National Storage Mechanism | Additional information

RNS Number : 7103V
Quilter PLC
11 August 2020

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

For the six month period ended 30 June 2020

Each of the Directors of Quilter plc confirms to the best of his or her knowledge and belief that:

The condensed set of consolidated financial statements, which comprises the consolidated income statement and statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of financial position, consolidated statement of cash flows and the related explanatory notes, has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union and gives a true and fair view of the assets, liabilities, financial position and profits of the Group for the period ended 30 June 2020. These interim financials have been prepared and published in compliance with the acceptable accounting frameworks of the London Stock Exchange ("LSE"), where the company has its primary listing.
The interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of consolidated financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the Group's 2019 Annual Report, that could have a material effect on the financial position or performance of the enterprise in the first six months of the current financial year.

As per provision C1 of the UK Corporate Governance Code, the results for the six months ended 30 June 2020 taken as a whole, present a fair, balanced and understandable position of the Company's prospects.

Quilter plc is listed as a primary listing on the LSE and a secondary listing on the Johannesburg Stock Exchange ("JSE").

Paul Feeney
Chief Executive Officer
10 August 2020

Mark Satchel
Chief Financial Officer
10 August 2020

Independent review report to Quilter plc

Report on the condensed consolidated interim financial statements

Our conclusion
We have reviewed Quilter plc's condensed consolidated interim financial statements (the "interim financial statements") in the interim results of Quilter plc for the 6 month period ended 30 June 2020. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed
The interim financial statements comprise:
* the consolidated statement of financial position as at 30 June 2020;
* the consolidated income statement and consolidated statement of comprehensive income for the period then ended;
* the consolidated statement of cash flows for the period then ended;
* the consolidated statement of changes in equity for the period then ended; and
* the explanatory notes to the interim financial statements.

The interim financial statements included in the interim results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors
The interim results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the interim results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, 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.

What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP
Chartered Accountants
London
10 August 2020

Consolidated income statement

For the six month period ended 30 June 2020

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

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

The attached notes form an integral part of these condensed consolidated interim financial statements.

Consolidated statement of comprehensive income

For the six month period ended 30 June 2020

	Note	Six months 2020	Six months 2019	Full year 2019
Profit/(loss) after tax	43	(17)	146
Exchange gains/(losses) on translation of foreign operations	1	-	(1)
Items that may be reclassified subsequently to income statement		-	(1)
Measurement movements on defined benefit plans		-	-	(7)
Tax on amounts related to defined benefit pension plans		-	-	1
Items that will not be reclassified subsequently to income statement		-	-	(6)
Total other comprehensive income/(expense), net of tax		1	-	(7)
Total comprehensive income/(expense)	44	(17)	139
Attributable to:
Continuing operations	45	(32)	(28)
Discontinued operations	4(c)	(1)	15	167
Equity holders of Quilter plc	44	(17)	139

The attached notes form an integral part of these condensed consolidated interim financial statements.# Consolidated statement of changes in equity

For the six month period ended 30 June 2020 (��m)

Paul Feeney
Chief Executive Officer

Mark Satchel
Chief Financial Officer

The attached notes form an integral part of these condensed consolidated interim financial statements.

Consolidated statement of cash flows

For the six month period ended 30 June 2020

The cash flows presented in this statement cover all the Group's activities (continuing and discontinued operations and cash that is held for sale) 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.

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

1 On 11 March 2020 the Company announced a share buyback programme to purchase shares up to a maximum value of £375 million, in order to reduce the share capital of the Company. The programme commenced on 11 March 2020 and will continue into 2021. As part of Tranche 1 of the programme, which completed in June 2020, the Company has acquired 43,217,594 shares for a total consideration of £50 million, and incurred additional costs of £2 million. Tranche 2 of the programme commenced in June 2020. As part of the second tranche a further 2,769,270 shares have been purchased for £4 million up to 30 June 2020. The shares from both tranches, which have a nominal value of £3 million, have subsequently been cancelled, giving rise to a capital redemption reserve of the same value as required by the Companies Act 2006.

The attached notes form an integral part of these condensed consolidated interim financial statements.

Consolidated statement of financial position

At 30 June 2020 (��m)

In preparing these interim financial statements, management has made judgements and estimates in applying the Group's significant accounting policies affecting the reported amounts of assets and liabilities and income and expense reported at the date of the financial statements. The Group Audit Committee reviews these areas of judgement and estimates and the appropriateness of significant accounting policies adopted in the preparation of these interim financial statements.

In addition to the critical accounting judgements disclosed in note 1 of the Group's 2019 Annual Report (which have remained critical for the six months ended June 2020) and in light of the COVID-19 pandemic, management have further considered the following areas of judgement:

| Area | Critical accounting judgements In addition to the goodwill impairment assessment, as a result of the COVID-19 impacts to the Group's expected future AuMA and cash flows described above, the Group has also reassessed the surplus in the recoverable amount of the Group's deferred tax assets over the taxable profits contained in the latest three-year forecast. There has been no impact on the current value of the deferred tax assets. Sensitivity analysis demonstrates that the Group's deferred tax assets remain recoverable after a decrease in profitability over that future three-year period of up to 10%. There have been no major changes to the Group's capital and financial risk management as a result of COVID-19. Full capital and financial risk management disclosures are included within note 36 of the Group's 2019 Annual Report. Detailed discussion of the Group's performance and financial position to 30 June 2020 are included in the Financial Review.

Notes to the condensed consolidated interim financial statements for the six month period ended 30 June 2020

4: Acquisitions and discontinued operations

4(a): Business acquisitions

There have been no acquisitions during the period ended 30 June 2020.

Charles Derby Group Limited acquisition on 14 February 2019

The purchase price of £31 million has been 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 consistent with those disclosed in note 5(a) of the Group's 2019 Annual Report. The Group has recognised goodwill of £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 £13 million as disclosed in note 5(a) of the Group's 2019 Annual Report included a provision of £12 million in respect of pension transfer advice provided to certain Lighthouse clients between 2016 and 2018, prior to the Group's acquisition of Lighthouse in June 2019. As a result of an investigation by the FCA into DB pension transfer advice provided to British Steel employees by Lighthouse, and an additional number of complaints received during 2020, the Group has increased its scope for the provision to include all British 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 17). This resulted in an increase to the provision at acquisition of a further £12 million, which brought the provision balance to £24 million. Management have taken a prudent view with regards to insurance recoveries against the provision made while discussions with Lighthouse's insurers remain ongoing. Accordingly, an insurance recovery asset of £3 million related to the provision has been recognised at 30 June 2020, representing management's assessment of the fair value on a best estimate basis. A further review of the tax treatment has resulted in recognition of a deferred tax asset of £2 million. The impact upon the fair value of net assets acquired as a result of the British Steel DB pension transfer advice provision, insurance recovery asset and deferred tax asset at acquisition is a net liability of £19 million. The estimated fair value of net assets acquired in Lighthouse is assessed as £6 million and the Group has recognised goodwill of £40 million in relation to this acquisition.

4(b): 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.

£m	Notes	Six months 2020	Six months 2019 (restated)	Full year 2019
Income
Gross earned premiums		-	76	145
Premiums ceded to reinsurers		-	(43)	(86)
Net earned premiums		-	33	59
Fee income and other income from service activities¹		-	95	164
Investment return¹		-	1,004	1,386
Total income		-	1,132	1,609
Expenses
Claims and benefits paid		-	(46)	(98)
Reinsurance recoveries		-	33	72
Net insurance claims and benefits incurred		-	(13)	(26)
Change in reinsurance assets and liabilities		-	78	121
Change in insurance contract liabilities		-	(91)	(134)
Change in investment contract liabilities		-	(991)	(1,364)
Fee and commission expenses, and other acquisition costs		-	(23)	(45)
Other operating and administrative expenses		-	(16)	(8)
Total expenses		-	(1,056)	(1,456)
(Loss)/profit on sale of operations before tax²		(1)	-	103
(Loss)/profit before tax from discontinued operations		(1)	76	256
Tax expense attributable to policyholder returns	7(a)	-	(59)	(76)
(Loss)/profit before tax attributable to equity holders from discontinued operations		(1)	17	180
Income tax expense	7(a)	-	(61)	(89)
Less: tax expense attributable to policyholder returns		-	59	76
Tax expense attributable to equity holders		-	(2)	(13)
(Loss)/profit after tax from discontinued operations		(1)	15	167
Attributable to:
Equity holders of Quilter plc		(1)	15	167
Earnings per ordinary share on profit attributable to ordinary shareholders of Quilter plc
Basic - from discontinued operations (pence)	8(b)	(0.1)	0.8	9.1
Diluted - from discontinued operations (pence)	8(b)	(0.1)	0.8	8.9

¹ In the period ended 30 June 2019, the Group made a restatement to reallocate £50 million from "Investment return" to "Fee income and other income from service activities" in order to correctly classify the revenue recognised and conform with the Group's presentation policy.
² An additional £1 million of transaction and separation costs relating to the historical sale of the QLA and Single Strategy businesses have been recognised in the six months ended 30 June 2020.

