Annual
Report 2022
Strategic Report
2 2022 highlights
3 Chair’s statement
5 ChiefExecutiveOfficer’sstatement
8 Meet our Executive Committee
10 Our markets
12 Our strategy
20 Our business model
22 Section 172 (1) statement
26 Responsible Business
32 Task Force on Climate-related
Financial Disclosures statement
35 Non-financialinformationstatement
36 Financial review
44 Risk review
50 Viability statement and going concern
Governance Report
52 Chair’s introduction to
corporate governance
54 Governance at a glance
56 Board of Directors
59 Principal decisions of the Board in 2022
62 Report from the Designated Workforce
Engagement Directors
64 Board Corporate Governance and
Nominations Committee Report
69 Board Audit Committee Report
75 Board Risk Committee Report
79 Board Technology and Operations
Committee Report
82 Remuneration Report
82 Board Remuneration
Committee Report
84 Remuneration at a glance
89 Directors’ Remuneration
Policy (summary)
94 Annual Report on Remuneration
108 Directors’ Report
Financial statements
113 Statement of Directors’ responsibilities
114 Independent auditors’ report
121 Primaryfinancialstatements
126 Notes to the consolidated
financialstatements
194 Appendix
196 ParentCompanyfinancialstatements
Other information
205 Shareholder information
209 Alternative Performance Measures
212 Glossary
Our business
Quilter is a modern, UK-focused,
full-service wealth manager
providing advice-led investment
solutions and investment
administration services to high
net worth and affluent clients
and their adviser firms.
Our purpose
Our purpose is to help create
prosperity for the generations
of today and tomorrow. We strive
to do this through long-term
advice-based relationships,
delivering good investment
management performance while
maintaining consistently high
quality customer service.
Visit
plc.quilter.com/investor-relations
for the latest news
Learn
how we grow in a way the creates
long-term sustainable value at
plc.quilter.com/responsible-business
Quilter plc share register
Quilter plc listed on the London and Johannesburg Stock
Exchanges on 25 June 2018. Quilter plc has a premium listing
on the London Stock Exchange and a secondary listing on the
Johannesburg Stock Exchange.
Contents
1Quilter Annual Report 2022
Financial performance highlights, continuing business only
£99.6bn
-11%
Assets under management and administration (“AuMA”)*
2022
2021
£99.6bn
£111.8bn
£1.8bn
-55%
Net flows*
2022
2021
£1.8bn
£4.0bn
£134m
-3%
Adjusted profit before tax*
2022
2021
£134m
£138m
£175m
n/a
IFRS profit after tax from continuing operations
2022
2021
£175m
£23m
7.9p
+7%
Adjusted diluted earnings per share*
2022
2021
7.9p
7.4p
4.5p
+13%
Recommended total dividend per share (continuing operations)
2022
2021
4.5p
4.0p
22%
0%
Operating Margin*
2022
2021
22%
22%
Note:
All 2021 comparatives presented above exclude Quilter International, which was sold
on 30 November 2021.
Alternative Performance Measures (“APMs”)
WeassessourfinancialperformanceusingavarietyofmeasuresincludingAPMs,
as explained further on page 209. These measures are indicated with an asterisk.
Strategic highlights
Operational highlights
Responsible business highlights
£65m
Optimisation
programme achieved
targeted cost savings
of £65 million
Set carbon reduction
targets for both Scope 1
and Scope 2 emissions
for our operations
Progressed our
responsible investment
propositions through the
launch of new strategies
Quilter’s Business
Simplification
programme continues
to track towards the
proposed £45 million
target, with annualised
run-rate savings of
£23 million achieved
to date
Our Board and Executive Committee
Read more about the Board changes on page 66
and our Executive Committee on page 8.
2022 highlights
£375m
Completion of the
£375 million share
buyback programme
from the Quilter Life
Assurance sale proceeds
£328m
£328 million Capital
Return in June 2022
to return the net surplus
proceeds from the sale
of Quilter International
2 Quilter Annual Report 2022
Chair’s statement
Ruth Markland
Chair
Although I joined the Board of Quilter just after our Listing in 2018,
this is my first letter to you as Chair of your Company. 2022 was a
notable year for Quilter, not just because the business environment
presented challenges for the entire Wealth Management industry
but also because it marked a year of significant transition in the
leadership of your Company.
I assumed the responsibility of chairing the company at the
conclusion of the 2022 Annual General Meeting and Steven Levin
succeeded Paul Feeney as Chief Executive Officer on 1 November
2022. The Board was unanimous in its view that Steven is the
right person to take on the leadership of Quilter. He has been
instrumental in building our business in recent years and has
proven expertise in terms of large scale transformations and
successfully delivered our Platform Transformation Programme.
Steven had also been responsible for our Affluent segment, the
largest revenue and profit contributor to the Group. With this deep
knowledge of the Group, he is well-placed to take Quilter on the
next phase of its strategic journey. More background on the
Board’s deliberations on both my and Steven’s appointments is
provided in the Corporate Governance Report on pages 52 to 111.
I would like to thank Paul Feeney for his service to Quilter over the
last decade. Paul was not only responsible for conceiving Quilter’s
strategy but also successfully listed the Company and oversaw
the disposal of a number of parts of the business which were
subsequently deemed non-core. These disposals included our
single strategy asset management business, our heritage life
assurance business, and, more recently, our international business.
These actions generated around £1.5bn of surplus capital of which
c.£1.3 billion was returned to current and past shareholders.
We wish Paul well in all his future endeavours.
I am greatly looking forward to working with Steven and delivering
on Quilter’s potential in the years ahead. My principal focus, and
that of your Board, is to support, challenge and guide Steven and
his executive team to ensure that we achieve the goals we have
set ourselves.
Steven has set out his initial perspectives on the business in his
letter to shareholders. We both share the view that Quilter is a
well-positioned business operating in structural growth markets.
However, we have more to do to ensure that we are capturing our
share of that opportunity. To get Quilter to where we want it to be will
take some time but given the uniqueness of our franchise and our
strong market positions, we believe that succeeding in our chosen
course of action will deliver significant returns for our shareholders.
Shareholder returns and dividend
The Board is pleased to recommend a Final Dividend of 3.3 pence
for the 2022 financial year which, together with the Interim Dividend
of 1.2 pence per share paid in September, takes the proposed Full
Year total dividend to 4.5 pence which represents an increase of
13% over the continuing business dividend for 2021.
The pay-out ratio for 2022 was 57%. Following the revision to our
target dividend pay-out range to 50%-70% of post-tax, post-interest
adjusted profit, the 2022 Full Year Dividend sits just below the
mid-point of that new range. Subject to the operating environment
remaining stable, the Board expects future dividends to continue
the progression up the target range.
The Final Dividend will be paid on Monday 22 May 2023, subject
to shareholder approval at our 2023 Annual General Meeting
on Thursday 18 May 2023, to shareholders who are on the share
register on Friday 21 April 2023.
4.5p
+13%
Recommended total dividend per share.
Capital Returns
As well as the normal dividend, the other notable component of
shareholder returns in 2022 was the capital return to shareholders
from the sale of Quilter International. After consulting with
shareholders, it was clear that there was a broad consensus for
the capital return to be conducted in a timely manner. To facilitate
this, the Board recommended, and shareholders approved at a
General Meeting held on 12 May 2022, a £328 million capital
return through a B Share Scheme followed by a six for seven Share
Consolidation. We consider this an effective method of rewarding
our shareholders and returning capital to them in a timely and
efficient manner.
2023 Annual General Meeting
At our 2022 Annual General Meeting, resolution 16, which sought
authorisation for political donations or expenditure, passed with
the requisite majority of votes, however 22.5% of the votes cast
were against the resolution.
As in previous years, there was a significant difference in voting
between the South African and UK share registers on this
resolution with 63.77% and 99.94% support respectively.
3Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
In line with provision 4 of the UK Corporate Governance Code,
we continue to directly engage with our largest South African
shareholders on this resolution. We continue to recognise that in
a current South African governance context, any linkage between
business and politics is a sensitive issue.
Quilter has no intention of undertaking political donations and
has not done so since Listing but, in line with other listed UK
companies, we have sought such authority to avoid any inadvertent
breaches of UK company law given the breadth of the applicable
provisions. We will table a similar resolution at the 2023 Annual
General Meeting and will continue to explain clearly the reasons
why the Board believe this resolution is an important protection
for the Company in the 2023 Notice of Annual General Meeting.
As part of our drive for greater efficiency across our business
and consistent with our desire to act in the best interests of all
our shareholders, we intend to seek regulatory and shareholder
approval at the 2023 Annual General Meeting to undertake a
second Odd-lot Offer. An Odd-lot Offer entails Quilter making an
offer to eligible shareholders (in this instance owners of fewer than
200 shares) to repurchase their shares at a modest premium to the
market price. Quilter currently has nearly 200,000 shareholders, of
which just under 134,000 each hold fewer than 200 shares. These,
principally South African, shareholders were originally granted their
shares in Old Mutual plc from their interest as policyholders when
that business demutualised in 1999. They have not actively chosen
to invest in a UK-domiciled company and have become Quilter
shareholders as a result of our demerger from Old Mutual plc in
2018. The proposed Odd-lot offer will further reduce the cost to
Quilter of managing our shareholder base and will allow investors
holding small numbers of shares to dispose of their holdings
in a cost effective manner. Eligible shareholders can, of course,
elect to retain their shareholding in Quilter, if they so choose.
Other Board matters
I would like to thank Rosie Harris for her longstanding contribution
to the Quilter Board. Rosie stepped down from the Board in April
2022, having joined the Board prior to our Listing in April 2017,
and she served as Chair of our Board Risk Committee from
appointment. George Reid, who chairs the Board Audit Committee,
took on the role of chairing the Board Risk Committee on an interim
basis until a permanent successor was appointed.
I am delighted that Neeta Atkar joined the Board in August 2022
and was appointed Chair of the Board Risk Committee from
1 October 2022. Neeta has a deep understanding of risk and
regulation having spent her executive career working at the Bank
of England and the Financial Services Authority before taking on
roles in the financial services industry with Andersen Consulting,
Abbey National, Royal & Sun Alliance, Lloyds Banking Group and
TSB Bank where she was the Chief Risk Officer. She is also a
member of the Board Audit Committee.
I would also like to thank Glyn Jones, our former Chair, who stepped
down from the Board in May 2022 following our Annual General
Meeting, for his distinguished leadership of the Quilter Board since
before Listing. In June we appointed Glyn Barker to the Board with a
view to him assuming the role of Chair but subsequently, for personal
reasons, he stepped down from the Board in November 2022.
On my appointment to the Chair of Quilter in May 2022, Tim
Breedon took on my previous responsibilities both as our Senior
Independent Director and Chair of the Board Remuneration
Committee and I am delighted that Tim has agreed to continue
in those roles on an on going permanent basis.
Diversity and inclusion
We currently meet the FTSE Women Leaders Review targets for
at least 40% representation of females on our Board and at least
one woman in a senior Board role. We also meet the Parker Review
recommendation that all FTSE 350 boards should have at least one
Director from a minority ethnic group on their board. Please refer
to the fuller disclosure in the Governance Report on page 67.
Governance and culture
We recognise the importance of a healthy culture within a
business to ensure the successful delivery of its strategic ambition.
Your Board takes an active role in shaping Quilter’s culture and
is encouraged by our executive team’s concerted efforts in 2022
to drive greater inclusion and diversity across the organisation.
While we are content with the progress made in this area, we
acknowledge that there is more to be done to drive greater
diversity across our business at the executive level.
Managing a business responsibly is key to an organisation’s
long-term success and for Quilter that includes being a responsible
investor. We recognise the role of investors, along with other parts
of the economy, in supporting the transition to a low carbon
economy – vital for the long-term prosperity of us all. Quilter is
taking a proactive approach to embedding environmental, social
and governance (ESG) considerations across the whole value chain
of our business.
Quilter has continued to maintain a high level of engagement with
existing and prospective shareholders this year. Engagement levels
in 2022 have been broadly consistent with 2021. Given the changes
to our Board and executive leadership team, I have personally
maintained a high level of engagement with our largest shareholders
in 2022 and in early 2023, I met with our largest shareholders
during which time we covered topics including corporate governance,
executive remuneration and Chair and CEO succession process.
Conclusion
2022 was a year in which we returned the proceeds from the sale
of Quilter International to shareholders, enhanced our customer
propositions, delivered a resilient profit given the market context,
and have put a leadership team in place to take Quilter forward on the
next stage of its journey. While we expect 2023 to have its challenges,
we face the future with confidence and are absolutely committed
to driving growth from our simpler more focused business.
On behalf of the Board, I would like to thank our management
team and all our colleagues for their continued effort, focus and
commitment to achieving our goals in what have been challenging
market conditions. Thank you also to our shareholders for your
continued support.
Ruth Markland
Chair
Chair’s statement
continued
4 Quilter Annual Report 2022
Chief Executive
Officer’s statement
Steven Levin
Chief Executive Officer
Before I get into the detail of our performance in 2022, I should extend
my thanks to my predecessor, Paul Feeney, for his decade of service
to Quilter as well as his long-standing support for me personally.
Turning now to the business, clearly, the operating environment has
a meaningful influence on the flows we can attract and revenues
we generate from the assets we manage and administer on behalf
of our clients. 2022 was a particularly challenging year for the entire
wealth management industry due to lower equity markets and
higher bond yields. In that context, I am pleased we delivered a
resilient adjusted profit outturn of £134 million (2021: £138 million)
and a stable operating margin of 22% during the year.
Current market conditions are very different from those we
anticipated at our Capital Markets Day in late 2021, prior to the war
in Ukraine. This has led us to rebase some of the targets we set out
then. Notwithstanding this, my focus will always be on managing the
things within our control to deliver the best outcomes we can for all
our stakeholders and, as I discuss below, my priority is on improving
the revenue momentum and cost efficiency of our business.
Business Strategy and Transformation
Over the last ten-years, we have built a business that covers the full
spectrum of the UK wealth industry. While we are well-positioned to
meet the needs and provide good customer outcomes to our High
Net Worth and Affluent clients, my initial assessment is that there
is more to be done to ensure we are delivering on our potential as
a business. We have three core channels through which we serve
clients, each of which generated around £200 million of revenues
per annum in 2022:
· Our High Net Worth segment operates under the Quilter Cheviot
and Quilter Private Client Advisers brands. This business continues
to perform well. While the growth rate of this business in terms of
new flows has been good relative to peers, I believe we have the
capacity to perform better. We will continue to drive our growth
plans by improving productivity, as well as adding investment
managers and dedicated financial advisers to enhance the
support and value we provide to clients.
We serve our Affluent clients through two channels:
· First, our Quilter Channel where we provide platform and
investment solutions through our restricted adviser network.
While there is understandably a focus on absolute adviser
numbers as a proxy for growth in this business, it is more
important to me that we have a productive adviser force which
is fully aligned with our propositions, that the business continues
to deliver good customer outcomes and that we deliver an
appropriate return to shareholders.
· Second, the IFA Channel where our platform business provides
investment administration and investment solutions to the IFA
market. The enhanced capability of our new platform allows
us to support a wider range of IFA firms and to meet a broader
spectrum of customer needs than has historically been the case.
We continue to add new firms and generating stronger flows
from this channel is a key priority for me.
Since my appointment as Chief Executive Officer on 1 November
2022, I have been reviewing what we have done well and what
we need to do better.
In terms of what has gone well, we have successfully reshaped
our business since Listing, transformed our platform technology,
delivered significant cost reduction programmes, paid around
£1 billion to shareholders through special capital returns, enhanced
our investment propositions to include ESG overlays as well as
variants to meet client risk and style preferences, and maintained
excellent levels of service to our clients and advisers.
But we can do better. This is a business with a huge amount
of potential, and we are not yet delivering the growth of which we
are capable. To drive improvement in our business, with customer
outcomes at the core of this, my focus is on building distribution,
enhancing propositions, and driving efficiency, and for these
to deliver better customer outcomes and a significant increase
in profitability.
Taking each in turn:
· Distribution – one of the core strengths of Quilter is our
two large scale distribution channels: IFAs and our own Quilter
Channel advisers. We are strongly positioned in each channel,
but we recognise the market in which we operate has evolved
with sponsor-backed consolidation becoming an increasingly
disruptive force. This has had two implications for Quilter. First,
where IFAs who use our platform have been acquired, it can lead
to outflows from our business as they consolidate their business
elsewhere. Secondly, in the Quilter Channel we have lost some of
our own advisers to consolidators. On the former, our counter is
to leverage our new platform by growing our franchise with larger
IFA firms. Progress is in line with expectations, but it is, by nature,
a gradual build. On the latter, we are continuing to look at ways
to ensure Quilter is attractive to advisers and that they are
aligned with our propositions to provide good customer
outcomes. We are also finessing our exit proposition for retiring
advisers to protect our core franchise and ensure the Quilter
proposition remains attractive compared to our peers.
5Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Chief Executive Officer’s statement
continued
· Proposition – here we need to be more agile, responsive
and both customer and market focused. Quilter Investors’
performance was strong in 2022, with all strategies outperforming
their comparators except Cirilium Active. Over the last quarter,
we’ve reviewed our investment capabilities and decided to unify
management of all our Cirilium funds under a single team to
ensure greater consistency of investment style and performance,
and to better align our solutions with our customer needs.
This action led to the departure of the two Cirilium Active
portfolio managers. To reinvigorate the market positioning of
Cirilium Active under the new team, we intend to reduce pricing
at the end of March with an expected mid-single digit impact
on the revenue margin on our Affluent Managed Assets on a full
year basis. Finally, we will be launching a responsible investment
multi-asset range which mirrors the well-received action we took
with WealthSelect in early 2022.
· We have an award winning platform with market leading
functionality. But we see increasing price competition and we
need to be more competitive. We have planned actions on our
Platform pricing to defend our existing flow, provide better value
to customers and accelerate growth in new business. I expect
this initiative to lead to around a basis point of margin attrition
over the next 18 months over and above the basis point per
annum to which we have historically guided, but with this expected
to be more than offset by greater flows and revenues over time.
· Efficiency – we will update on additional efficiency plans later
this year. We have made good progress with our Optimisation
and Simplification programmes, but our cost base remains high.
We have acquired businesses, particularly in advice, and not
always integrated as far as we could. That has led to cumbersome
business processes, unnecessary complexity and higher costs.
So, there is opportunity to further simplify our business to
improve the way we manage ourselves and the way we support
our customers and advisers. Getting the operating margin in our
business to a satisfactory level is an absolute priority for me.
All of the above is intended to drive a meaningful step-up in
profitability and to make us a better business for our customers.
I am determined to deliver the growth and returns our shareholders
expect. Whilst some aspects of our plans might impact revenues and
operating margin in the short term, we are confident they will lead to
higher overall revenues and a faster growth rate in the medium term.
Flows and Investment Performance
Advice is central to all Quilter propositions and our goal is to deliver
good customer outcomes in all that we do. That means providing
excellent client and adviser support while delivering value including
consistent investment returns, over time, in line with client risk and
ESG preferences.
In 2022 we faced two particular challenges:
· First, across the industry, new business activity was hindered
by ‘risk off’ sentiment following Russia’s invasion of Ukraine in
February which contributed to inflationary shocks from higher
energy and food prices and cost-of-living pressures. This has
naturally reduced the propensity for most households to save
and invest beyond regular pension saving.
· Secondly, as I already noted, the adviser market has been going
through a period of structural change with an increasing amount
of private equity capital looking to back advice consolidation
vehicles. As a result, we have seen a number of smaller
independent firms seeking to move their clients to these new
businesses which impacted on flows in our UK Platform which
administers funds on behalf of clients of these firms.
While we have performed well in the current market with Quilter
generating the largest share of gross flows across the retail advised
industry based on the latest Fundscape data (to end December
2022), our net flows have been below the level we target.
Turning to investment performance, our Wealth Select portfolios
continued to deliver strong performance while our Cirilium Active
proposition remained stylistically out of favour. The management
team who delivered a strong track record with our Cirilium Blend
range have taken over the management of Cirilium Active with
a view to revitalising performance.
2022 was a more challenging year for investment performance in
our High Net Worth division and, over three years, we have slipped
into 3rd Asset Risk Consultants (“ARC”) quartile although the
cumulative difference between 2nd and 3rd quartile is just over
1.2%. We have delivered outperformance over a 10 year period.
Business Performance
Our overall assets under management and administration declined
by 11% over the course of the year to £99.6 billion with the reduction
in revenues limited to 2% to £606 million (2021: £618 million).
Lower management fee revenues were partially offset by higher
levels of interest income from the corporate capital and cash held
in our business. We reduced operating expenses by £8 million from
2021 levels to £472 million despite the impact of much higher than
usual inflation across our business.
Across our two segments, High Net Worth delivered revenue
stability, despite lower markets supported by a higher contribution
from net interest income reflecting higher UK interest rates. Higher
operating expenses of £11 million largely reflected planned business
investment and led to a similar decline in profit to £45 million.
A 5% decline in revenues in our Affluent segment to £387 million
reflected weaker markets and the repositioning of our adviser
base contributing to the reduction in other income. Strong cost
management combined with a lower overall FSCS charge limited
the decline in profits to £6 million for the Affluent segment with
a contribution of £105 million for the year.
Within our Head Office segment, we reduced operating expenses
for managing the Group in 2022 by £6 million. In addition, higher
interest rates contributed to an increase in net interest income
generated on our available cash and capital resources which
support our regulatory capital and liquidity requirements. Both
factors contributed to a reduction in the net cost of the segment
to £16 million from £29 million in 2021.
The Group’s IFRS profit from continuing operations after tax
was £175 million compared to £23 million in 2021. Adjusted profit
before tax of £134 million for 2022 (2021: £138 million) represents
the Group’s IFRS profit, adjusted for specific items that management
consider to be outside of the Group’s normal operations or one-off
in nature. The exclusion of certain adjusting items may result in
adjusted profit before tax being materially higher or lower than
the IFRS profit after tax. Adjusted profit before tax does not provide
a complete picture of the Group’s financial performance, which is
disclosed in the IFRS income statement, but is instead intended to
provide additional comparability and understanding of the financial
results. Principal differences between this measure and our IFRS
profit is largely due to non-cash amortisation of intangible assets,
our business transformation expenses and the impact of
6 Quilter Annual Report 2022
policyholder tax positions on the Group’s results. This latter item
was significantly positive in 2022 because of the decline in markets
over the course of the year.
Business transformation expenses will remain elevated in
2023 reflecting the pre-funded expenditure on our Simplification
programme and other cost reduction initiatives and is expected
to reduce substantially thereafter.
Total Group adjusted diluted earnings per share were 7.9 pence,
an increase of 7% (2021: 7.4 pence from continuing operations).
We target mid-teens compound annual growth rate in EPS to 2025
from the 2020 base. Compound growth of 23% from the 2020 base
represents a strong performance against that metric. However,
given the planned actions being taken to accelerate growth, the
rate of EPS growth is likely to be slower over the remaining target
period. On an IFRS basis, we delivered basic EPS from continuing
operations of 12.2 pence per share versus 1.4 pence per share
for the comparable year of 2021 on the same basis.
The Board is pleased to recommend a Final Dividend of 3.3 pence
per share versus 2.8 pence for 2021, bringing the total dividend for
the year to 4.5 pence per share, an increase of 13% on the continuing
business dividend for 2021 of 4.0 pence per share (total dividend
5.6 pence per share, including 1.6 pence per share in respect of
Quilter International distribution).
During the year, shares in issue declined by 252 million as a result
of our share buyback programme which completed in January 2022
and our B Share Scheme and Share Consolidation which returned
net surplus proceeds of £328 million to shareholders following the
disposal of Quilter International in November 2021. Since Listing
our capital return programme from disposals has reduced our
total share count by around a quarter.
Responsible Business and Stewardship
Ensuring Quilter is a business whose actions go beyond making
a profit, has been a core part of the culture we have built since we
listed. For me, this comes down to how we act and how we invest.
How we act
Our fundamental commitment to acting responsibly is reflected
in the excellent level of customer and adviser service we provide,
mirrored by our commitment to being a responsible employer.
The Quilter Foundation makes a positive contribution to the
communities in which we operate and this year the charity
launched a local community fund to further expand its impact.
During 2022, we significantly increased our focus on climate action.
We set ourselves carbon reduction targets for both Scope 1 and
Scope 2 emissions for our operations and expect to release a fuller
climate action strategy (including Scope 3, emissions were possible)
later in 2023.
Chief Executive Officer’s statement
continued
How we invest
There are two approaches to being a responsible investor:
· Risk mitigation: the integration of ESG factors and stewardship
within the advice and investment process.
· Specific responsible investment-related objectives; this builds on
the risk mitigation and relates to linking products or strategies to
specific responsible investment related outcomes or objectives.
Our focus has been on strengthening the integration of ESG factors
within our advice and investment processes and building on our
active ownership work through our stewardship activity including
exercising our voting rights and engaging with our underlying
investments, be they companies or funds. This is reflected in our
achievement in retaining signatory status of the Stewardship Code
for 2022. In addition, we have also significantly expanded our range
of dedicated responsible investment solutions both in our High Net
Worth and Affluent segments.
Outlook
My goal is to deliver the service and propositions our customers
need alongside rates of growth and returns our shareholders
expect. I am focused on driving towards that outcome at pace.
We anticipate investor sentiment will slowly recover this year
supporting a gradual improvement in IFA net flows coupled with
another strong net flow performance from the Quilter Channel and
a solid out-turn from our High Net Worth segment. The weighted
average of these growth rates suggests an improvement in Group
net flows to a bit over 2% this year. We expect this to improve to
4-5% as market activity normalises and we deliver the business
initiatives I have set out, we clearly aspire to build momentum
further from this level.
The Group’s income levels depend to a large extent on market levels
and interest rates. Assuming these remain broadly stable through
2023, then the Group’s Adjusted Profit will again depend on careful
cost control as well as the pace of our focused investment in
customer proposition initiatives. Overall, our expectation is that
these factors may lead to a decline in Adjusted Profit for 2023,
although we currently anticipate the outcome being modestly
ahead of current market expectations.
Given the changed market and economic environment since our
Capital Markets Day in November 2021, we now expect to reach
a 25% operating margin in 2025, rather than our previous target
of 2023. Given our business mix, we continue to believe that an
appropriate operating margin for our business should be higher
than 30% and that clearly remains the longer-term goal which
we are focused on.
Steven Levin
Chief Executive Officer
7Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Mark Satchel
Chief Financial Officer
Mark brings deep finance, corporate action and business
experience to the Board. He joined Old Mutual in the UK in January
2000 and held numerous leadership positions within the finance
function and businesses there, during which time he played key
roles in the acquisitions of Intrinsic (now Quilter Financial Planning)
and Quilter Cheviot. This experience has been invaluable in
ensuring that Quilter effectively executes its strategy, for example,
allowing him to lead the successful disposals of Quilter Life
Assurance and Quilter International. Mark previously served as
Chief Financial Officer of the business from 2010 to August 2017
and as Corporate Finance Director for the 17 month period to
March 2019. Mark is qualified as a Chartered Accountant in South
Africa and worked for KPMG in both South Africa and Canada prior
to moving to the UK. Mark is a Trustee of The Grey Foundation
in the UK.
Marcus Brookes
Chief Investment Officer & Managing
Director, Quilter Investors
Marcus joined Quilter Investors from Schroders Personal Wealth,
where he held the role of Chief Investment Officer. He has
considerable investment management experience with a deep
understanding of the multi-asset sector, having managed
multi-manager fund ranges for more than 20 years at Schroders,
Cazenove Capital, Gartmore and Insight Investments. This
extensive experience equips Marcus well to hold responsibility
for Quilter Investors’ portfolio management desk. In January 2023
Marcus was appointed Managing Director of Quilter Investors and
focuses on manager engagement and driving Quilter Investors’
investment proposition and performance in addition to his
Chief Investment Officer responsibilities.
Penny Cole
Human Resources Director
Penny has over 15 years’ experience at Quilter. During her time
with the Group, Penny has held multiple senior HR roles including
Head of HR for our UK and International Platform businesses.
She has worked across multiple jurisdictions and geographies and
led significant and complex people change. In her previous role as
People Transformation Director, Penny spearheaded the externally
recognised and multi award winning ‘Hello Tomorrow’ programme.
She has extensive experience across the spectrum of HR, including
Remuneration, Culture, Talent and Succession, Organisational
Design, Learning and Development and HR Operations. Penny
has worked across multiple industries and sectors including
Telecommunications, Third Sector and Financial Services.
Meet our Executive Committee
Steven Levin was appointed as the
Chief Executive Officer on 1 November
2022, as detailed in the Board Corporate
Governance and Nominations
Committee Report on page 64.
Shortly after his appointment, Steven
announced a series of changes to the
roles of the existing members of the
Executive Committee and the
appointment of Marcus Brookes,
Penny Cole and Stephen Gazard to the
Committee with effect from 1 January
2023. These changes will ensure that,
as our most senior management
committee for the Group, the Executive
Committee is well placed to support
Steven in his new role. The Executive
Committee will continue to have the
right balance of skills and experience
that we need to deliver for our
stakeholders, and to not only maintain,
but accelerate the Group’s performance.
Steven Levin
Chief Executive Officer
Steven has deep industry knowledge, having worked in asset
management, investments, platform and distribution roles.
He joined the Group in 1998, the Executive Committee in 2011
and the Board in November 2022 when he was appointed as
Chief Executive Officer. Steven has played a leading role in
delivering several high-profile strategic initiatives for the Group,
including the implementation of Quilter’s new investment platform
and supporting the development of Quilter’s ESG proposition.
As Head of Affluent, Steven focused on bringing Quilter’s Platform
and Investment Solution businesses together to operate in a more
customer centric manner with our Advice business. Steven’s broad
industry and leadership experience allows him to effectively drive
strategic delivery. Steven is a qualified Actuary and Chartered
Financial Analyst.
8 Quilter Annual Report 2022
Karin Cook
Chief Operating Officer
Karin has over 30 years’ experience in the financial services
industry, having held senior operations, technology and finance
roles at HSBC, Morgan Stanley, Goldman Sachs and most recently
at Lloyds Banking Group where her role encompassed customer
operations, payments, technology, security, property and
procurement. This experience enables Karin to be instrumental
in driving efficiency across all areas of the Group. Karin chairs the
Quilter Operating Committee, providing oversight on material
technology and operational change programmes. She is a
passionate, committed and informed ally to the LGBTQ+ community
and has been recognised in OUTstanding LGBTQ+ Role Model Lists
from Involve – The Inclusion People.
Stephen Gazard
Chief Distribution Officer & Chief Executive
Officer, Quilter Financial Planning
Stephen has served as Chief Executive Officer of Quilter Financial
Planning since June 2020 and in January 2023 he was appointed as
Chief Distribution Officer, subject to regulatory approval. Stephen
brings a wealth of industry experience to Quilter, including his
tenure as a financial planner and advice business owner. Prior to
joining Quilter, he held numerous senior leadership roles in the
wealth management profession across owner managed, AIM listed,
provider owned and FTSE 100 / 250 trading environments
delivering both corporate restructures and growth.
Andy McGlone
Chief Executive Officer at Quilter Cheviot
and Quilter Private Client Advisers
Andy has substantial experience in investment management,
having worked in the evolved Quilter Cheviot business for his
entire career, beginning at Quilter Goodison in 1994 as a Trainee
Investment Manager. He served as Managing Director before
being appointed Chief Executive Officer of Quilter Cheviot in
January 2019, and Quilter Private Client Advisers in January 2022,
when these two businesses were brought together. Andy’s deep
knowledge of discretionary wealth management provides him with
the ideal combination of skills and understanding to continue to
ensure strong investment performance for clients and to develop
the Quilter Cheviot and Quilter Private Client Advisers businesses
in line with Quilter’s strategy. Andy is a Fellow of the Chartered
Institute for Securities and Investments.
Nick Sacre-Hardy
Chief Risk Officer
Nick plays a key role in the definition, setting and management
of Quilter’s risk profile. Formerly Quilter’s Chief Internal Auditor,
Nick joined Quilter in June 2016 as the Head of Audit for Investment
Management. Nick has a wealth of financial services experience
having held senior roles at Morgan Stanley and Credit Suisse.
He also spent time in professional practice with both Ernst & Young
and BDO Stoy Hayward. Nick is a Chartered Accountant and
member of the Institute of Chartered Accountants of Scotland.
Senior Leaders supporting the Executive Committee
Clare Barrett
Company Secretary
Clare joined Quilter in October 2017 as Deputy Company
Secretary and was promoted to Company Secretary in August
2022. Clare was a key member of the team that prepared Quilter
for its Listing on the London and Johannesburg Stock Exchanges
in June 2018 and since then she has led the Corporate Secretariat
team and overseen the implementation of Corporate Actions,
including the Return of Capital, the share buyback programme
and the Odd-lot Offer. Clare has extensive experience in the
financial services industry having gained board corporate
governance, transactional and shareholder relations experience
at Hammerson plc, Legal & General Group Plc and Barclays PLC,
where she was Director and Head of their Secretarial Services
team. Clare is an experienced Chartered Secretary and Fellow
of the Corporate Governance Institute.
Daniel Baynton
Chief Internal Auditor
Daniel has been a core part of the Internal Audit team since joining
the business in 2016 as Head of Audit, helping to build and manage
a highly effective Internal Audit function. He has been responsible
for providing important independent assurance and insight to the
business Boards and executive management for the Affluent
Segment. Prior to joining Quilter, Daniel worked at Santander,
in roles across all three lines of defence culminating in a role as
Head of the Santander Conduct Risk Programme. Daniel has over
15 years’ experience across financial services and started his career
with Arthur Andersen and Deloitte. Daniel is a Fellow of the
Association of Chartered Certified Accountants.
Meet our Executive Committee
continued
9Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
The markets in which Quilter operates offer
strong growth potential. Quilter provides
services to the High Net Worth and Affluent
segments of the UK population as they
build their long-term savings ahead of
retirement and then help them manage
decumulation of those assets during
retirement itself.
Our markets
Key trends
Economic downturn and rising
interest rates and cost of living
2022 was a challenging year for the
wealth management industry. The war
in Ukraine led to high energy and
commodity prices driving increased
inflation and pushing up interest rates.
The combination of lower equity markets
and higher bond yields (impacting the
value of bond portfolios) in 2022 has led
a negative cyclical impact on revenue
levels across the industry. The
uncertainty over the depth of economic
slowdown within the UK and globally in
2023, may continue to adversely impact
investor confidence.
Making financial advice
more accessible
The need for accessible financial
advice to help consumers make effective
investment decisions continues to be
a growing area within the UK wealth
management industry. The FCA, as part
of its consumer investment strategy in
2022, set out new proposals to support
mass market consumers with less
complex needs and to prevent in-person
financial advice from being too costly.
Offering a Hybrid advice proposition
that leverages technology to address
this advice gap is a growing and evolving
trend and one that will be relevant to
full service UK wealth managers
such as Quilter.
Technology and Digital innovation
Technology is key in all aspects and
functionality of our lives and is important
within the wealth management sector
as well. COVID-19 lockdowns changed
the way clients were willing to engage
with companies and service providers.
The need for digital strategies to allow
clients and advisers to digitally access
their investments is more important
than before.
Digital innovation across the wealth
management industry is a development,
which Quilter looks to embrace.
Innovation allows us to improve and
deliver a more personalised customer
experience and one which empowers
clients and advisers.
Quilter is well positioned across each part
of the wealth value chain; the provision
of advice, wealth administration, and
investment management. It is Quilter’s
mission to create prosperity for the
generations of today and tomorrow.
An integrated business such as Quilter,
has opportunity to grow and win market
share despite broader industry challenges
such as modest growth in numbers of
financial advisers, fee pressure, the cost
of regulation and continuing regulatory
and fiscal changes.
Following several significant disposals
since Listing to simplify our business,
we reorganised ourselves into two client
segments, High Net Worth and Affluent
and are well positioned to grow with our
customers and their advisers. We focus on
technology and digital innovation, providing
long-term advice, delivering good investment
management performance and maintaining
consistently high-quality customer service.
We are also being fully committed to being
a responsible business.
10 Quilter Annual Report 2022
Our markets
continued
Since 2015, the UK wealth market
assets have grown by c.10%, on a
compound basis. Regulatory and
digital trends have encouraged
clients and advisers to consolidate
investment assets onto platforms
and we expect these trends to
continue in the near to
medium term.
Consolidation in the UK Wealth
Management market
The UK wealth management industry
has attractive attributes; strong
structural growth, long term relationships
with customers, recurring revenues and
high customer retention rates.
High barriers to entry into the wealth
management industry, such as brand
recognition, scale, technological
investment and adviser recruitment
are enablers for consolidation, as
demonstrated by activity during 2022
which included consolidation activity
from banks and private equity firms.
Responsible investment
Evolving legislative and regulatory
requirements, such as TCFD and the FCA
Sustainability Disclosure Requirement
Regime, along with increasing demand
from clients looking to align their
investments with environmental and
social goals, means that acting and
investing will need to be an integral part
of a wealth managers’ proposition.
Quilter’s aim is to create prosperity
for the generations of today and
tomorrow. To create a sustainable
business, that both acts and invests
responsibly and being a responsible
wealth manager forms a core part
of our four strategic ambitions.
Large market with growth trends
The UK wealth management market is
the fifth largest in the world
1
and whilst
macroeconomic conditions were
challenging for equity and bond markets
during 2022, the market has grown
c.10% since 2015
2
. The ‘baby boomer’
generation is a key customer
demographic as they approach
retirement. However, an increasing
need for individuals to take personal
responsibility for retirement saving
and intergenerational wealth transfer
will support the sustainability of the
industry. Building relationships with
younger generations as they begin to
focus on their own saving for retirement
will also support future growth.
1
Credit Suisse Global Wealth Databook 2022.
2
Fundscape Platform Report Q4 2022 Retail Advised
Platform AuA, adding £148 billion St. James Place
AuM. Compeer UK Wealth Management Report,
2022. Wealth managers and private banks, Boring
Money Online Investing 2022.
£1.8tn
Total market value
2
11Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Our strategy
Since our Listing in 2018, we have transformed
our business into a simpler, modern, full-service UK
centric wealth manager. Our strategy is focused on
growing with our clients and advisers, enhancing the
efficiency of our operations, increasing digitalisation
across the business and being a responsible wealth
manager. This will enable us to increase flows
through our two main distribution channels and
manage more of those flows in our investment
solutions. We aim to deliver top-line growth with
operating leverage. We are guided by a strong set
of principles and values, embodying a diverse and
inclusive culture, where colleagues embrace our
cultural values of being pioneering, dependable and
stronger together that will not only help us achieve
our goals but also benefit all of our stakeholders.
Our four strategic pillars for delivering growth
and driving efficiency:
01
Grow with our clients
and advisers
02
Enhance efficiency
03
Embed digital
04
Be a responsible
wealth manager
01. Grow with our
clients and advisers
Strategic objective:
Aligning our expertise and resources around the needs of our advisers and
our two client segments, with tailored advice and products, and a streamlined
experience, delivering relevant service offerings and good customer outcomes.
Key performance indicators
Client numbers Net inflows as percentage
of opening AuMA*
Number of Restricted
Financial Planners (“RFPs”)
Number of discretionary
investment managers
Definition
High Net Worth clients are based on
the number of households or client units
served by Quilter Cheviot.
Affluent client numbers are identified as
individuals, or corporate or trust entities
actively engaged with the Quilter
Investment Platform.
Definition
Total net flows as a percentage of opening
AuMA. This measure evaluates the level of
flows during the period in relation to the
asset base, excluding from market
movements.
Definition
Number of advisers licensed to advise
clients across Pension, Investment and
Protection solutions, but only permitted to
recommend products and solutions from
providers on the Quilter Financial Planning
Restricted Panel.
Definition
Number of individuals who provide
discretionary investment management
services to clients of Quilter Cheviot in
line with individual circumstances and
investment objectives.
2022 performance
2022
2021 36,117458,077
36,160467,245
Affluent.
High Net Worth.
· The Affluent segment delivered client
growth of 2%, demonstrating our ability
to attract clients and IFA firms.
