outstanding at 31 December 2020 have exercise prices of (cid:101)nil for both the Quilter plc Performance Share Plan and Charles Derby Group 
Performance Share Plan, and (cid:101)1.2(cid:24) for the Quilter plc Sharesave Plan, with a weighted average remaining contractual life of 1.8 years. At 31 December 
2019 the exercise price was (cid:101)nil for both the Quilter plc Performance Share Plan and Charles Derby Group Performance Share Plan, and (cid:101)1.2(cid:24) for the 
Quilter plc Sharesave Plan, with a weighted average remaining contractual life of 2.7 years.

26(c): Measurements and assumptions
In determining the fair value of equity-settled share-based awards and the related charge to the income statement, the Group makes assumptions 
about future events and market conditions. Specifically, management makes estimates of the likely number of shares that will vest and the fair value 
of each award granted which is valued and ‘locked in’ at the grant date.

The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. 
The(cid:98)estimate of fair value of share options granted is measured using either a (cid:37)lack-Scholes option pricing model or a Monte Carlo simulation.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

227

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

26: Share-based payments continued
26(c): Measurements and assumptions continued

The inputs used in the measurement of fair values at the grant date for awards granted during 2020 were as follows(cid:29)

Scheme
Quilter plc Performance Share Plan 
– Share Options (Nil cost options)

Quilter plc Performance Share Plan 
– Conditional Shares

Quilter plc Share Reward Plan 
– Conditional Shares

Weighted 
average 
share 
price 
£

1.17

1.17

1.17

Weighted 
average 
expected 
volatility

3(cid:24).1(cid:8)

3(cid:24).1(cid:8)

3(cid:25).4(cid:8)

Weighted 
average 
expected
 life
(years)

3.00

3.02

2.00

Weighted 
average risk 
free interest
 rate

Weighted 
average 
expected
dividend yield

Expected 
forfeitures 
per annum

0.1(cid:8)

0.1(cid:8)

0.1(cid:8)

0.0(cid:8)

0.0(cid:8)

0.0(cid:8)

4(cid:8)

4(cid:8)

4(cid:8)

The expected volatility used was based on the historical volatility of the share price over the period for which trading history is available. The risk-free 
interest rate was based on the yields available on UK Government bonds as at the date of grant. The bonds chosen were those with a similar 
remaining term to the expected life of the share awards.

26(d): Share grants
The following summarises the fair value of Restricted Shares and Conditional Shares granted by the Group during the year(cid:29)

Instruments granted during the year
Quilter plc Performance Share Plan – Conditional Shares
Quilter plc Share Reward Plan – Conditional Shares

Year ended 31 December 2020

Year ended 31 December 2019

Number granted
4,911,597
13,471,153

Weighted average 
fair value
(cid:101)1.17
(cid:101)1.17

Number granted
4,048,663
10,314,569

Weighted average 
fair value
(cid:101)1.39
(cid:101)1.39

26(e): Financial impact
The share-based payment reserve of (cid:101)42 million (2019(cid:29) (cid:101)4(cid:24) million) represents the cumulative expense of the Group for the unsettled portion 
of equity awarded schemes.

The total expense recognised in the year arising from equity compensation plans was as follows(cid:29)

Expense arising from equity-settled share and share option plans – continuing operations
Expense arising from equity-settled share and share option plans – discontinued operations

Total expense arising from share and share option plans

Year ended
31 December
2020
£m
25
–

Year ended
31 December
2019
£m
25
1

25

26

228

Quilter | Annual report 2020

27: Investment contract liabilities
The following table provides a summary of the Group’s investment contract liabilities(cid:29) 

Carrying amount at 1 January
From continuing operations

Fair value movements
Investment income

Movements arising from investment return
From discontinued operations

Fair value movements
Investment income

Movements arising from investment return
Contributions received
Maturities
(cid:58)ithdrawals and surrenders
Claims and benefits

Other movements
Change in liability
Currency translation loss(cid:18)(gain)
Disposal of subsidiaries

Investment contract liabilities

31 December 2020
£m

Gross
52,455

Re-
insurance
–

Net
52,455

Gross
56,450

31 December 2019
£m

Re-
insurance
(1,671)

Net
54,779

2,632
696
3,328

–
–
–
4,871
(97)
(3,226)
(59)
2

4,819
133
–

57,407

–
–
–

–
–
–
–
–
–
–
–

–
–
–

–

2,632
696
3,328

–
–
–
4,871
(97)
(3,226)
(59)
2

4,819
133
–

5,091
719
5,810

1,427
142
1,569
5,718
(166)
(7,419)
(205)
2

5,309
(121)
(9,183)

–
–
–

(205)
–
(205)
1,148
–
–
–
(1)

942
–
729

5,091
719
5,810

1,222
142
1,364
6,866
(166)
(7,419)
(205)
1

6,251
(121)
(8,454)

57,407

52,455

–

52,455

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 individual policyholders.

The maturity value of these financial liabilities is determined by the fair value of the linked assets at maturity date. There will be no difference between 
the carrying amount and the maturity amount at maturity date.

The reinsurers’ share of policyholder liabilities relating to investment contract liabilities reduced to (cid:101)nil in 2019 due to the disposal of QLA. 

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 (cid:522)recoverability test(cid:523)). 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.

Following the sale of QLA in 2019 (see note (cid:25)(b)) the Group no longer has any pure insurance contracts. (cid:58)ithin the Group’s International business, 
insurance contracts are unbundled. The insurance component does not give rise to any future liabilities and the deposit component is presented in 
investment contract liabilities. As a result, the Group no longer has any insurance liabilities or reinsurance assets. In the year ended 31 December 
2020 unbundled insurance premiums of (cid:101)1 million (31 December 2019(cid:29) (cid:101)1 million) are offset by (cid:101)(1) million (31 December 2019(cid:29) (cid:101)(1) million) of 
premiums ceded to reinsurers.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

229

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

28: Provisions

31 December 2020
(cid:37)alance at beginning of the year
Additions from business combinations
Charge to income statement
Utilised during the year
Unused amounts reversed
Reclassification within statement of financial position1

Balance at 31 December 2020

31 December 2019
(cid:37)alance at beginning of the year
Ad(cid:77)ustment on initial application of IFRS 1(cid:25)
Additions from business combinations
Charge to income statement2
Utilised during the year
Unused amounts reversed
Disposals
Reclassification within statement of financial position

(cid:37)alance at 31 December 2019

Compensation
provisions
£m
31
12
10
(5)
(6)
–

42

Compensation
provisions
£m
54
–
14
9
(19)
(13)
(11)
(3)

31

Sale of QLA
£m
6
–
–
(3)
–
–

3

Sale of QLA
£m
–
–
–
6
–
–
–
–

6

Sale of Single 
Strategy 
business
£m
10
–
–
(1)
(2)
–

7

Sale of Single 
Strategy 
business
£m
20
–
–
1
(11)
–
–
–

Clawback 
and other 
provisions
£m
17
–
1
(4)
(3)
14

25

Clawback and 
other 
provisions
£m
20
(5)
1
7
(1)
(4)
(1)
–

10

17

Total
£m
64
12
11
(13)
(11)
14

77

Total
£m
94
(5)
15
23
(31)
(17)
(12)
(3)

64

1Clawback provision was disclosed on a net basis in 2019. In 2020 the balance has been reclassified, with the liability due to product providers on indemnity commission 
disclosed within provisions and the recoverable amount from brokers disclosed within receivables.
2Part of the charge to income statement in 2019 is included within the discontinued operations income statement.