4(c): Discontinued operations - Statement of comprehensive income

£m	Six months 2020	Six months 2019	Full year 2019
(Loss)/profit after tax	(1)	15	167
Total comprehensive (expense)/income for the period from discontinued operations	(1)	15	167

4(d): Discontinued operations - Net cash flows

£m	Six months 2020	Six months 2019	Full year 2019
Total net cash flows used in operating activities	-	(1,424)	(3,789)
Total net cash (used in)/from investing activities	(9)	1,381	3,765
Total net cash used in financing activities	-	(90)	(130)
Net decrease in cash and cash equivalents	(9)	(133)	(154)

5: Alternative performance measures ("APMs")

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

Basis of preparation of adjusted profit

Adjusted 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. Adjusted profit is a non-GAAP measure which adjusts the IFRS profit for specified items as detailed in note 5(b). The definition of adjusted profit is the same as in the last annual financial statements.

£m	Notes	Six months 2020	Six months 2019	Full year 2019
		Continuing operations	Discontinued operations	Total
Advice and Wealth Management		41	-	41
Wealth Platforms		47	-	47
Head Office		(17)	-	(17)
Adjusted profit before tax		71	-	71
Reallocation of QLA costs		-	-	-
Adjusted profit before tax after reallocation	6(b)	71	-	71
Reconciliation to IFRS profit:
Goodwill impairment and impact of acquisition accounting	5(b)(i)	(23)	-	(23)
Profit on business disposals	4(b)	-	(1)	(1)
Business transformation costs	5(b)(ii)	(39)	-	(39)
Managed Separation costs	5(b)(iii)	-	-	-
Finance costs	5(b)(iv)	(5)	-	(5)
Policyholder tax adjustments	5(b)(v)	47	-	47
Customer remediation	5(b)(vi)	(5)	-	(5)
Total adjusting items before tax		(25)	(1)	(26)
Profit/(loss) before tax attributable to equity holders		46	(1)	45
Tax attributable to policyholder returns	7(a)	(38)	-	(38)
Income tax credit/(expense)	7(a),(b)	36	-	36
Profit/(loss) after tax		44	(1)	43

¹ Discontinued operations includes the results of the Quilter Life Assurance ("QLA") business in 2019.

5(b): Adjusting items

In determining adjusted profit before tax, certain adjustments are made to IFRS profit before tax to reflect the underlying performance of the Group. These are detailed below.

5(b)(i): Goodwill impairment and impact of acquisition 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 adjusted profit as well as the amortisation and impairment of acquired other intangible assets, any acquisition costs and finance costs related to the discounting of contingent consideration. The effect of these adjustments to determine adjusted profit are summarised below. All adjustments are in respect of continuing operations.# Note Six months 2020 Six months 2019 Full year 2019

Amortisation of other acquired intangible assets 10(a)

23
22
45

Acquisition related (income)/costs¹

(1)
3
6

Unwinding of discount on contingent consideration

1
1
3

Total goodwill impairment and impact of acquisition accounting

23
26
54

¹Acquisition related (income)/costs in the six months to 30 June 2020 include a £(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 costs include items such as transaction costs or deferred incentives arising on the acquisition of businesses.

5(b)(ii): Business transformation costs

Business transformation costs include four items: 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 period ended 30 June 2020, these costs totalled £39 million (30 June 2019: £35 million, 31 December 2019: £77 million) in aggregate, the principal components of which are described below:

UK Platform Transformation Programme

30 June 2020: £20 million
30 June 2019: £30 million
31 December 2019: £57 million

Following the soft launch last year, the programme completed a successful initial migration in February, with c.80% of Quilter Investment Platform assets expected to be migrated by the end of 2020, with completion of the project expected to be in early 2021. The total costs associated with extending the programme in this way are expected to be around £200 million, representing an increase of £15 million on previous guidance.

Quilter Investors' build out costs

30 June 2020: £(1) million
30 June 2019: £nil
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 and costs are now therefore minimal.

Optimisation Programme costs

30 June 2020: £19 million
30 June 2019: £5 million
31 December 2019: £18 million

The Group is continuing its phased, multi-year Optimisation Programme, targeting a 4 percentage point uplift in the Group's operating margin by 2021. Phase 1 is aiming to unify and simplify the Group through a number of efficiency initiatives that will deliver improvements in operational performance, incurring £19 million of costs in the period ended 30 June 2020.

Restructuring costs following disposal of Quilter Life Assurance

30 June 2020: £nil
30 June 2019: £nil
31 December 2019: £3 million

As a result of the disposal of QLA on 31 December 2019, the Group recognised £3 million as an adjusting item principally in respect of redundancy costs. The Group expects to incur further restructuring costs during the following 18 months, including the cost of decommissioning IT systems, as the Transitional Service Agreement with ReAssure (the acquirer) runs off and the remaining Quilter business is restructured following the disposal.

5(b)(iii): Managed Separation costs

One-off costs related to the Managed Separation from Old Mutual plc have been excluded from adjusted profit on the basis that they are not representative of the operating activity of the Group. During 2019 costs incurred primarily related to post-listing rebranding. These costs are not expected to persist in the long term as they relate to a fundamental restructuring of the Group. For the period ended 30 June 2020 these costs were £nil (30 June 2019: £2 million, 31 December 2019: £6 million).

5(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 adjusted profit. For the period ended 30 June 2020 finance costs were £5 million (30 June 2019: £5 million, 31 December 2019: £10 million).

5(b)(v): Policyholder tax adjustments

For the period ended 30 June 2020 the total of policyholder tax adjustments to adjusted profit is £47 million (30 June 2019: £(76) million, 31 December 2019: £(74) million) relating to both continuing and discontinued operations, as shown in note 7(c). Adjustments 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/(loss) before tax attributable to equity holders. For a further explanation of the impact of markets on the policyholder tax charge see note 7(a). Adjustments are also made to remove policyholder tax distortions from other non-operating adjusting items.

5(b)(vi): Customer remediation

A provision of £24 million for potential redress payable and related costs was established within the fair value of the Lighthouse assets and liabilities acquired at June 2019 in relation to advice provided to British Steel pension members. The methodology employed to assess the probable redress payable uses assumptions and estimation techniques which are consistent with principles under the FCA's FG17/9 "Guidance for firms on how to calculate redress for unsuitable defined benefit pension transfers". A further £5 million (30 June 2019: £nil) increase in the provision has been recognised in the income statement in the six months ended 30 June 2020, reflecting the impact of post-acquisition market and discount rate movements. There has been no impact on the income statement in the six months ended 30 June 2020 related to the associated insurance asset recoverable balance. This has been excluded from adjusted profit on the basis that the costs are not representative of the operating activity of the Group. Further details are provided in note 17. Within 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 ("FCA") thematic review and the FCA's guidance FG16/8 Fair treatment of long-standing customers in the life assurance sector. During 2019, £10 million (£6 million at 30 June 2019) of the provision was released (as detailed in note 17).

5(c): Reconciliation of IFRS income and expenses to 'Total net fee revenue' and '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: Net management fee, Total net fee revenue and Expenses as part of the Group's adjusted profit for continuing operations. Allocations are determined by management and aim to show the sources of profit (net of relevant directly attributable expenses). These allocations remain consistent from period to period to ensure comparability.

£m	Six months 2020	Six months 2019	Full year 2019
Net mgmt fees¹	Other revenue¹	Total net fee revenue¹	Expenses
Income
Fee income and other income from service activities	324	97	421
Investment return	-	(1,249)	(1,249)
Other income	-	-	-
Total income	324	(1,152)	(828)
Expenses
Change in investment contract liabilities	-	1,254	1,254
Fee and commission expenses, and other acquisition costs	(35)	(38)	(73)
Change in third party interest in consolidated funds	-	-	-
Other operating and administrative expenses	(7)	-	(7)
Finance costs	(2)	(2)	(6)
Total expenses	(42)	1,214	1,172
Tax credit attributable to policyholder returns	38	-	38
Profit/(loss) before tax attributable to equity holders from continuing operations	320	62	382
Adjusting items:
Goodwill impairment and impact of acquisition accounting	-	-	-
Business transformation costs	-	-	-
Finance costs	-	-	-
Customer remediation	-	-	-
Policyholder tax adjustments	(47)	-	(47)
Adjusting items	(47)	-	(47)
Total Group - continuing operations	273	62	335

£m	Six months 2020	Six months 2019	Full year 2019
Net mgmt fees¹	Other revenue¹	Total net fee revenue¹	Expenses
Income
Fee income and other income from service activities⁴	353	89	442
Investment return⁴	18	4,362	4,380
Other income	-	2	2
Total income	371	4,453	4,824
Expenses
Change in investment contract liabilities	-	(4,348)	(4,348)
Fee and commission expenses, and other acquisition costs	(61)	(39)	(100)
Change in third party interest in consolidated funds	-	-	-
Other operating and administrative expenses	(9)	-	(9)
Finance costs	-	(2)	(2)
Total expenses	(70)	(4,389)	(4,459)
Tax (expense)/credit attributable to policyholder returns	(78)	-	(78)
Profit/(loss) before tax attributable to equity holders from continuing operations	223	64	287
Adjusting items:
Goodwill impairment and impact of acquisition accounting	-	-	-
Business transformation costs	-	-	-
Managed Separation costs	-	-	-
Finance costs	-	-	-
Policyholder tax adjustments	61	-	61
Adjusting items	61	-	61
Total Group -# 6: Segmental information

6(a): Segmental presentation

The Group's operating segments comprise Advice and Wealth Management and Wealth Platforms, which is consistent with the way 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 in these condensed consolidated interim financial statements.