· The number of households served by the
High Net Worth segment experienced
muted total growth, as we move towards
focussing on higher net worth clients.
2022 performance
2022
2021 4%
2%
· Net inflows/opening AuMA decreased
2 percentage points in 2022 reflecting the
more uncertain UK economic backdrop.
· Solid performance from the Quilter
channel in the Affluent segment with
gross platform flows of £2.6 billion
(2021: £2.6 billion).
· Robust performance in the High Net
Worth segment with modestly lower
gross flows and stable retention leading
to net inflow of £0.9 billion for the year
(2021: £1.1 billion).
2022 performance
2022
2021 601,563
601,442
Affluent.
High Net Worth.
· Following the successful launch of our
new Platform, we have continued to focus
on ensuring alignment and productivity
of our own advisers.
· Total Restricted Financial Planners
decreased by 121 in 2022.
· Of the total 1,502 Restricted Financial
Planners as at the end of 31 December
2022, 60 were in the High Net Worth
segment and 1,442 were in the
Affluent segment.
2022 performance
2022
2021 170
179
· We achieved growth in discretionary
investment managers of 5% to 179
following a number of new recruits
and promotions during the year.
Outlook for 2023
· Grow the number of clients served,
ensuring a high-quality client and adviser
experience that provides a strong range
of investment solutions and delivers good
customer outcomes.
Outlook for 2023
· Target net flow growth of 2%+ in 2023,
building to c.4-5% per annum as markets
normalise, with aspirations to build
momentum further.
Outlook for 2023
· Stabilise and return to adviser growth
in 2023 and beyond.
Outlook for 2023
· Continue to grow number of
discretionary investment managers
toward our 2025 target of c.200 and build
out investment management proposition.
· Total 300 client facing staff (including
financial planners) by 2025.
Alternative performance measures
see pages 209-211
12 Quilter Annual Report 2022
Our strategy
continued
01. Grow with our
clients and advisers
Strategic objective:
Aligning our expertise and resources around the needs of our advisers and
our two client segments, with tailored advice and products, and a streamlined
experience, delivering relevant service offerings and good customer outcomes.
Key performance indicators
Client numbers Net inflows as percentage
of opening AuMA*
Number of Restricted
Financial Planners (“RFPs”)
Number of discretionary
investment managers
Definition
High Net Worth clients are based on
the number of households or client units
served by Quilter Cheviot.
Affluent client numbers are identified as
individuals, or corporate or trust entities
actively engaged with the Quilter
Investment Platform.
Definition
Total net flows as a percentage of opening
AuMA. This measure evaluates the level of
flows during the period in relation to the
asset base, excluding from market
movements.
Definition
Number of advisers licensed to advise
clients across Pension, Investment and
Protection solutions, but only permitted to
recommend products and solutions from
providers on the Quilter Financial Planning
Restricted Panel.
Definition
Number of individuals who provide
discretionary investment management
services to clients of Quilter Cheviot in
line with individual circumstances and
investment objectives.
2022 performance
2022
2021 36,117458,077
36,160467,245
Affluent.
High Net Worth.
· The Affluent segment delivered client
growth of 2%, demonstrating our ability
to attract clients and IFA firms.
· The number of households served by the
High Net Worth segment experienced
muted total growth, as we move towards
focussing on higher net worth clients.
2022 performance
2022
2021 4%
2%
· Net inflows/opening AuMA decreased
2 percentage points in 2022 reflecting the
more uncertain UK economic backdrop.
· Solid performance from the Quilter
channel in the Affluent segment with
gross platform flows of £2.6 billion
(2021: £2.6 billion).
· Robust performance in the High Net
Worth segment with modestly lower
gross flows and stable retention leading
to net inflow of £0.9 billion for the year
(2021: £1.1 billion).
2022 performance
2022
2021 601,563
601,442
Affluent.
High Net Worth.
· Following the successful launch of our
new Platform, we have continued to focus
on ensuring alignment and productivity
of our own advisers.
· Total Restricted Financial Planners
decreased by 121 in 2022.
· Of the total 1,502 Restricted Financial
Planners as at the end of 31 December
2022, 60 were in the High Net Worth
segment and 1,442 were in the
Affluent segment.
2022 performance
2022
2021 170
179
· We achieved growth in discretionary
investment managers of 5% to 179
following a number of new recruits
and promotions during the year.
Outlook for 2023
· Grow the number of clients served,
ensuring a high-quality client and adviser
experience that provides a strong range
of investment solutions and delivers good
customer outcomes.
Outlook for 2023
· Target net flow growth of 2%+ in 2023,
building to c.4-5% per annum as markets
normalise, with aspirations to build
momentum further.
Outlook for 2023
· Stabilise and return to adviser growth
in 2023 and beyond.
Outlook for 2023
· Continue to grow number of
discretionary investment managers
toward our 2025 target of c.200 and build
out investment management proposition.
· Total 300 client facing staff (including
financial planners) by 2025.
13Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Our strategy
continued
Strategic objective:
Maximising synergies across the business, increasing operational efficiency
and reducing costs and complexity. Simplification programme to achieve
c.£45 million in cost savings by the end of 2024.
Key performance indicators
Operating margin* Adjusted profit
before tax*
IFRS profit Total shareholder return
(“TSR”)
Definition
Represents adjusted profit before
tax divided by total net fee revenue.
Operating margin is a profitability measure
that reflects the percentage of adjusted
profit before tax generated from total
net fee revenues.
Definition
Adjusted profit before tax represents the
Group’s IFRS profit, adjusted for specific
items that management consider to be
outside of the Group’s normal operations
or one-off in nature, as detailed in note 7(b)
in the financial statements. The exclusion
of certain adjusting items may result in
adjusted profit before tax being materially
higher or lower than the IFRS profit after tax.
Definition
IFRS profit after tax from continuing
operations, prepared in accordance with
IFRS. For remuneration purposes, IFRS
profit before tax on a continuing basis
is adjusted to exclude amortisation
of intangible assets, policyholder tax
adjustments, business disposal impacts
and other one-off items (refer to Note 7(c)
and page 95 of the Remuneration Report.
Definition
The difference between the opening
and closing share price over the period,
plus any dividends paid during that period.
Performance shown for Quilter as traded
on the London Stock Exchange.
2022 performance
2022
2021 22%
22%
· The Group’s operating margin was
in line with the prior year, primarily as
a result of good cost discipline. Lower
revenues broadly match the decline
in average assets.
2022 performance
2022
2021 £138m
£134m
· Adjusted profit before tax of £134 million,
was 3% lower than 2021.
· The decline in net management fees was
due to lower average assets year on year.
· Other revenue increased reflecting
interest income earned on cash and
capital resources, offset by lower
mortgage and protection business levels
and lower adviser headcount.
· Operating expenses in 2022 were
down 2% primarily due to continued
cost discipline, lower FSCS levies and
the Optimisation and Simplification
cost initiatives delivering the intended
cost reductions.
2022 performance
2022
2022
2021
2021
£175m
£68m
£23m
£103m
IFRS profit on a continuing basis (excluding
amortisation, policyholder tax adjustments,
business disposal impacts and one-off items).
IFRS profit after tax from continuing operations.
· The Group’s IFRS profit after tax from
continuing operations was £175 million,
compared to a profit of £23 million for
2021. The increase in profit is largely
attributable to policyholder tax credits
resulting from market losses up to
December 2022 of £134 million
compared to market gains in the prior
year (2021: tax charge £73 million).
2022 performance
2022
2021 (0.1%)
(33.0%)
· Total shareholder return was negative at
33%. A similar downturn was experienced
across the wealth management sector,
as a result of the fall in equity markets
and rise in inflation which led to lower
revenues and profits.
Outlook for 2023
· Continuing the Simplification programme,
enhancing efficiency and reducing
complexity, with total benefit of £45 million
of cost saving expected by 2024.
· Given the shift in operating and market
conditions, we no longer expect to
achieve an operating margin of 25% for
2023. We still believe that an operating
margin in excess of 30% is an appropriate
goal for our business, but is likely to take
longer to attain than previous
expectation of 2025.
Outlook for 2023
· Accelerating growth in medium-term.
Outlook for 2023
· IFRS profit after tax from continuing
operations can vary significantly
year-on-year depending on the
change in policyholder tax. Business
Transformation expenses will remain
elevated in 2023 reflecting the
expenditure on our Simplification
programme and other cost reduction
initiatives but are expected to reduce
substantially thereafter.
Outlook for 2023
· N/A
02. Enhance efficiency
14 Quilter Annual Report 2022
Strategic objective:
Maximising synergies across the business, increasing operational efficiency
and reducing costs and complexity. Simplification programme to achieve
c.£45 million in cost savings by the end of 2024.
Key performance indicators
Operating margin* Adjusted profit
before tax*
IFRS profit Total shareholder return
(“TSR”)
Definition
Represents adjusted profit before
tax divided by total net fee revenue.
Operating margin is a profitability measure
that reflects the percentage of adjusted
profit before tax generated from total
net fee revenues.
Definition
Adjusted profit before tax represents the
Group’s IFRS profit, adjusted for specific
items that management consider to be
outside of the Group’s normal operations
or one-off in nature, as detailed in note 7(b)
in the financial statements. The exclusion
of certain adjusting items may result in
adjusted profit before tax being materially
higher or lower than the IFRS profit after tax.
Definition
IFRS profit after tax from continuing
operations, prepared in accordance with
IFRS. For remuneration purposes, IFRS
profit before tax on a continuing basis
is adjusted to exclude amortisation
of intangible assets, policyholder tax
adjustments, business disposal impacts
and other one-off items (refer to Note 7(c)
and page 95 of the Remuneration Report.
Definition
The difference between the opening
and closing share price over the period,
plus any dividends paid during that period.
Performance shown for Quilter as traded
on the London Stock Exchange.
2022 performance
2022
2021 22%
22%
· The Group’s operating margin was
in line with the prior year, primarily as
a result of good cost discipline. Lower
revenues broadly match the decline
in average assets.
2022 performance
2022
2021 £138m
£134m
· Adjusted profit before tax of £134 million,
was 3% lower than 2021.
· The decline in net management fees was
due to lower average assets year on year.
· Other revenue increased reflecting
interest income earned on cash and
capital resources, offset by lower
mortgage and protection business levels
and lower adviser headcount.
· Operating expenses in 2022 were
down 2% primarily due to continued
cost discipline, lower FSCS levies and
the Optimisation and Simplification
cost initiatives delivering the intended
cost reductions.
2022 performance
2022
2022
2021
2021
£175m
£68m
£23m
£103m
IFRS profit on a continuing basis (excluding
amortisation, policyholder tax adjustments,
business disposal impacts and one-off items).
IFRS profit after tax from continuing operations.
· The Group’s IFRS profit after tax from
continuing operations was £175 million,
compared to a profit of £23 million for
2021. The increase in profit is largely
attributable to policyholder tax credits
resulting from market losses up to
December 2022 of £134 million
compared to market gains in the prior
year (2021: tax charge £73 million).
2022 performance
2022
2021 (0.1%)
(33.0%)
· Total shareholder return was negative at
33%. A similar downturn was experienced
across the wealth management sector,
as a result of the fall in equity markets
and rise in inflation which led to lower
revenues and profits.
Outlook for 2023
· Continuing the Simplification programme,
enhancing efficiency and reducing
complexity, with total benefit of £45 million
of cost saving expected by 2024.
· Given the shift in operating and market
conditions, we no longer expect to
achieve an operating margin of 25% for
2023. We still believe that an operating
margin in excess of 30% is an appropriate
goal for our business, but is likely to take
longer to attain than previous
expectation of 2025.
Outlook for 2023
· Accelerating growth in medium-term.
Outlook for 2023
· IFRS profit after tax from continuing
operations can vary significantly
year-on-year depending on the
change in policyholder tax. Business
Transformation expenses will remain
elevated in 2023 reflecting the
expenditure on our Simplification
programme and other cost reduction
initiatives but are expected to reduce
substantially thereafter.
Outlook for 2023
· N/A
02. Enhance efficiency
Our strategy
continued
15Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Strategic objective:
Enhancing and modernising our digital service experience to engage clients
of today and tomorrow.
Key performance indicators
Number of visits
to Quilter websites
Number of online portal
customer registrations
Customer App downloads
Definition
Number of visits to any of the Quilter plc
or Quilter-brand websites.
Definition
Number of customers registered to use
our online portal, for the Quilter Investment
Platform and Quilter Cheviot.
Definition
Number of downloads to our Customer
App for our platform customers.
2022 performance
2022
2021 5,721,206
4,869,132
· The number of visits to any of the
Quilter plc or Quilter-brand websites has
decreased by 15% in 2022. This reflects
a change in our website strategy
which has reduced the number public
websites to enhance and simplify
the user experience.
2022 performance
2022
2021 7k195k
15k202k
Quilter Investment Platform.
Quilter Cheviot.
· The total number of online portal
customer registrations in 2022
increased by 7% from 2021. This reflects
our commitment to evolving our digital
communication and engagement with
our online customer portals.
2022 performance
2022
2021 N/A
31,811
· Successfully launched the Affluent Quilter
Customer App on 31 October 2022.
This signifies a key milestone in our digital
journey to modernise our digital service
experience to engage our customers
of today and tomorrow.
Outlook for 2023
· Enhance our digital communication
channel and branding.
· Continue our digital transformation
and ensure this is aligned with our
segment strategy.
Outlook for 2023
· Grow the number of online portal
customer registrations as we improve
our digital channels.
Outlook for 2023
· Grow the number of Customer App
downloads, as we continue to enhance
our digital proposition.
3. Embed digital
Our strategy
continued
16 Quilter Annual Report 2022
Our strategy
continued
17Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
4. Be a responsible wealth manager
Our strategy
continued
Strategic objective:
Strive to act and invest responsibly. Acting responsibly refers to the way we
operate and do business. It is about our culture, values, business conduct and how
we manage our relationships with our stakeholders. Investing responsibly refers
specifically to our products and services. It is about how we integrate responsible
investment considerations into our financial advice, investment platform and
investment management. Detail on our progress on the following KPIs
can be found in the Responsible Business report on page 26.
Key performance indicators
Female representation
in senior management
1
Ethnic minority
representation in senior
management
1
Scope 1 and 2 greenhouse
gas emissions
Number of young
people supported by
the Quilter Foundation
UN PRI rating.
Please find further details of our
UN PRI rating disclosure on our website
and Responsible Business report.
Definition
Number of females within our senior
management team.
Definition
Ethnic minority representation within
our senior management team.
Definition
Level of direct emissions from owned
or controlled sources (Scope 1) and
indirect emissions from the generation
of purchased energy (Scope 2).
Definition
Number of young people supported
by the Quilter Foundation.
Retained status as a
signatory of the FRC’s
UK Stewardship Code.
2022 performance
2022
2021 [X,XXX,XXX]
36%
· Female representation in senior
management was 36% at the end
of 2022, below the target of 38%
we had set out for 2022.
· Quilter Cheviot’s Women in Investing
Hub continued.
· Female Client Survey conducted,
aimed at understanding the
investment experiences of Quilter
Cheviot’s female customers.
2022 performance
2022
2021 [X,XXX,XXX]
4%
· Ethnic minority representation within our
senior management team for 2022 was
4%, below our 5% target.
2022 performance
2022
2021 2,754
1,462
· Published our first Task Force on Climate
Related Financial Disclosures (TCFD)
disclosure and set a Scope 1 and 2
emissions reduction target.
· In 2022 we launched our Quilter-wide
colleague sustainability committee and
ran our first colleague sustainability
survey designed to inform the analysis
of the emissions created.
2022 performance
2022
2021 12,606
26,557
· Our three-year employment grant was
concluded in 2022 and we partnered with
three charities to support 424 15-25 year
olds, reducing barriers faced when
gaining employment.
· Formed charitable partnerships with
MyBnk and Centre for Financial Capability
to further advocate the need for financial
education.
· Launched the Foundation’s Local
Community Fund, helping facilitate
smaller grants to causes nominated
by colleagues or advisers.
Outlook for 2023
· To further reinforce our long-term goals,
we have set out new minimum targets
for the end of 2025 to have 40% female
representation in senior management,
which is in line with the FTSE Women
Leaders Review Target.
Outlook for 2023
· Work towards a 5% ethnically
diverse representation in our senior
management by the end of 2023.
Outlook for 2023
· Reduce our Scope 1 and 2 emissions
by 80% by 2030.
· Set purchased goods and services
engagement target.
· Iterative improvements to our action
plan with a focus on our investments.
· Ongoing annual Sustainability Survey and
support to encourage colleague action.
· Assess Taskforce for Nature Related
Financial recommendations and
determine actions.
Outlook for 2023
· By 2025, we aim to have supported since
Listing, 100,000 young people through
the Quilter Foundation.
· Launch our next strategic partnership
through the Quilter Foundation.
This grant will focus on breaking down
the barriers to employment which exist
for some young people and seek to
leverage the broader organisation to
offer them opportunities to engage
with financial services.
1
Senior Management is defined as Executive Committee
and their direct reports, excluding personal assistants.
18 Quilter Annual Report 2022
4. Be a responsible wealth manager
Our strategy
continued
Strategic objective:
Strive to act and invest responsibly. Acting responsibly refers to the way we
operate and do business. It is about our culture, values, business conduct and how
we manage our relationships with our stakeholders. Investing responsibly refers
specifically to our products and services. It is about how we integrate responsible
investment considerations into our financial advice, investment platform and
investment management. Detail on our progress on the following KPIs
can be found in the Responsible Business report on page 26.
Key performance indicators
Female representation
in senior management
1
Ethnic minority
representation in senior
management
1
Scope 1 and 2 greenhouse
gas emissions
Number of young
people supported by
the Quilter Foundation
UN PRI rating.
Please find further details of our
UN PRI rating disclosure on our website
and Responsible Business report.
Definition
Number of females within our senior
management team.
Definition
Ethnic minority representation within
our senior management team.
Definition
Level of direct emissions from owned
or controlled sources (Scope 1) and
indirect emissions from the generation
of purchased energy (Scope 2).
Definition
Number of young people supported
by the Quilter Foundation.
Retained status as a
signatory of the FRC’s
UK Stewardship Code.
2022 performance
2022
2021 [X,XXX,XXX]
36%
· Female representation in senior
management was 36% at the end
of 2022, below the target of 38%
we had set out for 2022.
· Quilter Cheviot’s Women in Investing
Hub continued.
· Female Client Survey conducted,
aimed at understanding the
investment experiences of Quilter
Cheviot’s female customers.
2022 performance
2022
2021 [X,XXX,XXX]
4%
· Ethnic minority representation within our
senior management team for 2022 was
4%, below our 5% target.
2022 performance
2022
2021 2,754
1,462
· Published our first Task Force on Climate
Related Financial Disclosures (TCFD)
disclosure and set a Scope 1 and 2
emissions reduction target.
· In 2022 we launched our Quilter-wide
colleague sustainability committee and
ran our first colleague sustainability
survey designed to inform the analysis
of the emissions created.
2022 performance
2022
2021 12,606
26,557
· Our three-year employment grant was
concluded in 2022 and we partnered with
three charities to support 424 15-25 year
olds, reducing barriers faced when
gaining employment.
· Formed charitable partnerships with
MyBnk and Centre for Financial Capability
to further advocate the need for financial
education.
· Launched the Foundation’s Local
Community Fund, helping facilitate
smaller grants to causes nominated
by colleagues or advisers.
Outlook for 2023
· To further reinforce our long-term goals,
we have set out new minimum targets
for the end of 2025 to have 40% female
representation in senior management,
which is in line with the FTSE Women
Leaders Review Target.
Outlook for 2023
· Work towards a 5% ethnically
diverse representation in our senior
management by the end of 2023.
Outlook for 2023
· Reduce our Scope 1 and 2 emissions
by 80% by 2030.
· Set purchased goods and services
engagement target.
· Iterative improvements to our action
plan with a focus on our investments.
· Ongoing annual Sustainability Survey and
support to encourage colleague action.
· Assess Taskforce for Nature Related
Financial recommendations and
determine actions.
Outlook for 2023
· By 2025, we aim to have supported since
Listing, 100,000 young people through
the Quilter Foundation.
· Launch our next strategic partnership
through the Quilter Foundation.
This grant will focus on breaking down
the barriers to employment which exist
for some young people and seek to
leverage the broader organisation to
offer them opportunities to engage
with financial services.
19Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Our drivers of value creation
1. Colleagues
Quilter is a people-driven business,
with value created not only from our own
employees and advisers but also third
parties and independent advisers who are
supported by our services. Our culture helps
us achieve our purpose while operating
in a responsible manner.
2. Technology and expertise
Our highly skilled colleagues, experts in the
fields of financial planning and investments,
combined with our technological
capabilities, provide high-quality service
and strong customer engagement.
3. Risk management and operational
resilience
Our risk management, governance and
controls help achieve good customer
outcomes and provide a strong foundation
to continue to provide high levels of service
in challenging environments.
4. Financial resources
We use our financial resources to invest
for growth, as well as to facilitate inorganic
opportunities, where appropriate.
A differentiated model with clear
benefits to all stakeholders
Quilter is a full-service wealth manager and
is well positioned in an industry benefitting
from structural growth. We have an open
and unbundled model, with client choice
at the heart of the offering. Our business
model supports both our advisers and their
clients as well as third-party independent
financial advisers and their clients, as their
financial requirements evolve throughout
their lives.
Few of our peers have both their own
adviser force while also supporting
independent financial advisers. Even fewer
have the scale of our distribution reach.
We have one of the largest platforms in
the Retail Advised market, meaning we can
offer the benefits of our scale to clients at
sustainable, fair prices. Our investment
solutions are closely aligned to the advice
process and aim to offer good customer
outcomes through the investment cycle.
The benefits of our model
· Our dual advice channels (our own
advisers and independent financial
advisers (IFAs)) provide strategic control
of distribution as the independent
financial adviser market consolidates.
· Our own platform gives us scale and
operating leverage across the business.
· Our own investment solutions enables
us to capture an additional source
of revenue.
Our business model
We serve two
customer segments…
Customer profile
A wealth management customer,
no matter their investable assets,
needs three things:
· financial advice;
· a platform on which to hold their
assets; and
· investment solutions to deliver
returns aligned to their risk appetite
and ESG values.
Quilter provides each of those. As well
as having our own advice force, we also
support independent financial advisers.
High Net Worth
c.£250,000+ of
investable assets
Benefits and synergies created
by the High Net Worth segment
· Quilter Private Client Advisers is
a Quilter channel to drive net flows
while maintaining strong relationships
with independent advisers.
· Full-range client offering: investment
management, advice or both.
Affluent
c.£50,000+ of
investable assets
Benefits and synergies created
by the Affluent segment
· Full spectrum of adviser support.
· Scale benefits from shared Platform.
· Single investment team and dual-
channel distribution focusing
resources and driving flows.
Offering a differentiated model helping drive value
creation, with clear benefits to clients and shareholders.
20 Quilter Annual Report 2022
…through two
strong distribution
channels…
…and a single
operating model.
Financial advice
We earn revenues from the advice provided
by our advisers. A client typically pays a
one-off initial advice fee, then an ongoing
annual advice fee representing a
percentage of their investment.
Platform and wrappers
Investment platforms are depositaries
for managing and holding investments,
with assets held in collective investment
accounts or appropriate tax efficient
wrappers such as ISAs or pensions.
We earn revenues from the assets held.
A client pays a fee on a quarterly basis,
representing a percentage of their
investments under administration.
Investment solutions
Quilter offers a full-breadth of investment
management services, ranging from
bespoke portfolios at Quilter Cheviot to
unitised, risk-based multi-asset solutions
at Quilter Investors. A client pays an annual
management charge based on their assets
under management.
Quilter Platforms
Our platforms are available
to Quilter advisers and
independent advisers,
as well as directly via a
dedicated customer portal.
Quilter
proprietary
solutions
Third-party
solutions
Quilter channel
IFA channel
Our business model
continued
21Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Delivering for our stakeholders: Section 172 (1) statement
The Companies Act 2006 (the “Act”)
and the UK Corporate Governance
Code 2018 require the Annual Report
to provide information that enables
our stakeholders to assess how the
Directors of Quilter have performed
their duties under section 172 of the Act.
The Act provides that Quilter Directors must act in a way that
they consider in good faith and would be most likely to promote
the success of Quilter for the benefit of shareholders as a whole.
In doing so, Quilter Directors must have regard, amongst other
things, to the factors set out below:
· the likely consequences of any decision in the long term;
· the interests of Quilter colleagues;
· the need to foster the Company’s business relationships;
· the impact of Quilter’s operations on the community
and the environment;
· the desirability of the Company maintaining a reputation
for high standards of business conduct; and
· the need to act fairly for all our members.
Building Quilter to deliver long-term success
for all our stakeholders
To ensure that Quilter achieves its purpose of helping create
prosperity for the generations of today and tomorrow, it is critical
for the Board to balance the needs, interests and expectations of
our key stakeholders. At times these competing stakeholder views
can be contradictory and in order to achieve long-term success,
it is the Board’s role to navigate these complexities. The Board has
a comprehensive stakeholder engagement programme and seeks
to act in the best interests of the Group, whilst being fair and
balanced in its approach.
In addition to direct engagement with our stakeholders, papers
submitted to our Boards and Board Committees across the Group
identify for their consideration where stakeholders could be
impacted by the proposals. At all times, the Boards remain focused
on ensuring good customer outcomes. Some of the ways the Board
engages with our stakeholders, including examples of how our
Board has considered stakeholders when it made key strategic
decisions in 2022, can be read on pages 59 to 61.
The Board has identified six key stakeholder groups whose
interests and needs it regularly considers.
Section 172 (1) statement
Quilter’s stakeholders
Advisers
Colleagues
Communities
Customers
Investors
Regulators
The advisers who provide advice under the Quilter brand, the third-party advice firms
who operate within our regulatory framework, and third-party independent advisers
who use our products, services and our investment platform.
All of our 3,005 full-time, part-time and contract staff who work to support Quilter’s
customers and advisers.
The societies in which we operate and where our products and services are taken
up and the suppliers that support Quilter to deliver products and services for customers
and colleagues.
Those who use our products and services to meet their long-term financial needs.
Those who have invested in Quilter shares and those who recommend investment in
Quilter and its peers, including equity and debt investors, analysts and rating agencies.
Our core UK regulators, the Prudential Regulation Authority and the Financial Conduct
Authority, and various international regulators including the Central Bank of Ireland.
22 Quilter Annual Report 2022
Advisers expect Quilter to:
· Provide an investment platform that facilitates the provision
of a high-quality service to advisers and their customers.
· Have a wide range of compelling investment propositions
that meet the needs and expectations of customers.
· Provide a high-quality control environment that enables
advisers to be productive within an effective control
environment with tools that support their business.
· Support advisers in providing high-quality, trusted advice
to their customers which complies with all regulatory and
best practice standards of conduct.
How does the Board engage with advisers?
· Our Chief Executive Officer regularly briefs the Board on key
issues impacting all advisers.
· The Board and Board Risk Committee scrutinise and challenge
the Strategic Risk Appetite Principles and outputs to identify
how effectively and safely Quilter is supporting advisers in
serving customers.
· Two members of the Board also serve on the Quilter Financial
Planning Board. They engage regularly with advisers to
understand their perspectives and priorities and their
interactions are subsequently reported to the Board.
· The Board and the Board Risk Committee receive regular
updates on the quality of the service provided to advisers
following the implementation of the Group’s investment
platform.
· Management maintain a programme of communication
and interactions with Quilter Financial Planning’s advisers
to enhance the cultural alignment between Quilter and
Quilter Financial Planning’s advisers. The Chief Executive
Officer attended adviser syndicate events throughout the
year. The data and feedback from these initiatives continue
to be reported to the Board.
What was the result of that engagement?
· The Board asked management to continue to enhance
Quilter’s proposition so that it is attractive for our advisers.
· Enhancements have been made to make it easier for advisers
to work with Quilter, including the simplification and
automation of processes.
Our colleagues expect Quilter to:
· Create a values-led culture that is open and inclusive.
· Invest in the development of its people and its technology so
that its people can deliver excellent service to our customers.
· Offer an attractive reward structure and a compelling
colleague proposition.
· Provide support within and outside the workplace, particularly
in the context of the ongoing cost-of-living challenges.
· Listen to ideas, suggestions and concerns, and take action
as appropriate.
How does the Board engage with colleagues?
· The Board receives biannual reports from the HR Director on
the Group’s people, culture and ways of working, and closely
monitors colleague engagement survey scores.
· The Board endorsed management’s plans to improve the
inclusivity and diversity of the organisation and sponsored the
launch of the Group-wide Inclusion and Diversity Action Plan.
· Tazim Essani and Paul Matthews are the designated
Non-executive Directors for workforce engagement and play
an active role in ensuring that the views of our colleagues are
conveyed to the Board. In 2022, Tazim and Paul continued to
attend certain Quilter Employee Forum meetings, and held
monthly meetings with the Chair of the Employee Forum.
They further attended a workshop with the Chairs of Quilter’s
Colleague Networks.
· The Executive Directors engage directly with colleagues across
the Group.
What was the result of this engagement?
· In January 2022 the Board received a briefing from an external
speaker on inclusion and diversity to ensure it can effectively
oversee the Group’s efforts to drive its inclusion and diversity
agenda. The Board asked that the session be extended to
Quilter’s wider management community which resulted in over
300 managers attending a virtual diversity and inclusion
session. The session was designed to enhance understanding
of what it takes to create a truly inclusive workplace and how
the Board and management can influence the approach to
diverse representation.
· Feedback from engagement with the Non-executive Directors
resulted in clear guidance being issued to colleagues on hybrid
working arrangements.
· The Board Remuneration Committee gave close consideration
to the impacts for colleagues resulting from the cost-of-living
crisis and inflation. The Board welcomed management’s
initiative to make a one-off payment of £1,200 to employees
on a full-time equivalent salary of £50,000 or less, which was
confirmed alongside our half year results.
· Following feedback from the Board and the Executive
Committee, the frequency of the staff surveys (Peakon) will
be reduced in 2023 enabling staff to give more considered
feedback whilst ensuring more colleagues have their say.
Advisers Colleagues
2,200
employees (71%*) attended the Quilter Virtual Conference
in January 2022
*Number of full-time, part-time and contract staff employed
as at the date of the Quilter Virtual Conference.
Section 172 (1) statement
continued
23Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Our communities and suppliers expect Quilter to:
· Contribute to the communities in which Quilter is located
and where our products and services are used.
· Seek to mitigate the environmental impact of its operations
and to create products and services which facilitate our
customers’ desire to invest responsibly.
· Treat suppliers fairly and professionally.
How does the Board engage with its communities?
· By providing oversight of the Quilter Responsible Business
agenda, which affects customers, communities and the
environment. This responsibility for the Responsible Business
framework is delegated to the Board Corporate Governance
and Nominations Committee who receive regular updates
on progress.
· By endorsing and providing regular oversight of Quilter’s
strategy of being a responsible wealth manager.
What was the result of this engagement?
· In 2022, the Quilter Foundation (the “Foundation”) had
six active strategic partners and awarded over £700,000
in grants.
· In addition, the Foundation launched the ‘Local Community
Fund’ in January 2022. Through this initiative, any colleague
or adviser can nominate a local cause that is aligned to the
Foundation’s objectives, for grants of up to £10,000. In 2022
the Fund awarded over £120,000 to 17 charities, which
included food banks and mental health charities.
· Colleagues and advisers contributed to community
volunteering and raised over £100,000 to support the work
of the Foundation.
· A total of 23 charities benefitted from grants from the
Foundation, enabling support for 26,557 young people.
How does the Board engage with its suppliers?
· Quilter proactively engages with strategic and critical suppliers
on a regular basis through formal governance meetings and
discussing business strategy, performance and areas of
further opportunity or risk. Throughout the year the Board
regularly received updates on the performance of our
strategic partners.
What was the result of this engagement?
· Ongoing dialogue has helped ensure the supply chain has
remained resilient.
· We work collaboratively with our strategic partners to drive
development of the functionality of the systems our
customers and advisers use.
· With the current energy crisis and rising inflation Quilter is
working closely with suppliers to understand how they would
continue to operate in the event of power outages, as well as
the steps they are taking to remain financially resilient.
Customers expect Quilter to:
· Provide consistently high-quality service and access to
products and services that meet their needs and expectations,
within their risk appetite and with the flexibility to reflect their
ESG preferences.
· Provide personalised customer propositions, through
supporting long-term advice-based relationships.
· Deliver good investment performance.
How does the Board engage with customers?
· The Board scrutinises a regular Customer Report which
includes feedback on the perceived quality of Quilter products
and services to ensure the business is continually learning
from the feedback received from customers and their
advisers. Quilter currently has three main sources of customer
feedback: Trust Pilot, Inmoment Surveys and customer
complaints, in addition to indicative feedback from advisers
through our distribution teams and customers via our
contact teams.
· All Board and Committee papers include, where appropriate,
analysis of the impact on customers of business proposals.
· The Board and the Board Risk Committee receive regular
updates from the Chief Executive Officer, with support
from the Chief Risk Officer, on the progress of customer
remediation programmes.
· The Board Remuneration Committee receives reports on how
the business has served its customers as part of its oversight
of the executive scorecard that drives the remuneration
outcomes for our senior executive team.
· The Board continues to oversee the delivery of the
organisational change to implement Quilter’s strategy of
organising the business around its two core client-focused
segments, High Net Worth and Affluent.
What was the result of that engagement?
· The Board has overseen the development of a plan to
implement the new Consumer Duty which is due to be
implemented by July 2023. The new duty aligns with a core
part of the Company’s strategic rationale to deliver good
outcomes for customers.
· In response to feedback from the Board the reporting on
how we support our customers continues to be enhanced
to include metrics as to how Quilter’s customers feel about
their day-to-day interactions with Quilter.
· Quilter continued to work closely with its customers and
regulators in relation to the conduct of past business reviews
and the provision of compensation to customers who received
unsuitable advice, which resulted in a loss. This advice was
in relation to Defined Benefit (“DB”) to Defined Contribution
(“DC”) pension transfers from Lighthouse advisers prior to
Lighthouse transitioning to Quilter’s systems and controls
after its acquisition by Quilter.
· Quilter has worked with government to introduce
suitable legislation to ensure consumers are adequately
protected online.
Communities Customers
Section 172 (1) statement
continued
23
charities benefitted from
grants from the Foundation
24 Quilter Annual Report 2022
Our investors expect Quilter to:
· Deliver a strategy that creates long-term shareholder value,
delivering sustainable dividends supported by cash flow
and capital generation.
· Have a resilient business model which generates sustainable
returns for shareholders and reliable cash flow for debt investors.
· Maintain robust corporate governance to ensure effective
oversight and control of the business.
· Maintain financial strength and resilience that enables the
business to withstand market headwinds and volatility.
· Integrate ESG factors within our investment processes.
How does the Board engage with its investors:
· Maintaining regular and constructive dialogue with investors
to communicate the Company’s strategy, Remuneration Policy,
Chair and Chief Executive Officer succession and performance.
· Providing updates on the Group’s trading and financial
performance to the markets, and conducting 195 meetings in
2022 with shareholders, debt holders and prospective investors.
· Ensuring private shareholders received excellent support from
our share registrars in the UK and South Africa.
· Holding an Annual General Meeting and General Meeting
that was accessible for shareholders overseas to listen
to by telephone.
· Consulting with our shareholders on their preferred
mechanism for the distribution of the net proceeds of the sale
of Quilter International.
What was the result of this engagement?
· Quilter returned £328 million of the net proceeds arising from
the sale of Quilter International to shareholders by way of a
B Share Scheme accompanied by a Share Consolidation which
was implemented in May 2022.
· The Board considers investor feedback on an ongoing basis.
An example of how debtholders’ and shareholders’ interests
were considered is set out on page 61 in the Principal
Decisions of the Board regarding our new Tier 2 Bond Issue
launched in January 2023.
· Following consultation with major shareholders, the new
Directors’ Remuneration Policy was approved by shareholders
with a 96.16% majority at the 2022 Annual General Meeting.
· Continuing dialogue with major South African shareholders
on the Company seeking an enabling authority at each
Annual General Meeting regarding political donations.
Our regulators expect Quilter and its subsidiaries to:
· Run Quilter’s operations in a prudent manner, being
appropriately capitalised and with sufficient liquidity to enable
it to discharge its obligations.
· Manage its conduct risk and internal controls.
· Operate in the best interests of its customers and meet
the expected outcomes of customers.
· Operate in an open and transparent manner with its
regulators, its customers and the financial markets both as
an investment manager and a listed company in its own right.
How does the Board engage with the Group’s regulators?
· Transparent and open regulatory relationships are
fundamentally important and Quilter engages regularly with
its main regulators to ensure business is conducted in line
with their expectations and the evolving regulatory framework.
· The Board Risk Committee receive a quarterly report on
the status of material regulatory relationships and matters
under discussion.
· Quilter routinely shares certain Board and other relevant
papers with our main regulators.
· Certain Board Directors, Executive Committee members
and other senior leaders meet regularly with our main UK
regulators. Matters discussed in 2022 include regulatory
changes such as the Consumer Duty and Appointed
Representative Regime changes, the implementation of the
High Net Worth and Affluent segments, the new Tier 2 Bond
Issue, diversity, governance and operational resilience.
· The Board received regular updates on regulatory
developments in 2022. Subjects included an update on the
FCA’s Consumer Investments Strategy, the evolution of
ESG-related regulation, the regulators’ joint Discussion Paper
on critical third parties to the financial sector, and the review
of the UK’s Financial Services Compensation Framework.
What was the result of this engagement?
· Consideration of the views and expectations of our regulators
were core to the Board’s decision making during 2022,
including the return of the net proceeds to shareholders
following the completion of the sale of Quilter International.
· Quilter contributed responses to a number of consultations
and discussion papers, including in relation to the Consumer
Duty, the UK’s review of the Solvency II prudential regime
for insurers, the calculation of redress for non-compliant
DB transfer advice, the FCA and HM Treasury’s review of the
Appointed Representatives regime, the FCA’s consultation on
protecting investors in authorised funds following the Russian
invasion of Ukraine, and the review of the UK’s Financial
Services Compensation Framework.
Investors Regulators
Section 172 (1) statement
continued
£328m
returned to shareholders through
the B Share Scheme in 2022
25Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
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Responsible Business
Acting responsibly refers to the
way we operate and do business.
It is about our culture, values,
business conduct and how
we manage our relationships
with our stakeholders.
Investing responsibly refers
specifically to our products and
services. It is about how we seek
to integrate responsible investment
(“RI”) considerations into our
financial advice process, investment
platform tools and investment
management approach.
2022 materiality assessment
We are committed to reviewing
our approach to responsible wealth
management regularly to ensure
it continues to reflect the areas of
materiality for our business.
This year the materiality assessment
was conducted between July and
September. The output was
presented to the Quilter Responsible
Wealth Management Executive
Steering Committee and the Quilter
Board in September 2022.
The assessment included desk-based
research of the regulatory landscape,
our competitor propositions, the
expectations set by the external
bodies (of which we are a signatory)
and societal trends relating to
colleague, customer and adviser
preferences. This research included
consideration of customer and
adviser research conducted by
Quilter between 2020 and 2022. We
also conducted a series of interviews
with subject matter experts from our
responsible investment, proposition,
distribution and human resources
teams to gain their perspectives.
Based on this assessment we have
developed the following strategy for
our responsible wealth management
activities. This strategy is based
around the framework you will find
on the right-hand side of this page
and three core areas which we are
focusing on in the short term. You will
find these detailed on page 27.
Our strategic framework:
Our materiality assessment has
highlighted the need to leverage a
framework which prompts us to think
about how we act and how we invest.
Being a responsible wealth manager
Our purpose is to create prosperity for the
generations of today and tomorrow. To do this,
we must strive to create a sustainable business,
that acts and invests responsibly. That is why
being a responsible wealth manager is one of
the four pillars of our Group strategy.
26 Quilter Annual Report 2022
Oversight of delivery
Board
Responsibility for environmental, social and governance (“ESG”) matters – captured in the responsible wealth
management framework – resides with the Quilter plc Board, which has delegated oversight of the reporting
framework to the Board Corporate Governance and Nominations Committee.