Compensation provisions
Compensation provisions total (cid:101)42 million (31 December 2019(cid:29) (cid:101)31 million), and are comprised of the following(cid:29)

Lighthouse pension transfer advice provision of £28 million (31 December 2019: £12 million)
A provision for pension transfer advice was established within the fair value of the Lighthouse assets and liabilities acquired. As at 31 December 
2019,(cid:98)the provision related to approximately 30 complaints received on advice provided by Lighthouse in respect of pension transfers for (cid:37)ritish Steel 
Pension Scheme members, prior to the Group’s acquisition of Lighthouse in June 2019. All the complaints received related to transfers before 
that(cid:98)date.

During 2020, the FCA reported the results of their thematic review into the general market of pension transfers, which included (cid:37)ritish Steel pension 
transfers. The FCA review determined that the percentage of unsuitable files for (cid:37)ritish Steel transfers was higher than those for other pension 
scheme transfers in their sample. The FCA review included a sample of (cid:37)ritish Steel pension transfer advice provided by Lighthouse. Additionally, 
approximately 4(cid:24) further complaints have been received from (cid:37)ritish Steel Pension Scheme members subsequent to the publication of the Group’s 
2019 Annual Report. As such, the Group has extended the provision to include consideration of the full population of 2(cid:25)(cid:24) (cid:37)ritish Steel transfers on 
which Lighthouse advisers provided advice and the relevant customers proceeded to make a transfer, in order to determine a more reliable 
approximation of the estimated redress payable.

In April 2020, the Group was informed by the FCA that it would be required to appoint a skilled person to review the (cid:37)ritish Steel pension transfers. 
A skilled person has been appointed, and they have performed provisional redress calculations on a significant portion of the (cid:37)ritish Steel complaints 
received by Lighthouse where the advice given was not suitable. The redress calculated on the complaints has been extrapolated to the entire 
population of (cid:37)ritish Steel transfers, by subdividing the population into cohorts with similar characteristics, including dividing into transfers pre and 
post June 2017 when the Trustees of the (cid:37)ritish Steel Pension Scheme changed the basis on which transfer values were calculated. The timing of any 
benefits withdrawn by the member after the transfer also has an impact upon the redress calculated. The estimated redress per client as a 
proportion of the transfer value of the pensions was determined for each cohort and extrapolated to the overall population of cases where advice 
was provided, and that advice was then acted upon. The methodology employed to assess the calculated redress payable uses assumptions and 
estimation techniques which are consistent with principles under the FCA’s FG17(cid:18)9 (cid:522)Guidance for firms on how to calculate redress for unsuitable defined 
benefit pension transfers(cid:523). 

230

Quilter | Annual report 2020

 
28: Provisions continued
Compensation provisions continued

A total provision of (cid:101)28 million (31 December 2019(cid:29) (cid:101)12 million) has been calculated for the potential redress of all (cid:37)ritish Steel cases, including 
anticipated costs associated with the redress activity. This is comprised of two parts(cid:29)

(a) Client redress provision of (cid:101)2(cid:24) million (31 December 2019(cid:29) (cid:101)9 million). As noted above, this provision was increased during 2020 following the 
publication of the FCA thematic review and additional client complaints received.
(b) Anticipated costs associated with redress activity of (cid:101)3 million (31 December 2019(cid:29) (cid:101)3 million). This provision is recognised in respect of the 
anticipated costs of legal and professional fees related to the cases and redress process, which includes the expected costs to review advice provided 
of a similar nature in relation to cases that management believe may have similar characteristics. (cid:101)1 million of the legal and professional fees provision 
has been utilised during the year, and the provision was increased by a further (cid:101)1 million during the year.

The recognition of the total provision before utilisation of (cid:101)29 million has been further apportioned between the fair value of net assets of Lighthouse 
at acquisition and the expenses of the Group(cid:29)

(a) (cid:101)24 million (31 December 2019(cid:29) (cid:101)12 million) is recognised within the fair value of net assets acquired and impacts the goodwill balance recognised 
upon acquisition.
(b) The increase in the provision subsequent to acquisition of (cid:101)(cid:24) million has been recognised within expenses of the Group.

The table below shows the change in this provision and how the amounts have been recognised(cid:29)

Client redress provision
Anticipated costs

Total Lighthouse pension transfer advice complaints provision
Recognised within fair value of acquired net assets
Recognised within expenses

31 December 
2020
£m
25
3

28

24
5

Notes

6(a)

7(b)(vi)

Utilised 
during the 
year
£m
–
(1)

(1)

Balance 
before 
utilisation
£m
25
4

29

24
5

Increase in 
2020
£m
16
1

31 December 
2019
£m
9
3

17

12
5

12

12
–

Additionally, the recognition of the fair value of acquired assets has been increased by management’s estimate of the fair value of the insurance 
recoverable of (cid:101)3 million and the deferred tax asset receivable of (cid:101)2 million (both described in note (cid:25)(a)) which, taken together with the (cid:101)12 million 
increase in client redress provision described above, results in a net decrease of (cid:101)7 million to the fair value of the acquired net assets, which has been 
recognised as an increase in the goodwill balance in the year ending 31 December 2020.

Management has not changed the (cid:101)3 million insurance recoverable that has been included in the fair value of the acquired net assets of Lighthouse. 
Discussion with insurers is ongoing and management will review the recoverable amount as and when they receive further certainty. The insurance 
asset at 31 December 2020 is disclosed within (cid:522)Trade, other receivables and other assets(cid:523).

The final costs of redress for cases upheld will depend on specific calculations on a case-by-case basis, which are impacted by market movements and 
other parameters affecting the defined contribution scheme asset, and therefore exposed to volatility from this, and may vary from the amounts 
currently provided. The skilled person review is expected to conclude in the second half of 2021, after which settlements to customers will be made.