Adjusted profit is an Alternative Performance Measure ("APM") reported to the Group's management and Board. Management and the Board 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 current market prices. Intra-group recharges in respect of operating and administration expenses within businesses disclosed as discontinued operations are not adjusted for potential future changes to the level of those costs resulting from the disposal of those businesses. The segmental information in this note reflects the adjusted and IFRS profit measures and the assets and liabilities for each operating segment as provided to management and the Board. Income is further segmented into the geographic location of our businesses in note 6(d).

6(b)(i): Adjusted profit statement - segmental information for the six month period ended 30 June 2020

This reconciliation presents the Group's continuing operations split by operating segment, reconciling the IFRS income statement to pre-tax adjusted profit and to the Group's consolidated income statement on a line by line basis, to 'Profit/(loss) before tax attributable to equity holders' (for continuing operations only).

£m

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

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

6(b)(ii): Adjusted profit statement - segmental information for the six months ended 30 June 2019

£m

Operating segments	Notes	Advice and Wealth Management	Wealth Platforms	Head Office	Consolidation adjustments¹	Consolidated income statement
Income
Fee income and other income from service activities		246	198	-	6	450
Investment return		4,373	2	663	-	5,043
Other income		2	66	3	(50)	21
Segmental income		253	4,637	5	619	5,514
Expenses
Change in investment contract liabilities		-	(4,348)	-	-	(4,348)
Fee and commission expenses, and other acquisition costs		(47)	(56)	-	(87)	(190)
Change in third party interest in consolidated funds		-	-	-	(586)	(586)
Other operating and administrative expenses		(179)	(190)	(29)	54	(344)
Finance costs		(2)	(1)	(5)	-	(8)
Segmental expenses		(228)	(4,595)	(34)	(619)	(5,476)
Profit/(loss) before tax from continuing operations		25	42	(29)	-	38
Tax attributable to policyholder returns		-	(78)	-	-	(78)
Profit/(loss) before tax attributable to equity holders from continuing operations		25	(36)	(29)	-	(40)
Adjusted for non-operating items:
Goodwill impairment and impact of acquisition accounting	5(b)(i)	25	1	-	-	26
Business transformation costs	5(b)(ii)	-	30	5	-	35
Managed Separation costs	5(b)(iii)	-	-	2	-	2
Finance costs	5(b)(iv)	-	-	5	-	5
Policyholder tax adjustments	5(b)(v)	-	61	-	-	61
Adjusting items before tax		25	92	12	-	129
Adjusted profit/(loss) before tax - continuing operations		50	56	(17)	-	89

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

6(b)(iii): Adjusted profit statement - segmental information for the year ended 31 December 2019

In the Group's 2019 Annual Report, the reconciliation for full year 2019 included the results of the QLA business within adjusted 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.

£m

Operating segments	Notes	Advice and Wealth Management	Wealth Platforms	Head Office	Reallocation of QLA costs¹	Consolidation adjustments²	Consolidated income statement
Income
Fee income and other income from service activities		486	438	-	-	12	936
Investment return		10	5,823	3	-	1,030	6,866
Other income		1	160	6	-	(145)	22
Segmental income		497	6,421	9	-	897	7,824
Expenses
Insurance contract claims and changes in liabilities		-	(1)	-	-	-	(1)
Change in investment contract liabilities		-	(5,810)	-	-	-	(5,810)
Fee and commission expenses, and other acquisition costs		(73)	(110)	-	-	(111)	(294)
Change in third party interest in consolidated funds		-	-	-	-	(917)	(917)
Other operating and administrative expenses		(368)	(409)	(68)	(26)	131	(740)
Finance costs		(4)	(3)	(10)	-	-	(17)
Segmental expenses		(445)	(6,333)	(78)	(26)	(897)	(7,779)
Profit/(loss) before tax from continuing operations		52	88	(69)	(26)	-	45
Tax attributable to policyholder returns		-	(98)	-	-	-	(98)
Profit/(loss) before tax attributable to equity holders from continuing operations		52	(10)	(69)	(26)	-	(53)
Adjusted for non-operating items:
Goodwill impairment and impact of acquisition accounting	5(b)(i)	52	1	1	-	-	54
Business transformation costs	5(b)(ii)	(1)	58	20	-	-	77
Managed Separation costs	5(b)(iii)	-	1	5	-	-	6
Finance costs	5(b)(iv)	-	-	10	-	-	10
Policyholder tax adjustments	5(b)(v)	-	62	-	-	-	62
Adjusting items before tax		51	122	36	-	-	209
Adjusted profit/(loss) before tax after reallocation¹		103	112	(33)	(26)	-	156
Reallocation of QLA costs¹		-	-	-	26	-	26
Adjusted profit/(loss) before tax - continuing operations		103	112				## 6(c)(i): Statement of financial position - segmental information at 30 June 2020

	Notes	Advice & Wealth Management	Wealth Platforms	Head Office	Consolidation Adjustments¹	Total
Total Assets
Goodwill and intangible assets	10	444	134	-	-	578
Property, plant and equipment		27	107	1	-	135
Investments in associated undertakings		-	-	1	-	1
Contract costs		-	435	-	-	435
Loans and advances	32	203	-	-	-	235
Financial investments	11	51,974	-	5,898		57,872
Deferred tax assets	13	21	11	-	-	45
Current tax receivable		33	7	-	-	40
Trade, other receivables and other assets	258	237	6	65		566
Derivative assets		-	-	12		12
Cash and cash equivalents	14	399	721	590	757	2,467
Inter-segment funding - assets	3	12	-	(15)		-
Total assets		1,176	53,877	616	6,717	62,386
Liabilities
Investment contract liabilities	16	-	52,267	-	-	52,267
Third-party interests in consolidated funds		-	-	6,582		6,582
Provisions	17	56	22	10	-	88
Deferred tax liabilities	38	12	-	-		50
Current tax payable/(receivable)²	8	(7)	3	-		4
Borrowings and lease liabilities	24	107	199	-		330
Trade, other payables and other liabilities	300	438	23	82		843
Contract liabilities and deferred revenue		-	185	-	-	185
Derivative liabilities		-	-	72		72
Inter-segment funding - liabilities		-	-	15	(15)	-
Total liabilities		426	53,024	250	6,721	60,421
Total equity		1,965
Total equity and liabilities						62,386

¹Consolidation adjustments comprise the elimination of inter-segment transactions and the consolidation of investment funds.
²Current tax payable/(receivable) includes Group relief payable and receivable that net to ��nil on a consolidated basis but may appear as a receivable within individual segments.

6(c)(ii): Statement of financial position - segmental information at 30 June 2019

	Notes	Advice & Wealth Management	Wealth Platforms	Head Office	Discontinued Operations	Consolidation Adjustments¹	Total
Total Assets
Goodwill and intangible assets	10	453	134	-	-	-	587
Property, plant and equipment		33	54	3	(1)		89
Investments in associated undertakings		-	-	2	-	-	2
Contract costs		-	477	-	-	-	477
Loans and advances	27	186	7	-	-	-	220
Financial investments	11	1	50,001	-	6,421		56,423
Deferred tax assets	8	15	9	-	-		32
Current tax receivable		16	-	-	-		16
Trade, other receivables and other assets²	790	386	13	-	209	1,398
Derivative assets		-	-	-	24		24
Cash and cash equivalents	14	392	608	398	-	546	1,944
Assets of operations classified as held for sale³		-	-	-	12,324	(7)	12,317
Inter-segment funding - assets		-	12	-	-	(12)	-
Total assets		1,704	51,889	432	12,324	7,180	73,529
Liabilities
Investment contract liabilities	16	-	50,286	-	-	-	50,286
Third-party interests in consolidated funds		-	-	-	6,972		6,972
Provisions	17	19	20	6	-	-	45
Deferred tax liabilities	42	49	-	-	-		91
Current tax payable/(receivable)⁴	11	4	(11)	-	-		4
Borrowings	28	50	203	-	(1)		280
Trade, other payables and other liabilities	895	599	23	-	203	1,720
Contract Liabilities	1	191	-	-	-		192
Derivative liabilities		-	1	-	23		24
Liabilities of operations classified as held for sale³		-	-	-	11,988	(7)	11,981
Inter-segment funding - liabilities		-	-	12	-	(12)	-
Total liabilities		996	51,200	233	11,988	7,178	71,595
Total equity		1,934
Total equity and liabilities							73,529

¹Consolidation adjustments comprise the elimination of inter-segment transactions and the consolidation of investment funds.
²The Group's contract assets are included within Trade, other receivables and other assets, having previously been shown separately in the statement of financial position.
³Held for sale balances relate to the QLA business which was subsequently sold on 31 December 2019.
⁴Current tax payable/(receivable) includes Group relief payable and receivable that net to ��nil on a consolidated basis but may appear as a receivable within individual segments.