Executive
Responsibility for the responsible wealth manager strategy is delegated to the Chief Executive Officer,
supported by the Executive Committee. The Responsible Wealth Management Steering Committee is a formal
sub-committee of the Executive and provides executive oversight, direction and monitoring of the responsible
wealth management strategy.
Our current key areas of focus
Why this pillar is important according
to our assessment of materiality
Our commitments
to our customers
Measuring
our progress
Invest
responsibly
Read more
on page 28
Customers expect us to be able to manage their
money in a way that aligns with their values and
needs, whatever their life stage.
Customers trust us to protect, grow and pass
on their wealth to the future generation.
Colleagues want to be proud of the outcomes
we achieve for our customers and the way we
manage their money.
We will aim to:
· make it easy for our
customers to invest in line
with their values and
needs; and
· safeguard the futures of
our customers and their
families by considering the
environmental, social and
governance issues that
could impact their wealth
where we actively manage
their assets.
Our aim is to retain signatory
status of the Financial
Reporting Council’s (“FRC”)
Stewardship Code and we will
continue to be a signatory of
the United Nations backed
Principles for Responsible
Investment (“UN PRI”) as
these are currently
recognised as the custodians
of best practice for
responsible investment
within our industry.
Reflect our
community
Read more
on page 29
Customers expect us to care and understand their
needs, making the right decisions in the moments
that matter.
Customers expect us to be able to service both
them and their families as a whole.
Colleagues want to feel included and part of
something greater than themselves. They want
to know the business values their individual needs.
We will aim to build a
business that reflects the
diverse needs of our
customers, their families and
the communities they live in.
We have set targets to
increase the diversity of our
senior management: 40%
female representation for the
end of 2025 and 5% ethnic
minority representation
by the end of 2023.
Our aim is to have supported
100,000 young people since
listing through the Quilter
Foundation by 2025.
Consider
climate impact
Read more
on page 31
Customers want the best for their families
and future generations.
Colleagues believe in the threat climate
change poses; they want us to play our part
to help tackle it.
We will seek to play our part
in the global effort to create
a more sustainable world for
future generations.
We have set a target to
reduce our Scope 1 and 2
emissions by 80% by 2030.
Responsible Business
continued
27Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Propositional enhancements:
In 2022 we launched our new WealthSelect Sustainable and
Responsible Portfolios and broadened our Climate Assets range
through the launch of a new growth fund.
Stewardship Code
Stewardship involves engaging with companies and funds
to discuss and encourage improvement in their handling
and disclosure of ESG issues. Quilter was proud to retain its
signatory status of the Financial Reporting Council’s Stewardship
Code in 2022, a status which is verified annually on the basis of
our Stewardship Code Report. This report is updated annually
on our website and our 2022 report will be added after it is
submitted to the FRC in April. This report provides a summary
of the key stewardship activities we have undertaken during
the course of the year in Quilter Cheviot and Quilter Investors
as well as further detail on our responsible investment activities
more generally.
Responsible Business
continued
Invest responsibly
The United Nations backed Principles for Responsible Investment
(“UN PRI”) define responsible investment as ‘a strategy and practice
to incorporate environmental, social and governance (“ESG”) factors
into investment decisions and exercise active ownership’.
We believe that incorporating ESG data into investment decisions
and exercising active ownership helps to mitigate risk and identify
potential opportunities thereby contributing towards the
generation of long-term sustainable returns. That is why we are
in the process of integrating responsible investment (“RI”) practices
into the areas of the business where we actively manage assets
on behalf of our customers. This includes iteratively improving the
data and technology we provide to our investment professionals
and broadening the impact we have through stewardship. There
are differences in how this is and can be applied in practice in each
area of our business and you can read more about how this was
approached in 2022 on our websites or in our Stewardship
Code Report.
Read more at www.quilter.com/investments/responsible-investment/
or in our Stewardship Code Report plc.quilter.com/responsible-
business/reports-and-statements
We believe customers should have the information and choices
to enable them to invest in line with their values and needs.
That is why we strive to understand our customers’ responsible
investment preferences and provide them with the option to invest
in a solution or service which has a specific responsible investment
objective. In 2022, we made tools and training available to our
advisers and investment managers so that they are able to
understand a customer’s responsible investment preferences
and select a solution which aligns to these. We have delivered new
investment strategies and portfolios in recent years which have
responsible investment objectives, with some key new offerings
delivered in 2022 as noted below. We will aim to continue to evaluate
our proposition against our customers’ responsible investment
preferences and in 2023 will do so in line with the next phase of
the FCA’s Sustainability Disclosure Requirements (“SDR”) Regime.
Priorities
2022–4
2022
progress
Onward
priorities
Continue
to support
customers,
advisers and
colleagues to
engage with
and understand
responsible
investment
Training for Quilter
Cheviot Investment
Managers to support
the incorporation of
RI preferences into
suitability processes.
Training made available
to independent and
Quilter advisers as part
of Wealth Select launch.
Ongoing
programme
of engagement
with customers,
advisers and
colleagues.
Embed
responsible
investment
practices
where relevant
Embedded
consideration of
responsible investment
preferences into
Quilter’s advice
and Quilter Cheviot
suitability processes.
Improve ESG
data coverage
and broaden
stewardship
activities across
Quilter
Investors’
portfolios.
Deliver reporting
in line with
regulatory change
Initiate roll out of task
force for climate-related
financial disclosures
(“TCFD”).
Roll out of SDR.
Ensure our
proposition caters
to the responsible
investment
preferences of
our customers
Launched WealthSelect
Responsible &
Sustainable Portfolios
in Quilter Investors.
Launched Climate
Assets Growth Fund,
DPS Focused and
a further version of
the Positive Change
strategy in
Quilter Cheviot.
Ongoing
assessment
of customer
preferences with
updates made
where relevant.
Marisol Hernandez
Head of Responsible Investment
Affluent Segment
Gemma Woodward
Head of Responsible Investment
High Net Worth Segment
Stuart Clark
Portfolio Manager, Wealth Select
Claudia Quiroz
Head of Sustainable Investment
Quilter Cheviot
28 Quilter Annual Report 2022
Responsible Business
continued
Reflect our community
We believe that having an inclusive culture that embraces diversity
helps us better understand the evolving needs of our customers,
and therefore improves decision making for them and our business.
We are making changes to our internal practices to enable us
to attract and retain a diverse colleague community under the
leadership of our Head of Inclusion and Diversity. We want to invest
in initiatives designed to make our services more accessible to a
broader range of clients. Quilter Cheviot’s Women in Investing Hub
is an example of this.
We want all of our colleagues to remain focused on the customers
and advisers they serve and connected to the community they
operate within. That is why we chose to establish a charitable
foundation when we listed back in 2018. The Foundation aims to
break down the barriers to prosperity for young people and has
supported 57,710 young people since its launch.
Priorities 2022
progress
Onward
priorities
Put the customer
and adviser
experience
at the heart
of our culture
Implemented
next phase of
customer-centric
operating model.
Deliver Consumer
Duty Programme.
Create a more
inclusive and
diverse Quilter
Quilter Cheviot’s
Women in Investing
Hub continued &
Female Client
Survey conducted.
Recruitment
practice refresh.
2025 senior
management
targets.
Assess routes of
action to support
greater diversity
in adviser market.
Respond to the
needs of our
employees in the
moments of truth
Provided additional
support during the
cost-of-living crisis
to colleagues.
Launch refreshed
wellbeing strategy.
Create a
demonstrable
symbol of our
commitment
to go beyond
making a profit
Appointed new
manager of the
Quilter Foundation
(joined January
2023) and refreshed
trustee Board.
Launched the
Foundation’s Local
Community Fund.
Donations to
Disaster Emergency
Committee (“DEC”)
appeals for Ukraine
and Pakistan.
Launch next
phase of Quilter
Foundation
employment grant.
Colleagues
fundraised
£120k
In 2022 our colleagues
continued to show their
support for the Quilter
Foundation, raising over
£100,000. Colleagues also
raised over £20,000 for other
charitable causes. Matched
funding from Quilter plc
contributed a further £60,000.
DEC donations
£195k
In 2022 we unfortunately
continued to see
emergencies around the
world. Quilter responded
to both the DEC’s appeal
for Ukraine and it’s appeal
for Pakistan. Colleagues
fundraised over £70,000
and Quilter plc contributed
a further £125,000.
3-year employment
grant concluded
In 2022 our three-year
employment grant concluded.
We partnered with three
charities, Street League,
Safe New Futures and School
of Hard Knocks, to support
424 15-25 year olds reduce
the barriers they faced to
gaining employment.
Local Community
Fund launched
In response to colleague
feedback, we launched
the Foundation’s Local
Community Fund in 2022.
The aim of the fund was to
create a mechanism through
which the Foundation could
make smaller grants to causes
nominated by colleagues
or advisers.
During the year we granted
£120,000 to 17 charities
across the British Isles.
This included a number of
organisations contributing
support to those affected
by the rising cost of living.
£120,000
granted
Quilter Foundation highlights
You can read more about our impact through the Foundation by
visiting plc.quilter.com/responsible-business
29Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Responsible Business
continued
Inclusion and Diversity Action highlights:
In 2022, we launched our two-year action
plan designed to identify and deliver
sustainable, long-term change.
You can read more about our two-year Inclusion and Diversity
Action Plan here plc.quilter.com/responsible-business
The Action Plan was endorsed by the Quilter plc Board and delivery
is overseen by the Inclusion and Diversity Executive Steering
Committee, chaired by Quilter’s Chief Executive Officer. Good
progress was made in 2022 but we are cognisant of the industry
wide challenge to address inclusion in financial services and realise
that significant effort and focus is required over a sustained period.
In 2022 our focus was on setting the foundations for success,
encouraging data disclosure and education.
Attracting and retaining diverse talent: A thorough review
of recruitment processes was conducted to ensure our talent
acquisition practices can enable our action plan. In addition, the
talent acquisition team, along with the wider human resources
function, underwent specialist training to ensure they are
appropriately equipped to support delivery of our ambition.
Education and community: The Quilter plc Board, senior leaders
and line managers attended informative and inspiring sessions
with John Amaechi OBE. Over 300 employees attended in total.
To reinforce the importance of inclusion and diversity we also
mandated a specific performance objective for managers, offering
guidance and setting clear expectations. We launched our new
Inclusion and Diversity Forum. The Forum meets quarterly and is
designed to create a safe space for dialogue on this topic between
colleagues from across our organisation. We also continue to
support our employee networks – Together with Pride, Gender
Diversity and Cultural Diversity.
Data disclosure: We recognise the importance of data disclosure,
not least in measuring and monitoring progress but also as an
indicator of colleagues’ level of psychological safety in sharing
personal data with Quilter. In 2022 we focused on creating
psychological safety through storytelling and role modelling,
and we also expanded our disclosure fields to cover a broader
set of diversity characteristics.
Colleague diversity data
We use targets to drive our desired improvement in the diversity
of our senior management. In 2022, our target was to achieve 38%
female representation and 5% ethnic minority representation in
this community. Although gender diversity improved year-on-year,
we narrowly underachieved these targets, ending the year with
36% female and 4% ethnic minority representation. Nonetheless,
we remain committed to sustainable change and believe the
progress noted above will support this. To further reinforce our
long-term goals, we have set out new minimum targets for the end
of 2025 to have 40% female representation, which is in line with the
FTSE Women Leaders Review Target, and 5% ethnic minority
representation by the end of 2023. As we progress toward these
medium-term minimum goals, we will continue to set stretch
targets for the executive that will drive and support diverse
representation across our senior management.
With regards to our pay gap data, in 2022 we have reported a
median gender pay gap of 31% and a median bonus gap of 44%,
a reduction on 2021. We have also voluntarily included our ethnicity
pay gap calculations. Our median ethnicity bonus gap of 35% is
lower than 2021.
The data below is as at 31 December 2022 and staff are asked
to contribute their data via an electronic portal. For detail on
the diversity of our Board directors see page 54.
Data disclosure response rates
Gender
Gender
identity
Sexual
orientation Ethnicity Disability
Age
group Religion
Socio
economic
100% 46% 72% 90% 61% 100% 80% 60%
Gender representation
Senior management
1
2022
2021 36,117458,203
18 (36%)32 (64%)
All colleagues
2022
2021 36,117458,203
1,329 (44%)1,676 (56%)
Latest UK Census (2021) benchmark
2022
2021 36,117458,203
51%49%
Male Female
Gender pay gap
Gender pay data 2022 2021
Mean hourly pay gap 30% 33%
Median hourly pay gap 31% 29%
Mean bonus gap 62% 72%
Median bonus gap 44% 53%
Female colleagues receiving a bonus 90% 92%
Male colleagues receiving a bonus 92% 91%
Ethnicity pay gap
Ethnicity pay data 2022 2021
Mean hourly pay gap 12% 15%
Median hourly pay gap 5% 4%
Mean bonus gap 48% 44%
Median bonus gap 35% 38%
Colleagues from an ethnic minority group
receiving a bonus 82% 87%
White colleagues receiving a bonus 92% 92%
Ethnic group representation
Ethnic group representation
Asian
2
%
Black
3
%
Mixed
4
%
White
5
%
Other
6
%
N/A
7
%
Senior Management 2% 0% 2% 92% 0% 4%
All colleagues 6% 2% 2% 87% 1% 2%
Latest UK Census (2021)
benchmark 10% 4% 3% 81% 2% –
1
Senior Management is defined as Executive Committee and their direct reports,
excluding personal assistants.
2
Colleagues who identified as belonging to one of the following ethnic groups:
Bangladeshi, Chinese, Indian, Pakistani or Asian other.
3
Colleagues who identified as belonging to one of the following ethnic groups: Black
African, Black Caribbean, Black other.
4
Colleagues who identified as belonging to one of the following ethnic groups: Mixed
White/Asian, Mixed White/Black African, Mixed White/Black Caribbean, Mixed other.
5
Colleagues who identified as belonging to one of the following ethnic groups: White
British. White Irish, White Gypsy/Traveller, White other.
6
Colleagues who identified as belonging to one of the following ethnic groups:
Arab, Any other.
7
Colleagues who responded but opted not to disclose their ethnic group.
30 Quilter Annual Report 2022
Colleague sustainability survey
In June 2022, we ran our first Quilter sustainability survey.
The survey was designed to obtain more information on colleague
commuting and working from home habits. It allowed us to hear
their ideas about the opportunities we have to act more
sustainably. We had a 33% response rate, with coverage across
our office locations. We made the results of the survey available
to colleagues so that they could see the emissions impact of
different commuting choices. As a result of the feedback, we
were able to refine our Scope 3 emissions calculations through
the use of some actual employee commuting data and also
launched a new quarterly sustainability newsletter, designed to
promote the support we are making available to colleagues to
enable more sustainable choices. We currently intend to repeat
this survey to track the impact of our improvements and reflect
on engagement.
Consider climate impact
We believe in the importance of playing our part in the global
effort to create a more sustainable world and consider our
exposure to climate-related risks. In 2022 we set a reduction target
for the emissions associated with our direct and indirect operations
(Scope 1 and 2) and continued to develop our understanding
of the emissions from our value chain (Scope 3). Excluding our
investments, the biggest contributor to our Scope 3 emissions are
those associated with our third-party spend. In 2022, we worked
with a third-party to broaden our understanding of the emissions
generated by the third-parties we procure services from and the
levers we have available to reduce this impact. Delivering on these
opportunities will be a priority in 2023 and we remain committed
to building out our approach further. Further details can be found
in our Task Force on Climate-Related Financial Disclosures (“TCFD”)
report which is summarised on page 32.
Priorities 2022
progress
Onward
priorities
Contribute to a
just transition to
net zero by 2050
Scope 1 and 2
targets set.
Set purchased
goods and services
engagement
target.
Iteratively improve
our action plan
with a focus on
our investments.
Enable our people
to take tangible
action to address
the climate crisis
Colleague
sustainability
committee launched.
First Colleague
Sustainability Survey.
Iterative
improvements
to encourage
colleague action.
Assess the action
required of Quilter
on biodiversity
Assess Taskforce
for Nature
Related Financial
Disclosures
recommendations
and determine
actions.
Operational greenhouse gas emissions
Our 2022 Scope 1 and 2 emissions were 46% lower than
our 2020 baseline. The primary driver of this was the reduction
in our office footprint driven by the sale of our International
business. Moving forwards, we anticipate short-term reductions
will be harder to achieve. In 2022 we worked with a third party to
update our methodology for calculating Scope 3 emissions and
this has meant we have restated higher 2021 figures below.
Operational greenhouse gas emissions and energy use data
Greenhouse gas emissions
as at 31 December
2022
tCO2e
2021
tCO2e
Scope 1 emissions Global 377 1,132
1
UK 371 1,125
1
Scope 2 (location-based)
emissions
Global 1,085 1,622
UK 1,043 1,505
Scope 2 (market-based)
emissions
Global 833 1,151
2
UK 754 1,017
Total Scope 1 & 2 emissions
3
Global 1,462 2,754
UK 1,414 2,630
Scope 3 emissions
4
(excluding investments)
Global 39,900 56,599
UK 39,891 54,013
Total operational emissions Global 41,362 59,353
UK 41,305 56,643
Operational carbon intensity
(tCO2e per Full Time
Equivalent (FTE))
5
Global 14.10 19.56
UK 14.22 18.80
Streamlined Energy and Carbon Reporting (SECR) 2022 kWh 2021 kWh
Global energy use 8,776,775 11,935,393
UK energy use 8,605,404 11,615,018
Meaning of Scope Definitions
All operational emissions data (incl. energy consumed) calculated according to the
Greenhouse Gas (GHG) Reporting Protocol – Corporate Standard. The GHG protocol
categorises emissions according to ‘Scope’, as follows:
– Scope 1 (Direct GHG) These are emissions from sources that are owned or
controlled by an organisation. This includes fuel combustion on site e.g. gas boilers,
fleet vehicles and air-conditioning leaks.
– Scope 2 (Energy – Indirect GHG) These are emissions from the consumption of
purchased electricity, heat and steam, or other sources of energy (e.g. chilled water)
generated upstream from the organisation. For purchased electricity, organisations
are required to report Scope 2 emissions according to a ‘location-based’ method
and a ‘market-based’ method (see below):
– Location-based. This reflects the average emissions intensity of grids on which
energy consumption occurs (using mostly grid-average emission factor data).
– Market-based. This reflects emissions from electricity that organisations have
purposefully chosen and therefore includes where they may have renewable
energy contracts in place or generate their own energy.
– Scope 3 (value chain – indirect) These are all indirect emissions (not included
in Scope 2) that occur in a company’s value chain, including both upstream and
downstream emissions (e.g. business travel, waste).
Due to data availability, Quilter’s calculations do not take into account the emissions
generated by self-employed advisers. This includes, Quilter Financial Planning, Quilter
Financial Advisers and other independent advisers who use our platform or asset
management services. Our Scope 3 disclosures do not include data for the impact
generated by our investments.
Footnotes to data table
1
Including a refrigerant leak accounting for 509 tCO2e. This figure differs from last
year‘s reported value due to underestimation of gas supply in our Southampton office.
2
This figure differs from last year’s reported value due to a change in market-based
emission factors for our geothermal supply in our Southampton office.
3
This is calculated as the total of Scope 1 and Scope 2 (location-based) emissions.
4
Our disclosed Scope 3 emission metrics (excluding investments) contain some
estimations and reliance on externally provided data. Following a change in
methodology, our emissions from purchased goods and services have been
recalculated for 2021.
5
Calculated as total operational emissions divided by the average number of
FTE employees as at year-end. This metric is provided as a comparison against
other organisations.
Responsible Business
continued
31Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
For accounting periods starting on or after 1 January 2021, the FCA required premium listed companies, such as Quilter plc, to include
a statement of consistency with the TCFD’s recommendations and recommended disclosures within their Annual Report.
1
Where the
relevant disclosures are provided in a separate report, listed companies must provide a description of where that document can be found.
Whilst material and significant climate-related information can be found in this report, we have chosen to produce disclosures consistent
with the TCFD’s recommendations and recommended disclosures in a separate standalone report, intended to supplement our annual
report. This allows us to produce more detailed supplemental climate-related information, in a form tailored and accessible to a wide
range of stakeholders. Our ‘2022 Group TCFD report’ can be found online at: plc.quilter.com/responsible-business/reports-and-statements.
See below for a summary of the TCFD recommended recommendations, our disclosures and where in the standalone 2022 Group TCFD
report they can be found
1
:
Theme TCFD Recommended disclosure Our disclosure
Governance
Disclose the organisation’s
governance around
climate-related risks
and opportunities.
Describe the Board’s oversight of climate-related
risks and opportunities.
See page 9
· We have presented the governance structure for
Board oversight and management of climate-related
risks and opportunities.
· We have described relevant recent activities performed
by the Board and senior management.
Describe management’s role in assessing and
managing climate-related risks and opportunities.
See pages 10 - 12
Strategy
Disclose the actual
and potential impacts
of climate-related risks
and opportunities on the
organisation’s businesses,
strategy, and financial
planning, where such
information is material.
Describe the climate-related risks and opportunities
the organisation has identified over the short,
medium, and long term.
See pages 14 - 16
· The climate-related risks we have identified are market,
reputational and legal, policy and regulatory, and
physical risks such as extreme weather events.
· Our climate-related opportunities include increased
demand for sustainable products and services.
· We have described how the identified risks have
informed our strategy, business activities and services.
We have an opportunity to expand upon how these risks
have informed financial planning in our 2023 disclosure.
· A climate-related scenario analysis exercise for the
Group, which explored our long-term resilience to three
potential climate scenarios, is described.
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy, and financial planning.
See pages 17 - 20
Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
See page 21
Risk management
Disclose how the
organisation identifies,
assesses, and manages
climate-related risks.
Describe the organisation’s processes for identifying
and assessing climate-related risks.
See page 23
· We have described how climate-related risks have been
integrated into our overall risk management framework,
including information on how climate-related risks are
determined in relation to other identified risks.
· Our approach to managing climate-related risks within
our investments is described in more detail, covering
our approach to ESG-integration, stewardship activities
and engagement.
Describe the organisation’s processes for managing
climate-related risks.
See pages 23, 25 - 30
Describe how processes for identifying, assessing,
and managing climate-related risks are integrated
into the organisation’s overall risk management.
See pages 23 - 24
Metrics and targets
Disclose the metrics and
targets used to assess
and manage relevant
climate-related risks and
opportunities where such
information is material.
Disclose the metrics used by the organisation to
assess climate-related risks and opportunities In line
with its strategy and risk management process.
See pages 32 - 34
· With regard to our operational activities we use GHG
metrics to assess, monitor, and manage our exposure
to climate-related reputational risks. We have disclosed
our Scope 1 and Scope 2 GHG emissions and estimated
our Scope 3 emissions (excluding investments) and set
a target to reduce our Scope 1 and 2 emissions.
· With regard to our investment activities, we are not
able to disclose our GHG emissions for investments
due to data limitations. However, in our High Net Worth
segment, we have provided a carbon-related matrix,
the weighted average carbon intensity (“WACI”) as a
measurement of exposure to climate-related market risk
in our investments. Within Affluent, we have provided
carbon footprint metrics for our WealthSelect
Responsible and Sustainable ranges and have disclosed
the WACI of a proportion of our investments to the
extent that data is available and reasonable credible.
Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (“GHG”) emissions,
and the related risks.
See pages 32 - 33
Describe the targets used by the organisation
to manage climate-related risks and opportunities
and performance against targets.
See page 32
1
Our disclosures are consistent with the four recommendations and the eleven recommended disclosures set out in the report entitled ‘recommendations of the task force on
climate-related financial disclosures’ published in June 2017 by the TCFD as required under the FCA’s listing rules. We have considered the document entitled ‘annex: implementing
the recommendations of the task force on climate-related financial disclosures’ published in October 2021 and highlighted where future improvements are needed to meet these
enhanced recommended disclosures above.
Task Force on Climate-related Financial Disclosures statement
Responsible Business
continued
32 Quilter Annual Report 2022
Other key activities: our people
Talent management and engagement
The success of our business relies on recruiting and retaining the
very best talent. As part of our annual talent and succession review,
future skill needs of the organisation are identified in order to
highlight any skill gaps within the organisation and plan for how
to address these (for example through training, recruitment,
apprenticeships etc).
We have continued our partnership with Future Talent, a leading
education and learning platform, to provide two flagship leadership
development programmes: the Transformational Leadership
Programme for experienced leaders and managers looking
to step into senior leadership roles, and the Aspiring Manager
Transformational Leadership programme, aimed at first-time
line managers or those aspiring to take on a management position.
We currently have 234 people on our leadership programmes.
6% of people who have participated in the programme have
since been promoted, compared with the Quilter average of 2.5%.
A new coaching framework was also rolled out last year, primarily
designed to support new leadership and management teams that
were coming together as the business transformed. In addition,
colleagues can access training and development, including degree
programmes and relevant professional qualifications, where
relevant to their role and development needs.
We seek the views of our colleagues through the Workday Peakon
Employee Voice tool. The survey provides key engagement insights
to leaders and managers and informs our people strategy to
ensure we are focusing on employee needs whilst also tracking
key priorities such as inclusion and diversity. Our engagement score
increased to 7.4/10 in 2022, independently rated as ‘good’ and in
the middle range of the finance sector. The Employee Forum
represents colleagues across Quilter and meets with senior leaders
on a monthly basis to discuss key issues that impact the interests of
our people. The views of the Employee Forum, together with views
and feedback from our weekly surveys, are taken into account and
support management’s decision making.
We continue to make the option available to permanent employees
to invest in Quilter shares via a save as you earn (“SAYE”) scheme
and arrange townhalls and provide regular communications to
explain our business performance.
HR policies
Our people policies support our aim to create an inclusive culture
that embraces diversity and enables our people to thrive. They also
reflect relevant employment laws, including the Universal Declaration
of Human Rights and ILO Declaration on Fundamental Principles
and Rights at Work. All employees and suppliers providing on site
services in the UK are paid no less than the real Living Wage, a
voluntary initiative run by the Living Wage Foundation. In October
2021 they published the rates of £11.05 per hour for London and
£9.90 per hour outside of London and these were refreshed in
September 2022 to £11.95 and £10.90 respectively – the largest
percentage increases in recent memory in direct response to the
cost of living challenges. Firms have six months to update any
employees whose pay is below these minimums to remain
accredited, however, we voluntarily made the appropriate changes
for affected individuals with immediate effect and ensured all of our
starting salaries begin in excess of these amounts. In light of the
pressures faced by many of our colleagues due to the rising cost of
living, we made a one off payment in August 2022 to all employees
on an full time salary of £50,000 or less.
We promote equal opportunities and ensure that no job applicant
or colleague is subject to discrimination or less favourable
treatment on the grounds of gender, marital status, nationality,
ethnicity, age, sexual orientation, responsibilities for dependants,
or physical or mental disability. We are committed to continuing the
employment of, and for arranging training for, employees who have
become disabled while employed by Quilter. We select candidates
for interview, career development and promotion based on their
skills, qualifications, experience and potential.
A grievance procedure is in place to provide a clear and secure
route for employees to raise a complaint or problem about any
issue relating to their work, working environment, pay and benefits,
working hours or a concern about any other issue affecting their
employment. In line with our whistleblowing policy, colleagues are
required to report knowledge or suspicion of malpractice or actions
that endanger Quilter’s employees or assets. The Whistleblowing
Policy provides employees who raise concerns in good faith with
protection from detriment to their future employment
opportunities. Concerns can be reported to line managers, Risk and
Compliance or via the independent confidential ethics hotline which
is available year round. This hotline is also available to suppliers and
advisers who work with Quilter.
Our customers
Customer service and engagement
We continue to invest effort into the collation of customer feedback
and seek to act upon the insights it provides to improve service
and ensure our proposition continues to meet customer needs.
We continue to monitor our Trustpilot score. As at December 2022,
our score stood at 4.2/5, meaning we saw an improvement through
the course of the year. In 2022 we linked our pre-existing customer
satisfaction surveys generated for customers of our platform and
Quilter Private Client Advisers to Trustpilot to enable greater
transparency of the feedback we are receiving and continued to
work with an external organisation to collate customer satisfaction
scores for these two areas of our business. Our customer
satisfaction score remained flat on 2021 at 84% and market insight
indicates that this was a good outcome given the disruption seen
last year due to market conditions. The feedback gained from these
sources is made available to a variety of stakeholders across the
business and we seek to ensure we act on any areas for
improvement which are highlighted.
Responsible Business
continued
33Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
To broaden our understanding of our customers and target
customers further, we continue to run research projects. The most
notable example of this in 2022 was the Female Client Survey run
by Quilter Cheviot as part of the Women in Investing initiative.
The survey aimed to understand the investment experiences
of our female clients including what aspects lead them to invest,
how they make investment decisions, and how their differing
circumstances affect the way they invest. We have released the
output of this project externally and have used the insights to
inform our proposition.
In advance of the implementation of the FCA’s Consumer Duty
in 2023, in 2022 we initiated a pan-Quilter programme designed
to ensure readiness and have a specific workstream focused on
customer support. One of the customer groups we have considered
as part of this work is those customers who could be considered
vulnerable, for whom we have already made various adjustments
in recent years to ensure they are appropriately supported. The
programme is also implementing a new approach to the testing
of customer communications so that we can continue to ensure
they are as understandable as possible.
Consumer advocacy
During 2022, we continued to call for the UK Government to
protect consumers against the threat of online financial scams.
This included campaigning for the online advertising elements
of the Online Safety Bill to remain part of the bill and responding
to Department for Digital, Culture, Media & Sport on the Online
Advertising Programme to make the case that it should align
with the Online Safety Bill to help prevent online financial scams
advertisements. As part of our work advising NHS employees,
we led successful calls for the government to extend the 2020/21
NHS Pension Scheme Pays deadline and the continuation of the
extension of the cessation of abatement rules. Both issues helped
to ensure healthcare workers were given adequate time to plan
their finances and did not face undue tax costs while they were
focused on fighting the NHS backlog, as well as ensuring the most
experienced and senior doctors and nurses continue to work
without being penalised for doing so.
Policies and practices
Customer policies
Our Product Governance Policy sets minimum standards for
the Group and its subsidiaries in manufacturing and distributing
financial products appropriately to meet customer needs. The policy
is implemented to support compliance with various regulatory
frameworks, including the UK implementation of the Markets in
Financial Instruments Directive (“MiFID II”), the underlying regulation
on markets in financial instruments (“MiFIR”), and the Insurance
Distribution Directive (“IDD”). The Product Governance Policy is
subject to an annual attestation process managed by the Quilter
Risk Function. In our Group, individual legal entity Boards are
responsible for setting product strategy and ensuring product
governance is effective. The Boards delegate execution of product
strategy and operational responsibility to the business Chief
Executive Officer.
Our Product Governance Policy outlines minimum marketing
and communications requirements for Quilter Group functions
and subsidiaries. Marketing material published by businesses must
be clear, fair and not misleading. Materials should be sufficient to
ensure customers can make informed financial decisions in relation
to the product or service, including the clear communication
and explanation of charging structures for related products.
All communications must consider our customers’ information
needs and comply with applicable regulations, including the
Financial Conduct Authority’s (“FCA”) Treating Customers
Fairly (“TCF”) requirements.
Data privacy and IT security
The collection and use of customers’ and advisers’ personal data
is governed by our Privacy Policy and supporting standards and
overseen by a Group Data Protection Officer (“GDPO”) with the
support of a formal committee, the Quilter Privacy Forum. The
Board oversees Quilter’s IT strategy, including our approach to
information and data security. At an executive management level,
the Group Chief Operating Officer is responsible for IT strategy and
is supported by the Director of Information Security & Technology
and team, with input also from the GDPO and Data Guardians
embedded in our businesses. All colleagues and full-time
contractors are required to complete mandatory annual training
on data privacy and IT security.
Our Code of Conduct
Our Code of Conduct sets out the duties of all colleagues and
includes acting with integrity and respect, treating customers fairly,
managing conflicts of interest, good market conduct, information,
data and communications, use of Company assets, prevention
of financial crime and working with regulators and governments.
Colleagues are required to undertake annual mandatory training
to ensure they fully understand the requirements of the code
of conduct.
Financial crime, anti-bribery and corruption
As a financial services company we recognise the potential risk
of being a target for financial crime, including money laundering,
terrorist financing, tax evasion and fraud. We also acknowledge
the potential risk of bribery and corruption which could result
in financial loss, regulatory fines and/or censure and damage
to reputation. We have zero tolerance for financial crime, bribery
or corruption and have a robust control environment in place
including the following policies: 1) Anti-money Laundering and
Counter Terrorist Financing Policy, 2) Anti-bribery and Corruption
Policy, 3) Fraud Prevention Policy, and 4) Financial Crime Prevention
Policy. All colleagues are required to complete mandatory training
on these topics annually to ensure that they understand their role
in preventing financial crime, bribery and corruption.
Responsible Business
continued
34 Quilter Annual Report 2022
Human rights and modern slavery
We recognise our responsibility to not only respect the rights
and freedoms of those that work for Quilter but also of those
in our supply chain. Our human resource and supplier policies
and processes prohibit Quilter from doing business with parties
involved in modern slavery, forced labour, compulsory labour and
child labour. These policies also promote equal opportunity and
eschew any form of discrimination or unfair treatment on the
grounds of protected characteristics, or because of any other
personal factor. We respect the right of employees to associate
for the purposes of collective bargaining and colleagues are free
to join a union of their choice.
Working with suppliers
Our Third-Party Risk Management Policy sets out requirements
with respect to our procurement, outsourcing and supplier
management activities. Our Supplier Code of Conduct applies
to all suppliers and their sub-contractors that provide goods and
services to Quilter. It sets out the minimum standards we expect
our suppliers to adhere to when doing business with Quilter in
addition to the contractual terms agreed. The Code covers legal
and compliance, ethical standards, conflicts of interest, anti-bribery
and corruption, brands, trademarks and intellectual property,
information and data protection, labour standards, living wage,
discrimination, health and safety, and environmental management.
We also expect our suppliers to promote these standards in their
own supply chain where practical.
Tax
We are committed to full compliance with our tax obligations,
paying the right amount of tax at the right time. We have zero
tolerance for tax evasion and we do not promote tax avoidance or
aggressive tax planning arrangements to our customers or to other
parties. Our Tax Risk Policy sets out high-level requirements to
ensure that tax calculations and filings comply with all applicable
tax law and are prepared on a timely basis.
Political lobbying
Quilter is a politically neutral organisation and does not engage
in party political campaigning or make party political donations.
We will not employ any current politician to conduct public affairs
activities in any capacity. Furthermore, we will not make any award
or payment in money or in kind to any current politician for the
provision of public affairs activities. Quilter did not employ any
former politician to conduct public affairs activities on our behalf
in 2022. If Quilter wishes to employ any former UK Government
Minister or senior official within two years of leaving office, the
appointment must be approved by the Advisory Committee on
Business Appointments (“ACOBA”), and the employee must not
lobby the government for two years after leaving office, as stated
in the Ministerial Code.
Quilter does, however, seek to influence government policy which
could impact our customers, with particular focus on consumer
rights and protection. Quilter is a member of several industry
trade bodies in the UK, including the Investment Association (“IA”),
Personal Investment Management and Financial Advice Association
(“PIMFA”), the Association of British Insurers (“ABI”), the UK
Sustainable Investment and Finance Association (“UKSIF”)
and The Investing and Savings Alliance (“TISA”).
Non-financial information
statement
The Responsible Business report from pages 26 to 35 constitutes
Quilter’s Non-Financial Information Statement, which complies
with sections 414CA and 414CB of The Companies Act. The table
below sets out where to find details on specific matters relevant
to these requirements within this section and elsewhere in our
Annual Report:
Anti-bribery and corruption Page 34
Business model Pages 20 to 21
Employees Pages 30 and 33
Environmental matters Pages 31 to 32
Human rights Page 35
Non-financial KPIs Pages 16 to 19
Principal risks Pages 47 and 48
Social matters Page 29
Responsible Business
continued
35Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Financial review
Mark Satchel
Chief Financial Officer
Review of financial performance
Overview
The Group delivered a robust set of results during 2022 against
the backdrop of a recessionary global economic environment,
with higher inflation, which reduced the value attributed to equity
and bond investments. Accordingly, investor sentiment for wealth
and savings solutions reduced during the year.
Against this backdrop, the Group’s AuMA ended the year at
£99.6 billion, down 11% from the starting position at the beginning
of the year with £14.0 billion of negative market movements more
than offsetting net inflows of £1.8 billion. Average AuMA for the year
was £102.8 billion compared to £105.3 billion in the comparative
year. Adjusted profit before tax was £134 million, down 3% on the
prior year (2021: £138 million), reflecting lower revenues given the
lower average AuMA for the year, offset by good cost discipline
despite the cost-of-living and inflation pressures.
In this section, unless indicated otherwise all results are presented
excluding Quilter International in both the current year and prior year
comparative, following its sale to Utmost Group in November 2021.
Alternative Performance Measures (“APMs”)
We assess our financial performance using a variety of measures
including APMs, as explained further on pages 209 to 211. In the
headings and tables presented, these measures are indicated with
an asterisk: *.
Net inflows of £1.8 billion for the year were 55% lower than the
prior year (2021: £4.0 billion). The more challenging macroeconomic
and geopolitical environment contributed to lower investment
activity across the wealth management industry, with this notably
evidenced through subdued gross inflows. Net inflows are stated
inclusive of net outflows from assets on third-party platforms
of £1.1 billion (2021: £0.6 billion). Gross flows for the Group were
20% lower than the prior year at £10.5 billion (2021: £13.2 billion),
primarily as a result of lower flows into the Quilter Platform.
This was due to lower investor confidence and the wider impacts
of rising interest rates and inflation on the cost-of-living, leading
to an industry-wide slow-down. As a consequence, net inflows
as a percentage of opening AuMA were 2% (2021: 4%).
· The Affluent segment’s net inflows of £1.1 billion were down
62% on the prior year (2021: £2.9 billion) due to £1.3 billion lower
net inflows in the Quilter Investment Platform against a strong
prior year comparative, and net outflows of £1.1 billion
(2021: net outflows of £0.6 billion) in assets managed by Quilter
on third-party platforms in relation to legacy and closed books
of business. Net inflows of £2.2 billion onto the Quilter Investment
Platform were down 37% (2021: £3.5 billion), with lower gross
sales in the IFA channel being a specific contributing factor.
The Quilter distribution channel performed broadly in line with
the prior year where the Platform is winning a greater share of
sales from our own advisers, weighted towards pensions, and we
established a simplified procedure to allow us to accelerate back
book transfers. This is offset with lower overall market activity
as investor confidence reduced during the course of 2022.
Gross flows on the Quilter Investment Platform of £7.5 billion
(2021: £9.0 billion) were 17% lower as clients reacted to the
macro environment. Pension and ISA product sales comprise
£5.5 billion (2021: £6.4 billion). Persistency for the Affluent
segment remained good and slightly ahead of historical levels
at 91% (2021: 90%).
· The High Net Worth segment recorded net inflows of £0.9 billion
which were down 18% from the prior year (2021: £1.1 billion),
and continued to deliver a robust performance with good flows
from the Quilter channel offsetting a slowdown in IFA flows.
Gross inflows of £2.3 billion were down on 2021 of £2.7 billion,
offset by lower outflows compared to the prior year. This reflects
improved persistency at 95% versus 94% in 2021.
36 Quilter Annual Report 2022
The Group’s AuMA ended the year at £99.6 billion, down 11%
from the opening position at the start of 2022 (2021: £111.8 billion),
due to the fall in global equity and bond indices. The Affluent
segment AuMA of £74.9 billion decreased by 10% (2021:
£83.3 billion) of which £24.9 billion is managed by Quilter, down
on the opening position at the start of 2022 (2021: £27.4 billion).
High Net Worth’s AuM was £25.5 billion, down 11% from opening
2022 (2021: £28.7 billion), with all assets managed by Quilter.
In total, £50.2 billion of AuMA is managed by Quilter across
the Group (2021: £56.0 billion).