The key assumptions which have an impact upon the redress payable calculation are the discount rate, changes in market levels and proportion of 
cases where redress is estimated to be payable. For the purpose of the redress calculation, changes in the discount rate impact the valuation of the 
defined benefit ((cid:522)D(cid:37)(cid:523)) scheme at the reporting date, and market level changes impact the valuation of the personal pension scheme for each client. 

The following table presents the potential change to the provision balance at 31 December 2020 as a result of movements in the key assumptions(cid:29) 

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Change in discount rate to value the D(cid:37) pension liability of 0.2(cid:24)(cid:8)
Change in market levels of (cid:24)(cid:8)
Change in number of cases upheld of 10(cid:8)

31 December 
2020
£m

Increase
(4)
(2)
1

Decrease
4
2
(1)

A further assumption which has an impact upon the provision is the timing of benefits taken. The uncertainty regarding the timing of benefits taken 
by each member for the cases not yet determined by the skilled person has a potentially material future impact upon the provision. The range of 
outcomes for the provision, including anticipated costs, varies from (cid:101)2(cid:24) million to (cid:101)3(cid:25) million at each extremity of possible timing of benefits taken.

Quilter | Annual report 2020

231

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

28: Provisions continued
Compensation provisions continued

Compensation provisions (other) of £14 million (31 December 2019: £19 million)
Other compensation provisions of (cid:101)14 million are all held within the Group’s continuing operations and include amounts relating to the cost of 
correcting deficiencies in policy administration systems, including restatements, any associated litigation costs and the related costs to compensate 
previous or existing policyholders and customers. This provision represents management’s best estimate of expected outcomes based upon 
previous 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 timing of outflows is that the ma(cid:77)ority of the balance is expected to be settled within 12 months. Estimates are reviewed annually 
and ad(cid:77)usted as appropriate for new circumstances. Management estimate a reasonably possible change of (cid:14)(cid:18)- (cid:101)4 million, based upon a review of the 
cases and the range of potential outcomes. 

Provisions arising on the disposal of Quilter Life Assurance
The QLA business was sold on 31 December 2019 (see note (cid:25)(c)), resulting in a number of provisions totalling (cid:101)(cid:25) million being established in respect 
of the costs of disposing the business and the related costs of business separation.

The costs of business separation arise from the process to separate QLA’s infrastructure, which is complex and covers a wide range of areas including 
people, IT systems, data, contracts and facilities. A programme team has been established to ensure the transition of these areas to the acquirer. 
These provisions have been based on external quotations and estimations, together with estimates of the time required for incremental resource 
costs to achieve the separation.

The most significant element of the provision is the cost of migration of IT systems and data to the acquirer. (cid:58)ork has taken place during 2020 and 
will continue into 2021. Calculation of the provision is based on management’s best estimate of the work required, the time it is 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 (cid:77)udgements 
and estimates, management have made use of their past experience of previous IT migrations following business disposals. Management estimate 
a reasonably possible change of (cid:14)(cid:18)- (cid:101)1 million, based upon the time it takes to complete the work, which is expected to conclude in 2021.

During the year (cid:101)3 million of the provision has been utilised.

Sale of Single Strategy Asset Management business provision
In 2018, a restructuring provision was recognised as a result of the sale of the Single Strategy Asset Management business to enable the remaining 
Quilter Investors business to function as a standalone operation going forward. The provision includes those costs directly related to replacing and 
restoring the operational capability that previously underpinned and supported both parts of the asset management business. Key parts of this 
capability had either been disposed of or disrupted as a consequence of the sale. The provision established for restructuring was (cid:101)19 million, of which 
(cid:101)(cid:24) million was utilised during 2018 and a further (cid:101)11 million utilised in 2019. During 2020, further utilisation of (cid:101)1 million has been incurred, and (cid:101)2 
million has been reversed, and therefore the provision at year end 31 December 2020 is (cid:101)nil.

Additional provisions totalling (cid:101)(cid:25) million were also made in the year ended 31 December 2018 as a consequence of the sale of the Single Strategy 
Asset Management business. These were in relation to various sale related future commitments, the outcome of which was uncertain at the time 
of the sale and the most significant of which is in relation to the guarantee of revenues for the seller in future years arising from funds invested by 
customers of Quilter. A further (cid:101)1 million was added to the provision during 2019, bringing the closing balance to (cid:101)7 million at 31 December 2019. 
The balance remains at (cid:101)7 million at 31 December 2020.

The provision considers sensitivities including potential scenarios which would result in a reduction in Group assets under management held in 
Merian (Single Strategy Asset Management business) funds, leading to a reduction in the management fees paid to Merian. The scenarios are based 
upon assumptions determined considering historical outflows over the past three years, expectation of outflows in the next two years and the latest 
information received from Merian. Per the conditions of the sale agreement, the maximum remaining potential exposure is (cid:101)17 million, based on 
business periods between 2020 and 2022. The expected range of payments based upon the latest information received from Merian and 
management’s reasonable expectations of AUM invested within Merian funds during the assessment periods is between (cid:101)(cid:24) million to (cid:101)12 million. 

Of the total (cid:101)7 million provision outstanding, (cid:101)2 million is expected to be settled in the first half of 2021 related to the 2020 measurement year, 
and the remaining (cid:101)(cid:24) million (2019(cid:29) (cid:101)3 million) is estimated to be payable after one year, with expected final settlement due in the first half of 2023.

Clawback and other provisions
Other provisions include amounts for the resolution of legal uncertainties and the settlement of other claims raised by contracting parties and 
indemnity commission provisions. (cid:58)here material, provisions and accruals are discounted at discount rates specific to the risks inherent in the liability. 
The timing and final amounts of payments in respect of some of the provisions, particularly those in respect of litigation claims and similar actions 
against the Group, are uncertain and could result in ad(cid:77)ustments to the amounts recorded. 

232

Quilter | Annual report 2020

 
28: Provisions continued
Clawback and other provisions continued

Included within the balance in 2020 is (cid:101)18 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 on the income 
statement 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. 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 provision is assessed as no longer payable. The 
provision has been assessed at the reporting date and ad(cid:77)usted for the latest cancellation information available. At 31 December 2020, an associated 
balance of (cid:101)13 million recoverable from brokers is included within (cid:522)Trade, other receivables and other assets(cid:523). At 31 December 2019 the associated 
asset of (cid:101)14 million was offset within the provision balance.

Management estimate a reasonably possible change of (cid:14)(cid:18)- (cid:101)(cid:25) 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 (cid:101)2(cid:24) million provision outstanding, (cid:101)13 million is estimated to be payable within one year (2019(cid:29) (cid:101)17 million).

29: Tax assets and liabilities
Deferred income taxes are calculated on all temporary differences at the tax rate applicable to the (cid:77)urisdiction in which the timing differences arise 
and are all non-current.