6(c)(iii): Statement of financial position - segmental information at 31 December 2019

	Notes	Advice & Wealth Management	Wealth Platforms	Head Office	Consolidation Adjustments¹	Total
Total Assets
Goodwill and intangible assets	10	458	134	-	-	592
Property, plant and equipment		30	111	2	-	143
Investments in associated undertakings		-	-	1	-	1
Contract costs		-	455	-	-	455
Loans and advances	31	180	6	-	-	217
Financial investments	11	1	52,249	-	7,095	59,345
Deferred tax assets	11	22	10	-	-	43
Current tax receivable		-	-	13	-	13
Trade, other receivables and other assets	207	177	3	37		424
Derivative assets		-	-	32		32
Cash and cash equivalents	14	383	725	838	527	2,473
Inter-segment funding - assets		-	12	-	(12)	-
Total assets		1,121	54,065	873	7,679	63,738
Liabilities
Investment contract liabilities	16	-	52,455	-	-	52,455
Third-party interests in consolidated funds		-	-	-	7,675	7,675
Provisions	17	28	26	10	-	64
Deferred tax liabilities	38	50	-	-		88
Current tax payable/(receivable)²	1	(7)	12	-		6
Borrowings	26	108	201	-		335
Trade, other payables and other liabilities	322	477	37	-	836
Contract liabilities and deferred revenue	1	190	-	-		191
Derivative liabilities		-	-	-	17	17
Inter-segment funding - liabilities		-	-	12	(12)	-
Total liabilities		416	53,299	272	7,680	61,667
Total equity		2,071
Total equity and liabilities						63,738

6(d): 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.

Six months 2020

��m	Advice and Wealth Management	Wealth Platforms	Head Office	Wealth Platforms	Consolidation adjustments	Total continuing operations	Discontinued operations
UK
Premium based fees	56	-	-	35	-	91	-
Fund based fees¹	169	82	-	47	-	298	-
Retrocessions received, intragroup	-	1	-	2	(3)	-	-
Fixed fees	-	1	-	14	-	15	-
Surrender charges	-	-	-	6	-	6	-
Other fee and commission income	-	11	-	-	7	18	-
Fee income and other income from service activities	225	95	-	104	4	428	-
Investment return	3	(919)	1	(335)	(297)	(1,547)	-
Other income	-	78	3	(1)	(69)	11	-
Total income	228	(746)	4	(232)	(362)	(1,108)	-
International

Six months 2019 (restated)

��m	Advice and Wealth Management	Wealth Platforms	Head Office	Wealth Platforms	Consolidation adjustments	Total continuing operations	Discontinued operations
UK
Gross earned premiums	-	-	-	1	-	1	76
Premiums ceded to reinsurers	-	-	-	(1)	-	(1)	(43)
Net earned premiums	-	-	-	-	-	-	33
Premium based fees	45	-	-	36	-	81	6
Fund based fees¹	201	86	-	51	-	338	33
Retrocessions received, intragroup	-	1	-	1	(2)	-	5
Fixed fees	-	1	-	14	-	15	1
Surrender charges	-	-	-	8	-	8	-
Other fee and commission income²	-	-	-	-	8	8	50
Fee income and other income from service activities²	246	88	-	110	6	450	95
Investment return²	5	2,748	2	1,625	663	5,043	1,004
Other income	2	82	3	-	(66)	21	-
Total income	253	2,918	5	1,735	603	5,514	1,132
International

¹Income from fiduciary activities is included within fund based fees.
²In the six month period ended 30 June 2019 the Group has made a restatement to reallocate ��50 million from "Investment return" to "Fee income and other income from service activities", within discontinued operations, to correctly classify the revenue recognised and conform with the Group's presentation policy.

Full year 2019

��m	Advice and Wealth Management	Wealth Platforms	Head Office	Wealth Platforms	Consolidation adjustments	Total continuing operations	Discontinued operations
UK
Gross earned premiums	-	-	-	1	-	1	145
Premiums ceded to reinsurers	-	-	-	(1)	-	(1)	(86)
Net earned premiums	-	-	-	-	-	-	59
Premium based fees	103	-	-	72	-	175	11
Fund based fees¹	383	175	-	101	-	659	65
Retrocessions received, intragroup	-	2	-	2	(4)	-	10
Fixed fees	-	3	-	28	-	31	2
Surrender charges	-	-	-	16	-	16	1
Other fee and commission income	-	39	-	-	16	55	75
Fee income and other income from service activities	486	219	-	219	12	936	164
Investment return	10	3,825	3	1,998	1,030	6,866	1,386
Other income	1	161	6	(1)	(145)	22	-
Total income	497	4,205	9	2,216	897	7,824	1,609
International

7: Tax

7(a): Tax charged to the income statement

��m	Note	Six months 2020	Six months 2019	Full year 2019
Current tax
United Kingdom		1	15	33
International		2	2	5
Adjustments to current tax in respect of prior periods		-	-	(11)
Total current tax charge		3	17	27
Deferred tax
Origination and reversal of temporary differences		(38)	51	40
Effect on deferred tax of changes in tax rates		(1)	2	2
Adjustments to deferred tax in respect of prior periods		-	-	(3)
Total deferred tax (credit)/charge		(39)	53	39
Total tax (credited)/charged to income statement - continuing operations		(36)	70	66
Total tax charged to income statement - discontinued operations	4(b)	-	61	89
Total tax (credited)/charged to income statement		(36)	131	155
Attributable to policyholder returns - continuing operations		(38)	78	98
Attributable to equity holders - continuing operations		2	(8)	(32)
Total tax (credited)/charged to income statement - continuing operations		(36)	70	66
Attributable to policyholder returns - discontinued operations	4(b)	-	59	76
Attributable to equity holders - discontinued operations		-	2	13
Total tax charged to income statement - discontinued operations		-	61	89
Total tax (credited)/charged to income statement		(36)	131	155
Policyholder tax

This "policyholder tax" is an element of total tax expense. To make the tax expense more meaningful, tax attributable to policyholder returns and tax attributable to 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 ��(36) million for the year ended 30 June 2020, compared to an expense of ��70 million for the prior year. This income tax (credit)/ 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 adjustment is made to adjusted profit to remove these distortions, as explained further in note 5(b)(v).

Significant market volatility during the period ended 30 June 2020 resulted in investment losses of ��175 million on products subject to policyholder tax. The loss is a component of the total "investment return" loss of ��(1,547) million shown in the income statement. The impact of the ��175 million investment return loss is the primary reason for the ��(38) million tax credit attributable to policyholder returns in respect of the continuing business for the period ended 30 June 2020 (30 June 2019: ��78 million charge in respect of continuing operations and ��59 million charge in respect of discontinued operations).

7(b): Reconciliation of total income tax expense

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

Note	Six months 2020	Six months 2019	Full year 2019

Profit before tax from continuing operations	8	38	45
Tax at UK standard rate of 19% (2019: 19%)		1	7
Different tax rate or basis on overseas operations		(3)	(3)
Untaxed and low taxed income		(4)	(1)
Disallowable expenses		2	1
Adjustments to current tax in respect of prior years		-	-
Net movement on deferred tax assets not recognised		-	(1)
Effect on deferred tax of changes in tax rates		(1)	2
Adjustments to deferred tax in respect of prior years		-	-
Income tax attributable to policyholder returns		(31)	65
Total tax (credited)/charged to income statement - continuing operations		(36)	70
Total tax charged to income statement - discontinued operations	4(b)	-	61
Total tax (credited)/charged to income statement		(36)	131

7(c): Reconciliation of income tax expense in the income statement to income tax on adjusted profit

Notes	Six months 2020	Six months 2019	Full year 2019

Income tax (credit)/expense on continuing operations¹		(36)	70
Tax on adjusting items
Goodwill impairment and impact of acquisition accounting		-	4
Business transformation costs		8	7
Managed Separation costs		-	-
Finance costs		1	1
Customer remediation		1	-
Tax adjusting items
Policyholder tax adjustments	5(b)(v)	47	(61)
Other shareholder tax adjustments²		(5)	9
Tax on adjusting items - continuing operations		52	(40)
Less: tax attributable to policyholder returns within adjusted profit - continuing operations³		(9)	(17)
Tax charged on adjusted profit - continuing operations		7	13
Reversal of income tax expense on the reallocation of QLA costs		-	-
Tax charged on adjusted profit - continuing operations before the reallocation of QLA costs		7	13
Income tax expense on discontinued operations¹	4(b)	-	61
Tax on adjusting items
Customer remediation		-	(1)
Tax adjusting items
Policyholder tax adjustments	5(b)(v)	-	(15)
Other shareholder tax adjustments²		-	(1)
Tax on adjusting items - discontinued operations		-	(17)
Less: Tax attributable to policyholder returns within adjusted profit - discontinued operations³		-	(44)
Tax charged on adjusted profit - discontinued operations		-	-
Reversal of income tax credit on the reallocation of QLA costs		-	-
Tax charged on adjusted profit - discontinued operations before the reallocation of QLA costs		-	-
Tax charged on total adjusted profit		7	13

¹Includes both tax attributable to policyholders and shareholders, in compliance with IFRS reporting.
²Other shareholder tax adjustments comprise the reallocation of adjustments from policyholder tax as explained in note 5(b)(v).
³Adjusted profit treats policyholder tax as a pre-tax charge (this includes policyholder tax under IFRS and the policyholder tax adjustments) and are therefore removed from tax charge on adjusted profit.

8: Earnings per share

The Group calculates earnings per share ("EPS") on a number of different bases. IFRS requires the calculation of basic and diluted EPS, Adjusted EPS reflects earnings that are consistent with the Group's adjusted profit measure before and after the reallocation of QLA costs, and Headline earnings per share ("HEPS") 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.

Basic 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 period. The weighted average number of shares excludes Quilter plc shares held within Employee Benefit Trusts ("EBTs") to satisfy the Group's obligations under employee share awards, and Quilter plc shares held in consolidated funds ("Own shares"). 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 period.