The Group’s revenue margin of 47 bps was 1 bp lower than
the prior year (2021: 48 bps). For assets administered within the
Affluent segment, the revenue margin remained in line with the
prior year at 27 bps. For assets managed in the Affluent segment,
the revenue margin decreased by 2 bps to 47 bps as a result of
anticipated mix shifts in underlying assets towards lower margin
products. Within the High Net Worth segment the revenue margin
decreased by 2 bps to 69 bps, primarily due to lower commission
and contract charges.
Adjusted profit before tax decreased by 3% to £134 million
(2021: £138 million). The decline in net management fees to
£483 million (2021: £500 million) broadly matched the decline
in average AuMA year-on-year (2022: £102.8 billion compared to
2021: £105.3 billion). Other revenue increased by 4% to £123 million
(2021: £118 million) reflecting interest income earned on cash and
capital resources, offset by lower mortgage and protection new
business levels and lower adviser headcount. Operating expenses
in 2022 were £472 million, down 2% on the prior year (2021:
£480 million) primarily due to continued cost discipline, lower
FSCS levies and the Optimisation and Simplification cost initiatives
delivering the intended cost reductions. These decreased expenses
have been partially offset by higher annualised FNZ charges
following the late Q1 2021 launch of the Platform and inflationary
increases. The Group’s operating margin was 22%, in line with
the prior year.
The Group’s IFRS profit after tax from continuing operations
was £175 million, compared to £23 million for 2021. The increase in
IFRS profit is largely attributable to policyholder tax credits resulting
from market losses up to December 2022 of £134 million compared
to market gains in the prior year (2021: tax charge £73 million).
Adjusted diluted earnings per share for continuing operations
increased 7% to 7.9 pence (2021: 7.4 pence).
Key financial highlights
Quilter highlights from continuing operations
1
2022 2021
Assets and flows
AuMA* (£bn)
2
99.6 111.8
Of which Affluent 74.9 83.3
Of which High Net Worth 25.5 28.7
Inter-segment dual assets (0.8) (0.2)
Gross flows* (£bn)
2
10.5 13.2
Of which Affluent 8.5 10.5
Of which High Net Worth 2.3 2.7
Inter-segment dual assets (0.3) 0.0
Net inflows* (£bn)
2
1.8 4.0
Of which Affluent 1.1 2.9
Of which High Net Worth 0.9 1.1
Inter-segment dual assets (0.2) 0.0
Net inflows/opening AuMA*
2
2% 4%
Gross flows per adviser* (£m)
2,3
2.3 2.3
Asset retention*
2
92% 91%
Profit and loss
IFRS profit/(loss) before tax from continuing
operations attributable to equity holders* (£m)
2
199 12
IFRS profit/(loss) after tax from continuing
operations (£m) 175 23
Adjusted profit before tax* (£m)
2
134 138
Operating margin*
2
22% 22%
Revenue margin* (bps)
2
47 48
Return on equity*
2
7.0% 8.3%
Adjusted diluted EPS* from continuing
operations (pence)
2
7.9 7.4
Recommended total dividend per share from
continuing business (pence)
4.5 4.0
Basic earnings per share from continuing
operations (pence) 12.2 1.4
Non-financial
Total Restricted Financial Planners (“RFPs”)
in both segments
4
1,502 1,623
Discretionary Investment Managers in High
Net Worth segment
4
179 170
1
Continuing operations represent Quilter plc, excluding the results of Quilter
International. Adjusted profit before tax for Quilter International in 2021 was £50 million.
Adjusted diluted EPS from Quilter International in 2021 was 3.0 pence per share.
2
Alternative Performance Measures (“APMs”) are detailed and defined on
pages 209 to 211.
3
Gross flows per adviser is a measure of the value created by our Quilter
distribution channel.
4
Closing headcount as at 31 December.
Financial review
continued
37Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Total net fee revenue*
Total net fee revenue
from continuing
operations
2022 (£m) Affluent
High Net
Worth Head Office
Continuing
operations
Net management
fee* 300 183 – 483
Other revenue* 87 29 7 123
Total net fee
revenue* 387 212 7 606
Total net fee revenue
from continuing
operations 2021 (£m) Affluent
High Net
Worth Head Office
Continuing
operations
Net management
fee* 311 189 – 500
Other revenue* 95 23 – 118
Total net fee
revenue* 406 212 – 618
Total net fee revenue for Affluent was £387 million, down 5%
from the prior year (2021: £406 million). Net management fees of
£300 million were 4% down on the prior year (2021: £311 million)
due to the impact of lower average AuMA which decreased by 2%
to £77.1 billion in 2022 (2021: £78.5 billion), and anticipated changes
in fund mix in Quilter Investors where the proposition continues to
evolve into a broader mix of investment strategies. Other revenue
predominantly reflects revenue generated from the provision of
advice within Quilter Financial Planning. Within the revenue
generated by advice, mortgage and protection, recurring charges
and fixed fees were at lower levels than the prior year due to lower
markets and lower average adviser headcount. This decrease
is offset with increased interest income earned on cash balances
that support the capital and liquidity requirements of the business.
Total net fee revenue in High Net Worth was £212 million, in line
with the prior year. This was principally driven by Other revenue
in Quilter Cheviot, up £8 million (2021: £nil) due to interest received
from clients’ cash assets as a result of the rise in UK base rate.
The Other revenue balance predominantly reflects the revenue
generated from Quilter Private Client Advisers which was at similar
levels to those of 2021. Net management fees decreased by 3%
compared to the prior year which is aligned to a similar decrease
in the average AuM. This also includes an expected reduction in
commission revenue as the proportion of clients on fee-only
propositions continues to increase.
Operating expenses*
Operating expenses decreased by £8 million to £472 million (2021:
£480 million) as a result of continued cost discipline as we emerged
from the 2020/2021 pandemic and faced into higher UK inflationary
pressures and suppressed market conditions.
2022 2021
Operating expense
split (£m)
Continuing
operations
As a
percentage of
revenues
Continuing
operations
As a
percentage of
revenues
Support staff costs 118 127
Operations 22 27
Technology 35 42
Property 31 31
Other base costs
1
30 25
Sub-total base
costs 236 39% 252 41%
Revenue-
generating staff
base costs 92 15% 83 13%
Variable staff
compensation 75 12% 80 13%
Other variable
costs
2
46 8% 36 6%
Sub-total variable
costs 213 35% 199 32%
Regulatory/
professional
indemnity costs 23 4% 29 5%
Operating
expenses* 472 78% 480 78%
1
Other base costs includes depreciation and amortisation, audit fees, shareholder
costs, listed-related costs and governance.
2
Other variable costs includes FNZ costs, development spend and corporate functions
variable costs.
Support staff costs decreased by 7% to £118 million (2021:
£127 million) primarily driven by Business Simplification activities
delivering sustainable benefits.
Operations costs decreased by 19% to £22 million (2021:
£27 million) which reflects the move to the outsourced operations
model within the Quilter Investment Platform for the full period
in 2022, and a simpler operational base following the business
divestments made in preceding years. FNZ costs are reflected
in Other variable costs.
Technology costs decreased as we continue to rationalise
our infrastructure following the sale of Quilter International.
Further reductions are due to the elimination of dual running
costs following the completion of the Platform Transformation
Programme and ongoing Business Simplification activity.
Property costs remained stable at £31 million (2021: £31 million)
driven by an increase in operating costs because of higher
occupancy post pandemic, and the rising inflationary cost
associated with utility usage which were offset by the property
portfolio consolidation in 2022.
Other base costs increased by 20% to £30 million (2021: £25 million)
driven by annualised depreciation charges post completion of
property portfolio projects.
Financial review
continued
38 Quilter Annual Report 2022
Revenue-generating staff base costs have increased by 11% to
£92 million (2021: £83 million) reflecting the competitive environment
in which we operate and as a consequence of continued investment
in both Affluent and High Net Worth segments, which included
increasing the number of discretionary managers and the build
out of the combined advice and investment proposition in High
Net Worth. In particular, the Group invested in the development
of further business activities located in Dublin, Ireland within
the High Net Worth segment.
Variable staff compensation decreased by 6% to £75 million
(2021: £80 million) with reductions in share-based payment accruals
reflecting global equity market falls and further reductions relating
to the business performance against the backdrop of an
increasingly volatile global economy which negatively impacted
markets and investor sentiment throughout 2022.
Other variable costs increased by 28% to £46 million (2021:
£36 million) principally due to operating expenses associated
with the new platform and increased development spend following
the deferral of change activity during the pandemic.
Regulatory and professional indemnity costs decreased by 21%
to £23 million (2021: £29 million) largely driven by reduced FSCS
levy costs to Quilter of £6 million as a result of an overall lower
industry levy.
Taxation
The effective tax rate (“ETR”) on adjusted profit before tax was 14%
(2021: 9%). The Group’s ETR is lower than the UK corporation tax
rate of 19% principally due to utilisation of previously unrecognised
deferred tax assets in relation to trade losses. The Group’s ETR is
dependent on a number of factors, including future changes in the
UK corporation tax rate.
The Group’s IFRS income tax expense was a credit of £110 million
for the year ended 31 December 2022, compared to a charge of
£62 million for the prior year. The income tax credit in 2022 is
largely due to adverse movements in the market values of unit-
linked assets during the year compared to favourable movements
in those assets during 2021. The income tax expense or credit can
significantly vary year-on-year as a result of market volatility and the
impact market movements have on policyholder tax. The
recognition of the income received from policyholders to fund the
policyholder tax liability (which is included within the Group’s IFRS
revenue) can vary in timing to the recognition of the corresponding
policyholder tax expense, creating volatility to the Group’s IFRS
profit or loss before tax attributable to equity holders. An
adjustment is made to adjusted profit before tax to remove these
distortions, as explained further on page 40 and in note 7(b) of the
consolidated financial statements.
Optimisation
The Optimisation programme, which we announced in 2018, has
now completed, achieving its target of annualised run-rate cost
savings of £65 million. Total implementation costs since inception of
£87 million are £4 million below the original £91 million estimate. In
2022, we successfully deployed the final delivery of our Group-wide
general ledger system and further consolidated our data centre
and data reporting solutions within the IT estate. No further costs
are expected on this programme.
Business Simplification
Quilter’s Business Simplification programme continues to track
towards the proposed £45 million target announced at the Capital
Markets Day in November 2021, with costs to achieve expected to be
£55 million. In 2022, we completed the initial phase of simplification
of our organisational structure following re-segmentation of the
business. Further savings have been delivered across our Group
functions with ongoing rationalisation of our property and
technology estates being key contributors. To date the programme
has delivered £23 million of annualised run-rate cost savings with
an implementation cost of £17 million.
Lighthouse DB pension transfer advice provision
As reported previously, a provision was recognised in relation to
DB to DC pension transfer advice provided by Lighthouse advisers
prior to Lighthouse transitioning to our systems and controls
following our acquisition of Lighthouse.
A provision of £5 million (31 December 2021: £29 million) remains
for the potential redress of British Steel Pension Scheme cases and
other DB to DC pension transfer cases. This includes anticipated
costs of legal and professional fees associated with the redress
activity. The provision reflects (i) the outcome of the suitability
review on a case-by-case basis for all cases identified as being
in scope of the skilled person review relating to DB to DC pensions
transfers by Lighthouse, (ii) redress calculations performed by the
skilled person using the methodology designed following
discussions and in collaboration with the FCA, as well as the offers
made to customers who received unsuitable advice which caused
them to sustain a loss, and (iii) an estimate for cases to be
considered as part of the subsequent Group-managed past
business review (covering an extension of the population of
non-British Steel customers who were included in the skilled
person review) with the current skilled person acting as reviewer.
The provision decreased by £4 million during 2022, recognised
as a reduction within expenses of the Group (and excluded from
adjusted profit before tax), in order to reflect the results of the
redress calculations performed under the skilled person review,
and an estimate for cases to be considered as part of the past
business review. During the year £4 million of additional legal,
consulting, and other costs were incurred. Redress on British Steel
Pension Scheme cases and other DB to DC pension transfer cases
of £19 million and professional fees of £3 million were paid during
the year. Payments are expected to be completed during 2023.
Subject to FCA confirmation, we anticipate that the skilled person
review will conclude during 2023. The FCA has agreed that the
remaining review work described above (relating to certain
Lighthouse non-British Steel customers who received DB pension
transfer advice) can be conducted as a Group-managed past
business review.
Professional indemnity insurance coverage in relation to claims
in respect of legal liabilities arising in connection with Lighthouse
cases has been confirmed and the proceeds received, contributing
£12 million to the profit of the Group, which has also been excluded
from adjusted profit before tax.
Financial review
continued
39Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
The impact of acquisition and disposal-related accounting costs
of £42 million (2021: £41 million) include amortisation of acquired
intangible assets. These costs remained stable on those of the
prior year.
Business transformation costs of £30 million were incurred in 2022
(2021: £70 million, of which £51 million was on continuing operations)
consisting of:
· Business Simplification costs of £17 million (2021: £nil). In 2022,
the Group simplified its structures to support the two segments,
Affluent and High Net Worth, with further work planned into 2024.
During the year, we also delivered early simplification benefits
related to our property strategy and technology estate enabled
by the completion of the Platform Transformation Programme
and sale of Quilter International. To date the programme has
delivered £23 million of annualised run-rate cost savings with
an implementation cost of £17 million.
· The Optimisation programme incurred costs of £6 million
(2021: £22 million). The Optimisation programme commenced
in 2018 to provide closer business integration, create central
support, rationalise technology and reduce third-party spend
and is now complete, delivering annualised run-rate cost savings
of £65 million. This programme concluded during 2022.
· Restructuring costs following the disposal of Quilter Life
Assurance of £3 million in 2022 (2021: £1 million), including
property exit costs after the conclusion of the Transitional
Service Agreement with ReAssure.
· The Platform Transformation Programme concluded in 2021
with lifetime costs of £202 million. No further costs were incurred
in 2022 (2021: £28 million).
· Investment in business costs of £4 million were incurred in
2022 (2021: £nil) as the Group continues to enable and support
advisers, clients and improve productivity through better
utilisation of technology.
Reconciliation of adjusted profit before tax* to IFRS profit
Adjusted profit before tax represents the Group’s IFRS profit, adjusted for specific items that management considers to be outside of the
Group’s normal operations or one-off in nature, as detailed on page 142 in the consolidated financial statements. The exclusion of certain
adjusting items may result in adjusted profit before tax being materially higher or lower than the IFRS profit after tax.
Adjusted profit before tax does not provide a complete picture of the Group’s financial performance, which is disclosed in the IFRS income
statement, but is instead intended to provide additional comparability and understanding of the financial results.
Reconciliation of adjusted profit before tax to IFRS profit after tax For the year
ended
31 December
2022
For the year ended 31 December
£m
Continuing
operations
Discontinued
operations
1
Total
Affluent 105 111 50 161
High Net Worth 45 56 – 56
Head Office (16) (29) – (29)
Adjusted profit before tax* 134 138 50 188
Reallocation of Quilter International costs – (10) 10 –
Adjusted profit before tax after reallocation* 134 128 60 188
Adjusting for the following:
Impact of acquisition and disposal-related accounting (42) (41) – (41)
Profit on business disposals
2
– 2 90 92
Business transformation costs (30) (51) (19) (70)
Managed Separation costs – (2) – (2)
Other adjusting items (1) – – –
Finance costs (10) (10) – (10)
Policyholder tax adjustments 138 (7) – (7)
Customer remediation 12 (7) – (7)
Voluntary customer repayments (6) – – –
Exchange rate gain (ZAR/GBP) 4 – – –
Total adjusting items before tax 65 (116) 71 (45)
Profit before tax attributable to equity holders* 199 12 131 143
Tax attributable to policyholder returns (134) 73 – 73
Income tax credit/(expense) 110 (62) – (62)
Profit after tax
3
175 23 131 154
1
2021 discontinued operations include the results of Quilter International.
2
In 2021, the discontinued operations profit on business disposals of £90 million resulted from the disposal of Quilter International. The £2 million continuing operations profit
on business disposals resulted from the disposal of LighthouseCarrwood Limited. See note 6(a) for details.
3
IFRS profit after tax.
Financial review
continued
40 Quilter Annual Report 2022
Policyholder tax adjustments were a credit of £138 million for
2022 (2021: debit of £7 million) in relation to the removal of timing
differences arising from market volatility that can, in turn, lead to
volatility in the policyholder tax charge between periods. The
recognition of the income received from policyholders (which is
included within the Group’s IFRS revenue) to fund the policyholder
tax liability can vary in timing to the recognition of the corresponding
tax expense, creating volatility to the Group’s IFRS profit before tax
attributable to equity holders.
The customer remediation adjustment of £12 million of income
in 2022 (2021: expense of £7 million) reflects the impact of the
insurance proceeds received, final redress calculations performed
compared with the provision estimated, as part of the ongoing
skilled person review, and subsequent Group-managed past
business review with the current skilled person acting as reviewer.
Insurance proceeds in relation to claims in respect of legal liabilities
arising in connection with Lighthouse DB to DC pension transfer
advice have been received, contributing £12 million to the profit
of the Group. These impacts are excluded from adjusted profit on
the basis that the advice activities to which the charge and benefit
relates was provided prior to the Group’s acquisition of the business.
Additionally, a provision release of £4 million was recognised in the
current period (2021: net increase in provision of £7 million), with
further costs recognised of £4 million in relation to the additional
population to be reviewed as part of that Group-managed past
business review, including associated professional costs. Further
details of the provision are provided in note 28.
The voluntary customer repayments of £6 million (2021: £nil) relate
to revenue previously recognised in respect of Final Plan Closure
(FPC) receipts.
Foreign exchange movements for 2022 were £4 million (2021: £nil)
and relate to foreign exchange gains on cash held in South African
Rand in preparation for the capital return and Final Dividend
payments in May 2022. Cash was converted to South African Rand
upon announcement of the details of the capital return and dividend
payment providing an economic hedge for the Group. The foreign
exchange gain is equally offset by an amount recognised directly
to retained earnings. See note 7(b)(viii) to the Group’s consolidated
financial statements for further detail.
Cash generation*
Cash generation measures the proportion of adjusted profit after
tax that is recognised in the form of cash generated from operations.
The Group achieved a cash generation rate of 75% of adjusted
profit after tax over 2022 (2021: 76%).
Review of financial position
Capital and liquidity
Solvency II
The Group’s Solvency II surplus is £820 million at 31 December 2022
(31 December 2021: £1,030 million), representing a Solvency II ratio
of 230% (31 December 2021: 275%). The Solvency II information for
the year to 31 December 2022 contained in this results disclosure
has not been audited.
The Group’s Solvency II capital position is stated after allowing
for the impact of the foreseeable dividend payment of £45 million
(31 December 2021: £62 million).
Group Solvency II capital (£m)
At
31 December
2022
1
At
31 December
2021
2
Own funds 1,451 1,617
Solvency capital requirement (“SCR”) 631 587
Solvency II surplus 820 1,030
Solvency II coverage ratio 230% 275%
1
Filing of annual regulatory reporting forms due 19 May 2023.
2
As reported in the Group Solvency and Financial Condition Report for the year ended
31 December 2021.
The 45 percentage point decrease in the Group Solvency II ratio
from the 31 December 2021 position is primarily due to the capital
return to shareholders of £328 million from the net surplus
proceeds arising from the sale of Quilter International to Utmost
Group, partly offset by the net profit recognised in the period.
Composition of qualifying Solvency II capital
The Group’s own funds include the Quilter plc issued subordinated
debt security which qualifies as capital under Solvency II. The
composition of own funds by tier is presented in the table below.
Group own funds (£m)
At
31 December
2022
At
31 December
2021
Tier 1
1
1,249 1,412
Tier 2
2
202 205
Total Group Solvency II own funds 1,451 1,617
1
All Tier 1 capital is unrestricted for tiering purposes.
2
Comprises a Solvency II compliant subordinated debt security in the form of a Tier 2
bond, which was issued at £200 million in February 2018.
The Group SCR is covered by Tier 1 capital, which represents 198%
of the Group SCR of £631 million. Tier 1 capital represents 86% of
Group Solvency II own funds. Tier 2 capital represents 14% of Group
Solvency II own funds and 25% of the Group surplus.
Financial review
continued
41Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Dividend
The Board recommended a Final Dividend of 3.3 pence per share
at a total cost of £45 million. Subject to shareholder approval at the
2023 Annual General Meeting, the recommended dividend will be
paid on 22 May 2023 to shareholders on the UK and South African
share registers on 21 April 2023 (the “Record date”). For shareholders
on our South African share register, a Final Dividend of 72.78087
South African cents per share will be paid on 22 May 2023, using
an exchange rate of 22.05481. This will bring the dividend for the
full year to 4.5 pence per share (2021: 4.0 pence per share).
At our Capital Markets Day on 3 November 2021, we announced a
revised Group dividend policy. The new policy sets a target pay-out
range of 50% to 70% of post-tax, post-interest adjusted profits,
revised from 40% to 60% of post-tax adjusted profits previously
and applies for the 2022 financial year.
Share buyback programme
Early in 2022, the Company completed the share buyback
programme that was initiated to return to shareholders the net
surplus sale proceeds (after disposal costs) of £375 million from the
disposal of Quilter Life Assurance. The share buyback programme
was subject to staged regulatory and Board approvals and a total
of 264.1 million shares were purchased and cancelled at an average
price of 141.97 pence per share.
Capital Return (the “B Share Scheme”
and the “Share Consolidation”)
In March 2022, following the completion of the sale of Quilter
International at the end of November 2021, the Company proposed
to return the majority of the net surplus sale proceeds to
shareholders through the issuance and redemption of a new class
of redeemable B Shares followed by an Ordinary Share consolidation
on a six new Ordinary Shares for seven old Ordinary Shares basis.
Following receipt of regulatory approval and shareholder approval
at a General Meeting held on 12 May 2022, the B Shares, with
nominal value of 20 pence per share, were issued to shareholders
on 23 May 2022. The B Shares were subsequently redeemed on
24 May 2022 in the form of a payment of 20 pence per old Ordinary
Share for shareholders on our UK share register. For shareholders
on our South African share register, this equated to a return of
401.33300 South African cents per old Ordinary Share, using
an exchange rate of 20.06665 South African cents to one pence,
the average rate achieved on 7 and 8 March 2022 (the two days
immediately preceding the announcement of the Capital Return).
In total, £328 million of capital was returned to our shareholders
through the B Share Scheme.
The six for seven Share Consolidation was executed on a
contemporaneous basis with the effect of reducing the number
of shares in issue to c.1.4 billion, a c.500 million decrease in the
number of shares in issue since the Company was Listed on
25 June 2018. Following the Share Consolidation, the new
Ordinary Shares have a nominal value of 8 1/6 pence.
Debt issue
In early January 2023, the Company announced plans to issue a
new subordinated debt instrument in order to refinance its existing
£200 million 4.478 percent Fixed Rate Reset Subordinated Notes
due 2028 on their first call date of 28 February 2023. A new issue
of £200 million 8.625 percent Fixed Rate Reset Subordinated Notes
due April 2033 was completed on 18 January 2023.
Holding company cash
The holding company cash statement includes cash flows
generated by the three main holding companies within the
business: Quilter plc, Quilter Holdings Limited and Quilter UK
Holding Limited. The flows associated with these companies
are not directly comparable to those disclosed in the statutory
statement of cash flows, which comprises flows from the entire
Quilter plc Group including policyholder movements.
£m 2022 2021
Opening cash at holding
companies at 1 January 756 517
Single Strategy business sale –
warranty – (2)
Quilter International sale proceeds – 481
Return of capital to shareholders (328) –
Share repurchase (28) (197)
Cost of disposal (23) –
Dividends paid (78) (89)
Net capital movements (457) 193
Head Office costs, Business
Simplification and Optimisation
programme funding (52) (74)
Interest received 4 –
Interest costs (9) (9)
Net operational movements (57) (83)
Cash remittances from subsidiaries 163 184
Net capital contributions, loan
repayments and investments (15) (53)
Other net movements 2 (2)
Internal capital and strategic
investments 150 129
Closing cash at holding companies
at end of year 392 756
Financial review
continued
42 Quilter Annual Report 2022
Net capital movements
Net capital movements in the year were an outflow of £457 million.
This includes £328 million of capital returned to shareholders
following the sale of Quilter International, £28 million relating
to the share repurchase programme, dividend payments made
to shareholders of £62 million in May 2022 and £16 million in
September 2022, plus £23 million of costs relating to the disposal
of Quilter International.
Net operational movements
Net operational movements were an outflow of £57 million for
the year and include £52 million of corporate and transformation
costs. Interest paid of £9 million relates to coupon payments on
the Tier 2 bond and non-utilisation fees for the revolving credit
facility, with £4 million interest received on money market funds
and cash holdings.
Internal capital and strategic investments
The net inflow of £150 million is principally due to £163 million
of cash remittances from the trading businesses, partially offset
by £15 million of net capital contributions to support business
operational activities.
Mark Satchel
Chief Financial Officer
Financial review
continued
43Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Risk review
Introduction
The coming year is likely to remain challenging for Quilter given the
prospect of a prolonged economic downturn, continued inflationary
pressures, high interest rates and muted markets. Effective risk
management is key to generating value safely and in supporting
Quilter in managing through these difficult times.
The focus will remain on progressing Quilter’s long-term strategy,
growing with our clients and advisers, enhancing the efficiency of
operations, increasing digitalisation and being a responsible wealth
manager. This, alongside the FCA’s new Consumer Duty, present new
challenges and opportunities for Quilter to create a real competitive
advantage by delivering against our established strategy. Risks
remain in the execution of this strategy and the effective
management of these risks will be key to ensuring Quilter’s future
success and the continued delivery of good customer outcomes.
How we manage risk
Our Enterprise Risk Management Framework (“ERMF”) is embedded
across Quilter and helps Quilter assess and manage its risk
exposures. A strong and embedded risk culture is vital in ensuring
that risk implications are considered when making strategic and
operational decisions, and that Quilter understands its risk profile
and manages the business within the approved risk appetite.
The ERMF drives consistency across Quilter and aims to support
the evaluation and management of business opportunities,
uncertainties and threats in a structured and disciplined manner.
Risk governance
Quilter maintains a Group Governance Manual (“GGM”) which
sets out Quilter’s approach to governance. The Quilter governance
model is designed to promote transparency, accountability and
consistency through the clear identification of roles, the separation
of business management and governance and control structures,
and by tracking performance against accountabilities. The
segregation of risk taking, oversight and assurance is codified
in Quilter’s three lines of defence model, which ensures clear
accountability and ownership for risk and controls. The Risk
Function Charter provides clarity on the purpose and role
of the Risk Function as Quilter’s second line of defence, and the
means by which it maintains its objectivity and independence
from management.
The Executive Risk Forum is the primary management committee
overseeing the risk profile of Quilter. This forum is chaired by the
Quilter Chief Executive Officer, with representation from across
the Group. Ongoing oversight of the risk profile and of risk
management arrangements is undertaken by the Board Risk
Committee, with relevant matters also being considered by the
Board. Similar arrangements are maintained locally in each
significant business.
On a quarterly basis, the Quilter Chief Risk Officer formally reports
to the Board Risk Committee the second line perspective on the
risk profile of the Group, performance against risk appetite and
perspectives on the effectiveness of management responses.
Policy framework
The Quilter Policy Suite forms an integral part of our governance
and risk management framework, ensuring an appropriate system
of internal control. Together with the GGM, they form the basis
of clear delegated authorities and accountabilities, ensuring there
is appropriate Board oversight and control of important decisions,
and efficient and effective management of day-to-day business.
The GGM and policies are approved and adopted by the Board.
The policies are subject to an annual policy compliance review,
with results provided to the Board.
Nick Sacre-Hardy
Chief Risk Officer
44 Quilter Annual Report 2022
Risk appetite framework
Our risk appetite is the amount of risk we are willing to take in
the pursuit of our strategic priorities and is defined by the Board.
Culturally, it sets the tone regarding our attitude towards risk taking.
Risk appetite also plays a central role in informing decision making
across Quilter, protecting and enhancing the return on capital
invested. This risk appetite approach is applied consistently
across Quilter.
To support the strategic decision-making process, we apply risk
preferences which provide guidelines for striking the appropriate
balance of risk and reward when setting our business strategy.
A set of strategic risk appetite principles has been determined
by the Board. These principles provide the top down guidance
on our attitude towards key areas of risk for Quilter. They support
the ongoing management and oversight of risk, and are supported
by a series of more granular risk appetite statements, measures,
policies and standards. Quilter’s position against these principles
is measured on a regular basis through the monitoring of
underlying risk metrics.
Conduct risk
The Financial Conduct Authority (“FCA”) is the primary conduct
regulator for Quilter’s UK regulated entities. Quilter takes its
regulatory obligations in relation to customers and our conduct
very seriously and is committed to operating in a responsible
and compliant manner.
Quilter seeks to deliver on these obligations through culture
and values, backed by a rigorous governance system and an
approach to compliance that drives fair outcomes for customers.
The standards of behaviour Quilter expects from its staff are set
out in the Quilter Code of Conduct. This code is aligned to the
expectations of individuals set out in the FCA’s Conduct Rules.
Conduct risk is a core element of Quilter’s ERMF, recognising that
conduct risks can both impact, and result from, other risks within
the risk universe.
Conduct risk is monitored across Quilter’s businesses, with
quarterly reporting to the Board Risk Committee on Quilter’s
conduct risk profile, emerging issues and trends. Areas of concern
are noted, and actions are identified and are tracked to completion.
Quilter’s three lines of defence model
First line of defence Second line of defence Third line of defence
Management and employees
Primary responsibility for managing risks
as part of day-to-day activities, in line
with risk policies and appetite. Business
management decides which risks to take
and the exposure to assume.
Risk function
The Risk Function, which includes
Compliance, provides objective oversight,
monitoring and independent challenge
of the first line’s risk taking, and
risk management.
Group Internal Audit
Group Internal Audit provides
the Board and Management with
independent, objective assurance.
Strategic risk appetite principles
Owner:
Chief Distribution Officer
Chief Operating Officer
Owner:
Chief Financial Officer
Owner:
Chief Financial Officer
Owners:
Chief Operating Officer
Chief Risk Officer
Chief Internal Auditor
Customer
Quilter will enable
the delivery of good
customer outcomes
Liquidity
Quilter will ensure that
it has sufficient liquidity
to meet its financial and
funding obligations
Capital
Quilter will hold or have
access to sufficient capital to
maintain its own capital needs
Control environment
Quilter will at all times
operate a robust control
environment
Risk review
continued
45Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Prudential risk
Quilter is prudentially regulated by the Prudential Regulation
Authority (“PRA”) under Solvency II, by the FCA under the
Investment Firms Prudential Regime (“IFPR”) and other applicable
prudential regulations.
To meet these regulations, we operate a consistent approach to risk
management across Quilter. We have integrated the Own Risk and
Solvency Assessment (“ORSA”) and Internal Capital Adequacy and
Risk Assessment (“ICARA”) into our risk management framework.
Quilter’s ORSA and ICARA are comprehensive risk processes which
set out how risks are managed and how risks might change over
time as we execute our strategy and respond to changes in the
external environment.
We determine the capital and liquidity required to protect
Quilter’s resilience. We project the development of capital and
liquidity requirements over our planning period. The assessments
include a range of stress and scenario tests covering a broad range
of potential events, including market stresses, events which could
damage Quilter’s reputation and operational risk events. In
accordance with IFPR requirements we have developed recovery
plans to identify the management actions and recovery options
which are available in the event of extreme stresses, and
wind-down plans to ensure that we maintain sufficient capital
and liquidity to support the orderly wind-down of our investment
and advice businesses.
Operational risk
Quilter operates a series of processes to facilitate the identification
and management of operational risk and the reporting of risk
events. A discipline of Risk and Control Self Assessments (“RCSAs”)
and risk event management is facilitated by our risk system, along
with remedial action tracking. Root cause analysis is conducted
on material events.
Digital security
Embracing Digital is a key component of Quilter’s strategy, ensuring
we actively engage with our current and future customers in the
right way, across all facets of our business. Information security
is a core part of our ongoing management of digital platforms, and
a key requirement for projects that are delivering new or updated
digital functionality. Real-world information security events
continuously inform our risk posture, and we use a combination
of internal metrics and external threat intelligence to assess and
periodically revaluate the effectiveness of our control environment.
Using internationally recognised methodologies, we characterise
and actively monitor a wide variety of criminal actors who could
be a threat to Quilter. Understanding how these criminals operate
has enabled us to ensure we have the relevant controls in place
and to test these controls, using both internal methods and
external parties.
The identification, assessment and continuous management
of digital security related risks is aligned to our ERMF. Quilter’s
risk taxonomy is a key part of this framework which drives our risk
management processes and includes technical elements of these
risks such as systems availability, data loss and compromise, but
also the important wider reaching business impacts of digital risk
such as customer service risk. These risks are governed as part
of a well-established framework, including the executive sponsored
IT and Security Governance Forum and the Operations Committee
which report ultimately into Quilter plc Board Committees.
The Quilter Chief Risk Officer formally reports the second line
opinion on the risk profile of the firm, including information security
and technology risk, on a quarterly basis. Internal Audit also
regularly include digital and related risks as part of their audit
planning process.
Remuneration and reward
The most important element to risk management is a good
culture of risk informed decision making. We believe that a good
risk culture enables effective management of risk. We link risk
management to personal performance and development, as well
as to Quilter’s remuneration and reward schemes. An open and
transparent working environment which encourages our people to
embrace risk management, and speak up where needed, is critical
to the achievement of our objectives.
Risk-based planning
On an annual basis a Risk Plan is developed based upon a risk
analysis exercise. This analysis encompasses a risk assessment
of the prevailing risk profile, as well as external factors, including
regulatory change. The Risk Plan details the activities that will be
undertaken by the Risk Function across the risk domains, including
regulatory compliance, and includes advisory and assurance.
The Risk Plan is approved annually by the Board Risk Committee,
with regular tracking of progress on its delivery throughout the
plan year.
Risk profile
2022 has been a very challenging year. The rapid deterioration
in the economic and geopolitical environment which began at
the start of the year gave rise to significant impacts on consumers
and the markets, and had a material impact on Quilter’s business
performance, impacting net flows, assets under management
and administration (“AuMA”) and revenues.
Despite these challenges Quilter remained focused on its four
strategic priorities. Good progress was made on a number of fronts,
including the launch of Wealth Select +, the establishment of the new
Affluent commercial and proposition function, continued Platform
improvements and good progress in Business Simplification.
In July the FCA published the final rules and guidance in relation
to the new Consumer Duty, which sets higher and clearer standards
of consumer protection across financial services, and requires firms
to put their customers’ needs first. Good progress has been made
to date in the delivery of our Consumer Duty programme with
appropriate first and second line resources mobilised to support
implementation by July 2023.
Risk review
continued
46 Quilter Annual Report 2022
Risk review
continued
Principal risks and uncertainties
Principal risks and uncertainties
The Directors have carried out a robust assessment of the
principal and emerging risks facing Quilter, including those that
would threaten its business model, future performance, solvency
and liquidity, as well as those risks that are non-financial in nature.
The articulation of these principal risks and uncertainties is
consistent with Quilter’s Enterprise Risk Framework categorisation,
and with the ‘Top Risk’ reporting that is provided quarterly to the
Board Risk Committee and the Board.
The Board requires management to put in place actions to mitigate
these risks, and controls to maintain risk exposures within acceptable
levels defined by Quilter’s risk appetite. Since 2021, improvements
in the risk exposure associated with Information Technology,
Information Security, Change Execution, Third Party and Operational
Resilience has seen them removed from the table below. The table
below sets out Quilter’s principal risks and uncertainties throughout
2022, including Executive Committee member ownership and key
mitigants being implemented by management. The risk trend noted
is the residual risk trend (risk after the application of mitigants)
during 2022.
Risk
owner:
Chief
Financial
Officer
Economic environment
Quilter’s principal revenue streams are asset value related
and as such Quilter is exposed to the condition of global
economic markets. The evolving Ukraine conflict and
increased political uncertainty in the UK saw significant
market volatility during 2022 and this is expected to
continue into 2023. Inflation acted as a significant
headwind to Quilter, due to risings costs, and lower NCCF
with the potential that higher interest rates could further
impact equity markets and Quilter’s flows. Inflationary
pressures are expected to start easing in 2023 but the
pace and timing remains uncertain.
Mitigation:
2022 activity
· 2022 economic scenario testing at Group
and subsidiary level.
· Diversification of shareholder cash balances across
bank accounts and money market funds to reduce
credit concentration risk.
Planned and ongoing activity
· Stress and scenario analysis, including in respect
of market shocks.
· Ongoing enhanced monitoring of market and liquidity
risk exposures.
2022
risk
trend:
Risk
owner:
Chief
Financial
Officer
Business financial performance
Any negative impact on earnings, share price and/or capital
position could have a resulting adverse effect on Quilter’s
market credibility and financial standing. Throughout
2022, external economic and market conditions remained
challenging, and this impacted flows, AuMA and revenues.
The economic and political outlook remains uncertain
and ongoing inflationary pressures, alongside increasing
interest rates, risk damaging consumer confidence
further as cost-of-living pressures continue.
Mitigation:
2022 activity
· Implemented revised 2022 cost targets.
· Explore structural efficiencies that can be employed
to deliver 2023 cost base and beyond.
Planned and ongoing activity
· Continued monitoring of Key Risk Indicators relating
to liquidity, free cash and solvency positions.
2022
risk
trend:
Risk
owner:
Chief
Executive
Officer
Strategic delivery
The current stage of our strategy brings with it continued
strategic execution risk and the challenging external
conditions have led to an increase in this risk over the year.
Improved structural efficiency will reduce vulnerability
to short-term market conditions and enable long-term
investment. Customers place their trust in Quilter to
help deliver their financial futures, and delivery of good
customer outcomes in all of Quilter’s client propositions
will be key to the success of Quilter’s next phase.
Mitigation:
2022 activity
· Reprioritisation of the operating plan.
· Development of customer proposition and
points of differentiation.
Planned and ongoing activity
· Maintaining robust change discipline through
a comprehensive change framework and effective
governance structures.
· Dependency and resource mapping, identifying
and retaining key capabilities.
2022
risk
trend:
Risk trend key
Stable Decreasing Increasing
Business and strategic risks
47Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Risk
owner:
Chief
Executive
Officer
Climate strategy
Climate strategy risk is the risk that Quilter fails to develop
and deliver the achievable, coherent, comprehensive and
robust long-term climate strategy needed to appropriately
manage climate related financial and non-financial risks
(as set out in our 2022 TCFD report), meet regulatory and
other stakeholder expectations, and fulfil our strategic
ambition. This could result in reputational damage, the
potential for regulatory action, and/or financial impacts.
Quilter takes its responsibility to the environment very
seriously, and is determined to play its part in reducing
climate impacts.
Mitigation:
2022 activity
· Recruited a Head of Responsible Wealth Management.
· Began developing a detailed climate action strategy for
the business which encompasses Scope 3 emissions.
· Completed the requirements phase for 2022
TCFD-related disclosure deliverables.
Planned and ongoing activity
· Develop requirements for 2023 TCFD-related
disclosure deliverables.
· Complete a full risk assessment to ensure the climate
action strategy addresses any underlying risk factors.
2022
risk
trend:
Operational and regulatory risks
Risk
owner:
Chief
Executive
Officer,
Quilter
Financial
Planning
Advice
Quilter’s financial advice services are subject to
fundamental regulatory conduct requirements to assure
suitability of advisory recommendations. Failure to
operate effective arrangements to support the ongoing
delivery of suitable advice could expose Quilter to risks
associated with customer detriment, regulatory censure
and remediation programmes, with consequential
impacts to the Group’s business, financial condition
and reputation. Quilter continues to build on significant
improvements to the control environment over the past
18 months, with an improving trend seen against this risk.
Mitigation:
2022 activity
· Conclusion of programme of work to enhance the
control environment that supports the delivery of
suitable advice in the Quilter Financial Planning business.
· Defined benefit transfer advice remediation activity is
entering latter stages, with a small number of residual
cases being handled in compliance with the FCA’s
published section 404 compensation scheme.