Deferred tax summary

Deferred tax assets
Deferred tax liabilities

Net deferred tax liability

31 December 
2020
£m
78
106

31 December 
2019
£m
43
88

28

45

On the 3 March 2021 the Chancellor of the Exchequer announced in the (cid:37)udget a future increase in the Corporation Tax rate from 19(cid:8) to 2(cid:24)(cid:8), 
effective from 1 April 2023. The change in rate has not yet been substantially enacted but had it been at 31 December 2020 the impact on the 
deferred tax assets and liabilities would be a decrease in the net deferred tax liabilities of (cid:101)(cid:24) million. 

29(a): Deferred tax assets
Deferred tax assets are recognised for tax losses carried forward only to the extent that realisation of the related tax benefit is probable, being where, 
on the basis of all available evidence, it is considered more likely than not that there will be suitable taxable profits against which the reversal of the 
deferred tax asset can be deducted.

The movement on recognised deferred tax assets is as follows(cid:29)

31 December 2020
Tax losses carried forward
Accelerated depreciation
Accrued interest expense and other temporary differences
Share-based payments
Deferred expenses
Provisions
Netted against liabilities

Deferred tax assets at 31 December 2020

At beginning 
of the year
£m
19
19
3
8
7
–
(13)

43

Income
statement 
(charge)/
credit
£m
(4)
–
38
1
(1)
1
–

35

(Charged)/
credited
(cid:87)(cid:82)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
£m
–
–
–
–
–
–
–

–

(cid:36)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)
/disposal of 
subsidiaries
£m
–
–
–
–
–
–
–

–

At end of 
the year
£m
15
19
41
9
6
1
(13)

78

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

233

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

29: Tax assets and liabilities continued
29(a): Deferred tax assets continued

31 December 2019
Tax losses carried forward
Accelerated depreciation
Other temporary differences
Share-based payments
Contract liabilities
Deferred expenses
Netted against liabilities

Deferred tax assets at 31 December 2019

At beginning 
of the year
£m
19
13
4
4
2
35
(39)

38

Income
statement 
(charge)/
credit
£m
(1)
6
(3)
4
(1)
(15)
12

2

(Charged)/ 
credited
to equity
£m
–
–
2
–
–
–
–

2

Acquisition/
disposal of 
subsidiaries
£m
1
–
–
–
(1)
(13)
14

At end of the 
year
£m
19
19
3
8
–
7
(13)

1

43

The credit to the income statement of (cid:101)(38) million in 2020 in respect of Accrued interest expense and other temporary differences includes a credit 
of (cid:101)(39) million relating to first time recognition of a deferred tax asset on accrued interest expenses, as explained in note 11(a). 

The recognition of deferred tax assets is sub(cid:77)ect to the estimation of future taxable profits, which is based on the annual business planning process 
and in particular on estimated levels of assets under management, which are sub(cid:77)ect to a large number of factors including global stock market 
movements and related movements in foreign exchange rates, together with estimates of net client cash flow, expenses and other charges. 

The business plan, ad(cid:77)usted for known and estimated tax sensitivities, is used to determine the extent to which deferred tax assets are recognised. 
In general the Group assesses recoverability based on estimated taxable profits over a three year planning hori(cid:93)on. (cid:58)here credible longer-term profit 
forecasts are available (e.g. for the life insurance companies) the specific entity may assess recoverability over a longer period, sub(cid:77)ect to a higher level 
of sensitivity testing.

Deferred tax assets have been recognised to the extent they are supported by the Group’s business plans. The sensitivity of these assets is such that 
any decrease in profitability over the assessment period would result in a write down in the deferred tax assets.

Unrecognised deferred tax assets
The amounts for which no deferred tax asset has been recognised comprises(cid:29)

Expiring in less than a year
Expiring between one and five years
Expiring after five years

Unrelieved tax losses
Accelerated depreciation
Other timing differences

Total unrecognised deferred tax assets

31 December 2020
£m

31 December 2019
£m

Gross amount
–
–
780

780
–
5

785

Tax
–
–
146

146
–
1

147

Gross amount
–
–
472

472
28
7

507

Tax
–
–
80

80
5
2

87

Movements in unrecognised deferred tax assets
The value of unrecognised deferred tax assets has increased by (cid:101)(cid:25)0 million during the year. This is primarily as a result of the increase in losses related 
to the Group’s Managed Separation from previous parent (Old Mutual plc) under the terms of the Separation Agreement.

234

Quilter | Annual report 2020

 
i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

29: Tax assets and liabilities continued

29(b): Deferred tax liabilities
The movement on deferred tax liabilities is as follows(cid:29)

31 December 2020
Other acquired intangibles
Other temporary differences
Investment gains
Netted against assets

Deferred tax liabilities at 31 December 2020

31 December 2019
Deferred acquisition costs
Other acquired intangibles
Other temporary differences
Investment gains
Netted against assets

Deferred tax liabilities at 31 December 2019

At 
beginning 
of the year
£m
39
–
62
(13)

88

At 
beginning 
of the year
£m
11
40
1
46
(39)

59

Income 
statement 
(credit)/
charge
£m
(4)
4
19
–

19

Income 
statement 
(credit)/
charge1
£m
(3)
(8)
(1)
92
12

92

(cid:36)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:18)
disposal of 
subsidiaries
£m
1
(2)
–
–

(1)

Acquisition/
disposal of 
subsidiaries
£m
(8)
7
–
(76)
14

(63)

At end of 
the year
£m
36
2
81
(13)

106

At end of 
the year
£m
–
39
–
62
(13)

88

1In the year ended 31 December 2019, of the (cid:101)92 million income statement credit, (cid:101)41 million relates to continuing operations and (cid:101)(cid:24)1 million relates to discontinued 
operations.

29(c): Current tax receivables and payables
Current tax receivables and current tax payables at 31 December 2020 were (cid:101)24 million (2019(cid:29) (cid:101)13 million) and (cid:101)1 million (2019(cid:29) (cid:101)(cid:25) million), respectively.

30: Borrowings and lease liabilities
The following table analyses the Group’s borrowings and lease liabilities(cid:29)

Subordinated debt(cid:29) fixed rate loan at 4.478(cid:8)
Lease liabilities

Total borrowings and lease liabilities

Notes

30(a)

30(b)

31 December 
2020 
£m
199
120

31 December 
2019 
£m
198
137

319

335

30(a): Borrowings
(cid:37)orrowed funds are repayable on demand and categorised in terms of IFRS 9 Financial Instruments as (cid:522)Financial liabilities at amortised cost(cid:523). The 
carrying value of the Group’s borrowings is considered to be materially in line with the fair value. All amounts outstanding at 31 December 2020 are 
payable to a number of relationship banks.