The Group is also required to calculate HEPS in accordance with the Johannesburg Stock Exchange Limited ("JSE") Listing Requirements, determined by reference to the South African Institute of Chartered Accountants' circular 02/2015 Headline Earnings. Disclosure of HEPS is not a requirement of IFRS, but it is a commonly used measure of earnings in South Africa.

Source of guidance	Notes	Six months 2020	Six months 2019	Full year 2019

Basic earnings per share	IFRS	8(b)	2.4	(0.9)
Diluted earnings per share	IFRS	8(b)	2.3	(0.9)
Adjusted basic earnings per share	Group policy	8(b)	3.6	5.6
Adjusted diluted earnings per share	Group policy	8(b)	3.5	5.5
Headline basic earnings per share (net of tax)	JSE Listing Requirements	8(c)	2.4	(0.9)
Headline diluted earnings per share (net of tax)	JSE Listing Requirements	8(c)	2.4	(0.9)

8(a): Weighted average number of Ordinary Shares

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

Six months 2020	Six months 2019	Full year 2019

Weighted average number of Ordinary Shares	1,879	1,902
Treasury shares including those held in EBTs	(78)	(68)
Basic weighted average number of Ordinary Shares	1,801	1,834
Adjustment for dilutive share awards and options	36	18
Diluted weighted average number of Ordinary Shares	1,837	1,852

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

Notes	Continuing operations	Discontinued operations	Total	Continuing operations	Discontinued operations	Total	Continuing operations	Discontinued operations	Total
	Six months 2020	Six months 2020	Six months 2020	Six months 2019	Six months 2019	Six months 2019	Full year 2019	Full year 2019	Full year 2019
Profit/(loss) after tax		(1)	43	(32)	15	(17)	(21)	167	146
Total adjusting items before tax	5(a)	25	1	26	129	9	138	209	(101)
Tax on adjusting items	7(c)	(52)	-	(52)	40	17	57	13	17
Less: Policyholder tax adjustments	7(c)	47	-	47	(61)	(15)	(76)	(62)	(12)
Adjusted profit after tax after reallocation		64	-	64	76	26	102	139	71
Reversal of:
Reallocation of QLA costs¹		-	-	-	-	-	-	26	(26)
Income tax on reallocation of QLA costs		-	-	-	-	-	-	(5)	5
Adjusted profit after tax		64	-	64	76	26	102	160	50

¹Reallocation of QLA costs includes ��26 million of costs previously reported as part of the QLA business which have been reclassified from discontinued to continuing operations as these costs did not transfer to ReAssure on disposal at 31 December 2019, as reported in the Group's 2019 Annual Report.# Six Months 2020 and Six Months 2019 Earnings Per Share

Post-tax profit measure used

Measure	Continuing operations	Discontinued operations	Total	Continuing operations	Discontinued operations	Total	Continuing operations	Discontinued operations	Total
Six months 2020	Six months 2019	Full year 2019
Pence	Pence	Pence	Pence	Pence	Pence	Pence	Pence	Pence	Pence
Basic EPS IFRS profit	2.5	(0.1)	2.4	(1.7)	0.8	(0.9)	(1.1)	9.1	8.0
Diluted EPS IFRS profit	2.4	(0.1)	2.3	(1.7)	0.8	(0.9)	(1.1)	8.9	7.8
Adjusted basic EPS Adjusted profit	3.6	-	3.6	4.1	1.5	5.6	8.7	2.7	11.4
Adjusted diluted EPS Adjusted profit	3.5	-	3.5	4.1	1.4	5.5	8.6	2.7	11.3
Adjusted basic EPS after reallocation¹	N/A	N/A	N/A	N/A	N/A	N/A	7.5	3.9	11.4
Adjusted diluted EPS after reallocation¹	N/A	N/A	N/A	N/A	N/A	N/A	7.5	3.8	11.3

8(c): Headline earnings per share

��m	Six months 2020	Six months 2019	Full year 2019
	Gross	Net of tax	Gross
Profit/(loss) attributable to ordinary equity holders	43	(17)	146
Adjusting items:
Less: profit on business disposals	1	1	-
Headline earnings	44	(17)	43
Headline basic EPS (pence)	2.4	(0.9)	2.3
Headline diluted EPS (pence)	2.4	(0.9)	2.3

9: Dividends

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

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 Benefit Trusts.

10: Goodwill and intangible assets

10(a): Analysis of goodwill and intangible assets

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

��m	Gross amount	1 January 2019	Acquisitions through business combinations	Additions	Transfer to non-current assets held for sale	30 June 2019	Acquisitions through business combinations	Additions	Disposals	Other movements¹	31 December 2019	Acquisitions through business combinations²	Additions	30 June 2020
Goodwill	314	100	380	794	52	-	36	88	16	-	13	29	-	13
Software development costs	100	380	794	52	-	36	88	16	-	13	29	-	13	7
Other intangible assets	380	794	52	36	88	104	13	29	(4)	(4)	(4)	-	-	104
Total	794	88	4	(30)	856	29	1	(8)	1	879	7	3	889

Amortisation and other movements	1 January 2019	Amortisation charge for the period	30 June 2019	Amortisation charge for the period	Disposals	Other movements¹	31 December 2019	Amortisation charge for the period	30 June 2020

	-	(95)	(149)	(244)	-	(3)	(22)	(25)	-	4	8	(4)	(287)	(1)
Amortisation and other movements	-	(95)	(149)	(244)	-	(3)	(22)	(25)	-	4	8	(4)	(287)	(1)

Carrying amount	30 June 2019	31 December 2019	30 June 2020
Goodwill	336	350	357
Software development costs	6	8	10
Other intangible assets	245	234	211
Total	587	592	578

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 the period ended 30 June 2020, there have been fair value adjustments of ��7 million made to the net assets acquired in Lighthouse, with a corresponding increase in goodwill. Refer to note 4(a) for further details.

10(b): Analysis of other intangible assets

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

Distribution channel assets are in relation to various Quilter Financial Planning businesses. Customer relationship assets are largely in relation to the Quilter Cheviot and Quilter Financial Planning businesses. The brand asset is in relation to the Quilter Cheviot business.

10(c): Allocation of goodwill to cash generating units ("CGUs") and impairment testing

The Group's CGUs are based on the Advice and Wealth Management and Wealth Platforms operating segments. Goodwill is allocated to these CGUs as follows:

��m	30 June 2020	30 June 2019	31 December 2019
Goodwill (net carrying amount)
Advice and Wealth Management	226	205	219
Wealth Platforms	131	131	131
Goodwill (as per the Statement of Financial Position)	357	336	350
Goodwill held for sale	-	30	-
Total Goodwill	357	366	350

Impairment review

In accordance with the requirements of IAS 36 Impairment of Assets, goodwill in both the Advice and Wealth Management and Wealth 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 ("NCCF"), significant falls in profits and an increase in the discount rate. An indication of impairment has arisen during the period, given the significant adverse impact that the COVID-19 pandemic has had on global equity markets and the effect this has on the Group's AuMA and revenue. Consequently, the goodwill balance has been tested for impairment at 30 June 2020 and continues to demonstrate a surplus of the recoverable amount over the carrying value of the CGUs. As a result, no impairment is required.

The impact on expected future cash flows, resulting from equity market falls relating to COVID-19, has reduced the surplus of the recoverable amount over the carrying value since 31 December 2019. The most significant impact is seen within the Advice and Wealth Management segment, where AuMA is more correlated to equity market movements and is the key driver for future cash flows. 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. This highlights that further adverse movements to the key assumptions used in the CGU value-in-use calculation would be required before impairment is indicated.

	Advice and Wealth Management	Wealth Platforms
Reduction in forecast cash flows	31%	54%
Increase in discount rate¹	105%	234%

¹Percentage increase required based on current discount rate of 9.7%.

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 which have a direct impact on the level of the Group's fee income, as demonstrated by the recent volatility resulting from COVID-19.

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 ("SII") calculations. The value of in-force ("VIF") 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 adjusted 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. 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 COVID-19 and anticipated equity market growth on the Group's future cash flows. These cash flows grow 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 0.6% (2019: 1.7%). Market share and market growth information are also used to inform the expected volumes of future new business.

IAS 36 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 9.7% (2019: 10.0%) to discount future expected business plan cash flows across its two 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). When 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.

11: Financial investments

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

��m	30 June 2020	30 June 2019	31 December 2019
Government and government-guaranteed securities	567	1,055	1,018
Other debt securities, preference shares and debentures	2,040	2,449	2,160
Equity securities	12,334	12,339	12,051
Pooled investments¹	42,920	50,259	44,101
Short-term funds and securities treated as investments	11	25	15
Total financial investments	57,872	66,127	59,345
Less: financial investments classified as held for sale	-	(9,704)	-
Total financial investments net of held for sale	57,872	56,423	59,345
Recoverable within 12 months	57,871	65,987	59,344
Recoverable after 12 months	1	140	1
Total financial investments	57,872	66,127	59,345

¹As at 30 June 2019, the Group has corrected the value of pooled investments which was previously stated as ��50,261 million. This has not changed the closing balance of total financial investments at 30 June 2019, which remains at ��66,127 million.

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.

12: 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 13. The Group's exposure to various risks associated with financial instruments is discussed in the 2019 Annual Report.