Planned and ongoing activity
· Ongoing control improvement programme transitioning
into business as usual activity.
· A programme of work designed to make doing business
with us easier for customers and our advisers.
· Automating wherever possible in support of a less
manual control environment.
2022
risk
trend:
Risk
owner:
HR
Director
People
Quilter relies on its talent to deliver its service to
customers. The tight labour market and the cost-of-living
pressures are continuing to drive some challenging
conditions for employee retention. Failure to attract
and retain suitable talent may impact on the delivery
of Quilter’s strategy and may have an adverse impact
on Quilter’s business, its financial and operational
performance and its delivery of service to customers.
Mitigation:
2022 activity
· We Rise framework to support the delivery of Quilter’s
strategic objectives with agility and flexibility to adapt
to the changing internal and external environment.
Planned and ongoing activity
· Talent management and succession programme.
· Performance and risk-adjusted remuneration
arrangements.
· Regular employee engagement surveys.
· Quilter’s staff wellbeing initiative, ‘Thrive’.
· Coaching programme to support new teams coming
together as part of business transformation/change.
2022
risk
trend:
Risk
owner:
Chief Risk
Officer
Regulatory
Quilter is subject to regulation in the UK by the PRA and
the FCA. Additionally, the firm is subject to the privacy
regulations enforced by the Information Commissioner’s
Office and international equivalents. Quilter faces risks
associated with compliance with these regulations
and to changes in regulations or regulatory focus or
interpretation in the markets in which Quilter operates.
Failure to manage regulatory compliance effectively could
result in regulatory censure, including the possibility of
fines or prohibitions which could impact business
performance and reputation.
Mitigation:
2022 activity
· Plan defined for Consumer Duty implementation
and mobilisation of the programme.
· Implemented Appointed Representative regime changes.
Planned and ongoing activity
· Implement Consumer Duty requirements.
· Compliance monitoring programme.
· Regulatory engagement management, and regulatory
horizon scanning.
· Staff training and staff awareness programmes.
2022
risk
trend:
Business and strategic risks continued
Risk review
continued
48 Quilter Annual Report 2022
Quilter is a long-term business and as such we monitor risks which
are less certain in terms of timescales and impact. The emerging
risk profile is subject to regular review by management committees
and the Board. The identification of these risks contributes to our
stress and scenario testing which feeds into our strategic planning
Emerging risk radar
process and informs our capital calculations. The following are the
emerging risks we feel are the most significant. Economic outlook
and Geopolitical risk have been split out this year so they can be
appropriately articulated given the current external environment
Near term
Economic
outlook and
inflationary
pressure
The Bank of England’s Monetary Policy Committee latest projections describe a challenging outlook
for the UK economy with CPI inflation expected to remain elevated in the near term, it is expected
to fall sharply from mid-2023. Global GDP growth has slowed and is projected to remain weak during
2023. There are some signs that labour demand has started to soften, though the labour market
remains tight. Persistent high inflation and a recession could significantly impact all of Quilter’s
stakeholders, including customers, colleagues, and shareholders.
Margin
pressure
Increasing market pressures may require provision of services at a lower overall cost to customers to
remain competitive. An inability to adapt to margin pressure could cause a reduction in market share
of new business and negatively impact retention of existing business. Operating margin is a key focus
with cost control and expense management activities ongoing.
Geopolitical
risk
Instability within the Eurozone, the Russia-Ukraine conflict, tensions in the Middle East, Taiwan, the
South China Sea and North Korea, as well as ongoing strain in trade relations between the US, China
and the EU have contributed to increased volatility in the financial markets in recent years and have
contributed to diminished growth expectations for the global economy. It is possible that the effects
of such geopolitical events will include further financial instability, slower economic growth, significant
regulatory changes, currency fluctuations or higher unemployment and inflation in the UK,
continental Europe and the global economy, at least in the short to medium term.
Cyber threat
developments
Quilter operates in an environment where the nature of cyber threats are continually and quickly
evolving. The ever-increasing sophistication of cyber criminality presents a persistent threat of attack,
capable of compromising the continuity of operations, or the security and integrity of information.
Cyber security systems need to continuously monitor and innovate in response to emerging cyber
threat developments.
Infectious
disease
outbreak
Whilst the risk of pandemic resurgence remains low, a rise in outbreaks of other infectious diseases
could potentially have impacts on Quilter’s operations should mitigations be required to reduce
the spread.
Medium term
Disruptive
competition
and technology
The white labelling of platforms coupled with financial advice consolidations by private equity firms
who are aligning to white labelling partners could see competitors acquire skills and technology,
accelerating their digital capabilities. This, alongside advancements in Digital/Hybrid advice could
see new entrants enter the already highly competitive market, having the potential to erode Quilter’s
market share and increase fee pressure across the value chain.
Climate
change –
physical risks
Physical climate risks are now crystallising, evidenced by summer heat waves in the UK and low
rainfall. Whilst Quilter’s flexible working policy allowed employees to cope well with extreme heat last
year, some were impacted by public transport delays and reduced childcare provision. Such events
are expected to become more extreme and more frequent in future, posing challenges to Quilter,
the UK’s infrastructure and critical third parties’ operations.
Climate
change –
transition risks
To avoid a climate catastrophe, global emissions must peak by 2025, halve by 2030, and be net zero
by 2050. Achieving these aims has profound implications across the global economy and all industries.
A disorderly transition to a low carbon economy could have financial impacts for Quilter caused by
investment volatility or increased costs due to additional regulatory burden. COP27 was an
opportunity for world leaders to show how they planned on turning their promises into action and
whilst disappointing progress was made on phasing out fossil fuels, a historic agreement was reached
on a fund to compensate developing countries for losses and damage caused by climate change.
Longer
term
Generational
shifts
The UK population is ageing. A significant proportion of UK household wealth is held by the over-45s
and, over the next 30 years, this is set to be transferred between generations as inheritance or gifts.
These trends present both opportunities and risks to Quilter in the form of changing consumer
demands and expectations.
Risk review
continued
49Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Risk management and internal control
The Directors are responsible for ensuring that management
maintains an effective system of risk management and internal
control and for assessing its effectiveness. Such a system is
designed to identify, evaluate and manage, rather than eliminate,
the risk of failure to achieve business objectives and can only
provide reasonable and not absolute assurance against
material misstatement or loss.
Quilter is committed to operating within a strong system of internal
control that enables business to be transacted and risk taken without
exposing itself to unacceptable potential losses or reputational
damage. The Quilter Group Governance Manual sets out the
Group’s approach to internal governance and establishes the
mechanisms and processes by which management implements the
strategy set by the Board to direct the organisation, through setting
the tone and expectations from the top, delegating its authority
and assessing compliance.
Quilter’s principles of internal control (covering financial,
operational and compliance areas) are to maintain:
· clearly defined delegated authorities;
· clearly defined lines of responsibility;
· robust recording and reporting of transactions to support
the financial statements;
· financial reporting controls procedures and systems
which are regularly reviewed;
· protection of assets; and
· financial crime prevention and detection.
The Enterprise Risk Management Framework is overseen by the
Board Risk Committee and aims to align strategy, capital, processes,
people, technology and knowledge in order to evaluate and manage
business opportunities and threats in a structured, disciplined
manner. The Group’s principal risks and uncertainties are set
out on pages 47 to 48.
Further information on the Directors’ review of Risk and internal
control can be found on pages 75 to 78.
Viability statement
In accordance with provision 31 of the UK Corporate Governance
Code 2018, the Directors have assessed the prospects of the Group
for a period longer than the 12 months required in the Going
Concern Statement.
Quilter’s Risk Appetite Framework supports the delivery of Quilter’s
strategy and Business Plan with risk preferences and appetite
playing a central role in informing decision making across the Group.
Every year, the Board considers the longer-term viability of the
Group by reviewing the three-year Business Plan, the Own Risk and
Solvency Assessment (“ORSA”) and the Internal Capital Adequacy
and Risk Assessment (“ICARA”) for the Group. The three-year
review period is considered appropriate because it aligns with
the timeframe focused on for the annual strategic review exercise
conducted within the business and reviewed by the Board.
The Business Plan makes certain key assumptions in respect of the
competitive markets and the economic and political environments
in which the Group operates, the level of support provided to
companies within the Group and the impact of key strategic
initiatives. This year, the Business Plan considered the impact of
market risk and the prevailing economic and geopolitical climate,
and the risks and challenges this presents to the Group. In
particular, the Business Plan considered the potential for volatility
in debt, equity and currency markets which can adversely impact
the Group’s AuMA, revenue and profitability.
The first year of the Business Plan has the greatest certainty and
is used to set detailed budgets across the Group. Although three
years is regarded as an appropriate period for the assessment
of the Group’s viability, the Board also regularly considers other
strategic matters that may affect the longer-term prospects of the
Group. This includes the Board’s assessment of the principal risks
and uncertainties facing the Group in the longer term, including
climate change and any emerging risks, such as the generational
shifts potentially impacting the ability of newer generations to
accumulate wealth from income. The Board’s longer-term view is
that the Group will continue to grow as a wealth manager, serving
clients throughout their lives encompassing their accumulation
and decumulation phases.
The Board’s assessment included reviews of capital and liquidity
and an assessment of the principal risks over the three-year
planning period. A large portion of the Group’s revenue is
correlated to the Group’s AuMA, which can move materially
when there is significant volatility in global financial markets.
Viability statement
and going concern
50 Quilter Annual Report 2022
The ORSA and ICARA processes include an assessment of a range
of stresses and scenarios. These are performed in order to assess
capital and liquidity requirements and to test the impact of severe
stresses on the Group. Certain scenarios are tested at severity
levels which would be expected to occur once in every 50 and once
in every 200 years. These scenarios are tested in order to confirm
whether the Group and underlying operating entities have
sufficient capital and liquidity to meet their financial risk appetites.
Quilter has a documented recovery plan which sets out the
management actions and recovery options available to manage
the impacts of severe stresses.
In all the severe but plausible adverse scenarios tested, the Group
had sufficient capital and liquidity after allowing for management
actions. This demonstrates the Group’s resilience to adverse
conditions. The management actions which were assumed included
the cessation of dividend payments in the most extreme scenarios,
as well as actions to reduce costs, including reductions in variable
compensation costs and discretionary spending, and staff
recruitment freezes, similar to the tactical cost savings made
during 2020.
Reverse stress tests, which are performed to identify events which
would make the current plan unviable, have also been performed.
The results of these tests indicate that the Group can reasonably
expect to have sufficient capital and liquidity to be able to meet its
liabilities over the planning period and could sustain a significant
equity market fall, after management actions, well beyond the
market falls experienced during the first half of 2020 with no
foreseeable market recovery.
The Board regularly monitors performance against a range
of predefined key performance indicators and early warning
thresholds, which will identify if developments fall outside of
the Group’s risk appetite or expectations, allowing management
action to be taken.
The Strategic Report, on pages 2 to 51, sets out the Group’s
financial performance, business environment, outlook and financial
management strategies. In addition, details of the Group’s principal
risks and risk management framework are set out on pages 47 to 48.
Conclusion on viability
Considering the Group’s current capital and trading position,
its principal risks, and the remaining three-year period of the
Business Plan, with due consideration of the impact of the current
economic climate, the Board has a reasonable expectation that the
Company and the Group can continue in operation and meet their
liabilities as they fall due over the period to 31 December 2025.
Going concern
The Directors have considered the resilience of the Group, taking
into account its current financial position, the principal risks facing
the business and the effectiveness of the mitigating strategies
which are or will be applied. As a result, the Directors believe that
the Group is well placed to manage its business risks in the context
of the current economic outlook and has sufficient financial
resources to continue in business for a period of at least 12 months
from the date of approval of these consolidated financial statements,
and continue to adopt the going concern basis in preparing the
consolidated financial statements.
This Strategic Report was approved by the Board
on 8 March 2023.
Ruth Markland
Chair
On behalf of the Board
Viability statement and going concern
continued
51Quilter Annual Report 2022
Strategic Report
Governance Report Financial statements Other information
Dear shareholder
I am pleased to write to you as your Chair. I have served on the
Board as the Senior Independent Director since Quilter was listed
in 2018 and I was honoured to be asked by my fellow Directors
to chair your Board of Directors during the year. Since that time,
I have spent time with colleagues, major shareholders and other
stakeholders to hear their views directly and I am grateful for
the support I have received.
Whilst 2022 was undoubtedly a year of change for your Board,
you will see that there was also continuity. In April, Rosie Harris
stood down from the Board and George Reid agreed to act as the
Board Risk Committee Chair until such time as Rosie’s replacement
was in place. In May, Glyn Jones, our former Chair, who had
indicated in late 2021 he wished to step down, also left the Board
at the conclusion of the 2022 AGM. I wish to note, on behalf of the
Board, my sincere thanks to Rosie and Glyn who both played such
important roles preparing Quilter for Listing, and particularly to
Glyn who served as Quilter’s Chair with distinction and led the
Group though significant change as we reshaped the Company
into the UK centric wealth management business we are today.
2022 also saw the implementation of our succession plan for
a transition in Chief Executive Officer. Paul Feeney’s departure
in October after over a decade of service marked the beginning
of a new chapter for Quilter under the leadership of Steven Levin.
Steven, who came to the role with deep knowledge and experience
of Quilter built up over many years, is wholly focused on the
successful execution of our strategy.
In May, we announced that Neeta Atkar, an experienced
Non-executive Director, following a career spent in financial
services regulation and risk management, would join the Board
on 11 August and would be Chair of our Board Risk Committee
from 1 October. Glyn Barker joined the Board in June with a view
to assuming the role as Chair but for personal reasons resigned on
11 November. At this time, and following careful consideration by
the Board, I was delighted to agree to continue as Chair. I was also
pleased that Tim Breedon agreed to continue as Senior Independent
Director and Chair of the Board Remuneration Committee.
Chair’s introduction to
corporate governance
An important role of the Board is to oversee the delivery of the
Company’s strategy by the executive within the agreed risk appetite
in order to create long-term success for our shareholders and I am
confident that the current Board has the right skills and experience
for Quilter to achieve the successful execution of our strategy.
My Chair’s statement on pages 3 and 4 has touched on the
external political and economic environment and challenging
market conditions with the year opening with the formal cessation
of COVID-19 isolation measures and the on-going conflict in Ukraine,
and it is in that context that your Board has operated. On the
following pages, I would like to share with you the work of your
Board, and some of the principal decisions we have made during
the course of 2022.
I would like to thank my fellow Directors, Quilter colleagues and
our stakeholders who continue to show their strong support for
our Company and I look forward to providing you with an update
on our progress in 2023.
Ruth Markland
Chair
Ruth Markland
Chair
52 Quilter Annual Report 2022
Compliance with the UK
Corporate Governance
Code 2018
UK Corporate Governance Code 2018 (the “Code”)
Quilter is subject to the Code. It is the Board’s view that the
Company complied with the Code and took appropriate actions
during the Chair succession process to ensure compliance. Details
of the actions taken can be found on pages 66, 70 and 83. Details
of our Corporate Governance framework are available on page 55
and our website at plc.quilter.com. The Code is publicly available
at www.frc.org.uk.
Disclosure Guidance and Transparency Rules (“DTRs”)
By virtue of the information included in this Governance section
of the Annual Report including our Directors’ Report (pages 108
to 111) we comply with the corporate governance requirements
of the FCA’s DTRs.
Johannesburg Stock Exchange (the “JSE”)
Quilter has a secondary listing on the Johannesburg Stock
Exchange and is permitted by the JSE Listing requirements to
follow the corporate governance practices of our primary listing
market, London. Quilter is, however, mindful of the provisions of
the King IV Governance principles and the expectations of our
South African shareholders.
Principles of the UK Corporate
Governance Code 2018
More
information
Board leadership and company purpose
Long-term value and sustainability 1 to 51
Culture 61 to 63
Shareholder engagement 25
Other stakeholder engagement 22 to 25
Oversight of Board level conflicts of interest 67
Division of responsibilities
Role of the Chair 55
Division of responsibilities on the Board 55
Assessment of Non-executive Director role 55 and 66
Assessment of independence on the Board 55
Composition, succession and evaluation
Board effectiveness 68
Board and Executive succession planning 66 to 67
Audit, risk and internal control
Integrity of financial statements 71
Fair, balanced and understandable 72
Internal controls and risk management 72 and 77
Assessment of external independent auditor 73 to 74
Principal and emerging risks (Risk Review)
Viability statement and going concern
47 to 49
50 to 51
Remuneration
Policy, practices and alignment with purpose,
values and long-term strategy
86 to 93
Independent judgement and discretion 82 to 83
Chair’s introduction to corporate governance
continued
Board meeting attendance and Board changes during 2022
Scheduled
Board
meetings
Ad hoc
Board
meetings Appointment date Resignation date
Directors
Ruth Markland
1
(Chair)
8/8 7/7
Steven Levin 2/2 1/1 1 November 2022
Mark Satchel 8/8 7/7
Independent Non-executive Directors
Neeta Atkar 2/3 3/3 11 August 2022
Tim Breedon
2
(Senior Independent Director) 7/8 6/7
Tazim Essani 7/8 7/7
Moira Kilcoyne 7/8 7/7
Paul Matthews 8/8 5/7
George Reid 7/8 7/7
Chris Samuel 8/8 7/7
Former Directors
Glyn Barker 2/2 2/2 1 June 2022 11 November 2022
Paul Feeney 6/6 5/5 31 October 2022
Rosie Harris 3/3 2/4 30 April 2022
Glyn Jones
4/4 4/4 12 May 2022
1
Stepped down as Senior Independent Director and appointed as Chair on 12 May 2022 at the conclusion of the 2022 AGM.
2
Appointed as Senior Independent Director on 12 May 2022 at the conclusion of the 2022 AGM.
In addition to the meetings reported above, sufficient time was provided, periodically, for the Chair to meet privately with the Senior Independent Director and the Non-executive
Directors. The Board had access to briefings and training during the year, including the new FCA Consumer Duty. Where a Director was unable to attend a meeting due to illness
or a long-standing conflicting commitment, they reviewed the Board papers and provided comments to the Chair in advance of the meeting. Some ad hoc Board meetings were
held at short notice.
53Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
29%
12%
35%
24%
91%
9%
26%
15%
24%
35%
91%
9%
Board composition as at 31 December 2022
Governance at a glance
Board activity 2022 2021
Risk management and governance
Strategy and delivery of strategy
Business performance oversight
Stakeholder management
2022 Board activity and how the Board spent its time
Gender identity
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board*
Men 6 60% 3
Women 4 40% 1
Not specified/prefer not to say 0 0 0
*Chair, Chief Executive Officer, Chief Financial Officer, Senior Independent Director.
Ethnic background
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board*
White British or other White
(including minority-white groups) 8 80% 4
Mixed/Multiple Ethnic Groups 0 0 0
Asian/Asian British 2 20% 0
Black/African/Caribbean/
Black British 0 0 0
Other ethnic group,
including Arab 0 0 0
Not specified/prefer not to say 0 0 0
Length of tenure for Chair and Non-executive Directors
2022 2021
0-1 years
1-3 years
3-4 years
4-5 years
5-6 years
6 or more years
Industry knowledge and experience
Industry knowledge
Accounting and finance
Asset management
Distribution
Governance
International financial services
IT and operations
Legal
Risk
Wealth management
Figures represent number of Board members with relevant experience.
Board skills and experience as at 31 December 2022
2022 2021
54 Quilter Annual Report 2022
Chair
Ruth Markland
The Chair is accountable to shareholders
for leading the Board and ensuring the
Board receives timely accurate information
to take good decisions for the benefit
of all stakeholders. The Chair was
independent on appointment.
Senior Independent Director
Tim Breedon CBE
The Senior Independent Director supports
the Chair on all governance issues and
provides a communication channel between
the Chair and Non-executive Directors.
Independent
Non-executive Directors
The Non-executive Directors support
and constructively challenge the executive
team within a spirit of partnership and
mutual respect. All the Non-executive
Directors are considered to be independent.
The Board
Executive Directors
Operating within a robust governance framework
Board Corporate
Governance and
Nominations
Committee
Chair: Ruth Markland
Board Audit
Committee
Chair: George Reid
Board Risk
Committee
Chair: Neeta Atkar MBE
Board
Remuneration
Committee
Chair: Tim Breedon CBE
Board Technology
and Operations
Committee*
Chair: Moira Kilcoyne
Key management committees
Responsible for overseeing specific areas of responsibility such as the Group’s operations, technology functions and responsible investing.
Executive Risk Forum
Overseeing, challenging and
monitoring the management of
risk and effectiveness of the
systems of internal control
within the Quilter Group.
Operating Committee
Supporting the Chief Operating
Officer in the discharge of her
duties and co-ordinating the
Group’s operations and
technology arrangements.
Inclusion and
Diversity Steering
Committee
Driving the Group’s diversity,
inclusion and wellbeing strategy
and action plan.
Responsible Wealth
Management Steering
Committee
Providing direction and
monitoring of the responsible
wealth management strategy.
Steven Levin and Mark Satchel
The Quilter Board has delegated the day to day running of the Group to the Chief Executive Officer. The Executive Directors make
and implement operational decisions to run the Quilter business on a day-to-day basis. To support the Chief Executive Officer in discharging
his responsibilities, he is supported by the Quilter Executive Committee. The Quilter Executive Committee has in turn delegated certain of its
responsibilities to the management committees below. The Executive Committee reports to the Chief Executive Officer for their respective
areas of responsibility and delivery of the Operating and Business Plans. You can read more about the Executive Committee on pages 8 and 9.
The Board is the decision-making body for all matters of such
importance as to be of significance to Quilter as a whole because
of their strategic, financial or reputational implications or
consequences. A summary of the matters that are reserved
for the Board’s decision, which includes Board appointments,
Quilter’s strategy, financial statements, capital expenditure and any
major acquisitions, mergers or disposals, and the appointment and
removal of the Company Secretary, can be found at plc.quilter.com.
Governance at a glance
continued
*The Board Technology and Operations Committee was initially formed to oversee the implementation of the new investment platform and now this has successfully completed
the Committee formally closed at the end of 2022. Further information can be found on pages 79 to 81.
55Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Skills and experience:
Ruth, a former solicitor and previously Managing Partner of
Freshfields Bruckhaus Deringer’s Asia business, has a wealth
of FTSE 100 Board experience. She spent over ten years on the
Boards of Standard Chartered plc and Sage Group plc, where
she served as Senior Independent Director and Chair of the
Remuneration Committees. Ruth was also an independent
Non-executive Director of Deloitte LLP for five years until May 2020
and was a member of the Supervisory Board of Arcadis NV until
April 2021. Her considerable experience in senior board roles
provides her with the skills and experience to effectively chair
the Quilter Board. Ruth was appointed as Chair of the Board
on 12 May 2022.
Skills and experience:
Tim is an experienced Non-executive Director and Committee
member. He has had a distinguished career in financial services,
with past appointments including Group Chief Executive Officer of
Legal & General, being a Member of the Takeover Panel, and holding
Non-executive Director roles with the Association of British Insurers
and the Financial Reporting Council. In February 2022, Tim retired
from the board of Barclays Bank plc, and stood down as Chair
of the Barclays plc and Barclays Bank plc Board Risk Committee,
and as a member of the Barclays Board Audit Committee, Board
Nominations Committee and Board Remuneration Committee.
Tim continues to serve on the Board of Barclays plc and chairs
Barclays Bank Ireland PLC and Apax Global Alpha Limited.
Tim’s extensive business leadership and governance best practice
experience enables him to provide challenge, advice and support
to Quilter management on business strategy, performance, decision
making and governance matters. Tim was appointed as Senior
Independent Director on 12 May 2022 and his prior experience
enables him to act as a helpful sounding board for the Chair and
other Board members.
Board of Directors
The Quilter Board comprises the Chair,
the Senior Independent Director, Chief
Executive Officer, Chief Financial
Officer and independent Non-executive
Directors. All Directors are subject to
re-election annually by shareholders at
the Company’s Annual General Meeting.
The skills and experience and how our
Directors contribute to the long-term
sustainable success of the Company
are set out in their biographies on
the following pages.
Ruth Markland
Chair
Appointed: June 2018
Committee membership
· Board Corporate Governance
and Nominations Committee
(C)
· Board Remuneration
Committee
Tim Breedon CBE
Senior Independent Director
Appointed: June 2020
Committee membership
· Board Corporate Governance
and Nominations Committee
· Board Remuneration
Committee (C)
· Board Risk Committee
1
Changes to Committee membership
1
Tim Breedon stood down as a member of the Board Risk
Committee on 31 December 2022.
2
The Board Technology and Operations Committee was initially
formed to oversee the implementation of the new investment
platform. Now this has successfully completed, the Committee
was formally closed at the end of 2022. More information can
be found on pages 79 –81.
3
Paul Matthews will step down as a Workforce Engagement
Director, after serving three years in the role, at the conclusion
of the 2023 AGM.
56 Quilter Annual Report 2022
Skills and experience:
Mark brings deep finance, corporate action and business
experience to the Board. He joined Old Mutual in the UK in January
2000 and held numerous leadership positions within the finance
function and businesses there, during which time he played key
roles in the acquisitions of Intrinsic (now Quilter Financial Planning)
and Quilter Cheviot. This experience has been invaluable in
ensuring that Quilter effectively executes its strategy, for example,
allowing him to lead the successful disposals of Quilter Life
Assurance and Quilter International. Mark previously served as
Chief Financial Officer of the business from 2010 to August 2017
and as Corporate Finance Director for the 17 month period to
March 2019. Mark is qualified as a Chartered Accountant in South
Africa and worked for KPMG in both South Africa and Canada prior
to moving to the UK. Mark is a Trustee of The Grey Foundation in
the UK.
Skills and experience:
Steven has deep industry knowledge, having worked in asset
management, investments, platform and distribution roles.
He joined the Group in 1998, the Executive Committee in 2011
and the Board in November 2022 when he was appointed as
Chief Executive Officer. Steven has played a leading role in
delivering several high-profile strategic initiatives for the Group,
including the implementation of Quilter’s new investment platform
and supporting the development of Quilter’s ESG proposition.
As Head of Affluent, Steven focused on bringing Quilter’s Platform
and Investment Solution businesses together to operate in a more
customer centric manner with our Advice business. Steven’s broad
industry and leadership experience allows him to effectively drive
strategic delivery. Steven is a qualified Actuary and Chartered
Financial Analyst.
Skills and experience:
Neeta has extensive experience of the financial services industry,
having worked initially at the Bank of England and subsequently the
Financial Services Authority before taking on roles with Andersen
Consulting, Abbey National, Royal & Sun Alliance, Lloyds Banking
Group and, latterly, with TSB Bank where as Chief Risk Officer, she
was a member of the executive team responsible for creating and
listing the Bank on the Stock Exchange. Neeta has broad experience
of chairing risk committees, gained previously at Yorkshire Building
Society and currently at Nomura Europe Holdings plc and at the
British Business Bank plc, where she is also the Senior Independent
Director. This experience, together with her deep understanding of
customers, risk and regulation, will enable Neeta to make a significant
contribution to the Board as it continues to ensure that Quilter’s
risk management framework is integrated with its strategy.
Skills and experience:
Tazim’s wealth of experience in senior executive roles at regulated
financial services businesses over the last 30 years equips her well
to provide strategic guidance and constructive challenge to Quilter’s
leadership team. Her executive career has focused on strategy and
business development to drive growth and transformation, with her
previous roles including a senior business strategy role at Santander
UK, Group Head of Corporate Development at Close Brothers
Group plc and senior roles at GE Capital and Royal Bank of Scotland.
Throughout her career, Tazim has developed a deep understanding
of corporate finance, transformational change and business
development, enabling her to contribute strongly to the Board’s
deliberations. Alongside Paul Matthews, Tazim is a designated
Workforce Engagement Director with a particular interest in
promoting diversity and inclusion. Tazim is a Non-executive Director
of City of London Investment Group plc, a Council Member of the
Royal Horticultural Society and an executive coach at The Alliance.
Board of Directors
continued
Neeta Atkar MBE
Independent Non-executive
Director
Appointed: August 2022
Committee membership
· Board Audit Committee
· Board Risk Committee (C)
· Board Technology and
Operations Committee
2
Steven Levin
Chief Executive Officer
Appointed: November 2022
Tazim Essani
Independent Non-executive
Director
Appointed: March 2021
Committee membership
· Board Audit Committee
· Board Remuneration
Committee
· Workforce Engagement
Director
Mark Satchel
Chief Financial Officer
Appointed: March 2019
57Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Skills and experience:
George has extensive financial experience having spent over 20
years in the accounting profession. This knowledge, gained during
lengthy tenures at PwC, and, latterly, Ernst & Young LLP as managing
partner and Head of Financial Services for Scotland and UK regions,
provides George with a deep understanding of accounting and
audit matters, and the control environment required for a wealth
management business. Such experience allows him to critically
assess key accounting and financial considerations including those
associated with our recent disposal of Quilter International. George
is a Fellow of the Institute of Chartered Accountants in England
and Wales. George is the Senior Independent Director and Audit
Committee Chair of FIL Life Insurance Limited. In July 2022, George
was appointed as a member of the Board Corporate Governance
and Nominations Committee.
Skills and experience:
Chris is an experienced Chair and Non-executive Director and
his deep experience in the financial services industry enables
him to challenge, advise and support Quilter’s management team
on a wide range of business, investment, distribution, finance and
operational matters. Chris was Chief Executive of Ignis Asset
Management, a business with circa. £65bn of assets under
management, from 2009 to mid-2014. Over this period, he led the
successful transformation, and then sale, of the business. Chris has
held Board-level positions at a number of asset management
businesses including Gartmore, Hill Samuel Asset Management,
Cambridge Place Investment Management and spent 10 years with
a US Investment Bank, Prudential-Bache. He began his career with
KPMG where he qualified as a Chartered Accountant. Chris chairs
BlackRock Throgmorton Trust plc. Chris will step down as a
Non-executive Director of UIL Limited on 31 May 2023 and as Chair
of JP Morgan Japanese Investment Trust plc at their Annual General
Meeting in January 2024.
Board of Directors
continued
George Reid
Independent Non-executive
Director
Appointed: February 2017
Committee membership
· Board Corporate Governance
and Nominations Committee
· Board Audit Committee (C)
· Board Risk Committee
· Board Technology and
Operations Committee
2
Chris Samuel
Independent Non-executive
Director
Appointed: July 2021
Committee membership
· Board Risk Committee
· Board Technology and
Operations Committee
2
Skills and experience:
Moira has extensive technology and cyber security leadership
experience, having spent much of her career working in senior
technology roles at Morgan Stanley and Merrill Lynch, latterly
executing global change management and transformative
IT implementation as Co-Chief Information Officer for Global
Technology and Data at Morgan Stanley. Moira is currently
a Non-executive Director of Arch Capital Group and Elliot
Opportunity II and previously served as a Non-executive Director
of Citrix Systems Inc. This experience, gained at both executive and
non-executive level, together with her understanding of business
operations, operational resilience, management of data and
supplier oversight, equips her to oversee and challenge the design
and delivery of Quilter’s technology and operations strategies as
well as the ongoing oversight of Quilter’s investment platform.
Moira is a member of the Board of Governors of FINRA.
Skills and experience:
Paul is an experienced FTSE 100 Board Director who has over four
decades’ worth of knowledge of the savings and pensions industry.
His career at Standard Life, spanning nearly 30 years, where his
roles included Group Executive Director, Chief Executive Officer UK
& Europe and Chair of Standard Life Wealth, enables him to identify,
and support management to understand the opportunities and
risks facing Quilter, particularly in its distribution businesses.
This insight enables him to effectively assess and challenge the
executive’s strategy proposals, execution and risk management.
As an executive mentor at Merryck & Co, Paul uses his extensive
leadership skills and experience to coach senior leaders. Paul’s
track record in leading major businesses that rely on having strong
leadership and positive cultures is also helpful in discharging his
role as a designated Workforce Engagement Director, which he
performs alongside Tazim Essani.
Moira Kilcoyne
Independent Non-executive
Director
Appointed: December 2016
Committee membership
· Board Risk Committee
· Board Technology and
Operations Committee
2
(C)
Paul Matthews
Independent Non-executive
Director
Appointed: August 2018
Committee membership
· Board Risk Committee
· Board Remuneration
Committee
· Workforce Engagement
Director
3
58 Quilter Annual Report 2022
Principal decisions of the Board in 2022
Delivery of our strategic
objectives
Simplification
As Quilter has become a smaller, more UK focused Group,
the Board, supported in part by findings of the 2022 externally
facilitated Board effectiveness review, examined its own working
practices with the intention to move to providing a more efficient
way of delivering effective oversight. We wish to become a leaner
and more agile organisation and the Board and its processes are
no exception to this. A review of the Board’s governance structure
was conducted, with assistance from the Company Secretary, in
order to simplify and streamline the principal Board Committees.
Following this review, the Board concluded that the activities of
the Board Technology and Operations Committee, which had
delivered on its original strategic objective of overseeing the
delivery of Quilter’s new investment platform, could be handled
in our governance process without the need for a separate Board
Committee. In terms of the Committee’s remit, responsibility
for oversight of strategic technology development will be assumed
by the Board as a whole, whilst technology and operational risk
matters will be subsumed by the Board Risk Committee. At its
December 2022 meeting, the Board formally noted their sincere
thanks to the Committee Chair for her excellent leadership, and
to management for their focus and dedication in delivering this
pivotal strategic matter, and agreed to formally dissolve the Board
Technology and Operations Committee. The work this Committee
oversaw has now been fully integrated into other governance
processes and care has been exercised to ensure that
management still have appropriate access to the skills, insights
and experience of the Chair of that Committee, Moira Kilcoyne.
In a similar vein, and in recognition of the maturing internal controls
and benefits delivered from the introduction and embedding of
new financial systems, the number of Board Audit Committee
meetings scheduled for 2023 has been reduced.
Being a responsible wealth manager
The Board has continued to provide close oversight on the
delivery against this objective, as well as ensuring we are effectively
managing climate-related risks. The Board was updated on the
tools and training made available to our advisers and investment
managers so that they are able to understand a customer’s
responsible investment preferences and select a solution which
aligns to these. The Board will continue to be informed about
management’s delivery of the proposition against our customers’
responsible investment preferences and have asked to be kept
updated with regards to the FCA’s Sustainability Disclosure
Requirements (“SDR”) Regime. The Board routinely examines the
investment performance of the funds Quilter offer and the Board
has asked the Board Risk Committee to scrutinise in more detail
how we mitigate the risk of greenwashing.
Digital strategy
During the year, the Board continued to provide oversight to the
digital strategy. In November 2022 a new mobile Customer App
was launched to help customers manage their products and
services more easily. The Board has been kept closely briefed
by management on the development of the Digital Hybrid Advice
initiatives. The Board has discussed in detail the operating model,
products, target customers and regulatory requirements for this
business growth initiative. The technology that underpins this
proposal is expected to have additional broader implications for
the advice business that will drive efficiency and growth and the
Board agreed to reschedule the launch of the firm’s hybrid advice
proposition. This reprioritisation will enable us to strengthen and
automate internal controls in Quilter Financial Planning, which is
a necessary building block to enable hybrid advice to be fully
integrated into Quilter’s proposition.
The Board reviewed and approved proposals that are aimed
at deepening and strengthening Quilter’s relationships with the
advisers in the Quilter Network and National by making it easier
for our advisers to do business with Quilter and increasing
opportunities for advisers to grow and invest in their businesses.
In a competitive market, the Board believe that there is more to
be done to deliver on our advice led model.
Reviewing the Group strategy
In July 2022 the Board held an in person two day strategy session.
Guided by the Board, the management team presented a
comprehensive overview and analysis of each business segment
and the challenges, opportunities and progress made towards
delivering our strategic goals. External experts supported the
discussions with insightful analysis on the competitor and market
position and industry insights and trends. The Board tested and
challenged the strategic priorities and asked management to
accelerate the execution of the strategy to ensure Quilter was truly
customer centric, our governance, processes and costs are fit for
the size of our current business and we are well positioned to serve
the needs of our customers, advisers and our investors.
Product and proposition
The new platform is fully embedded and despite the challenging
market conditions, and ongoing programme of improvements,
the platform continues to be a springboard for the further
development of our strategy. The Board considered and approved
further investment in our technology to enable more channels to
be available for our customers and advisers to interact with us,
particularly as we support customers in generational wealth
planning. This is also a way for all our businesses to leverage the
capability we already have. Our digital reach improved but we also
recognise that there is more to do. With investors increasingly aware
of environmental concerns and as we develop solutions to support
generational wealth, the Board was heartened by the progress
made on environmental solutions, how these are embedded
in the investment products and how we make this information
clear for advisers and customers.
59Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Customers
The new FCA Consumer Duty (the “Duty”) represents a significant
regulatory change over which the Board has maintained close
oversight during the year. The Group Board and regulated
subsidiary board members have been briefed in full on the impacts
of the Duty and progress has been monitored. In October 2022,
the Board and subsidiary Non-executive Directors met together
to consider the plans for Quilter to implement the new Duty
consistently across the Group in a way that is appropriate and fair
for all customers. The Directors examined the plans to assess the
changes and enhancements needed to demonstrate fully how
Quilter’s products and services deliver good customer outcomes.
Having been reviewed by the Group and subsidiary boards and the
independent Non-executive Director Consumer Duty Champions,
the Board agreed the implementation plan. The Board Risk
Committee will closely scrutinise progress against the plan in 2023.
The Group implementation plan was shared with the FCA as part
of our routine engagement.
In addition, the Board also received updates on the programme
of voluntary redress for customers within our platform business
where fees had been erroneously taken. The Board was pleased
that management took prompt action to rectify the issues once
they became apparent. As is part of normal practice, a “lessons
learnt” exercise has been undertaken, which identified the need
to ensure that there are appropriate escalation routes for all
colleagues to raise issues so that customer complaints can be
considered by appropriately qualified people. We continue to
work closely with our regulator to agree any possible redress for
customers who were given unsuitable historic advice with regards
to DB to DC pensions.
During the year, the Board has paid particular regard to investment
performance, particularly given the macroeconomic and market
headwinds, and the impact the cost-of-living crisis has had on the
amount of new money that people are willing to invest. The Board
had a clear focus on ensuring that our investment processes, risk
oversight and investment risk were closely monitored at a time of
extreme market volatility, given the potential impacts for customers.
Setting realistic but stretching
financial and operating targets
In November 2022, the Board reviewed and approved the Business
Plan for the forthcoming three year period. The Business Plan sets
the financial and non-financial targets for the period and shows the
capital and liquidity impacts of that Plan which are aligned to the
Group’s risk appetite. Noting the significant uncertainties in the
external environment at the time of setting the Business Plan,
and the relatively smaller size of the business following the sale of
Quilter Life Assurance and Quilter International, the Board carefully
considered the targets and were mindful during 2023 that a rebase
of some elements of the Plan may be necessary to take account
of the market movements.
Alongside the production of the Business Plan, management
developed an Operating Plan which sets out the key strategic
initiatives and programmes of work required to deliver the Business
Plan and the Group strategy. The Board carefully considered the
resource available to deliver the Operating Plan, the alignment of
the financial and operating plans and the achievability of the Plans.
In particular, the Board raised some concerns with the Executive
regarding employee capacity to manage the demands upon them
and asked for some aspects of the Plan to be reconsidered to
ensure targets were realistic and could be delivered safely
and within reasonable time parameters.
A priority of the Board has been to continue to oversee the delivery
of the Operating Plan and any material changes to that Plan, which
underpins the Business Plan. Given the market conditions in 2022
and the implementation of our Board succession plans, we have
directed management to carefully prioritise where they should focus
their time. The Board supported management’s recommendation
for there to be further investment in technology to deliver on our
Business Simplification programme.
Monitoring the delivery of the
2022 Operating Plan
During the year, the Board has received quarterly updates on the
progress being made to deliver the 2022 Operating Plan, which
supports the delivery of the Business Plan and our Group strategy.
Our Chief Operating Officer has continued to provide regular
updates to the Board on the progress made in simplifying the
Group’s operations, and the improvements made to operational
processes through automation as well as expected cost savings
achieved by the use of technology. The Board spent time
challenging the pace of change and asked to receive updates from
the Chief Executive Officer on cost management at each meeting.