On 28 February 2018, the Group issued a (cid:101)200 million subordinated debt security in the form of a 10-year Tier 2 bond with a one-time issuer call 
option after five years to J.P. Morgan Securities plc, paying a semi-annual coupon of 4.478(cid:8) (the (cid:522)Tier 2 (cid:37)ond(cid:523)). The bond was remarketed and sold to 
the secondary market in full on 13 April 2018. It is now listed and regulated under the terms of the London Stock Exchange. The bond matures in 2028 
with the option to redeem in 2023.

In addition, the Group entered into a (cid:101)12(cid:24) million revolving credit facility which remains undrawn and is being held for contingent funding purposes.

30(b): Lease liabilities
The Group has entered into commercial non-cancellable leases on certain property, plant and equipment where it is not in the best interest of the 
Group to purchase these assets. Such leases have varying terms, escalation clauses and renewal rights.

Termination options are included in a number of property leases across the Group. These are used to maximise operational flexibility in terms of 
managing the assets used in the Group’s operations. The ma(cid:77)ority of termination options held are exercisable only by the Group and not by the 
respective lessor.

Quilter | Annual report 2020

235

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

30: Borrowings and lease liabilities continued
30(b): Lease liabilities continued

As at 31 December 2020, future undiscounted cash outflows of (cid:101)22 million (2019(cid:29) (cid:101)2(cid:25) million) have been included in the lease liability which will occur 
beyond termination option dates on three of the Group’s principal property leases, as it is reasonably certain that these leases will not be terminated. 
The lease term is reassessed if an option is exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise) it. The assessment 
of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is 
within the control of the lessee.

During the year, certain lease terms were reassessed to reflect the expectation that termination options will now be exercised. The financial effect of 
this reassessment was a decrease in recognised lease liabilities and right-of-use assets of (cid:101)7 million (2019(cid:29) (cid:101)nil). These are the only significant property 
leases where the term is modelled up to a termination option date.

Lease liabilities represent the obligation to pay lease rentals as required by IFRS 1(cid:25) and are categorised as financial liabilities at amortised cost.

Opening balance
Implementation of IFRS 1(cid:25)
Acquisitions through business combinations
Additions1
Disposals and ad(cid:77)ustments to lease liabilities
Interest charge for the year
Payment for interest portion of lease liability
Payment for principal portion of lease liability

Closing balance

To be settled within 12 months
To be settled after 12 months

Total lease liabilities

Maturity analysis2
(cid:58)ithin one year
One to five years
More than five years

Total lease liabilities – undiscounted

1The ma(cid:77)ority of additions during 2019 relate to the lease for Senator House, the Group’s new London property.
2The maturity analysis of lease liabilities is on an undiscounted basis.

31 December 
2020
£m
137
–
–
6
(11)
4
(2)
(14)

31 December 
2019
£m
–
89
1
60
–
3
(3)
(13)

120

9
111

120

11
57
75

143

137

13
124

137

15
50
99

164

236

Quilter | Annual report 2020

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

31: Trade, other payables and other liabilities

Claims outstanding
Amounts owed to intermediaries

Amounts payable on direct insurance business
Deposits received from reinsurers
Accounts payable on reinsurance business
Outstanding settlements
Accruals and deferred income
Trade creditors
Deferred consideration
Other liabilities1

Total trade, other payables and other liabilities

To be settled within 12 months1
To be settled after 12 months

Total trade, other payables and other liabilities

1See note 4(b) for details of changes to comparative amounts.

31 December 
2020
 £m
131
8

31 December 
2019 
restated¹
£m
182
11

139
–
–
255
111
41
16
110

672

666
6

672

193
16
1
270
160
41
39
81

801

797
4

801

32: Contract liabilities
Contract liabilities relate to non-refundable front-end fee income, comprising fees received at inception or receivable over an initial period for services 
not yet provided, and is deferred through the creation of a contract liability on the statement of financial position and released to income as the 
services are provided. Equal service provision is assumed over the lifetime of the contract and, as such, the contract liability is amortised on a linear 
basis over the expected life of the contract, ad(cid:77)usted for expected persistency. The contract liability principally comprises fee income already received 
in cash. The table below analyses the movements in contract liabilities.

1 January 2019 (as originally stated)
Fee income receivable reclassification1
1 January 2019 restated1
Fees and commission income deferred
Amortisation

Foreign exchange
Continuing operations movements
Discontinued operations movements
Disposal of subsidiaries

31 December 2019 restated(cid:123)
Fees and commission income deferred
Amortisation

Foreign exchange
Continuing operations movements

31 December 2020

The Group expects to recognise the above contract liability balances as revenue in the following years(cid:29)
(cid:58)ithin one year
One to five years
More than five years

Total contract liabilities
1See note 4(b) for details regarding the restatement of the Group’s fee income receivable.

Insurance and 
Investments
£m
225
230

Asset
 Management 
£m
1
–

455

44
(62)
(3)

(21)
(8)
(23)

403

35
(62)
3

(24)

379

1

–
(1)
–

(1)
–
–

–

–
–
–

–

–

Total 
£m
226
230

456

44
(63)
(3)

(22)
(8)
(23)

403

35
(62)
3

(24)

379

31 December 
2020 
£m

31 December 
2019
restated¹ 
£m

61
184
134

379

60
192
151

403

Quilter | Annual report 2020

237

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

33: Post-employment benefits
The Group operates a number of defined contribution and defined benefit pension schemes in the UK, the Channel Islands and Ireland.

Defined contribution pension schemes
The Group’s defined contribution schemes require contributions to be made to funds held in trust, separate from the assets of the Group. 
Participants receive either a monthly pension supplement to their salaries or contributions to personal pension plans. For the defined contribution 
schemes, the Group pays contributions to separately administered pension schemes. The Group has no further payment obligations once the 
contributions have been paid. The contributions are recognised in current service cost in the consolidated income statement as staff costs and other 
employee-related costs when they are due.

Defined benefit schemes
The Group operates two defined benefit schemes(cid:29) The Quilter Cheviot Limited Retirement (cid:37)enefits Scheme and the Quilter Cheviot Channel Islands 
Retirement (cid:37)enefits Scheme which are both closed to new members. The assets of these schemes are held in separate trustee administered funds. 
Pension costs and contributions relating to defined benefit schemes are assessed in accordance with the advice of qualified actuaries. Actuarial 
advice confirms that the current level of contributions payable to each pension scheme, together with existing assets, are adequate to secure 
members’ benefits over the remaining service lives of participating employees. The Group’s policy is to fund at least the amounts sufficient to 
meet minimum funding requirements under applicable employee benefit and tax regulations. The schemes are reviewed at least on a triennial 
basis or in accordance with local practice and regulations. In the intervening years the actuary reviews the continuing appropriateness of the 
assumptions applied.