30 June 2020

	��m	Fair value Mandatorily at FVTPL	Fair value Designated at FVTPL	Amortised cost	Non-financial assets and liabilities	Total Assets
Assets
Investments in associated undertakings¹	1	-	-	-	1	1
Loans and advances	235	-	-	235	-	235
Financial investments	57,872	57,870	2	-	-	57,872
Trade, other receivables and other assets	566	-	-	508	58	566
Derivative assets	12	12	-	-	-	12
Cash and cash equivalents	2,467	1,225	-	1,242	-	2,467
Total assets that include financial instruments	61,153	59,097	2	1,985	59	61,153
Total other non-financial assets	1,233	-	-	-	1,233	1,233
Total assets	62,386	59,097	2	1,985	1,292	62,386
Liabilities
Investment contract liabilities	52,267	-	-	-	52,267	52,267
Third-party interests in consolidation of funds	6,582	-	-	-	6,582	6,582
Borrowings and lease liabilities	330	-	-	330	-	330
Trade, other payables and other liabilities	843	-	-	738	105	843
Derivative liabilities	72	72	-	-	-	72
Total liabilities that include financial instruments	60,094	72	-	1,068	105	60,094
Total other non-financial liabilities	327	-	-	-	327	327
Total liabilities	60,421	72	-	1,068	432	60,421

¹Investments in associated undertakings classified as non-financial assets and liabilities are equity accounted.

30 June 2019

	��m	Fair value Mandatorily at FVTPL	Fair value Designated at FVTPL	Amortised cost	Non-financial assets and liabilities	Total Assets
Assets
Investments in associated undertaking¹	2	-	-	-	2	2
Loans and advances	220	-	-	220	-	220
Financial investments	56,423	56,421	2	-	-	56,423
Trade, other receivables and other assets	1,398	-	-	1,354	44	1,398
Derivative financial instruments	24	24	-	-	-	24
Cash and cash equivalents	1,944	1,072	-	872	-	1,944
Total assets that include financial instruments	60,011	57,517	2	2,446	46	60,011
Total other non-financial assets	1,201	-	-	-	1,201	1,201
Total assets net of held for sale	61,212	57,517	2	2,446	1,247	61,212
Total assets classified as held for sale	12,317	11,421	137	86	673	12,317
Total assets	73,529	68,938	139	2,532	1,920	73,529
Liabilities
Investment contract liabilities	50,286	-	-	-	50,286	50,286
Third-party interest in consolidation of funds	6,972	-	-	-	6,972	6,972
Borrowings	280	-	-	280	-	280
Trade, other payables and other liabilities	1,720	-	-	1,587	133	1,720
Derivative financial instruments	24	24	-	-	-	24
Total liabilities that include financial instruments	59,282	24	-	1,867	133	59,282
Total other non-financial liabilities	332	-	-	-	332	332
Total liabilities net of held for sale	59,614	24	-	1,867	465	59,614
Total liabilities classified as held for sale	11,981	11,040	-	125	816	11,981
Total liabilities	71,595	11,064	-	1,992	1,281	71,595

¹Investments in associated undertakings classified as non-financial assets and liabilities are equity accounted.

31 December 2019

	��m	Fair value Mandatorily at FVTPL	Fair value Designated at FVTPL	Amortised cost	Non-financial assets and liabilities	Total Assets
Assets
Investments in associated undertakings¹	1	-	-	-	1	1
Loans and advances	217	-	-	217	-	217
Financial investments	59,345	59,343	2	-	-	59,345
Trade, other receivables and other assets	424	-	-	373	51	424
Derivative assets	32	32	-	-	-	32
Cash and cash equivalents	2,473	1,159	-	1,314	-	2,473
Total assets that include financial instruments	62,492	60,534	2	1,904	52	62,492
Total other non-financial assets	1,246	-	-	-	1,246	1,246
Total assets	63,738	60,534	2	1,904	1,298	63,738
Liabilities
Investment contract liabilities	52,455	-	-	-	52,455	52,455
Third-party interests in consolidation of funds	7,675	-	-	-	7,675	7,675
Borrowings	335	-	-	335	-	335
Trade, other payables and other liabilities	836	-	-	730	106	836
Derivative liabilities	17	17	-	-	-	17
Total liabilities that include financial instruments	61,318	17	-	1,065	106	61,318
Total other non-financial liabilities	349	-	-	-	349	349
Total liabilities	61,667	17	-	1,065	455	61,667

¹Investments in associated undertakings classified as non-financial assets and liabilities are equity accounted.

13: Fair value methodology

This section explains the judgements and estimates made in determining the fair values of financial instruments that are recognised and measured at fair value in the financial statements. Classifying financial instruments into the three levels of fair value hierarchy (see note 13(b)), prescribed under IFRS, provides an indication about the reliability of inputs used in determining fair value.

13(a): Determination of fair value

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

for units in unit trusts and shares in open-ended investment companies, fair value is determined by reference to published quoted prices representing exit values in an active market;
for equity and debt securities not actively traded in organised markets and where the price cannot be retrieved, the fair value is determined by reference to similar instruments for which market observable prices exist;
for assets that have been suspended from trading on an active market, the last published price is used. Many suspended assets are still regularly priced. At the reporting date all suspended assets are assessed for impairment; and
where the assets are private 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. Where assets are valued by the Group, the general principles applied to those instruments measured at fair value are outlined below:

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.

Financial investments

Financial investments include government and government-guaranteed securities, listed and unlisted debt securities, preference shares and debentures, listed and unlisted equity securities, listed and unlisted pooled investments (see below), short-term funds and securities treated as investments and certain other securities. Pooled investments represent the Group's holdings of shares/units in open-ended investment companies, unit trusts, mutual funds and similar investment vehicles. Pooled investments are recognised at fair value. The fair values of pooled investments are based on widely published prices that are regularly updated. Other financial investments that are measured at fair value use observable market prices where available. In the absence of observable market prices, these investments and securities are fair valued 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

Borrowings and lease liabilities are stated at amortised cost.

13(b): Fair value hierarchy

Fair values are determined according to the following hierarchy:

| Description of hierarchy | Types of instruments classified in the respective levels |
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13(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 majority 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 ��nil from Level 1 to Level 2 during the year (30 June 2019: ��167 million, 31 December 2019: ��139 million).

There were transfers of financial investments of ��nil from Level 2 to Level 1 during the year (30 June 2019: ��55 million, 31 December 2019: ��76 million).

These movements are matched exactly by transfers of investment contract liabilities.

See note 13(e) for the reconciliation of Level 3 financial instruments.

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

The majority of the Group's financial assets are measured using quoted market prices for identical instruments in active markets (Level 1) and there have been no significant changes during the year. The linked assets are held to cover the liabilities for linked investment contracts (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 12 for full details).

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

The tables below further analyse the Group's financial assets and liabilities measured at fair value by the fair value hierarchy described in note 13(b):

��m	Level 1	Level 2	Level 3	Total
Financial assets measured at fair value
Mandatorily (fair value through profit or loss)	45,594	11,254	2,462	59,310
Loans and advances	203	-	-	203
Financial investments	44,166	11,242	2,462	57,870
Cash and cash equivalents	1,225	-	-	1,225
Derivative assets	-	12	-	12
Designated (fair value through profit or loss)	2	-	-	2
Financial investments	2	-	-	2
Total assets measured at fair value	45,596	11,254	2,462	59,312
Financial liabilities measured at fair value
Mandatorily (fair value through profit or loss)	49,405	7,054	2,462	58,921
Investment contract liabilities	49,405	400	2,462	52,267
Third-party interests in consolidated funds	-	6,582	-	6,582
Derivative liabilities	-	72	-	72
Total liabilities measured at fair value	49,405	7,054	2,462	58,921

��m	Level 1	Level 2	Level 3	Total
Financial assets measured at fair value
Mandatorily (fair value through profit or loss)	44,024	12,259	1,420	57,703
Loans and advances	186	-	-	186
Financial investments	42,766	12,235	1,420	56,421
Cash and cash equivalents	1,072	-	-	1,072
Derivative assets	-	24	-	24
Designated (fair value through profit or loss)	2	-	-	2
Financial investments	2	-	-	2
Total assets net of held for sale	44,026	12,259	1,420	57,705
Total assets classified as held for sale	11,535	22	1	11,558
Total assets measured at fair value	55,561	12,281	1,421	69,263
Financial liabilities measured at fair value
Mandatorily (fair value through profit or loss)	48,481	7,381	1,420	57,282
Investment contract liabilities	48,481	385	1,420	50,286
Third-party interests in consolidated funds	-	6,972	-	6,972
Derivative liabilities	-	24	-	24
Total liabilities net of held for sale	48,481	7,381	1,420	57,282
Total liabilities classified as held for sale	11,017	22	1	11,040
Total liabilities measured at fair value	59,498	7,403	1,421	68,322

��m	Level 1	Level 2	Level 3	Total
Financial assets measured at fair value
Mandatorily (fair value through profit or loss)	46,902	12,095	1,717	60,714
Loans and advances	180	-	-	180
Financial investments	45,563	12,063	1,717	59,343
Cash and cash equivalents	1,159	-	-	1,159
Derivative assets	-	32	-	32
Designated (fair value through profit or loss)	2	-	-	2
Financial investments	2	-	-	2
Total assets measured at fair value	46,904	12,095	1,717	60,716
Financial liabilities measured at fair value
Mandatorily (fair value through profit or loss)	50,315	8,115	1,717	60,147
Investment contract liabilities	50,315	423	1,717	52,455
Third-party interests in consolidated funds	-	7,675	-	7,675
Derivative liabilities	-	17	-	17
Total liabilities measured at fair value	50,315	8,115	1,717	60,147