Principal decisions of the Board in 2022
continued
60 Quilter Annual Report 2022
Overseeing material risk matters
In addition to receiving reports from the Chair of the Board Risk
Committee after each of their meetings, the Chief Risk Officer
attends as a matter of course all Board meetings and provides
his assessment of activity against the agreed risk appetite.
The Board has also spent time considering the impacts for our
customers of the redress programmes in place for those customers
who received unsuitable advice, which resulted in a loss. This advice
was in relation to DB to DC pension transfers from Lighthouse
advisers prior to Lighthouse transitioning to Quilter’s systems
and controls after its acquisition by Quilter.
The Board was also kept appraised and endorsed a voluntary
programme of redress proposed by management to affected
customers where we had inadvertently withheld dividends
and interest payments.
Ensuring Quilter’s people and
culture remain appropriate
During the year, the Board received biannual updates on people,
culture and ways of working. There are positive indicators around
how Quilter’s people work together, and the Board recognise how
the distinct cultures in our business segments sit together under
our overarching culture and values framework. The Board has
asked management to consider further how they can ensure that
Quilter continues to be a place where all colleagues thrive whilst
supporting a culture where high performance is recognised and
celebrated. You can read more about the Inclusion and Diversity
Action Plan on page 30. We are delighted to report that the Board
itself met its own current diversity targets for both gender and
ethnicity and you can read more about our new Board Diversity
Policy on pages 64 and 67.
Capital return and dividends
Despite the challenging external market conditions, the Company’s
capital, liquidity and cash flow continue to be strong and the Board
continued to exercise prudent oversight of these important metrics.
As reported in last year’s Annual Report, following conversations
with major shareholders regarding the best method to return the
proceeds from the sale of Quilter International, Quilter returned
over £328m to shareholders by way of a B Share Scheme and
Share Consolidation.
The Company’s dividend continues to be in line with the Dividend
Policy approved by the Board and implemented in May 2022.
Debt funding
During the second half of 2022, the Board considered the
options as to how to manage the potential refinancing of the
existing £200 million bond issued by the Company in 2018 with
a first call date option of 28 February 2023. The Board, led by
our Chief Financial Officer and with support from our corporate
advisers, carefully assessed the options available to us given the
market dislocation in the UK bond markets in November 2022
following the government’s mini budget. The Board Risk Committee
reviewed in detail the Risk Factors that would be disclosed in the
debt prospectus and the Board asked management to begin
preparations to allow the Company to undertake a new bond
issue in early 2023 to maintain optionality in the event of public
debt markets reopening. The Board received a further update
in December 2022 on the conditions in the debt market and were
kept appraised of the potential options available to the Company.
Following a normalisation of debt market conditions in early 2023
coupled with receipt of necessary legal and regulatory approvals,
the Board held an ad hoc Board meeting on 6 January 2023 to
consider the options available and to review in detail the
transaction documents including the Prospectus associated with
a potential new issue. The Board considered that the 2018 bond
be called and refinanced through a new bond issue of similar size.
Cognisant of its responsibilities under s172(1) of the Companies Act,
the Board debated in full the appropriate course of action.
Although the cost of the new debt issue was higher than the
coupon on the existing funding, had the debt not been repaid,
it would have repriced to a broadly similar coupon to the new issue
as well as potentially having a negative impact on our reputation
with credit market investors which, as a relatively infrequent issuer,
could have had a negative impact on the Group’s reputation
across the capital markets. The new capital funding arrangement
will support Quilter over the medium term. The Board confirmed
that a new Tier 2 Bond should be launched and on 16 January 2023
the new bond was announced to the market with a coupon rate
of 8.625% and a maturity date of 18 April 2033, and with an initial
call option in the period from 18 January 2028 to 18 April 2028.
The Board received an update on market and shareholder
sentiment at its next Board meeting.
Business review
Following the move to simplify our structure to better support the
end-to-end customer journey, the Board monitored the progress
being made to fully integrate our private client advice business into
Quilter Cheviot.
Following the Board Strategy meetings in July 2022, and given the
evolving competitor environment, the challenging external market
conditions, and with the appointment of our new Chief Executive
Officer, the Board asked Steven Levin to focus on execution and the
delivery of our strategy. As part of this work, Steven has implemented
a business review and is due to bring back to the Board his
assessment of how best to deliver Quilter’s strategic priorities.
Principal decisions of the Board in 2022
continued
61Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
We are pleased to present our joint report as Workforce
Engagement Directors. We want to share with you some of the
activities we undertook throughout 2022 and our thoughts on the
outputs of this work.
What is our role
Our role is to ensure that the views and concerns of the workforce
are central to all our Board decisions and are considered, in line
with the Company’s values, to support our long-term sustainable
success. Our role offers a clear and direct link to the Board for
colleagues from diverse groups and at all levels of the
organisation. Our feedback complements management’s
colleague engagement programmes and provides the Board with
further insights on colleagues and organisational culture more
broadly. The Board receives biannual updates on people, culture
and ways of working, with data sourced from a weekly Colleague
Pulse survey, and it is our role to provide more colour around this
data and help understand the tone of the conversation.
Colleagues are the key to our success, and the Board recognises
the importance of attracting and retaining talented people in a
highly competitive labour market. The Board is committed to
support colleagues, both within and outside the workplace,
particularly given the current economic environment and the
cost-of-living challenges in 2022 and into 2023.
Our progress
In 2022 we continued to collaborate with the Quilter Employee
Forum, whose membership is made up of individuals from
all parts of the organisation. With the agreement of the Forum
members, we attend part of the Forum meetings to listen to the
discussions, gauge the views of members and obtain feedback
to share with the Board on topics as diverse as the impact for
colleagues of the rising cost-of-living and the change of Chief
Executive Officer. In addition, we meet monthly with the Forum
Chair to discuss colleague sentiment and to share any Board
updates which are relevant for the Forum.
Attending the Quilter Employee Forum has also provided the
opportunity to understand the experience of colleagues working
in the business and to hear from them about how the business
and leadership changes in 2022 have impacted them. It has been
pleasing to hear that, overall, these challenges have been received
positively and generated a desire from our people to see more
collaboration across the business to support our customers.
Through engagement with the Employee Forum, we continue to
recognise how committed our colleagues are and have been able
to observe many examples throughout the year of where colleagues
have come together to promote good customer outcomes.
During the year, we observed that the Employee Forum could
be even more representative of the broader Group. Through
collaboration with HR, we have considered ways to ensure
all businesses and colleagues are fully represented.
5
Employee Forums attended
12
Discussions with the Chair
of the Employee Forum
This year we also attended a face-to-face workshop with the Chairs
of all Quilter colleague networks – the LGBT+ Network, the Cultural
Diversity Network, the Inclusion & Diversity Steering Committee
and the Gender Equality Network. By discussing their achievements
to date and planned activities for 2023, we recognise the value that
these networks bring to the Group. It was a pleasure to hear how
the networks, which are populated and chaired by colleagues in
addition to their professional roles, display a real desire and energy
to make a difference.
In January 2022 the Board received a briefing from an external
speaker on diversity and inclusion to support our Board in effectively
overseeing the Group’s efforts to drive the diversity and inclusion
agenda and to better understand the benefits that openness can
bring to an organisation. As a result of this, we asked management
to make this session available to the senior management
community and as a result, over 300 management colleagues
joined a tailored virtual discussion on this vital topic. A key goal
of the Quilter Inclusion & Diversity Action Plan, which was launched
in July 2022, is to drive transparency about the make-up of Quilter’s
people. Sponsored by Tazim, the Board warmly endorsed the
Action Plan. In line with other Directors and colleagues, we directly
supported the Action Plan by providing our demographic data,
including our age, gender identity, sexual orientation ethnicity,
religion, disability, and socio-economic background to support
internal and external initiatives to provide clear base metrics in
order to measure and hold management and the Board to account
on progress achieved.
To celebrate International Women’s Day, Tazim and other female
Non-executive Directors attended a session focused on female
talent and career progression, designed to forge connections
between senior female talent and the Board. The session provided
senior female colleagues the opportunity to ask the Non-executive
Directors questions about their careers, and to discuss challenges,
opportunities and experiences at Quilter.
Looking forward to the year ahead
2023 will be another year of continued engagement with
colleagues. The Board recognises that the dialogue between
Workforce Engagement Directors and our colleague networks is an
important mechanism in promoting our values across the business
and understanding the perspectives of colleagues. Alongside our
engagement with the Employee Forum, we attended the Quilter
Conference in January 2023, and will meet with the colleague
networks Chairs, engage with colleagues on our apprenticeship
scheme, and identify opportunities to engage with colleagues
across the organisation. Paul Matthews will step down as a
Workforce Engagement Director, after serving three years
in the role, at the conclusion of the 2023 AGM.
Report from the Designated
Workforce Engagement Directors
Paul Matthews
Independent Non-executive
Director
Tazim Essani
Independent Non-executive
Director
62 Quilter Annual Report 2022
Report from the Designated
Workforce Engagement Directors
continued
2022 employee engagement survey scores
“ “ My manager cares about me
as a person.”
“ People from all backgrounds
are treated fairly here.”
“ My manager provides me
with the support I need to
complete my work.”
“Overall engagement.”
2022
8.6/10 2022
8.6/10 2022
8.4/10 2022
7.4/10
2021
8.4/10 2021
8.4/10 2021
8.2/10 2021
7.0/10
“ “ I feel able to report risks
without fear of reprisal.”
“ The overall business
strategy set by senior
leadership is taking Quilter
in the right direction. ”
2022
8.3/10 2022
7.5/10
2021
8.2/10 2021
7.4/10
Leadership
Quilter’s people strategy continues to be an essential feature to
support our leadership team and all colleagues. In January 2022,
the Executive Committee led a virtual conference for all colleagues
to discuss our business strategy and reinforce support for our
people strategy and we are pleased to see that throughout 2022
there has been positive colleague engagement and participation
with the colleague programme. Colleagues also heard from
external guests who covered a range of subjects, including how to
shape organisational culture and financial wellbeing and resilience.
Group hybrid working principles and guidelines were published
in December 2022, to offer clarity to colleagues about Quilter’s
hybrid working arrangements. The approach encourages
colleagues on a case-by-case basis to discuss with management
working patterns, taking into account what works for colleagues,
our customers and our business. As workforce engagement
directors, we view this approach as an example of where
management are adapting to the change in how people want
to work in a post-pandemic environment.
Supporting our people
Quilter continues to carry out regular surveys on colleague
engagement. We have seen a steady improvement in engagement
across the Group with engagement scores increasing marginally
throughout 2022. We are delighted to see that across the six
engagement metrics we reported on last year, each score
has increased.
Feedback from colleagues this year highlighted that the frequency
of engagement surveys is considered too high. Colleagues have
reported that they often do not have the time each week to
complete the survey. Following our recommendation to
management that the frequency of these touchpoints be
reconsidered, the frequency will change to quarterly in 2023.
Note: Data as at 30 December 2022 and 31 December 2021 respectively.
Aligning our culture and values to our strategy
It is important that colleagues align with our culture and values,
which are Dependable, Stronger Together and Pioneering, and
that the Board has confidence that this alignment continues to
strengthen. In 2022, the Board has kept oversight of the people
strategy, which focused on targeted Group-wide and individual
business actions to target underlying issues and improve
colleague engagement scores. The Board also dedicated
time to discuss culture and values at our meetings in May
and September.
The Board considers the way colleagues feel able to voice
concerns and know that they will be listened to and appropriate
action taken should issues be raised, an extremely important
measure of a strong and healthy culture. We are pleased to
see a rise in the related metric in this year’s survey results.
The survey result demonstrates that most colleagues continue
to feel it is easy to highlight areas of potential concern. George
Reid, who is our Whistleblowing Champion, talks more about
this important role in the Board Audit Committee Report which
you can read on page 73.
Workforce engagement key themes
63Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Dear shareholder
This is my first report to shareholders as your Board Corporate
Governance and Nominations Committee Chair. This Committee
plays a key role in ensuring that our Board and Executive
leadership have the right skills and experience to deliver our
strategic priorities. It has been a busy year for the Committee
with succession plans implemented for a number of key Board
and Executive roles. During 2022, we announced the appointment
of two new Non-executive Directors and a new Chief Executive
Officer and completed the Chair succession process following
Glyn Jones stepping down from the Board in May 2022.
Mindful of the changes to the Board during the year, we carefully
considered the membership of our Board Committees and made
arrangements to refresh the membership in line with the UK
Corporate Governance Code 2018. Further details including our
approach to governance during this time are included in the Board
Committee reports.
The change in Chief Executive Officer and his senior management
team gave us the opportunity to ensure that we have the right
people in senior roles and that we also take action to build a
strong senior management team for the longer term. There will
be continuing focus on talent and succession planning in 2023.
We were fortunate to conduct an externally facilitated Board
effectiveness review in the Autumn of 2022, which has helped me
work with my fellow Board colleagues and management to consider
how we can best drive the business forward. An overview of the
process and the key outputs are set out on page 68.
The Committee recommended to the Board a new Board Diversity
Policy which was approved with effect from 31 December 2022.
The new Board Diversity Policy is a broad refresh to reflect the
importance of Diversity and Inclusion at Quilter and to closely align
to the voluntary targets set out in the FTSE Women Leaders Review
and the new Listing Rules, which will be in place for reporting
periods commencing from April 2022.
I am pleased to report that Quilter has continued to meet the
targets in our Board Diversity Policy for the Board. We have also
met the targets in the new Listing Rules for there to be 40% female
representation on the Board and for there to be at least one woman
in a senior Board position (being the Chair, Chief Executive Officer,
Chief Financial Officer or Senior Independent Director). In
accordance with the recommendations of the Parker Review,
Quilter further had at least one Director from a minority ethnic
background serving on the Board. Whilst we did not achieve our
internal aspiration to reach 38% female representation within our
senior management population (being the Executive Committee
and their direct reports), we know that we need to sustain our focus
to attract and retain more senior women and to enable women
to grow their careers with us. That will, we hope, ensure we reach
our goal of 40% female representation in senior management
roles by the end of 2025. In accordance with the Code, as at
31 December 2022, 39% of senior management (being the
Executive Committee, Company Secretary and their direct reports)
were female (2021: 28%). We remain committed to maintaining the
momentum of our gender diversity programme. A summary of the
diversity and composition of the Board is set out on page 54 and
the progress made by management is summarised on page 30.
The Committee has also carefully considered the next steps
in simplification as Quilter is now organised in its new business
segments. We continue to oversee preparations to implement a
new Board and management governance structure in 2023 which
will enable Quilter to be more agile and reflect the more focused
organisation we now are.
In December 2022, following consideration of the Board
effectiveness review, the Committee recommended to the Board
that the Board Technology and Operations Committee be closed.
You can read more about the process and how technology and
operational matters are now addressed on page 81. The Committee
will continue to review the Group’s Corporate Governance
framework and activities performed by the Board Committees.
As previously reported, the Committee further continued to oversee
the Responsible Business framework and received updates on the
progress being made in this strategically important area.
Finally, I would like to note my thanks to Glyn Jones for his careful
stewardship of Quilter during his tenure as Chair. I would further like
to thank our former Company Secretary, Patrick Gonsalves, who retired
at the end of July 2022. Patrick’s support to Quilter in preparation for
Listing and in the years following Listing was invaluable. The Board was
delighted to appoint Clare Barrett, Patrick’s deputy, as his successor.
Ruth Markland
Chair
Ruth Markland
Chair
64 Quilter Annual Report 2022
Board Corporate Governance and
Nominations Committee Report
8%
4%
5%
78%
5%
91%
9%
26%
7%
17%
10%
40%
91%
9%
At a glance
Committee responsibilities
· Reviews the composition of the Board and recommends
the appointment of new Directors.
· Considers succession plans for the Chair and other
Board positions.
· Considers succession plans for key executive
leadership positions.
· Monitors corporate governance issues.
· Oversees the annual Board effectiveness review.
· Provides oversight of the Group’s Responsible
Business framework
Committee governance
The Board Corporate Governance and Nominations Committee
currently comprises the Chair of the Board, the Senior
Independent Director and one independent Non-executive
Director. Ruth Markland was appointed as Chair of the Committee
on 12 May 2022 at the conclusion of the 2022 AGM, when she was
also appointed as Chair of the Board.
Details of the skills and experience of the Committee members
can be found in their biographies on pages 56 to 58.
Committee evaluation
As part of the 2022 Board effectiveness review, the Board
has assessed that the Committee membership is appropriate
in providing challenge and oversight and that the Committee
is operating effectively.
Discharging our responsibilities
The Committee reviewed its activities over the previous 12 months
against its Terms of Reference and confirmed that it had fully
discharged its responsibilities in line with its remit. The Terms
of Reference are available at plc.quilter.com.
Attendance
The Chief Executive Officer and HR Director regularly attend
Committee meetings, except when it would not be appropriate
for them to do so. Given the Chair and Chief Executive Officer
succession matters considered during the year, careful
consideration was given to ensure that the attendees were
appropriate for all scheduled and ad hoc meetings.
Collaboration
The Chair briefs the Board on key discussions and provides a written
report to the Board, where feasible, after each meeting. Where
appropriate, the papers and reports presented to the Committee
are made available to all Quilter Non-executive Directors.
Committee activity 2022 2021
Board & Board Committee Succession
Planning
Corporate Governance
Responsible Business framework
Executive Succession Planning and Talent
Board Evaluation
Committee activity Committee membership and meetings
attended/eligible to attend
Scheduled
meetings
Ad hoc
meetings
1
Ruth Markland (Chair) 3/3 8/8
Tim Breedon 2/3 8/8
George Reid
2
2/2 8/8
Former members
Glyn Barker
3
– 3/3
Glyn Jones
4
2/2 –
1
Some of the ad hoc meetings were sub committee meetings relating to succession.
2
George Reid joined the Committee on 27 July 2022.
3
Glyn Barker served as a member of the Committee during his time as a Director
between June and November 2022.
4
Glyn Jones resigned from the Board and stood down as Committee Chair
on 12 May 2022 at the conclusion of the 2022 AGM.
Where a Director was unable to attend a meeting due to illness or a long-standing
conflicting commitment, they reviewed the Committee papers and provided
comments to the Committee Chair in advance of the meeting.
Board Corporate Governance and
Nominations Committee Report
continued
65Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Board Corporate Governance and
Nominations Committee Report
continued
Key areas of Committee focus
Board and Board Committee succession planning
A key area of responsibility for the Committee is to consider
the skills and composition of the Board and Board Committee
membership with a view to ensuring that there is an appropriate
balance of Directors with the desired skills, experience, thought,
independence and knowledge required to deliver Quilter’s
strategy. The accountabilities, competencies and expectations
required of the holder of each role on the Board, including those
required by the Code, have been documented in our Board
Charter, which is reviewed annually. This includes the
responsibilities of the Directors as a whole, including their
responsibilities under section 172(1) of the Companies Act 2006,
and the role profiles of the Chair, Senior Independent Director,
Committee Chairs, Non-executive Directors and Executive
Directors. The Chair considered each Directors’ individual
contribution to the Board together with feedback from the 2022
Board effectiveness review. The Chair provided feedback to the
Non-executive Directors on their performance and Tim Breedon,
as Senior Independent Director, provided feedback to the Chair.
Ruth Markland, when in role as Senior Independent Director,
provided feedback to the former Chair, Glyn Jones. It was
confirmed that all Directors were discharging their roles effectively.
The time commitment expected of the Non-executive Directors
is set out in the Board Charter and their letters of appointment.
The Committee is also responsible for reviewing and making
recommendations to the Board on succession planning for the
Board and key leadership positions within Quilter. As at year end,
the Chair and all the Non-executive Directors have served on
the Board for six years or less. Heightened focus is applied in
the assessment of independence where Non-executive Directors
have served for more than six years. All the Directors are subject
to annual re-election by shareholders and the specific reasons
why each Director’s contribution is, and continues to be, important
to the Company’s long-term sustainable success are set out in
their biographies on pages 56 to 58. All Non-executive Directors
have been assessed as independent in accordance with the Code,
and the Chair was independent on appointment.
The membership of the Quilter Board is regularly reviewed by the
Committee using a Board Skills, Experience and Diversity matrix
to ensure that the Board has available to it all of the required skills
to oversee the delivery of Quilter’s strategy and long-term success.
A summary of this matrix is set out on page 54. In line with best
practice, the Committee has also agreed emergency succession
arrangements for all of the key Board positions including the
Chair of the Board, the Senior Independent Director and the Board
Committee Chairs. Although strong candidates are available for
each position on an emergency basis, it is still likely that some
external recruitment would be required for permanent successors
given that the Board is not large enough to carry a pool of
succession candidates for all Board roles.
Board changes and succession planning
In April 2022, Rosie Harris stood down from the Board. Rosie had
served on our Board since April 2017 and was Chair of the Board
Risk Committee. The Board were extremely grateful for Rosie’s
wise oversight as management embedded the Risk Framework
as a newly listed company. The search for Rosie’s successor was
led by an external executive search agency, Egon Zehnder, who
have only been retained for Board searches and have no other
connection with Quilter or any individual Director.
Whilst the external search was conducted, the internal succession
plan was enacted and George Reid, who has served on the Board
Risk Committee and the Board Technology and Operations
Committee since he joined the Board in 2017, and is the Chair
of our Board Audit Committee, agreed to chair the Board Risk
Committee until such time as a replacement could be identified.
George did an exemplary job in chairing this Committee.
Following the search process, the Board were pleased to
welcome Neeta Atkar to the Board on 11 August 2022 with a
view to Neeta assuming the role of Board Risk Committee Chair
once her induction had largely concluded. Neeta has a wealth of
experience as a risk practitioner and as a Board Risk Committee
Chair. The Chair responsibilities were handed over to Neeta
on 1 October 2022.
As noted in the 2021 Annual Report, Glyn Jones, who had been
Quilter Chair since November 2016 indicated in late 2021 his desire
to stand down from the Board in 2022. Glyn resigned from the
Board in May at the conclusion of the 2022 Annual General
Meeting. Glyn was instrumental in supporting the Quilter executive
team through Managed Separation and the Company’s Listing in
2018, and the subsequent reshaping of the business. The Board
were extremely grateful to Glyn for his oversight and careful
stewardship during his tenure as Chair. In accordance with best
practice, Glyn took no part in the process to oversee the search
for his successor. In line with the Board Succession Plan, and
given a full external search was progressing, the Board asked
Ruth Markland to take on the Chair role from the conclusion of the
Annual General Meeting and, in line with best practice, she ceased
to chair any meetings of the Board Remuneration Committee and
stood down from the Board Audit Committee at the same time.
In June 2022, following an external search by Egon Zehnder against
pre-agreed criteria, Glyn Barker was appointed to the Board as a
Non-executive Director with a view to him becoming Quilter Chair.
Glyn informed the Board of his decision to step down for personal
reasons on 11 November 2022. We wish Glyn well for the future.
Following this, the Board concluded it was in the best interests
of shareholders and other stakeholders that Ruth Markland be
asked to continue as Chair. Ruth is committed to working with
her Board colleagues and the executive team to deliver for all our
stakeholders. Ruth was not involved in the discussions or process
to confirm her appointment as Chair which was led by our Senior
Independent Director, Tim Breedon. Tim’s appointment as
Senior Independent Director and Chair of Board Remuneration
Committee was confirmed at the same time and he was not
involved in this process. Tim’s wealth of business, governance
and remuneration experience and wise counsel is appreciated
by the whole Board.
For the period from Ruth’s initial appointment as Chair in May
to November 2022, when she was asked to continue as Chair,
the Board put in place arrangements in line with the
recommendations of the Code. Tim Breedon chaired all meetings
of the Board Remuneration Committee and was appointed as
Senior Independent Director.
66 Quilter Annual Report 2022
Board Corporate Governance and
Nominations Committee Report
continued
Executive succession
As announced on 10 October 2022, Paul Feeney stood down
from the Board on 31 October 2022 after over a decade of service
as Chief Executive Officer and an Executive Director. Paul led the
Company with vision and passion and was responsible for building
Quilter into the strategically well positioned wealth manager it is
today. In considering Executive succession, the Board identified
Steven Levin as the nominated successor to the Chief Executive
Officer role. Steven had been supported by a development plan
to equip him to succeed Paul and over time his Group level
responsibilities had increased to run the Affluent business. Steven
was a member of Paul’s Executive Committee, has a strong track
record of execution and delivery and is well known to Quilter
colleagues. Following an assessment of Steven’s readiness and
consideration of Quilter’s strategy, the Board were pleased to
confirm the appointment of Steven, as our Chief Executive Officer.
The Committee also delegated to a Sub-Committee, chaired
by the Board Audit Committee Chair, and composed of the Senior
Independent Director and the Chair of the Board Risk Committee,
the oversight of the process to appoint a new Chief Risk Officer
and Chief Internal Auditor.
In appointing our new Chief Executive Officer from within Quilter,
the Committee and Board have a heightened focus on talent
management in 2023.
Diversity and inclusion
An important area of focus for this Committee is to oversee Quilter’s
work on diversity and inclusion for the Board, senior management
and broader colleagues. We received updates on the progress
being made to build supportive networks, promote mentoring and
achieve greater diversity in its broadest sense. Early in 2022, the
Board, along with senior executives who support the Board, took
part in a thought provoking interactive session on diversity and
inclusion led by John Amaechi OBE, Founder of APS Intelligence,
exploring our roles as leaders in making change happen.
Having commented on the FCA consultation on diversity
in the financial services industry and in view of the publication
in February 2022 of the FTSE Women Leaders Review, and
the new Listing Rule and DTR requirements for reporting periods
commencing from April 2022, the Committee reviewed the Board
Diversity Policy and recommended some changes to the Policy
to the Board. The Board approved the new Board Diversity Policy
with effect from 31 December 2022. The changes include setting
more stretching targets for gender diversity on the Board and
senior management. The Committee, who were joined by Tazim
Essani who has a particular interest in diversity and inclusion, were
keen to ensure that the Policy appropriately expressed the Board’s
interest in the promotion of Quilter as a place all can thrive. The
Directors provided the Company Secretary with their personal
data and this is aggregated and will be used by the Committee
when considering Board succession and composition. I am
pleased to report that the Board continues to meet the voluntary
recommendations of the FTSE Women Leaders Review for female
representation on the Board, including the recommendation that
at least one of our senior Board members (defined as a Chair, Chief
Executive Officer, Chief Financial Officer or Senior Independent
Director) is female. The Board also meet the Parker Review
recommendation to have at least one Director from a minority
background on the Board. A summary of the diversity and
composition of the Board is set out on page 54.
The Board routinely engages with colleagues in a variety of ways,
including mentoring and attending team events. Paul Matthews
and Tazim Essani continued to serve on the Board’s behalf as
Workforce Engagement Directors. Tazim’s sponsorship of the
Company’s Inclusion and Diversity Action Plan was a visible signal
to our colleagues and other stakeholders as to the Board’s
commitment to making Quilter a place where everyone can thrive.
How our Workforce Engagement Directors have discharged their
responsibilities and the key areas of focus for 2023 are set out
on pages 62 and 63. Paul Matthews will step down as a Workforce
Engagement Director, after serving three years in the role, at the
conclusion of the 2023 Annual General Meeting.
We endeavour to ensure that our colleagues are representative of
the communities that they work in. In accordance with the Code, as
at 31 December 2022, 39% (2021: 28%) of our senior management
team, comprising the Executive Committee, the Company
Secretary, and their direct reports, are female.
Responsible Business framework
Being a responsible wealth manager is a core strategic priority and
the Committee focused our efforts on overseeing the Responsible
Business framework receiving updates during the year on how
management are delivering the targets to support our reporting
requirements. As in 2021, the Board directly monitored our
responsible investment strategy, the Board Risk Committee
ensured that the reporting of risks and risks around our ESG
strategy were appropriately identified, monitored and mitigated
and the Board Audit Committee scrutinised our external reporting.
Corporate governance
As noted in our 2021 Annual Report, the Committee keeps actively
under review our Corporate Governance framework. With the
refocusing of our business and management now reporting under
the Affluent and High Net Worth segments, the Committee has spent
time examining how best to govern the Group. A recommendation
has been made to the Board on a simplified approach that has
regard to the legal and regulatory responsibilities for our operating
entities, whilst ensuring our governance is simple, proportionate
and appropriate.
Conflicts of interest
In accordance with the Companies Act 2006 and the Company’s
Articles of Association, the Board may authorise conflicts of
interest. Directors are required to declare any potential or actual
conflicts of interest that could interfere with their ability to act in
the best interests of Quilter. The Company Secretary maintains a
Conflicts of Interest Register, which is reviewed by the Board and
the Board Corporate Governance and Nominations Committee.
Noting the recommendations of the Code, the Committee
recommends to the Board any new external appointments that a
Director wishes to adopt. During the year, the Committee carefully
reviewed requests to approve new external appointments for a
number of our Non-executive Directors and concluded that these
additional responsibilities would not impact their time commitment
or cause any potential conflicts of interest for Quilter.
67Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Board Corporate Governance and
Nominations Committee Report
continued
Background
In 2022, the Board agreed it was appropriate to commission an
externally facilitated Board effectiveness review in line with best
practice. Quilter’s last externally facilitated review was performed
in 2019. The review was conducted between August 2022 and
November 2022 and was carried out in line with the
recommendations of the UK Corporate Governance Code 2018.
The review was led by the Chair, and we are pleased to be able to
report on the process we undertook, the outputs from the review
and our approach for 2023. The Chair has asked the Senior
Independent Director to provide oversight to the action plan
and he will report on that to the Board.
Appointment
Following a selection process led by the Chair with support from
the Company Secretary and overseen by the Board Corporate
Governance and Nominations Committee, Quilter appointed
Manchester Square Partners (“MSP”) to facilitate the Board
effectiveness review. MSP has no connection to any individual
Director. They do provide coaching support to a small number
of executives, but aside from this have no other connection
with Quilter. The Board Corporate Governance and Nominations
Committee considered the scope of MSP’s engagement with Quilter
and concluded that this would not preclude MSP from being
the external facilitator of the 2022 Board effectiveness review.
The Board Corporate Governance and Nominations Committee
recommended to the Board the scope of the review with a view
to examining the performance of the Board, its Committees,
individual Directors and the Chair.
Process
Following briefings by the Chair and Company Secretary, the
review was carried out by the qualitative approach of in-depth
structured one-to-one interviews by MSP with each Board
member, anchored around the following key themes:
· Strategy I Challenges and Risk I Values and Culture
· Role of the Board I Dynamics I Engagement
· Structure of the Board I Composition I Succession
· Governance I Execution I Leadership
MSP also reviewed Board and Committee papers for the 12 month
period prior to the review and the full report of the previous
externally facilitated review conducted in 2019. Due to the timing
of the interviews, the current Chief Executive Officer, Steven Levin,
was not interviewed as part of the process. As Neeta Atkar was
new to the Board in August 2022, she did not participate in the
in-depth interviews, but her initial impressions were gained
by way of an informal meeting.
Results and actions
MSP presented their report to the Quilter Board in December 2022,
which facilitated an open and constructive debate by the Board.
The key themes emerging from the review were used to develop
an action plan, which was reviewed and endorsed by the Board
at its meeting on 2 March 2023. A summary of the themes and
actions identified by the Board are set out opposite.
We are pleased to report that the review concluded that good
progress has been made on all suggested improvements since
the last external Board review in 2019. The review identified
that the Board and Board Committees are functioning well,
and that governance procedures and practices are strong.
The Board is collegiate and supportive and that there is a good
degree of trust and respect between Non-executive Directors.
Following discussion of the MSP report, the Board identified some
areas of focus for the future which have formed the basis of the
action plan. The actions, as summarised in the table below, have
been endorsed by the Board. Led by the Senior Independent
Director, the Board Corporate Governance and Nominations
Committee will monitor the delivery of the plan, and the Senior
Independent Director will provide regular updates to the Board.
The Board has already taken action to address some of the
recommendations. The Board have asked MSP to perform a
follow up review to check on progress in the first half of 2023.
Summary of the key themes the Board agreed in the action
plan and how these will be addressed
Matter to be addressed How the issue will be addressed
Future Board Governance Framework and Operating Model
As Quilter has refined its
perimeter and refocused
to be a UK wealth manager,
Board Governance will be
reviewed to rationalise
how Quilter is run.
This will include reviewing
Committee remits and
membership.
The Board will continue to drive
the work to simplify the Board
and management governance.
Board Focus and Operation
The Board will take the
opportunity to reconsider
how best to use their
time effectively.
The Board Strategy meeting has been
brought forward to May 2023.
The Board calendar to be reconsidered
and clear steer provided to
management on any papers required
for the Board and sufficient time
allocated to ensure time is spent on the
most strategically important matters.
Board papers will be refined to be more
succinct with Board KPIs re-examined
and refreshed.
The Board will keep under active
review where external stakeholder
engagement may be of benefit to the
Board, including ensuring the views
of the workforce are appropriately
considered by the Board.
Board Dynamics
The Non-executive
Directors will continue
to consider how best to
engage both inside and
outside of the boardroom.
Non-executive Director only sessions
will be scheduled and how the Board
is working will be kept under active
review. The format of talent events
will be refreshed.
Update on 2021 Board and Board Committee effectiveness
The Board Corporate Governance and Nominations Committee
has regularly reviewed the progress on the action plan in
response to the 2021 Board effectiveness review and
concluded that all actions have been satisfactorily addressed.
Board effectiveness review
68 Quilter Annual Report 2022
Dear shareholder
As Chair of the Board Audit Committee, I am pleased to report
on the work the Committee has undertaken during 2022.
The Committee’s core duties and responsibilities remain
unchanged. The Committee has continued to assist the Board
in monitoring the Group’s control environment, providing strong
governance over the Group’s financial reporting, and challenging
the judgements made by management and the estimates and
assumptions on which they are based, whilst ensuring appropriate,
balanced disclosures are made.
During the year, the Committee continued to assess the financial
control and reporting environment and is pleased to see
improvements resulting from the embedding of the new general
ledger. There is more work to do to fully embed these process
improvements in some of the subsidiary businesses. We will
remain focused on ensuring greater consistency in the reporting
processes applied across the Group. Further information on how
the Committee has overseen the Group’s financial reporting and
controls can be found on pages 71 and 72.
Towards the end of the year, the Committee commissioned
an effectiveness review of the Internal Audit function which was
conducted internally by way of a questionnaire. We are pleased
to see that the function continues to perform strongly particularly
given the change in Chief Internal Auditor during the year. Details
of the Chief Internal Auditor appointment can be found on page 73.
We have received assurance from both our internal effectiveness
review and the FRC’s Audit Quality Review (“AQR”) that our external
auditors, PricewaterhouseCoopers LLP (“PwC”), continue to
perform satisfactorily. The outcome of these reviews can be found
on pages 73 and 74.
The Committee spent time considering the accounting and related
disclosures for the capital return to shareholders by way of a
B Share Scheme accompanied by a Share Consolidation which was
implemented in May 2022. Since year-end we have also considered
the disclosure requirements arising in connection with the new
issue of £200 million subordinated debt and redemption of the
previous £200 million subordinated debt instrument.
There have been some changes to the membership of the
Committee during the year and I would like to take this opportunity
to extend my thanks to Rosie Harris for her valuable contribution
to the work of the Committee. In accordance with the UK Corporate
Governance Code 2018 and best practice, Ruth Markland ceased
to be a member of the Committee on assuming the role as Quilter
Chair. We were pleased to welcome Neeta Atkar who joined the
Board and the Board Audit Committee in August 2022.
I reported to you last year that the Committee will focus on
simplifying the Group’s financial disclosures and I am pleased to
report that progress has been made in this regard following the sale
of Quilter International. The Committee has also worked to ensure
that other disclosures are presented more simply and clearly.
There will be further scope for simplification in the 2023 financial
statements and the Committee will stay focused in this regard.
The following pages provide further information on how the
Committee has discharged its responsibilities during the year.
It is anticipated that in 2023 the Committee’s main focus will be
on overseeing, challenging and holding management to account
on the provisions held and the evolution and adequacy of finance
systems, procedures and controls.
T
George Reid
Chair
George Reid
Chair
69Quilter Annual Report 2022
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29%
6%
9%
30%
26%
91%
9%
30%
4%
24%
8%
34%
91%
9%
Committee activity 2022 2021
Review of Financial Statements
Internal and External Audit
Internal Controls
Regulatory Compliance and Reporting
Governance
Committee responsibilities
· Reviews the Group’s accounting policies and the contents
of financial statements.
· Monitors disclosure controls and procedures.
· Considers the adequacy, scope of work and resourcing
of the external and internal audit functions.
· Oversees the relationship with our external auditors.
· Monitors the effectiveness of internal financial controls.
The Committee relies on and is supported by the detailed work
conducted by the Audit Committees and Governance, Audit and
Risk Committees of Quilter’s significant subsidiaries.
Committee governance
The Board Audit Committee currently comprises three independent
Non-executive Directors. The Chair of the Committee has recent
and relevant financial experience and the Committee as a whole
has competence relevant to the business sectors that Quilter
operates in. On appointment as Quilter Chair, Ruth Markland
ceased to be a member of the Committee. Glyn Barker, a former
accountant, attended each Committee meeting whilst he was
on the Board. No meetings were held in the period between Ruth
Markland stepping down from the Committee and Glyn Barker
joining the Board.
Details of the skills and experience of the Committee members
can be found in their biographies on pages 56 to 58.
Committee evaluation
As part of the 2022 Board effectiveness review, the Board
has assessed that the Committee membership is appropriate
in providing challenge and oversight and that the Committee
is operating effectively.
Discharging our responsibilities
The Committee reviewed its activities over the previous 12 months
against its Terms of Reference and confirmed that it had fully
discharged its responsibilities in line with its remit. The Terms
of Reference are available at plc.quilter.com.
Attendance
The Chief Internal Auditor, the Chief Financial Officer, the Chief Risk
Officer and representatives of PwC, the external auditors, attend
all meetings of the Committee. The Committee holds regular
private sessions with the Chief Internal Auditor and the
representatives of PwC, without management present.
Collaboration
The Chair briefs the Board on key discussions and provides a
written report to the Board after each meeting. The papers and
reports presented to the Committee are made available to all
Quilter Non-executive Directors. The Committee has continued to
work collaboratively and effectively with other Board Committees
on matters such as the effectiveness of internal controls.
At a glance
Committee activity Committee membership and meetings
attended/eligible to attend
Scheduled
meetings
Ad hoc
meetings
George Reid (Chair)
1
9/10 1/1
Neeta Atkar
2
3/3 –
Tazim Essani 9/10 1/1
Former members
Glyn Barker
3
2/2 1/1
Rosie Harris
4
4/4 –
Ruth Markland
5
5/5 –
1
George Reid was unable to attend one meeting due to illness and this meeting was
chaired by the Risk Committee Chair.
2
Neeta Atkar joined the Committee on 11 August 2022.
3
Glyn Barker joined all Committee meetings during his time as a Director between
June and November 2022.
4
Rosie Harris resigned from the Board and stood down as a Committee member
on 30 April 2022.
5
Ruth Markland ceased to be a member of the Committee on appointment
as Quilter Chair.
Where a Director was unable to attend a meeting due to illness or a long-standing
conflicting commitment, they reviewed the Committee papers and provided
comments to the Committee Chair in advance of the meeting.
70 Quilte r Annual Report 2022
Board Audit Committee Report
continued
Key areas of Committee focus
Financial reporting
The Committee reviewed and challenged the Annual Report
and Accounts, Preliminary Announcement and Interim Results for
2022. The Committee’s reviews were supported by analysis and
discussion from the Finance and Actuarial teams, reports from the
second line on the solvency position and reports of the external
auditors. Having considered these inputs and the Committee’s
own independent judgements, the Committee recommended
to the Board the approval of each of these reports.
The Group’s accounts are prepared in accordance with
International Financial Reporting Standards (“IFRS”). Certain
alternative performance measures (“APMs”) are used to aid the
understanding of the Group’s financial statements by Quilter’s
shareholders and other stakeholders. The Committee has
continued its close scrutiny of APMs and great care has been
taken to ensure that where they are used, they are necessary,
clearly highlighted and explained and are reconciled to statutory
performance measures in line with the guidance from the FRC.