In 2019, the Trustees of the Quilter Cheviot Limited Retirement (cid:37)enefits scheme purchased a bulk annuity from Aviva to de-risk the defined benefit 
pension scheme obligation. This investment strategy was intended to equally match the assets and liabilities of the scheme. This covers all remaining 
insured scheme benefits following previous bulk annuity transactions in 2013, 2014 and 201(cid:24). The Group in(cid:77)ected a capital contribution of (cid:101)7 million 
to effect this transaction. 

Further details explaining the considerations behind the Group’s decision to fund the buy-in are included in the 2019 Annual Report. 

IAS 19 Employee Benefits disclosures
This note gives full IAS 19 Employee Benefits disclosures for the above schemes. 

33(a): Liability for defined benefit obligations
The IAS 19 value of the assets and the scheme obligations are as follows(cid:29)

(cid:38)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:85)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:564)(cid:87)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)
Total IAS 19 retirement benefit obligation opening balance
Interest cost on benefit obligation
Effect of changes in actuarial assumptions
Actuarial losses
(cid:37)enefits paid

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:918)(cid:36)(cid:54)(cid:3)(cid:20)(cid:28)(cid:3)(cid:85)(cid:72)(cid:87)(cid:76)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:564)(cid:87)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:70)(cid:79)(cid:82)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)

Change in plan assets
Total IAS 19 fair value of scheme assets opening balance
Actual return on plan assets
Company contributions
(cid:37)enefits paid

Total IAS 19 fair value of scheme assets closing balance

(cid:49)(cid:72)(cid:87)(cid:3)(cid:918)(cid:36)(cid:54)(cid:3)(cid:20)(cid:28)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)
Funded status of plan
Unrecognised assets

(cid:49)(cid:72)(cid:87)(cid:3)(cid:918)(cid:36)(cid:54)(cid:3)(cid:20)(cid:28)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)

238

Quilter | Annual report 2020

31 December
2020
£m

31 December
2019
£m

(38)
(1)
–
(4)
2

(41)

39
5
–
(2)

42

1
(1)

–

(44)
(1)
(2)
(6)
15

(38)

56
(8)
6
(15)

39

1
(1)

–

 
33: Post-employment benefits continued
33(a): Liability for defined benefit obligations continued
Contributions for the year to the defined benefit schemes totalled (cid:101)nil (2019(cid:29) (cid:101)(cid:25) million), and (cid:101)1 million was accrued at 31 December 2020 
(2019(cid:29) (cid:101)1 million). The Group expects to contribute (cid:101)1 million in the next financial year, based upon the current funded status and the expected 
return assumption for the next financial year.

Changes in the asset ceiling
Opening unrecognised asset due to asset ceiling
Changes in asset ceiling

Closing unrecognised asset due to the asset ceiling

31 December
2020
£m

31 December
2019
£m

1
–

1

12
(11)

1

33(b): Income/expense recognised in the income statement
The total pension charge to staff costs for all of the Group’s defined benefit schemes for the year ended 2020 was (cid:101)nil (2019(cid:29) (cid:101)nil).

Actuarial gains and losses and the effect of the limit to the pension asset under IAS 19 Employee Benefits paragraph (cid:24)8 have been reported in other 
comprehensive income.

The cumulative amount of actuarial losses recognised in other comprehensive income is (cid:101)33 million (2019(cid:29) (cid:101)33 million).

Assumptions
The expected long-term rate of return on assets represents the Group’s best estimate of the long-term return on the scheme assets and is generally 
estimated by computing a weighted average return of the underlying long-term expected returns on the different asset classes, based on the target 
asset allocations. The expected long-term return on assets is a long-term assumption that is generally expected to remain the same from one year 
to the next unless there is a significant change in the target asset allocation, the fees and expenses paid by the plan or market conditions.

The Group, in consultation with its independent investment consultants and actuaries, determined the asset allocation targets based on its 
assessment of business and financial conditions, demographic and actuarial data, funding characteristics and related risk factors. Other relevant 
factors, including industry practices, long-term historical and prospective capital market returns, were also considered.

The scheme return ob(cid:77)ectives provide long-term measures for monitoring the investment performance against growth in the pension obligations. 
The overall allocation is expected to help protect the plan’s funded status while generating sufficiently stable real returns (net of inflation) to help cover 
current and future benefit payments.

(cid:37)oth the equity and fixed income portions of the asset allocation use a combination of active and passive investment strategies and different 
investment styles. The fixed income asset allocation consists of longer duration fixed income securities in order to help reduce plan exposure to 
interest rate variation and to better correlate assets with obligations. The longer duration fixed income allocation is expected to help stabilise plan 
contributions over the long run.

The weighted average duration of the defined benefit obligation is 20 years, based upon actual cash flows.

The following table presents the principal actuarial assumptions at the end of the reporting year(cid:29)

Discount rate
Rate of increase in defined benefit funds
Inflation

The mortality assumptions used give the following life expectancy at (cid:25)(cid:24)(cid:29)

2020
%
1.4
3.(cid:24)
2.9

2019
%
2.1
3.(cid:24)
2.8

31 December 2020
31 December 2019

Life expectancy at 65 for male 
member currently

Life expectancy at 65 for female 
member currently

Mortality table
S2PA Light
S2PA Light

Aged 65
23.40
23.40

Aged 45
25.50
2(cid:24).40

Aged 65
24.50
24.40

Aged 45
26.70
2(cid:25).70

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, inflation rate and rate of mortality.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

239

 
 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

33: Post-employment benefits continued
33(b): Income/expense recognised in the income statement continued
The sensitivities regarding the principal assumptions used to measure the defined benefit obligations are described below. Reasonably possible 
changes at the reporting date to one of the principal actuarial assumptions, holding other assumptions constant, would have affected the defined 
benefit obligation as follows(cid:29)

Discount rate (0.1(cid:8) movement)
Inflation rate (0.1(cid:8) movement)
Rate of mortality (increase by 1 year)

31 December 
2020 
£m

Decrease
0.7 
(0.3)
–

Increase
(0.7)
0.3 
1.7 

31 December 
2019 
£m

Decrease
0.7 
(0.3)
–

Increase
(0.7)
0.3 
1.(cid:25) 

33(c): Scheme assets allocation 
Scheme assets are stated at their fair values. Total scheme assets are comprised as follows(cid:29)

Equity securities
Debt securities
Cash and other assets

Total IAS 19 fair value of scheme assets

31 December
2020 
%
7
93
–

31 December
2019 
%
4
94
2

31 December
2020 
£m
3
39
–

31 December
2019 
£m
2
36
1

100

100

42

39

Equity instruments, debt instruments and investment fund assets have a quoted market price. All other assets, including the value of the bulk annuity 
policy, do not have a quoted market price. The bulk annuity policy, where assets are matched to the value of liabilities, is included at values provided 
by the insurer in accordance with relevant guidelines.