13(e): Level 3 fair value hierarchy disclosure

All of the assets that are classified as Level 3 are held within linked policyholder funds. This means that all of the investment risk associated with these assets is borne by policyholders and that 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.The table below reconciles the opening balance of Level 3 financial assets to the closing balance at each period end:

��m	30 June 2020	30 June 2019	31 December 2019
At beginning of the year	1,717	1,154	1,154
Total net fair value (losses)/gains recognised in:
- profit or loss	(3)	68	(20)
Purchases	-	31	314
Sales	(2)	(3)	(24)
Transfers in	887	210	369
Transfers out	(139)	(36)	(71)
Foreign exchange and other	2	(3)	(5)
Total Level 3 financial assets	2,462	1,421	1,717
Unrealised fair value (losses)/gains relating to assets held at the period end recognised in:
- profit or loss	(3)	68	(20)

1The opening balance for 2019 includes a ��3m shareholder investment in an unlisted equity, the Charles Derby Group; 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 period total ��887 million (30 June 2019: ��210 million, 31 December 2019: ��369 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 showed within Level 1 predominately due to the COVID-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 period comprise ��139 million (30 June 2019: ��36 million, 31 December 2019: ��71 million) which is due to a combination of stale priced assets that were not previously being repriced and that have been transferred into Level 2 as they are now actively priced, and during 2020 a suspended fund 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:

��m	30 June 2020	30 June 2019	31 December 2019
Pooled investments	1,082	245	361
Unlisted and stale price pooled investments	175	129	133
Suspended funds	907	116	228
Private equity investments	1,380	1,176	1,356
Total Level 3 financial assets	2,462	1,421	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.

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

��m	30 June 2020	30 June 2019	31 December 2019
At beginning of the year	1,717	1,151	1,151
Total net fair value (losses)/gains recognised in:
- profit or loss	(3)	68	(20)
Purchases	-	31	314
Sales	(2)	(3)	(24)
Transfers in	887	210	369
Transfers out	(139)	(36)	(71)
Foreign exchange and other	2	-	(2)
Total Level 3 financial liabilities	2,462	1,421	1,717
Unrealised fair value (losses)/gains relating to liabilities held at the period end recognised in:
- profit or loss	(3)	68	(20)

13(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 13(a) above, including the valuation techniques applied when significant unobservable assumptions are used to value Level 3 assets. The majority 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% change in the value of the financial asset or liability (30 June 2019: 10%, 31 December 2019: 10%), representing a reasonable possible alternative judgement 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 ��246 million to the reported fair value of Level 3 assets, both favourable and unfavourable (30 June 2019: ��142 million, 31 December 2019: ��172 million). As described in note 13(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.

13(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:

Trade, other receivables, and other assets: Level 3
Trade, other payables, and other liabilities: 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. 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 FVTPL. The loans and advances that are held at amortised cost would be classified as Level 3 in the fair value hierarchy. Borrowed funds are financial liabilities held at amortised cost and therefore not carried at fair value. Borrowed funds relate to subordinated liabilities and would be classified as Level 2 in the fair value hierarchy. Lease liabilities valued under IFRS 16 are held at amortised cost and therefore not carried at fair value. They would be classified as Level 3 in the fair value hierarchy.

14: Analysis of cash and cash equivalents

��m	30 June 2020	30 June 2019	31 December 2019
Cash at bank	485	369	787
Money market funds	1,225	1,410	1,159
Cash and cash equivalents in consolidated funds	757	546	527
Total cash and cash equivalents per consolidated statement of cash flows	2,467	2,325	2,473
Less: cash within held for sale	-	381	-
Total cash and cash equivalents per statement of financial position	2,467	1,944	2,473

Management consider that cash and cash equivalents are materially available for use in the Group's day-to-day operations, except for amounts held in consolidated funds of ��757 million (30 June 2019: ��546 million, 31 December 2019: ��527 million).

15: 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 1,856,264,234 Ordinary Shares of 7p each with an aggregated nominal value of ��129,938,496 (30 June 2019 and 31 December 2019: 1,902,251,098 Ordinary Shares of 7p each with an aggregated nominal value of ��133,157,577). This note gives details of the Company's Ordinary Share capital and shows the movements during the period:

	Number of shares	Nominal value (��m)	Share premium (��m)
At 1 January 2019	1,902,251,098	133	58
At 31 December 2019	1,902,251,098	133	58
Shares cancelled through share buyback programme1	(45,986,864)	(3)	-
At 30 June 2020	1,856,264,234	130	58

1On 11 March 2020 the Company announced a share buyback programme to purchase shares, up to a maximum value of ��375 million, in order to reduce the share capital of the Company. The programme commenced on 11 March 2020 and will continue into 2021. As part of Tranche 1 of the programme, which completed in June 2020, the Company has acquired 43,217,594 shares for a total consideration of ��50 million, and incurred additional costs of ��2 million. Tranche 2 of the programme commenced in June 2020. As part of the second tranche a further 2,769,270 shares have been purchased for ��4 million up to 30 June 2020. The shares from both tranches, which have a nominal value of ��3 million, have subsequently been cancelled, giving rise to a capital redemption reserve of the same value as required by the Companies Act 2006.# 16: Investment contract liabilities

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

��m

	30 June 2020	30 June 2019	31 December 2019
	Gross Re- insurance Net	Gross Re- insurance Net	Gross Re- insurance Net
Carrying amount at 1 January	52,455 - 52,455	56,450 (1,671) 54,779	56,450 (1,671) 54,779
From continuing operations
Fair value movements	(1,668) - (1,668)	4,002 - 4,002	5,091 - 5,091
Investment income	414 - 414	346 - 346	719 - 719
Movements arising from investment return	(1,254) - (1,254)	4,348 - 4,348	5,810 - 5,810
From discontinued operations
Fair value movements	- - -	1,078 (159) 919	1,427 (205) 1,222
Investment income	- - -	72 - 72	142 - 142
Movements arising from investment return	- - -	1,150 (159) 991	1,569 (205) 1,364
Contributions received	2,551 - 2,551	2,747 315 3,062	5,718 1,148 6,866
Maturities	(40) - (40)	(86) - (86)	(166) - (166)
Withdrawals and surrenders	(1,590) - (1,590)	(3,189) - (3,189)	(7,419) - (7,419)
Claims and benefits	(25) - (25)	(98) - (98)	(205) - (205)
Other movements	- - -	(1) (1) (2)	2 (1) 1
Change in liability	(358) - (358)	4,871 155 5,026	5,309 942 6,251
Currency translation loss/(gain)	170 - 170	5 - 5	(121) - (121)
Transfer to held for sale	- - -	(11,040) 1,516 (9,524)	- - -
Disposal of subsidiaries	- - -	- - -	(9,183) 729 (8,454)
Investment contract liabilities	52,267 - 52,267	50,286 - 50,286	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 ��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 "recoverability test"). If this is the case, then the contract costs asset is restricted to the recoverable amount. For linked contracts, the assumptions are on a best estimate basis. Following the sale of QLA (see note 4(b)) the Group no longer has any pure insurance contracts. Within 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 six months ended 30 June 2020 unbundled insurance premiums of ��1 million (30 June 2019: ��1 million, 31 December 2019: ��1 million) are offset by ��(1) million (30 June 2019: ��(1) million, 31 December 2019: ��(1) million) of premiums ceded to reinsurers.

17: Provisions

��m

	30 June 2020	30 June 2019	31 December 2019
	Compensation provisions Sale of QLA Sale of Single Strategy business Other Total	Compensation provisions Sale of QLA Sale of Single Strategy business Other Total	Compensation provisions Sale of QLA Sale of Single Strategy business Other Total
Balance at beginning of the year	31 6 10 17 64	54 - 20 20 94	54 - 20 20 94
Additions from business combinations	12 - - - 12	1 - - 1 2	14 - - 1 15
Charge to income statement	8 - - - 8	1 - - - 1	9 6 1 7 23
Utilised during the period	(3) (2) (1) - (6)	(15) - (5) (1) (21)	(19) - (11) (1) (31)
Unused amounts reversed	(1) - (1) - (2)	(6) - - - (6)	(13) - - (4) (17)
Reclassification within Statement of Financial Position¹	- - - 12 12	Transfer to liabilities held for sale (19) - - (1) (20)	Disposals (11) - - (1) (12) Reclassification within Statement of Financial Position (3) - - - (3)
Balance at 30 June	47 4 8 29 88	16 - 15 14 45	31 6 10 17 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 total ��47 million (30 June 2019: ��16 million, 31 December 2019: ��31 million), and are comprised of the following:

Lighthouse pension transfer advice provision of ��29 million (30 June 2019: ��nil, 31 December 2019: ��12 million)