The Committee has reviewed the Group’s Accounting Policies
and confirmed that they are appropriate to be used for the
2022 financial statements.
The Committee has also reviewed the basis of accounting, the
appropriateness of adopting the going concern basis of preparation
for the Group’s financial statements, and the Group’s assessment
of viability for a period longer than 12 months. In doing so, the
Committee considered:
· the Group’s three-year Business Plan which includes
consideration of the economic, regulatory, competitive
and risk environment; and
· the latest Group Own Risk and Solvency Assessment, and
Internal Capital Adequacy and Risk Assessment reports, which
cover current and future risk profile and solvency positions
based on a series of core assumptions, stress tests and
scenario analysis.
The form of the viability statement and period covered by
the statement were specifically considered by the Committee.
The Committee was satisfied with the content of the viability
statement and supported the time period for the statement
which is aligned with the Group’s three-year business planning
cycle. The viability statement can be found on pages 50 and 51.
During the year-end process, the Committee also reviewed
the Task Force on Climate-related Financial Disclosures Report.
Accounting judgements and estimates
The Committee received regular updates on the Group’s key
accounting judgements and estimates to enable the Committee
to consider and discuss these with management and the external
auditors in advance of the end of each reporting period. Critical
accounting judgements and material accounting estimates
deliberated by the Committee during review of the 2022 Annual
Report and Accounts included the treatment of:
Area of focus Issue/role of the Committee
Provisions for
past business
review cases
and the related
insurance
recovery assets
The Committee reviewed the estimates
involved in the provisioning for DB to DC
pension transfer cases which are subject
to a skilled person review in Lighthouse
and other past business review cases.
The Committee also reviewed the approach
taken to the recognition and measurement
of insurance recovery assets in the June 2022
interim financial statements, and year-end
financial statements.
The Committee’s work included
consideration of regulatory developments
and correspondence received from the skilled
person. The disclosures in the Group’s financial
statements were reviewed by the Committee
to ensure compliance with IFRS and
transparent presentation.
Goodwill and
intangibles
The Committee considered the
appropriateness of the key assumptions
underpinning the Group’s goodwill impairment
testing, and the sensitivities modelled.
In particular, the Committee considered
whether the carrying amounts of goodwill
and intangibles remained appropriate in
the context of changes in the UK and global
economy during 2022. The Committee
reviewed the associated disclosures in both
the interim and annual financial statements
to ensure these met the requirements of IFRS,
and provided relevant information to the
readers of the financial statements.
Deferred tax The approach taken to the recognition
and measurement of deferred tax assets,
and the estimations and assumptions used,
were reviewed by the Committee. In particular,
the Committee considered the impact of
changes in the economic climate during 2022
on the recoverability of deferred tax assets.
In addition, the Committee reviewed
the deferred tax disclosures in the Group’s
financial statements to ensure compliance
with IAS 12 (Income Taxes).
71Quilter Annual Report 2022
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Board Audit Committee Report
continued
Key areas of Committee focus
Fair, balanced and understandable
There has been a comprehensive review process to support the
Board in reaching its conclusion that the 2022 Annual Report is
fair, balanced and understandable and provides the necessary
information for shareholders to assess the Group’s position,
performance, business model and strategy.
The process which enabled the Committee to reach this
conclusion included:
· the production of the 2022 Annual Report and Accounts,
managed closely by the Chief Financial Officer, with overall
governance and co-ordination provided by a cross-functional
team of senior management;
· cross-functional support for the drafting of the 2022 Annual
Report and Accounts which included input from Finance, Risk,
Investor Relations, Corporate Secretariat, HR and wider
business leaders;
· a robust review process of inputs into the 2022 Annual Report
and Accounts by all contributors, to ensure disclosures are
balanced, accurate and verified, with further comprehensive
reviews by senior management;
· a review by the Company Secretary of all Board and Board
Committee minutes to ensure all material matters considered
at Board level meetings have been disclosed in the 2022 Annual
Report and Accounts;
· a specific management paper detailing the 2022 year-end
assessment of fair, balanced and understandable;
· a formal review by the Board Audit Committee of the draft 2022
Annual Report and Accounts in advance of the final sign-off; and
· a final review by the Quilter plc Board of Directors.
Having evaluated all relevant information, the assurances by
management and underlying processes used to prepare the
financial information the Committee is satisfied that, taken as
a whole, the 2022 Annual Report and Accounts are fair, balanced
and understandable and has confirmed this to the Board. This
process was also undertaken in respect of the Group’s 2022
Interim Results.
Controls over financial reporting
The Committee has remained focused on ensuring the Group’s
internal controls over financial reporting operate effectively.
Management has regularly reported on the state of the financial
control environment throughout the year, confirming that, overall,
there is an improving trend in the financial control environment
across Quilter. This is evidenced by improved controls testing
results, the low volume of risk events and improvements in
data quality. The financial control environment within the Quilter
Financial Planning business has received the Committee’s utmost
attention to ensure the necessary improvements are made. Time
has also been spent monitoring the progress made against the
internal control recommendations from PwC and the Committee
is content that adequate progress is being made towards closing
these agreed actions.
As part of the process to review and challenge the 2022 financial
statements, the Committee considered the processes and
controls in place to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of the financial
statements. The Chair of the Committee has reported to the
Board on this area.
CASS compliance
Monitoring compliance with the FCA’s Client Assets Sourcebook
(CASS) rules, and the frameworks in place to maintain appropriate
CASS controls in each of the regulated businesses, is essential
to protecting the interests of Quilter’s customers. The Committee
performs this role by reviewing the reports on CASS produced by
the internal and external auditors, the second line Risk Function
and by management. Throughout the year, there has been a
focus on collaboration across the Quilter CASS entities and on
streamlining the control frameworks. The Committee has been
kept informed on the progress made and is encouraged that
there has been a move towards greater consistency in CASS
controls over the year.
72 Quilter Annual Report 2022
Board Audit Committee Report
continued
Regulatory reporting
During the year, the Committee reviewed, challenged and
recommended to the Board for approval, the Group’s 2021 annual
Solvency II reporting having received detailed reports on the
disclosures from management, the second line Actuarial function
and the external auditors. The 2021 year-end consolidated Capital
Requirements Directive IV disclosures were approved by the
Committee ahead of their publication on Quilter’s website.
Towards the end of the year, the Committee also scrutinised and
approved the methodology and assumption changes to be applied
to the 2022 year-end Solvency II reporting. The Committee has,
and will continue to, closely monitor the potential impacts of the
Department of Business, Energy & Industry Strategy (“BEIS”)
consultation on restoring trust in audit and corporate governance.
The Committee reviewed the BEIS Response Statement published
in May and FRC Position Paper that followed in July.
Whistleblowing
To ensure a transparent and open culture that encourages
employees to speak up, Quilter recognises the importance of
having effective and trusted whistleblowing arrangements in place.
It is important that the Group’s whistleblowing arrangements are
not only effective in practice but are seen by staff and all other
stakeholders as being fair, rigorous and effective in resolving
concerns. The Committee has received semi-annual reports on
whistleblowing from management and has considered the details
of specific whistleblowing complaints, the outcome of
management’s investigations and the effectiveness of the
whistleblowing processes in place. The reports have included
metrics from the Peakon colleague surveys which relate directly
to a “speak up” culture. The Committee has also reviewed data
on grievances and other indicators that the Group has an open
culture where employees feel able to raise concerns. A “mystery
shopper” survey of the whistleblowing hotline was conducted in
the year and the outcome reported to the Committee. The Chair
of the Board Audit Committee is the Whistleblowing Champion
for Quilter.
Internal audit
Throughout the year, the Committee reviewed regular reports
from the Chief Internal Auditor, which drew the Committee’s
attention to the key audit findings together with management’s
response, updating on progress against the audit plan and
proposed changes to the plan as the year progressed. The reports
also detailed the extent to which management has self identified
the issues being raised by Internal Audit, as well as the progress
and effectiveness of management actions taken to address audit
findings. These measures are tracked closely as they provide
an indication of the maturity of the Group’s control framework.
The Committee has also heard regularly from Internal Audit
on its overall assessment of the internal control environment
and where action is needed to enhance internal controls.
During the year, the Committee approved the appointment
of a new Chief Internal Auditor, Daniel Baynton, following the
appointment of the previous incumbent as Chief Risk Officer.
This appointment was initially on an acting basis. In December 2022,
the Committee confirmed Daniel Baynton as the Chief Internal
Auditor on a permanent basis following a comprehensive selection
process which was overseen by the Chair of the Committee and
by a Sub-Committee of the Board Corporate Governance and
Nominations Committee.
Each year, the Committee meets jointly with the Board Risk
Committee to consider together the Risk Function Plan and the
Internal Audit Plan. The Committee approved a risk-based internal
audit plan for 2023 focused on the most critical areas for the
Quilter business and focused on supporting the safe delivery
of the organisation’s strategic priorities. In particular, the plan
recognises the importance of considering Consumer Duty
requirements during each audit review in 2023. The Chief Internal
Auditor has confirmed that the necessary resources and skillsets
are in place to deliver the 2023 Internal Audit Plan, including having
appropriate contingency to ensure that the Internal Audit function
can adjust and react to unexpected demands.
Following last year’s External Quality Assessment of the Internal
Audit function, the Committee commissioned an internal review
this year which sought views from key stakeholders across the
business. The results concluded that the function is well
respected, operates efficiently and effectively and makes a strong
contribution to the control environment across the Group. The
function scored highly for independence, objectivity and integrity.
The Committee also regularly monitors the effectiveness of the
function using a balanced scorecard, which is reviewed periodically
to ensure it remains appropriate. In addition to reviewing the
Internal Audit function’s effectiveness, the Committee assessed
the level of internal audit resource and the suitability of the skills
and experience of the Internal Audit function.
External audit
The Committee is responsible for overseeing the relationship with
the external auditors and the effectiveness of the audit process.
PwC were appointed as the Group’s statutory auditor, with effect
from the 2020 financial year, following a formal tender process.
In advance of each Committee meeting, the Chair of the
Committee meets separately with PwC’s lead audit partner,
Mark Pugh, to ensure the discussions at Committee meetings
are appropriately focused, challenging the conclusions reached
by management as well as the audit work performed thereon.
73Quilter Annual Report 2022
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Board Audit Committee Report
continued
To support a robust and high-quality external audit the Committee
has received regular and detailed reports from PwC throughout
2022 covering all aspects of their work. The Committee has
reviewed PwC’s internal control recommendations and also
assessed management’s response to these internal control
findings. PwC has continued to contribute strongly to discussions
on Quilter’s financial statements, the Group’s financial reporting
processes and key accounting judgements.
To safeguard the independence and objectivity of the external
auditors, the Committee adopted a policy on non-audit services,
which requires that non-audit services provided by the statutory
auditor, will not exceed 25% of the fees charged for audit and
audit related services. In addition to the reports provided by PwC
on their independence, the Committee has also received reports
from management providing details of the non-audit services
provided by PwC and consultancy support provided by other
leading audit firms. Towards the end of 2022, PwC were engaged
on work in relation to the issue of subordinated debt and this
engagement constituted a non-audit service. The Group’s total
fees for non-audit services remain within the 25% limit set out
in the policy.
Following the successful implementation of Audit Quality
Indicators (“AQIs”) last year, use of these as a tool to inform
the assessment of the effectiveness of the external audit has
continued this year. The indicators agreed are broadly in line with
the prior year audit and focus on areas important to an effective
audit, such as project management and the timeliness of
management deliverables. The AQIs have been reported on by
the external auditors to the Committee throughout the course of
the audit which has provided the Committee with more in-depth
information about factors that influence the external audit quality.
In November 2022, an effectiveness review, similar to that
undertaken in 2021, was conducted by the Company Secretary
using a written survey to seek the views of key stakeholders
to inform the Board Audit Committee’s assessment of PwC’s
performance across a range of criteria including independence,
effectiveness, objectivity, industry knowledge, efficiency and
service quality. The results of that survey concluded that PwC
continues to perform satisfactorily and had delivered an effective
service overall for the Group. PwC scored highly for
independence, integrity and objectivity which provides assurance
over audit quality. The Committee was pleased to note that PwC’s
delivery of a high-quality audit is further supported by the outcome
of the FRC’s AQR which assessed PwC’s 2021 audit as ‘limited
improvements required’.
The scope of the inspection under the AQR covered the audit
work performed on the following key audit matters:
· Sale of Quilter International (Group);
· Compensation provisions (Group);
· Goodwill impairment assessment (Group); and
· Impairment assessment of investments in subsidiaries (Parent).
As well as the audit work performed on the following other areas
of audit focus:
· Cash and cash equivalents; and
· Revenue recognition.
The Committee has discussed the findings of the AQR with
PwC and was pleased to note that there were no key findings and
some areas of good practice. We note that this puts the review
in the top category for public reporting. There were two areas of
limited improvements required that the Committee are satisfied
have been addressed by PwC.
The Company has complied with the Statutory Audit Services
for Large Companies Market Investigation (Mandatory Use
of Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014 for the financial year ended
31 December 2022. Quilter has no intention of tendering for
an alternative external auditor before the end of the current
required period of 10 years.
PwC are recommended for re-appointment by shareholders
at Quilter’s AGM to be held in May 2023.
Auditors’ remuneration
Year ended
31 December
2022
£m
Year ended
31 December
2021
£m
Fees payable for audit services
Group and Parent Company 1.3 1.5
Subsidiaries 2.1 2.2
Total fees for audit services 3.4 3.7
Fees for audit-related assurance services 1.2 0.8
Fees for non-audit services 0.2 0.5
Total Group auditors’ remuneration – continuing operations 4.8 5.0
Total Group auditors’ remuneration – discontinued operations – 0.3
Total Group auditors’ remuneration
1
4.8 5.3
1
All fees are presented net of VAT.
Key areas of Committee focus
74 Qui lter Annual Report 2022
Board Audit Committee Report
continued
Dear shareholder
This is my first report to you as Chair of the Board Risk Committee
having joined the Quilter Board in August 2022 and becoming
Chair of the Board Risk Committee on 1 October. I am grateful
to George Reid, who served as the Committee Chair following the
departure of Rosie Harris at the end of April 2022. Both George
and Rosie provided excellent stewardship of the Committee and
effective oversight of management during their periods as Chair.
Through my induction I have spent time with all members of
the Quilter Board as well as the Executive Committee and senior
members of the Risk Function. I am pleased to share with you
my report on the work the Committee has undertaken during
the year. I have been impressed by both the support and challenge
given to management during the year and I look forward to further
enhancing the role of the Committee in 2023.
The Committee supports and advises the Board on Quilter’s
risk profile providing a pan-Quilter perspective on all material risk
matters. We monitor the Group’s overall risk appetite, which is the
amount and type of risk Quilter is prepared to accept in the delivery
of its strategy, by monitoring both our internal and external risk
profile. The macroeconomic climate has been challenging during
the year, given high inflation and a fluctuating interest rate profile.
However, we have maintained strong and conservative capital and
liquidity positions, with prudent surpluses over risk appetite targets
throughout the year. As part of the issuance of the Bond the
Committee reviewed, considered and recommended to the Board,
the risk factors set out in the Prospectus dated 16 January 2023.
There continues to be a high level of external regulatory change
and we are focused on ensuring our plans to implement the
new FCA Consumer Duty are robust with appropriate governance
and resources in place to ensure that the Duty is appropriately
embedded in Quilter’s day-to-day processes and will be well
understood by our advisers and employees. Other regulatory
changes, such as the enhancements to the Appointed
Representatives Regime and the continuing focus on ESG risk,
have been carefully considered during the year and we will continue
to monitor risk mitigation activities closely. The Committee’s
activity during the year in relation to ESG risk included receipt of
a deep dive assessment on the risk of greenwashing and a review
of the outputs of a new climate and environmental stress scenario
test that has been implemented by management. More information
can be found in our Responsible Business Report which forms
part of the Strategic Report on pages 26 to 35.
The Committee continues to review the adequacy of our systems
for risk assessment, internal controls and reporting. As in prior
years, the Committee has remained focused on protecting
customers, with a focus on providing oversight of Advice Risk.
We have challenged management to continue to make the
necessary enhancements to the control environment in Quilter
Financial Planning and continue to exercise oversight of the
delivery of operational change and automation of procedures
to support and enhance customer experience.
The Committee has also had close regard to people risk given
the pressures of the economic environment and our business
change initiatives.
I am pleased to confirm that the Committee has fully discharged
its responsibilities within the year and worked in collaboration with
other Board Committees to ensure that appropriate scrutiny and
oversight was exercised on key risk matters. During the year, the
Committee Chair has provided regular updates to the Board on
matters considered by the Committee.
As we look forward to 2023, I intend to work closely with the Chief
Risk Officer to enhance the reporting the Committee receives in
order to support more effectively the Committee in discharging
its responsibilities on behalf of our stakeholders. I am grateful to
the Quilter team for their continuing focus and to my fellow board
colleagues for their support.
Neeta Atkar MBE
Chair
Neeta Atkar MBE
Chair
75Quilter Annual Report 2022
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Board Risk Committee Report
18%
15%
50%
17%
91%
9%
19%
6%
15%
60%
91%
9%
Committee activity 2022 2021
Top Risk Oversight
Regulatory Change
Risk Appetite, Profile and Capital & Liquidity
Risk Governance and Remuneration –
Change programmes –
Committee responsibilities
· Oversees risk strategy.
· Monitors and reviews the internal control framework.
· Recommends the total level of risk Quilter is prepared to take
(risk appetite).
· Assesses the top and emerging risks.
· Monitors the risk profile.
· Oversees the effectiveness of the Risk and Compliance function.
Committee governance
The Board Risk Committee currently comprises five independent
Non-executive Directors, with Tim Breedon stepping down from
the Committee on 31 December 2022. George Reid chaired the
Committee from 1 May 2022 to 30 September 2022.
Details of the skills and experience of the Committee members
can be found in their biographies on pages 56 to 58.
Committee evaluation
As part of the 2022 Board effectiveness review, the Board
has assessed that the Committee membership is appropriate
in providing challenge and oversight and that the Committee
is operating effectively.
Discharging our responsibilities
The Committee reviewed its activities over the previous 12 months
against its Terms of Reference and confirmed that it had fully
discharged its responsibilities in line with its remit.
Attendance
The Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer, Chief Risk Officer and Chief Internal Auditor regularly
attend Committee meetings. The Group Chair and, on occasion,
other Non-executive Directors attended Committee meetings
for matters as desired.
Collaboration
The Chair briefs the Board on key discussions and provides
a written report to the Board after each meeting. The papers
and reports presented to the Committee are made available to all
Quilter Non-executive Directors. The Committee has continued to
work collaboratively and effectively with other Board Committees
on matters such as the effectiveness of internal controls.
At a glance
Committee activity Committee membership and meetings
attended/eligible to attend
Scheduled
meetings
Ad hoc
meetings
Neeta Atkar
1
(Chair) 4/4 –
Tim Breedon
2
8/9 1/1
Moira Kilcoyne 8/9 0/1
Paul Matthews 9/9 1/1
George Reid 8/9 1/1
Chris Samuel 8/9 1/1
Former member
Rosie Harris
3
3/3 1/1
1
Neeta Atkar joined the Committee on 11 August 2022.
2
Tim Breedon stepped down from the Committee on 31 December 2022.
3
Rosie Harris resigned from the Board and stood down as Committee Chair
on 30 April 2022.
Where a Director was unable to attend a meeting due to illness or a long-standing
conflicting commitment, they reviewed the Committee papers and provided
comments to the Committee Chair in advance of the meeting.
76 Quilter Annual Report 2022
Board Risk Committee Report
continued
Key areas of Committee focus
Risk appetite
The Committee monitors and receives routine updates on the
Group’s risk appetite on behalf of the Board. During the year
we reviewed the Strategic Risk Appetite Principles (“SRAPs”) and
approved changes to Information Security and Regulatory risk
measures within the Control Environment SRAP. The Committee
has closely engaged on the enhancements to the Customer SRAP
as management continue to refine this to more appropriately
reflect how management assess customers’ outcomes in line
with the new Consumer Duty.
During Q3 the Internal Audit Failed Issues Assurance measure,
which forms part of the Control Environment SRAP, exceeded the
risk appetite threshold and the Committee welcomed the action
taken by management to address and mitigate the areas of risk
in relation to the Issues Assurance failures. With the exception
of this matter, the Committee was pleased to note that Quilter
continued to operate within its risk appetite limits in 2022,
based on performance against the SRAP measures.
The Committee also approved the methodology for constructing
the risk appetite thresholds (Long Term Targets, Early Warning
Thresholds and Limits) together with their actual levels as at
year-end 2022 for the Group.
Prudential risk
This has been the first year for the new reporting regime under
the Prudential sourcebook for investment firms (“IFPRU”) and we
have reported against the new internal capital adequacy and risk
assessment (“ICARA”) for the first time. Over the year, we reviewed
the component parts of the own risk and solvency assessment
(“ORSA”) and ICARA, including the capital allocations and stress
and scenario testing which have been debated and challenged.
We have reviewed and considered the recovery and wind down
plans and have discussed with management the enhancements
that will be made in 2023 to further improve the plans.
Capital and liquidity
The Committee received routine quarterly updates from our
Chief Financial Officer on the Group’s capital, cash and liquidity
positions against our risk appetite during the year. Despite the
challenging macroeconomic environment, Quilter remains
strongly capitalised and has operated within capital and liquidity
risk appetites during the year. Given the changing external
economic environment, we asked management to perform
further stress testing on economic scenario analysis on inflation
and interest rates and this was completed and reviewed during
the year.
Operational risk
The Committee received a demonstration of a new internal
risk assessment tool, Resolver, which was implemented in 2022.
During the year, the Committee asked management to refresh the
operational risk reporting that the Committee receives, and good
progress is being made on the enhancements requested.
New and emerging risks
The biannual updates on emerging risks identify risks to Quilter as
a business from the external environment including an assessment
of likelihood and time scale. In Q1 2022 the Committee considered
risk impacts for Quilter resulting from Russia’s invasion of Ukraine
with a view to identifying how to mitigate any risks to Quilter and
our customers. As it became apparent the economic climate was
worsening, the Committee received a risk assessment of the
impacts of inflation on, amongst other things, flows, investment
performance impacting our customers and the impact for
colleagues of the rising cost of living.
Risk factors – Bond Prospectus
The Committee reviewed, considered and recommended to
the Board risk factors contained within the Prospectus dated
16 January 2023. You can read more about the process we
undertook and the factors considered on page 61.
Risk management and internal control systems
The Board Risk Committee, the Board Audit Committee and the
Board Technology and Operations Committee regularly review
internal controls on behalf of the Board and receive regular
reports from management, Internal Audit and the Finance
function. The Chairs of the Board Audit Committee, the Board
Risk Committee and the Board Technology and Operations
Committee regularly brief the Board on the key matters
discussed by these Committees. Throughout the year ended
31 December 2022 and to date, the Group has operated a
system of internal control that provides reasonable assurance of
effective operations covering all controls, including financial and
operational controls and compliance with laws and regulations.
Processes are in place for identifying, evaluating and managing
the principal risks facing the Group in accordance with the
‘Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting’ published by the Financial
Reporting Council. The Board Risk Committee received
management’s assessment of the effectiveness of internal
controls over financial reporting as of 31 December 2022 and
concluded that, based on their assessment, they were effective.
The Board also considered and endorsed this assessment as
well as the Board Audit Committee’s review of the internal
controls over financial reporting. The Chair of the Board Audit
Committee reports on the review of controls over financial
reporting and how the Board Audit Committee has monitored
the independence and effectiveness of the internal and external
auditors on pages 73 and 74.
77Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Board Risk Committee Report
continued
Top risks
You can read about the Group’s assessment of our top risks and
how these are identified, managed and mitigated on pages 44 to
49 in the Risk Review. The Committee routinely receives quarterly
updates from the Chief Executive Officer and the Chief Risk Officer
on their assessment of these risks.
Advice risk
The Committee has held in depth discussions on the controls
to mitigate the risk associated with how Quilter and its advisers
provide appropriate advice to customers. Along with the Board
of Quilter Financial Planning, the Committee has overseen the
improvements made to date in the control environment of that
business and continues to monitor the steps being taken to
automate control processes and fully embed a robust and
effective control culture throughout the business. This will ensure
that our customers are appropriately protected and Quilter can
demonstrate that the advice provided is in their best interests
and promotes good customer outcomes. The Committee has
challenged management to consider and mitigate the business
risks for customers given the external market conditions.
Conduct risk
The Committee has continued to monitor our ongoing
management of conduct risk and receives regular updates on
conduct risk matters including complaints, advice and suitability,
and post advice arrangements and servicing.
People risk
The Committee has welcomed the improved employee
engagement score during the year and has continued to
monitor people risk carefully given the pressures of the economic
environment and business change initiatives. As the working
environment continues to evolve post the COVID-19 pandemic
we have discussed an update from Human Resources on the
mitigation of people risk though the implementation of a hybrid
working model.
Third-party suppliers risk
During the year this Committee, along with the Board Technology
and Operations Committee, has overseen the effectiveness of the
processes in place to manage the services provided to the Group
by third-parties ensuring robust oversight and engagement with
our suppliers. The Committee has welcomed the ongoing focus
in this area.
Strategic delivery risk
The Committee introduced biannual reviews of the strategic risk
profile associated with delivery of the operating plan. The risk
profile has heightened during the year largely reflecting the
impacts from market conditions due to the current economic
and geopolitical environment. The Committee asked management
to re-assess activity in order to ensure that Quilter is focused on
the most critical activities.
Regulatory risk
The Committee receives a quarterly report which provides
analysis and commentary on the interactions with our regulators.
The reporting covers regulatory change that impacts our
business, clients and customers. It includes horizon scanning
and an assessment of likely change and the impact for Quilter.
The Committee spent appropriate time during the year reviewing
and challenging the implementation plans for the new FCA
Consumer Duty ensuring these plans are robust with appropriate
governance and resources in place to ensure that the new
Consumer Duty will be embedded in Quilter’s day-to-day
processes and be well understood by our advisers and
employees. The Committee has also received an assessment on
how the future changes in the Appointed Representatives Regime
will be implemented in Quilter Financial Planning.
Conflicts of interest
The conflicts of interest inherent in our business model are closely
monitored and an update is presented to the Committee twice
a year by the Chief Executive Officer along with a second line
assessment. Policies and processes are in place to ensure that
there is appropriate scrutiny and consistency of how Quilter
manages potential conflicts of interest across the Group.
Data privacy risk
Twice a year the Committee considers a report from the Group
Data Protection Officer with his assessment of the data privacy
risk. This assessment details the adequacy of data protection
policies, procedures and governance arrangements to mitigate
data protection risks and comply with data protection legislation,
including the General Data Protection Regulation.
Money Laundering Officer’s report
The Committee receives an annual update from the Group’s
Money Laundering Reporting Officer which gives a pan-Quilter
view of the Anti-Money Laundering and Counter Terrorist
Financing operating environment and associated risks. Following
an increase of Financial Crime during the COVID-19 pandemic,
levels have now stabilised and we are focused on managing high
profile and emerging issues including sanctions risk.
Risk and Compliance function and plans
In July 2022, Matt Burton stepped down as Chief Risk Officer
to focus on his health. The Committee is grateful to Matt for his
outstanding contribution and has welcomed Nick Sacre-Hardy
as Chief Risk Officer. A review of the Risk function led by Nick
commenced in the final quarter of 2022 and the Committee
reviewed the results and proposed changes to the risk function
in Q1 2023.
The Committee monitors progress on the risk and compliance
function and plans. This includes an assessment of the quality
and appropriateness of resourcing and overall delivery of key
activity. Adjustments to the plans are brought back to the
Committee for approval if necessary.
Looking forward
As we look forward to 2023, the Committee will continue to pay
close regard to the impacts of the external environment for our
customers and advisers and ensure that Quilter is well placed
to ensure customer outcomes are appropriate and we continue
to exercise oversight to manage and mitigate risk.
Key areas of Committee focus
78 Quilter Annual Report 2022
Board Risk Committee Report
continued
Dear shareholder
I am pleased to present my report as Chair of the Board
Technology and Operations Committee.
During 2022, the Committee focused on driving improvements
to the digital experience for our customers and was pleased to
see the successful launch of the new Customer App for customers
of the investment platform.
The Committee has continued to oversee the development and
delivery of the technology strategy. Good progress has been made
in the rationalisation and modernisation of our infrastructure
during the year, bringing this programme of work to a close.
As change activity continued apace, we ensured that lessons
learned from the Platform Transformation Programme have been
embedded within management’s planning and risk decision making.
The Committee has challenged and endorsed management’s drive
for prioritising quality over cost savings and speed of delivery.
Continuing the progress made in recent years, the Committee has
overseen further enhancements to the resilience of the Group’s
operations and technology to ensure availability of our services for
our customers and advisers. The completion of our self-assessment
of operational resilience, a regulatory requirement, is an important
landmark for the Group and has supported the creation of
additional goals in this space for the next two years.
We received regular updates on Information Security deliverables
that are designed to keep the organisation, colleague and
customer data secure through design, the deployment of key
security capabilities, and targeted training for staff and awareness
campaigns for customers.
Following the departure of Rosie Harris at the end of April 2022,
the membership of the Committee was bolstered when Neeta
Atkar joined the Committee on her appointment to the Board
in August 2022. Neeta’s understanding of customers and risk
within the financial services industry strongly supported
our deliberations.
The Committee was set up to oversee management’s delivery
of significant strategic technology change, most notably the
implementation of the new investment platform. Following the
successful delivery of the investment platform in 2021 and the
continued demonstration of technological and operational
expertise across the Group during 2022, the Board agreed to
formally close the Committee with effect from 31 December 2022.
Reflecting on the priorities agreed in 2018 following the separation
from Old Mutual, the Committee can look back with satisfaction
at the significant milestones achieved and improvements made
across technology and operations. The challenge and scrutiny
provided by the Committee over areas such as information
security, operational resilience and change programmes has
created a strong foundation for the prospects of the Group going
forwards. I am looking forward to continuing to work closely with
management in 2023 and fully participating in discussions at the
Board and Board Risk Committee meetings on the important
matter of strategic technology change and management of IT risks.
Moira Kilcoyne
Chair
Moira Kilcoyne
Chair
79Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Board Technology and Operations
Committee Report
36%
10%
40%
14%
91%
9%
31%
11%
15%
43%
91%
9%
Committee activity 2022 2021
Change Programmes
Technology and Operations Strategy
IT Security
Operational Resilience
Committee responsibilities
· Oversees delivery of the Operations and Technology strategy.
· Provides oversight and challenge on Operations and
Technology risk.
· Oversees Information Security, Information Management
and Operational Resilience strategy, systems and controls.
· Oversees strategic operational and technology change
programmes.
Committee governance
The Board Technology and Operations Committee comprised of
four independent Non-executive Directors as at 31 December 2022.
Details of the skills and experience of the Committee members
can be found in their biographies on pages 56 to 58.
Committee evaluation
As an output of the 2022 Board effectiveness review, and in line
with the desire to simplify the Group Governance, the Board
assessed that the Committee had successfully met its objectives
and decided that it is the right time to close the Committee. You
can read more about this decision and how the Committee’s
responsibilities have transitioned to the Board and Board Risk
Committee on page 81.
Discharging our responsibilities
The Committee reviewed its activities over the previous 12 months
against its Terms of Reference and confirmed that it had
discharged its responsibilities in full.
Attendance
The Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer and Chief Risk Officer regularly attended Committee
meetings. Other Non-executive Directors attended Committee
meetings for matters of particular interest.
Collaboration
The Chair briefed the Board on key discussions and provided a
written report to the Board, where feasible, after each meeting.
The papers and reports presented to the Committee were made
available to all Quilter Non-executive Directors.
At a glance
Committee activity Committee membership and meetings
attended/eligible to attend
Scheduled
meetings
Moira Kilcoyne (Chair) 5/5
Neeta Atkar
1
2/2
George Reid 4/5
Chris Samuel 5/5
Former member
Rosie Harris
2
0/1
1
Neeta Atkar joined the Committee on 11 August 2022.
2
Rosie Harris resigned from the Board and stood down as Committee member
on 30 April 2022.
Where a Director was unable to attend a meeting due to illness or a long-standing
conflicting commitment, they reviewed the Committee papers and provided
comments to the Committee Chair in advance of the meeting.
80 Qu ilter Annual Report 2022
Board Technology and Operations Committee Report
continued
Key areas of Committee focus
Digital and data strategies
A key area of focus for the Committee in 2022 has been to
oversee and challenge the digital and data strategies, which
have included several initiatives aimed at improving the digital
experience for our customers and building foundational
capabilities to support them.
One component of the digital strategy has been the Customer
App that was successfully launched towards the end of 2022.
It has initially been deployed for Quilter Investment Platform
customers as part of the Affluent segment proposition, with the
intention to extend the Customer App in future to the High Net
Worth segment. The Customer App was developed to include
a range of functionality, with customer feedback used to identify
the features of most benefit for customers.
An area of focus for the Group’s data strategy has been the Data
Transformation Programme that has been laying the foundations
for the future. The aim of the first stage of the programme has
been to establish a new Group-wide data and reporting platform.
This will reduce the number of technologies in the estate, but
more importantly will enable customers to interact seamlessly
across the entire Group. Improvement in data quality, whilst being
critical for an effective operating environment, will also support
management’s work in readiness for the FCA Consumer Duty
regulations that come into force during 2023.
With the history of managed separation and acquisitions over
recent years, Quilter has consciously had a number of independent
website domains. As the Group has continued its focus on
simplification of our brand and optimising operational efficiency
and technology solutions, a project was approved in 2021 to
simplify the firm’s websites. Work in this area has progressed
during the year with a plan to migrate business websites to align
with our Affluent and High Net Worth segments. The websites will
support customers and advisers to access their products and
services across the Group.
Operational resilience
The Committee has continued to oversee the work to ensure
the Group’s operational resilience continues to be in line with our
and our regulators’ expectations. During the year management
completed a self-assessment of operational resilience that
included the Group’s resilience strategy, resilience journey and
the steps taken to comply with new regulatory requirements.
Where services are being provided or supported by third parties,
a consistent and proportionate approach has been taken by
management to ensure the resilience of services for our
customers. The management of our external technology partners
continues to be a key part of our resilience strategy.
The risk posed by external threats has continued to evolve and
gain prevalence, with the risks elevated by Russia’s invasion of
Ukraine. Management have been focused in managing the risks
posed by external threats with a culture and awareness
programme. This approach has now evolved to promote
awareness and behavioural change to develop a positive security
culture. The protection of client data and our systems underpins
our digital and data strategies and the Committee has received
regular updates that provide assurance of management’s
vigilance and continued focus on protecting our customers.
Operations enhancements
The Committee has continued to strongly encourage
management to modernise, simplify and automate operational
areas as part of a move to a data-driven, risk-based, processing
environment. Quilter Financial Planning has been the first
business to commence scoping work, with a view to enhancing
controls by reducing the volume of manual processes in place
through an investment in technology and data. Whilst the project
is at an early stage, significant progress is anticipated during 2023.
Quilter Investment Platform will be implementing the same
technology, a cross divisional initiative that aims to produce
further consistency and efficiency across operations. Progress
on this activity will enable Quilter to progress our digital strategy
at pace.
Sale of Quilter International
As part of the sale of the Quilter International business to Utmost
in 2021, a Transitional Services Agreement was put in place for
Quilter to continue to provide certain core services to support the
former Quilter International business. The Committee spent time
during the year overseeing initial preparations for the migration
of these customers from Quilter’s systems to Utmost’s to ensure
that the process will run smoothly and customer impacts are
minimised. The migration is due to be completed during 2023.
Segment technology and operations updates
During the course of the year the Committee continued its
approach of receiving more granular updates on technology
and operations in each business segment. The sessions enabled
the Committee to be informed about the collaboration across
the Quilter Group and ongoing efforts to simplify key processes
where it has been beneficial for customers for us to do so.
Transition of Committee responsibilities
During 2022, the Board conducted an externally facilitated
Board effectiveness review. Amongst other things, the review
considered the role of the Board Committees.
The Board Technology and Operations Committee was created
in 2017 to oversee the implementation of the new investment
platform which was successfully delivered in 2021. The
Committee further oversaw the work to develop a more mature
operational and technological organisation as Quilter continued
to deliver more customer-centric systems and operations.
The findings of the Board effectiveness review were discussed
with the Board and the Board concluded that the Committee
had successfully delivered its original objective, and agreed that,
with effect from 31 December 2022, the Committee be closed.
All the activity that the Committee conducted has been
mapped to our Board Risk Committee or will be overseen
directly by the Board.
81Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Board Technology and Operations Committee Report
continued
Dear shareholder
In my first year as Chair of the Board Remuneration Committee
(“Committee”), on behalf of the Board, I am pleased to present
the Remuneration Report (“Report”) in respect of the year ended
31 December 2022. This statement and the accompanying Report
aims to ensure high levels of disclosure regarding pay policy in
accordance with the UK Corporate Governance Code and
transparency in respect of remuneration and decision-making.
At the last AGM in May 2022, both our Report for 2021 and our
new Directors’ Remuneration Policy (“Policy”) received 96% of
votes in favour. Our Policy is intended to be in place for three years
and the next binding shareholder vote will be no later than the
2025 AGM, with the Policy kept under continuous review by the
Committee to ensure it remains appropriate. This Report will be
subject to an advisory vote at the 2023 AGM in line with regulatory
requirements.
2022 was a year of solid business performance considering
the challenging market in which we are operating in, with the
war in Ukraine, the cost-of-living crisis and economic uncertainty
impacting investor confidence and significantly dampening the
revenue environment across the wealth and asset management
industry. Despite this, the Company delivered a resilient financial
performance with net flows of £1.8 billion (down from £4.0 billion
in 2021) and Adjusted Profit of £134 million (down from
£138 million in 2021).
The Committee approved a 2022 short-term incentive (“STI”)
outcome of £89k (46% of maximum) for the new Chief Executive
Officer, Steven Levin, for the two months of qualifying service,
and £418k (46% of maximum) for the Chief Financial Officer,
Mark Satchel. Paul Feeney, who served as Chief Executive Officer
for 10 months of the year, received £466k (41% of maximum).
In determining these outcomes, the Committee exercised
discretion to adjust down the STI outcome profit, relative to the
reported IFRS profit, for the impact of below-the-line items where
appropriate. All Executive Directors received an outcome of 32%
of maximum for the vesting of the 2020 LTIP award after exercising
discretion to adjust for corporate activity. Full details of these
outcomes are set out in the Report.
During the year, the Company acknowledged the effect of higher
price inflation on employees and made a one-off cost-of-living
payment of £1,200 in August 2022 to all employees with a full-time
equivalent base salary of up to £50,000 per annum, and continues
to monitor inflation data and market developments closely.
The 2019 three-year Save As You Earn (“SAYE”) scheme matured
on 1 July 2022 with an option price 125 pence. Savings were
returned to participants at the end of the six-month exercise
period following maturity due to the prevailing share price being
lower than the option price. The 2022 scheme commenced on
1 July 2022 with an option price of 117 pence and was available
to all eligible UK employees over a three or five-year term.
Both Executive Directors joined the 2022 Scheme.
For 2022 we have reported a median gender pay gap of 31% and
a median bonus gap of 44%. Whilst our pay gaps have reduced
since Gender Pay Gap Reporting was introduced five years ago,
we still have much further to go. To reinforce our commitment to
diverse representation within our senior management roles and
to driving an inclusive culture, the Committee incorporated gender
and ethnic minority representation and workforce engagement
targets into the Executive Directors’ 2022 STI scorecards. These
targets were partially met and are reflected in the Executive
Directors’ 2022 STI outcomes, as detailed on page 97, and will
continue to form an important component of the STI scorecard
in future years. Further details of our gender pay gap and diverse
representation targets can be found on page 30 of the
Responsible Business Report.
Looking ahead, we will continue to monitor market developments
and the regulatory landscape to ensure that remuneration
supports the alignment of executive and shareholder interests and
is consistent with the prudent risk management of the business.