34: Master netting or similar agreements
The Group offsets financial assets and liabilities in the statement of financial position when it has a legal, enforceable right to do so and intends 
to settle on a net basis simultaneously. Currently, the only such offsetting within the Group relates to the pooling of bank accounts and, in some 
circumstances a bank account may be overdrawn and therefore offset.

The following tables present information on the potential effect of netting offset arrangements after taking into consideration these types of 
agreements.

Gross 
amounts
£m

(cid:36)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:909)(cid:86)(cid:72)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)
the statement of 
(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)
£m

Net amounts 
reported in 
the statement 
(cid:82)(cid:73)(cid:3)(cid:564)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)
position
£m

1,999

78

(78)

(78)

1,921

– 

Gross
amounts
£m

Amounts offset in 
the statement of 
financial position
£m

Net amounts 
reported in 
the statement 
of financial 
position
£m

2,331

78

(78)

(78)

2,253

– 

31 December 2020
Financial assets
Cash and cash equivalents

Financial liabilities
Trade, other payables and other liabilities

31 December 2019 (restated)¹
Financial assets
Cash and cash equivalents

Financial liabilities
Trade, other payables and other liabilities

1See note 4(b) for details of changes to comparative amounts.

240

Quilter | Annual report 2020

35: Contingent liabilities
The Group, in the ordinary course of business, enters into transactions that expose it to tax, legal 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 28). 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 in accordance with IAS 37 Provisions, 
Contingent Liabilities and Contingent Assets.

Contingent liabilities – acquisitions and disposals
The Group routinely monitors and assesses contingent liabilities arising from matters such as litigation, warranties and indemnities relating to past 
acquisitions and disposals. In April 2020, the Group was informed by the FCA that it would be required to appoint a skilled person, under section 
1(cid:25)(cid:25)(3)(a) of the Financial Services and Markets Act 2000 ((cid:522)FSMA(cid:523)) in relation to Lighthouse Defined (cid:37)enefit ((cid:522)D(cid:37)(cid:523)) pension transfer advice. The review 
covers Lighthouse Advisory Services Limited only, and no other companies within the Group. The review covers the period from 1 April 201(cid:24) to 27 
January 2020, which is the date that Lighthouse converted to the Quilter Financial Planning advice process for their Defined (cid:37)enefit transfer activity.
The review will cover (cid:37)ritish Steel D(cid:37) pension transfer advice activity undertaken by Lighthouse, and a representative sample of other Lighthouse D(cid:37) 
pension transfer advice activity. The skilled person will also calculate redress, following the FCA’s FG17(cid:18)9 “Guidance for firms on how to calculate redress 
for unsuitable defined benefit pension transfers” guidance. The skilled person will also review the redress methodology applied by Lighthouse to any 
complaints already upheld. The skilled person’s final report is expected to be submitted to the FCA in the third quarter of 2021.

For the (cid:37)ritish Steel cases, management currently consider that the likelihood of redress is probable on the ma(cid:77)ority of the cases, but this is sub(cid:77)ect to 
confirmation through the ongoing skilled person review process. An estimate of the amount of redress payable has been made and is included within 
Provisions in note 28. For the non-(cid:37)ritish Steel cases, it is possible that further costs of redress may be incurred following the outcome of the skilled 
person review. At present, there is no indication of redress payable in relation to non-(cid:37)ritish Steel cases. Any further redress costs related to 
non-(cid:37)ritish Steel cases, and any differences between the provision and final payment to be made for (cid:37)ritish Steel cases, will be recognised as an 
expense or credit in the Income Statement, following the finalisation of the acquisition balance sheet of Lighthouse in June 2020.

Tax
The Revenue authorities in the principal (cid:77)urisdictions in which the Group operates routinely review historical transactions undertaken and tax law 
interpretations made by the Group. The Group is committed to conducting its tax affairs in accordance with the tax legislation of the (cid:77)urisdictions in 
which they operate. All interpretations made by management 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 Revenue authorities. The 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 (cid:37)oard is 
satisfied that adequate provisions have been made to cater for the resolution of tax uncertainties and that the resources required to fund such 
potential settlements are sufficient.

Due to the level of estimation required in determining tax provisions, amounts eventually payable may differ from the provision recognised. This may 
include amounts relating to first time recognition of a deferred tax asset on accrued interest expenses, as explained in notes 11(a) and 29(a).

Complaints and disputes
The Group is committed to treating customers fairly and supporting its customers in meeting their lifetime goals. The Group does from time to time 
receive complaints and claims, and enters into commercial disputes with service providers, in the normal course of business. The costs, including legal 
costs, of these issues as they arise can be significant and, where appropriate, provisions have been established under IAS 37. 

36: Commitments
The Group has contractual commitments in respect of funding arrangements which will be payable in future periods. These commitments are not 
recognised in the Group’s statement of financial position. 

37: Capital and financial risk management
37(a): Capital management
The Group manages its capital with a focus on capital efficiency and effective risk management. The capital management ob(cid:77)ectives 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 regulatory 
requirements in all businesses in the Group. Capital forecasts have been reviewed regularly during 2020 in response to the emerging impacts of the 
CO(cid:57)ID-19 pandemic which has evolved over the year and, where appropriate, management actions have been taken in response to these forecasts. 

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

The Group’s overall capital risk appetite is set with reference to the requirements of the relevant stakeholders and seeks to(cid:29)
 – maintain sufficient, but not excessive, financial strength to support stakeholder requirements(cid:30)
 – optimise debt to equity structure to enhance shareholder returns(cid:30) and
 – retain financial flexibility by maintaining liquidity including unutilised committed credit lines. 

Quilter | Annual report 2020

241

 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

37: Capital and financial risk management continued
37(a): Capital management continued

The primary sources of capital used by the Group are equity shareholders’ funds of (cid:101)1,878 million (31 December 2019(cid:29) (cid:101)2,071 million) and 
subordinated debt which was issued at (cid:101)200 million in February 2018. 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 Solvency II requirements.

37(a)(i): Regulatory capital (unaudited)
The Group is sub(cid:77)ect to Solvency II group supervision by the PRA. The Central (cid:37)ank of Ireland is Quilter’s lead supervisor within the European Union 
and exercises a limited form of Solvency II group supervision over the Group. The Group is required to measure and monitor its capital resources 
under the Solvency II regulatory regime. 

The Group’s insurance undertakings are included in the Group solvency calculation on a Solvency II basis. Other regulated entities are included in the 
Group solvency calculation according to the relevant sectoral rules. The Group’s Solvency II surplus is the amount by which the Group’s capital on a 
Solvency II basis (own funds) exceeds the Solvency II capital requirement (solvency capital requirement or (cid:522)SCR(cid:523)). 