A provision for pension transfer advice has been established within the fair value of the Lighthouse assets and liabilities acquired. As at 31 December 2019, the provision related to approximately 30 complaints received in the first quarter of 2020 on advice provided by Lighthouse in respect of pension transfers for British 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. During the first half of 2020, the FCA reported the results of their thematic review into the general market of pension transfers, which included British Steel pension transfers. The FCA review determined that the percentage of unsuitable files for British Steel transfers was higher than those for other pension schemes in the general industry. The FCA review included a sample of British Steel pension transfer advice provided by Lighthouse. Additionally, approximately 30 further complaints have been received from British 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 266 British Steel transfers on which Lighthouse advisers provided advice and the relevant customer proceeded to make a transfer in order to determine a more reliable approximation of the estimated redress payable. The Group has performed a detailed redress file review of a sample of British Steel cases, deemed to be representative of the overall population. The sample was divided into transfers pre and post June 2017, when the Trustees of the British Steel pension fund changed the basis on which transfer values were calculated. The estimated redress per client as a proportion of the transfer value of the pensions was determined 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 probable redress payable uses assumptions and estimation techniques which are consistent with principles under the FCA's FG17/9 "Guidance for firms on how to calculate redress for unsuitable defined benefit pension transfers". A provision of ��26 million (31 December 2019: ��9 million) has been calculated for the potential redress of all British Steel cases. Based upon additional information obtained, the balance at acquisition, and as reported at 31 December 2019, has been reassessed and increased from ��9 million to ��21 million. 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. An additional provision of ��3 million (31 December 2019: ��3 million) has been recognised in respect of the anticipated cost 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. The provision of ��24 million recognised within the fair value of net assets acquired impacts the goodwill balance recognised upon acquisition. The increase in the provision subsequent to acquisition of ��5 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:

��m

Notes	31 December 2019	Change in H1 2020	30 June 2020
Client redress provision	9	17	26
Anticipated costs	3	-	3
Total Lighthouse pension transfer advice complaints provision	12	17	29
Recognised within fair value of acquired net assets	4(a)	12	12
Recognised within expenses	5(b)(vi)	-	5

The recognition of the fair value of acquired assets has been further reduced by management's estimate of the fair value of the insurance recoverable of ��3 million and the deferred tax asset receivable of ��2 million (both described in note 4(a)), resulting in a net increase of ��19 million to the fair value of the acquired asset, of which ��7 million was recognised in the six months ending 30 June 2020 (31 December 2019: ��12 million).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 DB scheme at the reporting date, and market level changes, as modelled by movements in the FTSE Private Investors Income index, impact the valuation of the personal pension scheme for each client. The following table shows the change upon the provision balance at 30 June 2020 as a result of movements in the key assumptions:

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

Compensation provisions (other) of ��18 million (30 June 2019: ��16 million, 31 December 2019: ��19 million)
Other compensation provisions of ��18 million are held within the Group's continuing operations and include amounts relating to the cost of correcting deficiencies in policy administration systems, including restatements and clawbacks, any associated litigation costs and the related costs to compensate previous or existing policyholders. This provision represents management's best estimate of expected outcomes based upon previous experience. Due to the nature of the provisions, the timing of the expected cash outflows is uncertain. Estimates are reviewed annually and adjusted as appropriate for new circumstances. Management estimate a provision sensitivity of +/-25% (��5 million).

Provisions arising on the disposal of Quilter Life Assurance
The QLA business was sold on 31 December 2019, resulting in a number of provisions totalling ��6 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, and 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. Work will take place during 2020 and 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 judgements and estimates, management have made use of their past experience of previous IT migrations following business disposals. Management estimate a provision sensitivity of +/-25% (��1.5 million). During the period ��2 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 ��19 million, of which ��5 million was utilised during 2018 and a further ��11 million utilised in 2019. During 2020, further utilisation of ��1 million has been incurred, and ��1 million has been reversed, and therefore ��1 million of the provision remains at 30 June 2020. Management estimate a provision sensitivity of +/-20% (��0.2 million). Additional provisions totalling ��6 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 in future years. A further ��1 million was added to the provision during 2019, bringing the closing balance to ��7 million at 31 December 2019. There has been no movement in the balance during the current period. 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 maximum potential exposure is ��30 million, arising between 2020 and 2022. Of the total ��7 million provision outstanding, ��4 million (2019: ��3 million) is estimated to be payable after one year.

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. Where 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 adjustments to the amounts recorded. Included within the balance in 2020 is ��18 million clawback provisions in respect of amounts due to product providers on indemnity commission, within the Quilter Financial Planning business. At 30 June 2020, an associated balance of ��12 million recoverable from brokers is included within Trade, other receivables and other assets. At 30 June 2019 and 31 December 2019 the associated asset of ��12 million was offset within the provision balance. Management estimate a provision sensitivity of +/-20% (��6 million). Of the total ��29 million provision outstanding, ��19 million is estimated to be payable within one year (2019: ��17 million).

18: 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 17). 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 May 2020, the Group received a requirement notice from the FCA in relation to Lighthouse DB pension transfer advice, requiring a report by a skilled person, under section 166(3)(a) of the Financial Services and Markets Act 2000 (FSMA). The review covers Lighthouse Advisory Services Limited only, and no other companies within the Group. The review covers the period from 1 April 2015 to 27 January 2020, which is the date that Lighthouse converted to the Quilter Financial Planning advice process for their Defined Benefit transfer activity. The review will cover British Steel DB pension transfer advice activity undertaken by Lighthouse, and a representative sample of other Lighthouse DB pension transfer advice activity. The skilled person will also calculate redress, following the FCA's FG17/9 "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 interim skilled person's report is expected in Q4 2020, with the final report to the FCA due in early 2021. For the British Steel cases, management currently consider that the likelihood of redress is probable on the majority of the cases. An estimate of the amount of redress payable has been made and is included within Provisions in note 17. For the non-British 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-British Steel cases. Any further redress costs related to non-British Steel cases, and any differences between the provision and final payment to be made for British 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 jurisdictions 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 jurisdictions 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.# Regulatory Filing

The Board 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.

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.

19: Related party transactions

In the normal course of business, the Group enters into transactions with related parties. Loans to related parties are conducted on an arm's length basis and are not material to the Group's results. There were no transactions with related parties during the current and prior year which had a material effect on the results or financial position of the Group.

20: Events after reporting date

Interim dividend

Subsequent to 30 June 2020, the Board has declared an interim dividend of 1.0 pence per ordinary share. This amounts to ₤18 million in total, and will be accounted for as an appropriation of retained earnings in the year ending 31 December 2020. The interim dividend will be paid on 21 September 2020 to shareholders on the UK and South African share registers.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

END
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Quilter PLC — Interim / Quarterly Report 2020

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National Storage Mechanism | Additional information

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

Independent review report to Quilter plc

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated statement of cash flows

Consolidated statement of financial position

4: Acquisitions and discontinued operations

4(a): Business acquisitions

Charles Derby Group Limited acquisition on 14 February 2019

Lighthouse Group plc ("Lighthouse") acquisition on 12 June 2019

4(b): Discontinued operations - income statement

4(c): Discontinued operations - Statement of comprehensive income

4(d): Discontinued operations - Net cash flows

5: Alternative performance measures ("APMs")

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

Basis of preparation of adjusted profit

5(b): Adjusting items

5(b)(i): Goodwill impairment and impact of acquisition accounting

Amortisation of other acquired intangible assets 10(a)

Acquisition related (income)/costs¹

Unwinding of discount on contingent consideration

Total goodwill impairment and impact of acquisition accounting

5(b)(ii): Business transformation costs

UK Platform Transformation Programme

Quilter Investors' build out costs

Optimisation Programme costs

Restructuring costs following disposal of Quilter Life Assurance

5(b)(iii): Managed Separation costs

5(b)(iv): Finance costs

5(b)(v): Policyholder tax adjustments

5(b)(vi): Customer remediation

5(c): Reconciliation of IFRS income and expenses to 'Total net fee revenue' and 'Expenses' within adjusted profit

6(a): Segmental presentation

6(b)(i): Adjusted profit statement - segmental information for the six month period ended 30 June 2020

6(b)(ii): Adjusted profit statement - segmental information for the six months ended 30 June 2019

6(b)(iii): Adjusted profit statement - segmental information for the year ended 31 December 2019

6(c)(ii): Statement of financial position - segmental information at 30 June 2019

6(c)(iii): Statement of financial position - segmental information at 31 December 2019

6(d): Geographic segmental information

Six months 2020

Six months 2019 (restated)

Full year 2019

7: Tax

7(a): Tax charged to the income statement

7(b): Reconciliation of total income tax expense

7(c): Reconciliation of income tax expense in the income statement to income tax on adjusted profit

8: Earnings per share

8(a): Weighted average number of Ordinary Shares

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

Post-tax profit measure used

8(c): Headline earnings per share

9: Dividends

10: Goodwill and intangible assets

10(a): Analysis of goodwill and intangible assets

10(b): Analysis of other intangible assets

10(c): Allocation of goodwill to cash generating units ("CGUs") and impairment testing

Impairment review

Value-in-use methodology

11: Financial investments

12: Categories of financial instruments

30 June 2020

30 June 2019

31 December 2019

13: Fair value methodology

13(a): Determination of fair value

Third-party interest in consolidated funds

Borrowings and lease liabilities

13(b): Fair value hierarchy

Background

13(c): Transfer between fair value hierarchies

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

13(e): Level 3 fair value hierarchy disclosure

��m

17: Provisions

��m

Lighthouse pension transfer advice provision of ��29 million (30 June 2019: ��nil, 31 December 2019: ��12 million)

Quilter PLC Interim / Quarterly Report 2020