The Group’s Solvency II surplus is (cid:101)1,021 million at 31 December 2020 (2019(cid:29) (cid:101)1,1(cid:25)8 million), representing a Solvency II ratio of 217(cid:8) (2019(cid:29) 221(cid:8)) 
calculated under the standard formula. The Solvency II regulatory position for the year ended 31 December 2020 allows for the impact of the 
recommended final dividend payment of (cid:101)(cid:25)1 million (2019(cid:29) (cid:101)(cid:25)4 million). The disclosure does not include the impact of Tranche 3 of the share buyback 
which had not been approved by the Group’s regulators at the reporting date.

The Solvency II results for the year ended 31 December 2020 (unaudited estimate) and 31 December 2019 were as follows(cid:29)

Own funds
Solvency capital requirement (SCR)
Solvency II surplus

Solvency II coverage ratio
1(cid:37)ased on preliminary estimates. Filing of annual regulatory reporting forms due by 20 May 2021.
2As represented within the Quilter plc Group Solvency and Financial Condition Report for the year ended 31 December 2019.

31 December 
20201
£m
1,897
876
1,021

31 December 
20192
£m
2,132
964
1,168

217%

221%

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

Group own funds
Tier 11
Tier 22

Total Group Solvency II own funds
1All Tier 1 capital is unrestricted for tiering purposes.
2Comprises a Solvency II compliant subordinated debt security in the form of a Tier 2 bond, which was issued at (cid:101)200 million in February 2018.

31 December 
2020
£m
1,688
209

31 December 
2019
£m
1,925
207

1,897

2,132

The Group’s insurance subsidiaries based in the UK and Ireland are also sub(cid:77)ect to Solvency II at entity level. Other regulated entities in the Group are 
sub(cid:77)ect to the locally applicable entity-level capital requirements in the (cid:77)urisdictions in which they operate. In addition, the Group’s asset management 
and advice businesses are sub(cid:77)ect to group supervision by the FCA under the CRD I(cid:57) regime.

The solvency and capital requirements for the Group and its regulated subsidiaries are reported and monitored through monthly Capital 
Management Forum meetings. Throughout 2020, the Group has complied with the regulatory capital 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.

242

Quilter | Annual report 2020

37: Capital and financial risk management continued
37(a): Capital management continued

37(a)(ii): Loan covenants
Under the terms of the revolving credit facility agreement, the Group is required to comply with the following financial covenant(cid:29) the ratio of total net 
borrowings to consolidated equity shareholders’ funds shall not exceed 0.(cid:24).

Total external borrowings of the Company
Less(cid:29) cash and cash equivalents of the Company

Total net external borrowings of the Company

Total shareholders’ equity of the Group
Tier 2 bond

Total Group equity (including Tier 2 bond)

(cid:53)(cid:68)(cid:87)(cid:76)(cid:82)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:72)(cid:91)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:69)(cid:82)(cid:85)(cid:85)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)

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

Note

30

30

31 December
 2020 
£m
199
(314)

31 December 
2019
 £m
198
(559)

(115)

1,878
199

2,077

(361)

2,071
198

2,269

-0.055

-0.159

37(a)(iii): Own Risk and Solvency Assessment (“ORSA”) and Internal Capital Adequacy Assessment Process (“ICAAP”)
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 and 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, entity level ORSA processes are performed for each of the solo insurance entities within the Group.

The Group ICAAP process is similar to the ORSA process although the ICAAP process is performed for a subset of the Group consisting of the 
investment and advisory firms within the Group (the (cid:522)ICAAP Group(cid:523)). The Group ICAAP report is also produced annually and summarises the analysis, 
insights and conclusions from the underlying risk and capital management processes in respect of the ICAAP Group. The ICAAP report is submitted to 
the FCA 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 ICAAP Group outside the usual reporting cycle. 

The conclusions of ORSA and ICAAP processes are reviewed by management and the (cid:37)oard throughout the year.

37(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, Credit Risk Standard and Credit Risk Appetite Statement. 
This framework applies to all activities where the shareholder 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 through ensuring 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(cid:29)
 – the credit rating of the counterparty, which is used to derive the probability of default(cid:30) 
 – the loss given default(cid:30) 
 – the potential recovery which may be made in the event of default(cid:30)
 – the extent of any collateral that the firm has in respect of the exposures(cid:30) and
 – any second order risks that may arise where the firm has collateral against the credit risk exposure.

i

S
t
r
a
t
e
g
c
R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e
R
e
p
o
r
t

F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s

O
t
h
e
r

i

n
f
o
r
m
a
t
i
o
n

Quilter | Annual report 2020

243

 
 
 
 
 
Notes to the consolidated financial statements

For the year ended 31 December 2020 continued

37: Capital and financial risk management continued
37(b): Credit risk continued

The credit risk exposures of the Group are monitored regularly to ensure that counterparties remain creditworthy, to ensure there is appropriate 
diversification of counterparties and to ensure that exposures are within approved limits. At 31 December 2020, the Group’s material credit 
exposures were to financial institutions (primarily through the investment of shareholder funds), corporate entities (including external fund managers 
and reinsurers) and individuals (primarily through fund management trade settlement activities). 

There is no direct exposure to European sovereign debt (outside of the UK) 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 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 and rebates of fund management charges 
on collective investments held for the benefit of policyholders. 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 financial statements.

Loans and advances sub(cid:77)ect to 12 month expected credit losses ((cid:522)12 month ECL(cid:523)) are (cid:101)31 million (2019(cid:29) (cid:101)37 million) and other receivables sub(cid:77)ect 
to lifetime expected credit losses ((cid:522)lifetime ECL(cid:523)) are (cid:101)(cid:24)2(cid:24) million (2019 restated – see note 4(b)(i)(cid:29) (cid:101)4(cid:24)8 million). These balances are not rated(cid:30) they 
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 sub(cid:77)ect 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.

31 December 2020
Cash at amortised cost, sub(cid:77)ect to 12 month ECL
Money market funds at F(cid:57)TPL

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)

31 December 2019 (restated)2
Cash at amortised cost, sub(cid:77)ect to 12 month ECL
Money market funds at F(cid:57)TPL

(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)
1Cash included in the consolidation of funds is not rated (see note 24(a)).
2See note 4(b) for details of changes to comparative amounts.

(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:81)(cid:72)(cid:76)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:83)(cid:68)(cid:86)(cid:87)(cid:3)(cid:71)(cid:88)(cid:72)(cid:3)(cid:81)(cid:82)(cid:85)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)
£m

AAA
–
1,062

1,062

AAA
–
1,156

1,156

AA
81
–

81

A
464
–

464

BBB
1
–

1