The Committee actively engages with shareholders and investor
bodies and welcomes the opportunity for further engagement
to discuss remuneration issues in advance of the 2023 AGM.
I appreciate the continued support and feedback from
our shareholders.
I would also like to take this opportunity to thank my predecessor,
Ruth Markland, for her excellent chairmanship prior to my
appointment.
Tim Breedon
Chair of the Remuneration Committee
Tim Breedon
Chair
82 Quilter Annual Report 2022
Board Remuneration
Committee Report
32%
5%
38%
25%
91%
9%
26%
25%
23%
26%
91%
9%
Committee activity 2022 2021
Remuneration schemes, including
all employee schemes
Risk and Governance
Specific remuneration arrangements
Group Remuneration Policy
Committee responsibilities
· Sets the overarching principles and parameters of remuneration
policy across Quilter.
· Considers and approves remuneration arrangements
for Executive Directors and senior executives.
· Approves individual remuneration awards.
· Agrees changes to senior executive incentive plans.
Committee governance
The Board Remuneration Committee (“Committee”) currently
comprises three independent Non-executive Directors and
the Chair of the Board, who was independent on appointment.
In accordance with the UK Corporate Governance Code, Ruth
Markland ceased to chair the Committee meetings on appointment
as Quilter Chair and Tim Breedon has chaired all Committee
meetings since May 2022. Tim was confirmed as Board
Remuneration Committee Chair in November 2022. Tim has served
as a member of this Committee since appointment in June 2020
and has extensive remuneration experience and expertise.
Details of the skills and experience of the Committee members
can be found in their biographies on pages 56 to 58.
Committee evaluation
As part of the 2022 Board Effectiveness Review, the Board
has assessed that the Committee membership is appropriate
in providing challenge and oversight and that the Committee
is operating effectively.
Discharging our responsibilities
The Committee reviewed its activities over the previous 12 months
against its terms of reference and confirmed that it had fully
discharged its responsibilities in line with its remit. The terms
of reference are available at plc.quilter.com.
Attendance
The Chief Executive Officer, Chief Financial Officer, HR Director,
Reward Director and the Committee’s independent remuneration
adviser regularly attend Committee meetings, except when it
would not be appropriate for them to do so. Attendees do not take
part in decisions relating to their own remuneration and potential
conflicts are suitably mitigated.
Collaboration
The Chair briefs the Board on key discussions and provides a
written report to the Board, where feasible, after each meeting.
The papers and reports presented to the Committee are made
available to all Quilter Non-executive Directors. The Committee
has met jointly with the Board Risk Committee to discuss the
impact of risk on remuneration matters.
At a glance
Committee activity Committee membership and meetings
attended/eligible to attend
Scheduled
meetings
Ad hoc
meetings
Tim Breedon (Chair) 7/8 3/3
Ruth Markland 8/8 2/2
Tazim Essani 7/8 3/3
Paul Matthews 8/8 2/3
Former members
Glyn Barker
1
1/1 1/1
Glyn Jones
2
5/5 –
1
Glyn Barker served as a member of the Committee during his time as a Director
between June and November 2022.
2
Glyn Jones resigned from the Board and stood down as a Committee member
on 12 May 2022 at the conclusion of the AGM.
Where a Director was unable to attend a meeting due to illness
or a long-standing conflicting commitment, they reviewed the
Committee papers and provided comments to the Committee
Chair in advance of the meeting.
83Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Board Remuneration Committee Report
continued
Executive Directors’ outcomes
STI metrics Steven Levin Mark Satchel Paul Feeney
All Executive
Directors
£76m
IFRS profit before
tax (STI Outcome)
2021: £60m
2%
Net flows as a
percentage of
opening AuMA
2021: 4%
46%
Short-term
incentive (STI)
as a % of max
2021: n/a
46%
Short-term
incentive (STI)
as a % of max
2021: 69%
41%
Short-term
incentive (STI)
as a % of max
2021: 66%
32%
Long-term
incentive (LTI)
as a % of max
2021: 56%
LTI metrics (2020-2022)
9%
Earnings per share
(EPS) CAGR
performance
achieved
2021: 12%
Below
median
Total Shareholder
Return (TSR)
2021: 55th percentile
64%
Total compensation
as a % of max
2021: n/a
54%
Total compensation
as a % of max
2021: 70%
50%
Total compensation
as a % of max
2021: 69%
2022 remuneration in numbers
Fixed pay Short-term incentive (“STI”) Long-term incentive (“LTI”)
· Salary
· Benefits
· Pension
· Normally reviewed annually
with effect from 1 April
· Award based on annual performance
metrics that assess Company and
individual performance
· 50% of the award is subject to a
three-year deferral under the Quilter
Share Reward Plan
· Awards subject to three-year
performance period ending
31 December 2022
· Award vests in Q1 following end of
the performance period and subject
to a further two-year holding period
How much Executive Directors earned in 2022
The following charts set out the aggregate emoluments earned by the Executive Directors for qualifying services in the year ended
31 December 2022.
Components of remuneration
Components of Executive remuneration and outcomes for 2022
Steven Levin £201k
£107k £89k £5k
Fixed
Salary 95.8
Benefits 1.5
Pension 9.6
Short-term incentive
Total incentive award 89.0
Long-term incentive
Award vests 5.5
Mark Satchel £1,175k
£502k £418k £255k
Fixed
Salary 450.0
Benefits 7.1
Pension 45.0
Short-term incentive
Total incentive award 417.5
Long-term incentive
Award vests 254.8
Paul Feeney £1,475k
£627k £466k £382k
Fixed
Salary 562.5
Benefits 8.1
Pension 56.3
Short-term incentive
Total incentive award 466.0
Long-term incentive
Award vests 382.2
84 Quilter Annual Report 2022
Remuneration at a glance
Steven Levin
90% of salary
P
aul Feeney
300% of salary
M
ark Satchel
224% of salary
300% of salary
300% of salary
235% of salary
Summary of the key elements of our Policy
Link between remuneration and business strategy
Performance
indicators
STI scorecard
weighting
2022 achievement
(% of maximum)
Short-term
incentive
Financial
IFRS profit before tax attributable to equity holders
(excluding amortisation, policyholder tax adjustments and other one-off items)
35% 50%
Net flows as a percentage of opening AuMA 25% 0%
Non-financial
Risk management
· Steven Levin (appointed 1 November 2022)
· Mark Satchel
· Paul Feeney (stood down 31 October 2022)
10%
60%
60%
50%
Customer outcomes 10% 79%
Strategic personal performance:
· Steven Levin (appointed 1 November 2022)
· Mark Satchel
· Paul Feeney (stood down 31 October 2022)
20%
75%
75%
55%
LTI scorecard
weighting
2022 achievement
(% of maximum)
Long-term
incentive
EPS growth
EPS compound annual growth rate (2019-2022) 70% 46%
TSR value
TSR relative to FTSE 250 (excluding investment trusts) 30% 0%
Shareholding
2022 2023 2024 2025 2026
Fixed pay
Performance
period
Vesting period
Long-term
incentive
Performance
period
Additional
holding period
Vesting period
1/3 1/3 1/3
Short-term
incentive
Cash element of incentive outcome (50% of the whole award) is paid in Q1 following the end of the performance year.
Deferred element of incentive outcome (50% of the whole award) is granted in shares and vests in three equal tranches in Q1 2024,
Q1 2025 and Q1 2026 subject to the Deferred Share Bonus Plan rules.
Maximum short-term incentive opportunity is 200% of salary.
Owned shares
Unvested shares
Additional awards subject to performance conditions
Minimum shareholding required (after five years)
Current shareholding
Maximum long-term incentive opportunity 200% of salary.
85Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Remuneration at a glance
continued
Key areas of Committee focus
Key performance highlights
· IFRS profit before tax attributable to equity holders (excluding
amortisation, policyholder tax adjustments and other one-off
items) for remuneration purposes was £76 million for 2022,
compared with £60 million in 2021.
· The Company continued to drive net new flows in challenging
market conditions as investor sentiment was weakened by
inflationary shocks and the cost-of-living crisis, with Quilter
achieving the largest share of gross flows across the retail
advised industry to the end of the third quarter. Our full year
net flows of £1.8 billion for 2022 was down on the £4.0 billion
in the previous year, and was below the level to which we aspire.
As a percentage of opening AuMA, net flows were 2% compared
with 4% achieved in the prior year.
· AuMA decreased by 11% during the year to close at £99.6 billion,
compared with £111.8 billion at the end of 2021. This was
primarily the result of market headwinds, with lower equity
markets and higher bond yields more than offsetting positive
net flows.
· Management responded strongly to the declining revenue
environment by instilling strong cost discipline, achieving
full-year expenses of £472 million, £8 million below prior year
despite the high inflationary environment, whilst also delivering
higher savings through Business Simplification than originally
targeted. This contributed to an operating margin of 22%,
in line with the prior year.
· We significantly increased our focus on climate action in 2022,
announcing a plan to reduce our Scope 1 and Scope 2 emissions
by 80% by 2030 from a 2020 baseline, as well as strengthening
the integration of ESG factors within our investment process;
both of these measures have been incorporated into the LTI for
the Executive Directors to underline our commitment to being
a responsible wealth manager.
· We have continued to focus resolutely on our customers,
with service a priority and the launch of some key propositional
updates, whilst investment performance across our Wealth
Select managed portfolios remained consistently strong,
although our flagship Cirilium Active range lagged industry
benchmarks over the period.
Short-term incentive outcome
· Business performance has been resilient in a challenging year
for the entire wealth management industry but, nonetheless,
our financial performance was below the targets we set
ourselves at the start of the year. Our 2022 IFRS profit result for
STI purposes of £76 million was in line with target, generating an
outcome equal to 50% of maximum and accounted for 35% of
the Executive Directors’ scorecard.
· Net flows as a percentage of opening AuMA were 2%
(£1.8 billion), which was below the threshold target of 4% and
therefore contributed a zero outcome for this metric, which
accounted for 25% of the Executive Directors’ scorecard.
· The risk management of the business and overall progress
against key customer outcome measures were positive, with
Quilter achieving a Trust Pilot score of 4.2, with 78% of reviews
at four or five stars and overall satisfaction at 82%. This is
considerably better than many of our peers. Investment
performance was generally strong with the exception of the
Cirilium Active proposition, with steps taken to address this.
· Good progress was made on our Inclusion and Diversity agenda,
and we published our first full Action Plan and our lowest
Gender Pay Gap since reporting began. The Company also made
good progress in driving an inclusive culture with an improved
colleague engagement score. Further details on our inclusion,
diversity and gender pay gap outcomes and targets can be
found on page 87.
· Overall, this generated an STI award of 46% of maximum
(£89k) for the Chief Executive Officer, Steven Levin, and 46%
of maximum (£418k) for the Chief Financial Officer, Mark Satchel.
Paul Feeney also received an award of 41% of maximum (£466k)
for the period he served as Chief Executive Officer.
· In determining these outcomes, the Committee exercised
discretion in the form of a downward adjustment to the
STI outcome profit result, relative to the reported IFRS profit,
for the impact of below-the-line items where appropriate.
They compared actual costs to targets and trued up to target
where costs are delayed but still expected to be incurred,
to ensure management didn’t benefit from any cost delays
versus genuine savings.
86 Quilter Annual Report 2022
Board Remuneration Committee Report
continued
Long-term incentive outcome
· The performance period for the 2020 LTI award ended
on 31 December 2022 and the award is due to vest on
27 March 2023, subject to a further two-year holding period.
· The performance conditions were weighted 70% on adjusted
EPS CAGR and 30% on TSR relative to the FTSE 250 excluding
investment trusts.
· In line with the treatment of prior vested LTI awards, the
Committee exercised discretion to adjust the EPS growth
calculation for the impact of corporate activity during the
vesting period to ensure the outcome appropriately reflected
underlying performance. Specifically, the Committee decided
to remove the earnings of divested businesses, net of stranded
costs, and neutralise the impact of the Company’s share
buyback and Share Consolidation programmes to ensure there
was a consistent measure of underlying growth, whilst also
increasing the target CAGR range to reflect an expectation of
higher growth within the core, continuing operations. This had
the effect of reducing the outcome of the EPS CAGR condition
from 55% of maximum to 46% of maximum. The full calculation
is set out on pages 99 to 100 of the Report.
· The outcomes of both the earnings growth and TSR measures
were negatively impacted by the challenging market conditions
in 2022. Quilter’s TSR – as well as other wealth and asset
managers – underperformed relative to other industries within
the FTSE 250 and was below the threshold target of median
performance, contributing zero for that metric.
· Awards will vest on 27 March 2023 with an overall outcome
of 32% of maximum for the Executive Directors, as detailed
on pages 99 to 100 of the Report.
Wider workforce considerations
The Committee considered carefully the effect of macroeconomic
conditions on the Company’s broad employee base, including
close monitoring of market data movements and targeted salary
review budgets to ensure the Company could appropriately
attract, develop and retain talent in a particularly tight labour
market. During the year, the Company also acknowledged the
effect of the higher price inflation on employees and made a
one-off cost-of-living payment of £1,200 in August 2022 to all
employees with a full-time equivalent base salary of up to £50,000
per annum. At the 1 April review date, base salaries for the wider
workforce are set to increase by an average 5%, which is a higher
rate than historically applied. The Company will continue to
monitor inflation data and market developments closely.
Remuneration Policy
· The Policy was approved by shareholders at the AGM
on 12 May 2022, with 96% votes in favour.
· The Policy itself had minor evolutionary updates to continue
to align to market and corporate governance best practice.
In applying the Policy the Committee amended the incentive
metrics and weightings for 2022, increasing the weighting of net
flows within the STI scorecard and expanding the LTI metrics to
include strategic priorities covering operating margin and ESG
measures. These updates will remain in place for 2023.
· The Policy is intended to be in place for three years and
assuming no changes are required earlier, will next be put
to a shareholder vote for formal approval at the 2025 AGM.
Alignment to strategic priorities
The application of the Policy continues to align management
incentives to the four strategic priorities of the Company,
as set out in the chart on page 89.
Inclusion, diversity and the gender pay gap
The Committee is focused on ensuring that pay arrangements
across the Group reflect our diversity and inclusion agenda.
Within the personal component of the 2022 STI scorecard for the
Executive Directors, the Committee included specific targets to
increase the proportion of female and ethnic minority colleagues
within our senior management (defined as our Executive Committee
and their direct reports (excluding Personal Assistants)). These
targets were not met, with the proportion of females at the end
of 2022 being 36% compared with a target of 38% and the
proportion of ethnic minority individuals being 4% compared with
a target of 5%, as the Company progresses toward its long-term
target of 40% female by the end of 2025 and 5% ethnic minority
representation in senior roles by the end of 2023, as published in
the Company’s Inclusion and Diversity Action Plan. Further details
on scorecard targets and achievements can be found within the
Executive Directors’ personal objectives on page 97.
To support efforts on driving an inclusive and unified culture,
the Committee also set a colleague engagement target of 7.4
(generated by an anonymous, weekly all-employee survey),
representing a 6% increase on the starting position of 7.0. At the
end of 2022, the score had improved to 7.4 in line with the target.
For 2022 we have reported a median gender pay gap of 31%
and a median bonus gap of 44%. Whilst our pay gaps have reduced
since Gender Pay Gap Reporting was introduced five years ago,
we still have further to go in this area.
An inclusive culture and diverse workforce continues to be a key
priority for the Company. Further details regarding our gender
pay gap figures, our diverse representation targets and progress
against our wider inclusion and diversity action plan can be found
on pages 30 of the Responsible Business Report.
87Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Board Remuneration Committee Report
continued
Key areas of Committee focus
Workforce engagement
Paul Matthews and Tazim Essani, Independent Non-executive
Directors of Quilter and members of the Committee, are
responsible for workforce engagement under the Corporate
Governance Code. During 2022 they attended the Employee Forum
and gained valuable insights on employee views, including the
impact for colleagues of the rising cost of living, the appointment
of Quilter’s new Chief Executive Officer, and organisational culture.
Further insights on their work is set out in the Governance in
action report on pages 62 to 63.
Considerations for the year ahead
The economic outlook remains uncertain and we expect the
challenging market conditions for wealth managers experienced
in 2022 to persist in 2023. We have a clear long-term plan to
transform the business and the Committee is focused on ensuring
that the execution of that plan for the benefit of all stakeholders
is appropriately reflected in the incentive arrangements and
outcomes for the Executive Directors over the coming period.
The Committee has decided that instead of setting the Executive
Directors’ profit target by reference to IFRS profit before tax
(excluding amortisation, policyholder tax adjustments and
other one-off items), the Committee will set the profit target by
reference to Adjusted Profit from the 2023 financial year onwards
but will retain – and disclose full details in the relevant year’s
Remuneration Report regarding the application of – an override to
adjust the Adjusted Profit outcome if any below-the-line costs for
Adjusted Profit purposes exceed the Board-approved business
plan or include any exceptional items that the Committee
concludes should be reflected in remuneration outcomes to
reinforce the continued alignment of Executive Director and
shareholder interests.
The previous IFRS profit definition has been in place since
the Company listed in 2018, at which point it was delivering the
Platform Transformation Programme and reshaping the perimeter
of the business, with material restructuring costs as a result,
so was seen by the Committee as a way of reinforcing alignment
with the interests of shareholders. Those programmes are now
complete and the Committee, noting that the definition of IFRS
profit for STI purposes is not a metric reported for any other
aspect of business performance and is not commonly used in the
market, has decided that it is now appropriate to adopt Adjusted
Profit for STI purposes, which, in contrast, is a widely followed
metric by market participants. Aligning profit for STI purposes
to Adjusted Profit will support the Policy principles of Clarity,
Simplicity and Predictability for all stakeholders. It will also align
the profit basis used in both the Company’s short and long-term
incentive plans.
The targets for the 2023 LTI award are set out on page 101 and
the targets for the 2023 STI award will be disclosed retrospectively
in the 2023 Directors’ Remuneration Report in line with normal
practice, given commercial sensitivity.
The Committee will also continue to monitor market practice
and regulatory developments.
The Committee considered the overall remuneration
arrangements for the Executive Directors for 2023 in accordance
with the Policy. Key points are as follows:
· the Committee approved a 5% increase to the Chief Financial
Officer’s base salary, which was in line with the average increase of
the wider workforce, and will be implemented at the 1 April 2023
salary review date. This was the first increase awarded to the
Chief Financial Officer since appointment in 2019;
· there will be no increase to the Chief Executive Officer’s base
salary at the 1 April 2023 review date; and
· there will be no increase in fee for the Board Chair and there
are currently no planned fee increases for Non-executive
Directors for 2023. As part of the change of Board Chair during
2022, the Committee approved a revised Board Chair Fee of
£350k, a 7% reduction on the prior incumbent.
88 Quilter Annual Report 2022
Board Remuneration Committee Report
continued
Directors’ Remuneration Policy
(summary)
The Policy is summarised below. The full details of the Policy are on
pages 119 to 131 of the 2021 Annual Report and Accounts, which
can be found in the investor relations section of the Quilter website.
The Policy was approved by shareholders at the 2022 AGM and it is
intended that the Policy will apply for three years from that date.
The Committee continues to assess the Policy against the principles
of clarity, simplicity, risk management, predictability, proportionality
and alignment to culture, as set out in the Corporate Governance
Code 2018.
How we create value for our stakeholders
How we align our
incentive schemes
Short-term
incentive
Long-term
incentive
Net flows as a %
of opening AuMA
Customer outcomes
EPS growth
Relative TSR
Part of personal
element of the
scorecard, informed
by relevant KPIs
Operating margin
Diverse
representation
Colleague
engagement
Responsible
investing
Carbon intensity
of own operations
Operating margin
EPS growth
Relative TSR
Adjusted profit
Enhance
efficiency
Embed digital Be the
responsible
wealth manager
Grow with
our clients
and advisers
The key drivers of our Remuneration Policy:
Alignment to culture
· to align the interests of the Executive Directors, senior executives and employees with the
long-term interests of shareholders and strategic objectives of the Company;
· to incorporate incentives that are aligned with and support the Group’s business strategy, align
executives to the creation of long-term shareholder value, and promote the long-term sustainable
success of the Company for the benefit of all stakeholders, within a framework that is sufficiently
flexible to adapt as our strategy evolves;
· to reinforce a strong performance culture, across a wide range of individual performance
measures, including behaviours, risk management, customer outcomes and the development
of the Company’s culture in line with its values over the short and long term;
· to ensure that remuneration practices are consistent with and encourage the principles
of gender neutrality, equality, inclusion and diversity; and
· to align management and shareholder interests through building material share ownership
over time.
Clarity
· to clearly communicate our Remuneration Policy and reward outcomes to all stakeholders.
Simplicity
· to ensure that our Remuneration Policy is transparent and easily understood; and
· to operate simple and clear remuneration structures across the Company.
Risk
· to provide a balanced package between fixed and variable pay, and long and short-term
elements, to align with the Company’s strategic goals and time horizons whilst
encouraging prudent risk management; and
· to ensure reward processes are compliant with applicable regulations, legislation
and market practice, and are operated within the bounds of the Board’s risk appetite.
Predictability
· to set robust and stretching performance targets which reward exceptional performance; and
· to set remuneration within the limits established under the Remuneration Policy.
Proportionality
· to attract, retain and motivate the Executive Directors and senior employees by providing total
reward opportunities which, subject to individual and Group performance, are competitive within
our defined markets both in terms of quantum and structure for the responsibilities of the role; and
· to consider wider employee pay when determining that of our Executive Directors.
Our strategic
priorities
89Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Remuneration Policy for Executive Directors
The tables on the following pages summarise the key components of Executive Director remuneration arrangements, which form part
of the Policy.
Elements Purpose and link
to strategy
Operation Maximum
opportunity
Fixed elements of pay
Base
Salary
Attract and retain
talent with the calibre,
personal skills and
attributes to develop,
lead and deliver the
Group’s strategy.
Base salaries are normally paid in equal monthly instalments during
the year and reviewed annually with increases usually effective 1 April.
In reviewing base salaries the Committee takes into account a number
of factors, and considers the direct and indirect impacts of any base
salary increases on total remuneration.
Individual and Company performance will be taken into account
in determining any salary increases.
There are
no prescribed
maximum salary
levels, but any
salary increases
will normally
be in line with
percentage
increases across
the wider
employee
population.
Benefits
To aid retention and
attract the best talent
for the business, whilst
ensuring the total
package is competitive
in the market.
To provide Executive Directors with a market competitive level of
benefits. Benefits currently provided to Executive Directors are in line
with other Quilter employees and include private medical insurance,
life assurance and income protection.
Executive Directors are eligible to participate in the UK all-employee
share plans on the same terms as other employees, including the
Company’s Share Incentive Plan and Sharesave Plan.
Any reasonable business-related expenses (including tax thereon
if determined to be a taxable benefit) can be reimbursed.
In line with other
employees, there
is no maximum
monetary level
for benefits as
this is dependent
on the individual’s
circumstances,
market practice
and the cost to
the Company.
Pension
To provide a
market-competitive
contribution that
helps to attract and
retain the best talent
for the business.
Executive Directors are eligible to receive employer contributions to the
Company’s pension plan (which is a defined contribution plan) or a cash
allowance in lieu of pension benefits, or a combination. Contributions
and/or a cash alternative are paid monthly.
This is currently
10% of base
salary.
Short-term
incentive
To align remuneration
with performance
against financial and
non-financial business
plan targets and
personal goals, within
the Group’s risk
appetite and taking
into consideration
the Company’s culture
and values, on an
annual basis.
Performance targets and weightings are normally reviewed and
set annually by the Committee taking into account business plans
and the Company’s risk appetite. Pay-out levels are determined
by the Committee following the year end, based on performance
against objectives.
Performance is usually measured based on a mix of financial,
non-financial, strategic and personal targets. The splits between
the performance measures and relative weighting of the targets
are reviewed by the Committee at the start of each year and set
out in the Annual Report on Remuneration.
STI pay-out for threshold performance is set at 25% of maximum,
on-target performance is set at 50% of maximum and maximum
is set at 100%.
At least 50% of any STI awarded to an Executive Director is normally
deferred in the form of conditional awards under the Share Reward
Plan, which vests annually in equal annual instalments over a
three-year period subject to the rules of the Share Reward Plan.
Malus and clawback provisions apply to both cash and deferred
portions of the STI awards as described in further detail in ‘Risk
adjustments, malus and clawback’ on page 126 of the 2021 Annual
Report and Accounts.
The maximum
STI opportunity
is 200% of base
salary.
Directors’ Remuneration Policy
continued
90 Quilter Annual Report 2022
Elements Purpose and link
to strategy
Operation Maximum
opportunity
Long-term
incentive
To incentivise and
reward Executive
Directors for achieving
superior long-term
business performance
that creates
shareholder value and
maximises sustainable
shareholder returns.
LTI awards are made under the Quilter plc Performance Share Plan
(“PSP”). Awards are normally granted annually as nil cost options, which
are subject to performance conditions. Awards normally vest after
three years, subject to the achievement of performance conditions
and continued employment.
Performance is measured based on a mix of financial and non-financial
targets. The splits between the performance measures and relative
weighting of the targets are reviewed by the Committee at the start
of each performance period and set out in the Annual Report on
Remuneration. The metrics and weighting are subject to periodic
review and may be amended for future plan cycles.
For each performance metric, a threshold and stretch level of
performance is set. At threshold, 25% of maximum of the relevant
element vests rising on a straight-line basis to 100% for attainment
of levels of performance between threshold and maximum targets.
LTI awards are subject to malus and clawback provisions as described
in further detail in ‘Risk adjustments, malus and clawback’ on page 126
of the 2021 Annual Report and Accounts.
An award over
Company shares
with a face value
of 200% of base
salary at the date
of grant.
Shareholding
requirement
To align Executive
Directors’ interests
with those of
shareholders.
The Group operates a mandatory shareholding policy under
which Executive Directors are required to build up and maintain a
shareholding in the Company with a value at least equal to 300% of
base salary. Executive Directors are expected to meet the requirement
within five years of the Company’s Listing date or, for newly-appointed
Executive Directors, within five years of appointment if later.
At least 50% of any shares vesting under Quilter’s share plans (on a
net-of-tax basis) are expected to be retained until the shareholding
requirements are met. Vested and unvested (net of tax) awards under
the Share Reward Plan are included in the calculation of a Director’s
shareholding for this purpose. Vested awards no longer subject to
performance conditions (net of tax) under the PSP are also included.
Executive Directors are normally required to hold shares for at least
two years following cessation of their appointment at the lower of the
minimum shareholding requirement of 300% of base salary or the
value of shares held at the point of departure (if the Executive Director
is still in the five-year accumulation period).
n/a
There are no changes to the composition of the STI scorecard in terms of metrics and weightings. However, the basis of the STI profit
metric will change from IFRS profit before tax (excluding amortisation, policyholder tax adjustments and other one-off items) to Adjusted
Profit from 2023 onwards. There are no other changes proposed to the application of any of the above elements of remuneration in 2023.
Directors’ Remuneration Policy
continued
91Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Directors’ Remuneration Policy
continued
Termination of office policy
If the employment of an Executive Director is terminated, any compensation payable will be determined by reference to the terms of
the service agreement in force at the time. As variable pay awards are not contractual, treatment of these awards is determined by the
relevant plan rules. Bad leavers are not entitled to any payment. The Committee may structure any compensation payments beyond the
contractual notice provisions in the contract in such a way as it deems appropriate as set out in the table below and taking into account
the best interests of the Company.
Policy element Details
Notice
Normally six months’ notice.
· In certain cases, Executive Directors will not be required to work their
notice period and may be put on garden leave or granted pay in lieu
of all or part of their notice period (“PILON”). PILON may be paid
monthly or in a lump sum depending on circumstances.
· Holiday does not accrue when PILON is paid. During a period of
garden leave, holiday that has accrued is deemed to have been taken
during the garden leave.
· Executive Directors will be subject to annual re-election at the AGM.
Treatment of annual incentive awards
Annual incentive awards will be made to good leavers (see below)
based on an overall assessment of corporate and personal
performance and (normally) pro-rated for the period worked
in the performance year of termination.
· Delivered in line with normal Policy and timeline, including the
application of deferral into shares.
Treatment of unvested legacy LTI and
deferred annual incentive share awards
All awards lapse except for good leavers.
· LTI awards continue to the normal vesting date for good leavers
1
unless (exceptionally) the Committee applies discretion to accelerate
the vesting to the termination date. In each case, the number of
shares released shall be based on the achievement of performance
conditions over the performance period (or curtailed performance
period, if applicable). The number of shares that vest would typically
be calculated on a pro rata basis, based on time served during the
vesting period.
· Deferred annual incentive share awards for good leavers1 continue
to the normal vesting date unless the Committee applies discretion
to accelerate the vesting to the termination date.
· Any post-vesting retention periods on share awards for good leavers
continue to apply as normal.
Compensation for loss of office
Settlement agreements may provide for, as appropriate:
· Incidental costs related to the termination, such as legal fees
for advice on the settlement agreement.
· Provision of outplacement services.
· Payment in lieu of accrued, but untaken, holiday entitlements.
· Exit payments in relation to any legal obligation or damages
arising from such obligation.
· Settlement of any claim arising from the termination.
· Continuation or payment in lieu of other incidental benefits.
· In the case of redundancy, in line with the Company operated
enhanced redundancy policy.
· Terms are subject to the signing of a settlement agreement.
1
Subject to further adjustments which may be applied to discretionary good leavers. An executive will be treated as a good leaver under certain circumstances such as death,
illness, injury, disability, redundancy, retirement, their employing company ceasing to be a Group Company or any other circumstances at the discretion of the Committee.
92 Quilter Annual Report 2022
Fixed
remuneration
On-target
Maximum
50% share
price growth
36%
32%
32%
1,792
100%
642
22%
39%
39%
2,942
18%
33%
49%
3,517
Fixed
remuneration
On-target
Maximum
50% share
price growth
36%
32%
32%
1,455
100%
521
22%
39%
39%
2,388
18%
33%
49%
2,855
Illustration of the application of the Policy
Our aim is to ensure that superior rewards are only paid for exceptional performance, with a substantial proportion of Executive Directors’
remuneration payable in the form of variable, performance-related pay. The graphics below illustrate the Executive Directors’ fixed
remuneration and how much they could earn for target and maximum performance for 2023.
In developing the scenarios, the following assumptions have been made:
Fixed remuneration
Consists of expected 2023 base salary, which will include the 5% uplift for the Chief Financial Officer from 1 April 2023, plus the value of
benefits in 2022 on a full-year basis (incorporating any pro-rated base salary uplift impacts) and a 10% pension contribution or allowance.
On-target
Based on the value of fixed remuneration plus the potential value that the Executive Director could earn for on-target performance:
· a short-term incentive element paying out at 50% of maximum; and
· long-term incentive element paying out at 50% of maximum.
The assumptions noted for ‘on-target’ performance are provided for illustration purposes only.
Maximum
In addition to fixed remuneration, includes the potential value under the STI and LTI plans that the Executive Directors could earn
for maximum performance.
Share price growth
Assuming share price growth of 50% to the maximum long-term incentive outcome, total remuneration would be £3,516,500 for the Chief
Executive Officer.
Chief Executive Officer (£’000) Chief Financial Officer (£’000)
Directors’ Remuneration Policy
continued
Fixed remuneration
Short-term incentive
Long-term incentive
93Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Annual Report on Remuneration
Audited
Content within an ‘Audited’ tab indicates that all the information
is audited.
Application of the Policy in 2023
Content within a shaded box reflects the implementation
approach for 2023.
The Report sets out how the Policy of the Company has been applied in 2022 and how the Committee intends to apply the Policy going
forward. An advisory shareholder resolution to approve this Report will be proposed at the AGM.
The table below sets out the single figure of remuneration for the full financial year 2022 together with 2021 comparator figures.
Audited
Executive Director
Base
salary
£’000
Benefits
£’000
Pension
1
£’000
STI
£’000
LTI
2
£’000
Total
£’000
Total
Fixed
£’000
Total
Variable
£’000
2022
Steven Levin (appointed 1 November 2022) 95.8 1.5 9.6 89.0 5.5 201.4 106.9 94.5
Mark Satchel 450.0 7.1 45.0 417.5 254.8 1,174.4 502.1 672.3
Paul Feeney (stood down 31 October 2022)
3
562.5 8.1 56.3 466.0 382.2 1,475.1 626.9 848.2
2021
Paul Feeney 675.0 10.2 67.5 886.0 754.4 2,393.1 752.7 1,640.4
Mark Satchel 450.0 7.1 45.0 618.0 502.9 1,623.0 502.1 1,120.9
1
Pension includes contributions made under the Group defined contribution pension scheme plus, where applicable, amounts received as a pension allowance.
2
LTI is a vesting value determined as a result of the achievement of performance measures or targets relating to the performance period ending on 31 December of the
relevant financial years. These relate to the PSP (see pages 99 to 101). The value of the 2020 LTI is calculated using the average share price over the final three-month period of
the year ending 31 December 2022, which was £0.9625. The actual vesting date is 27 March 2023 and the actual value will be reflected in next year’s Report. The amount of this
figure, which includes share dividend equivalents, attributable to share price depreciation is valued at £1,591 for Steven Levin, £73,638 for Mark Satchel and £110,457 for Paul
Feeney as at 31 December 2022. The 2021 LTI value has been updated to reflect the share price on the actual vesting date, 12 May 2022, which was £1.2291, and the dividend
equivalents issued before vesting of 15,863 additional shares for Paul Feeney and 10,574 additional shares for Mark Satchel.
3
Base salary, benefits, pension and STI amounts in the above table are for qualifying services during the year up until 31 October 2022 only. For the period between
1 November 2022 and 31 December 2022, Paul Feeney continued to support the Company through a period of handover and transition and, in line with the Policy, for this
period he received fixed compensation of £125,357 as part of his contractual notice period, as well as an STI of £93,000 calculated in line with the 2022 bonus scorecard in
operation for Executive Directors.
Components of the single figure
There were no increases to Executive Director base salaries at the 1 April 2022 review date. The Committee agreed for Mark Satchel
to receive a 5% base salary increase, which is in line with the average increase for the wider workforce, at the 1 April 2023 review date.
Audited
Executive Director
Annual base salary
as at 1 April 2022
£’000
Total base salary
paid in 2022 for
qualifying services
£’000
Total base salary
effective 1 April 2023
£’000
Steven Levin (appointed 1 November 2022) – 95.8 575.0
Mark Satchel 450.0 450.0 472.5
Paul Feeney (stood down 31 October 2022) 675.0 562.5 –
Benefits
Benefits include life assurance, private medical cover and income protection.
Audited
Name
Life assurance
£’000
Medical
£’000
Income protection
£’000
2022
Steven Levin (appointed 1 November 2022) 0.5 0.2 0.8
Mark Satchel 2.2 1.3 3.6
Paul Feeney (stood down 31 October 2022) 2.8 0.8 4.5
2021
Paul Feeney 3.5 1.1 5.6
Mark Satchel 2.3 1.1 3.7
Benefits for 2023
No changes to the approach.
94 Quilter Annual Report 2022
Pension
Pension includes contributions made under the Group defined contribution pension scheme and/or amounts received as cash in lieu
of pension contributions due to the impact of HMRC limits, for qualifying services only. The pension provisions of Executive Director
appointments are aligned to the pension arrangements of the wider workforce, which is currently set at 10% of base salary.
Audited
Name
Cash in lieu
of pension
contribution
£’000
Contribution
to pension
scheme
£’000
Total
contribution
£’000
2022
Steven Levin (appointed 1 November 2022) 8.9 0.7 9.6
Mark Satchel 41.0 4.0 45.0
Paul Feeney (stood down 31 October 2022) 56.3 – 56.3
2021
Paul Feeney 67.5 – 67.5
Mark Satchel 41.3 3.7 45.0
Pension for 2023
No changes to the approach.
2022 STI awards
For the purpose of determining the 2022 STI outcome, the Committee assessed the performance of the business and the individuals
by reference to a balanced scorecard of IFRS Profit (35%), net flows as a percentage of opening AuMA (25%), Customer/Risk (20%) and
Strategic Personal performance objectives (20%) in line with the Policy.
The summary below reflects the Committee’s assessment of performance for the year ended 31 December 2022.
Group financial achievement
Audited
Group financial performance measures
Weighting as
% of total STI
opportunity
Threshold
(25% of max)
Target
(50% of max)
Maximum
(100%) Outcome
Outcome as
% of max
IFRS profit before tax attributable to equity
holders (excluding amortisation, policyholder
tax adjustments and other one-off items) 35% £61m £76m £91m £76m 50%
IFRS profit reconciliation
In determining the outcome of the profit metric shown above, the Committee considered the impact of key business transformation costs
on IFRS profit and approved a discretionary downward adjustment to the STI outcome profit, relative to the reported IFRS profit, to ensure
it reflected a fair and reasonable outcome for the overall performance achieved. The adjustments are detailed in the schedule below,
which provides a reconciliation between reported profit, the STI target and STI outcome.
Audited
2022 profit reconciliation Reported profit STI target STI outcome
Adjusted profit before tax (before financing costs) £134m £146m £134m
Debt financing costs (£10m) (£10m) (£10m)
Adjusted profit before tax (after financing costs) £124m £136m £124m
Business Transformation
1
(£23m) (£31m) (£27m)
Contingency for further revenue and cost benefits
2
(£5m) (£24m) (£24m)
Platform Transformation Programme costs (“PTP”) – (£1m) –
Quilter Life Assurance & Quilter International restructuring costs
3
(£3m) (£4m) (£4m)
Customer remediation
4
£6m – £6m
Foreign exchange movements
5
£4m – –
IFRS profit before tax attributable to equity holders (excluding amortisation,
policyholder tax adjustments and other one-off items) £103m £76m £76m
1
Final Optimisation costs were £4 million lower than plan. Business Simplification costs were lower than the plan expectation for the year due to the timing of delivery and costs
are still expected to be incurred at a later date. As such, the Committee approved an adjustment to remove the benefit of below-target spend on Business Simplification.
2
As actual spend was lower than the original contingency budget, the Committee approved an adjustment to true-up the STI outcome to the target level and remove the
benefit of lower actual costs.
3
The difference between actual and target spend is due to the timing of building exit costs; the Committee approved an adjustment to remove the benefit of lower actual spend
during the period.
4
The customer remediation net benefit arises from £12 million of insurance recoveries on past redress costs related to historic pre-acquisition DB to DC pension transfer
advice, offset by costs of £6 million related to voluntary customer remediation payments arising from the Quilter Investment Platform Final Plan Closure matter.
5
Relating to the South African Rand transactions to complete the B Share Scheme, with no benefit attributed to the performance scheme.
Annual Report on Remuneration
continued
95Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Net flows as a percentage of opening AuMA
Net flows as a percentage of opening AuMA represented an increased maximum of 25% of the total STI opportunity, up from 20% in 2021.
This is aligned to the Group’s KPIs and is calculated by assessing the full year’s net flows, which is made up of gross inflows less gross
outflows, divided by the opening AuMA as at 1 January 2022. The below table details the performance and outcome:
Audited
Performance condition
Weighting as
% of total STI
opportunity
Threshold
(25% of max)
Target
(50% of max)
Maximum
(100% of max) Outcome
Outcome as
% of max
Net flows £4.4bn £6.2bn £8.9bn £1.8bn
Opening AuMA £111.8bn £111.8bn £111.8bn £111.8bn
Net flows as a percentage of opening AuMA 25% 4% 6% 8% 2% 0%
Group risk and customer performance achievement
Key Group non-financial objectives represented a maximum of 20% of the total STI opportunity. The risk measure assesses the
effectiveness of risk management at an overall corporate level for each of the Executive Directors by considering quantitative and
qualitative indicators of tone at the top and risk culture, management of risk profile with framework tools, management against risk
appetite, the understanding of risk in strategic and tactical decision making and regulatory relationships. For the Customer element of the
scorecard, performance was assessed against key risk and performance indicators covering governance, customer contact, complaints,
satisfaction, service, advice suitability and oversight and an assessment of value, as measured by the Company’s Customer Strategic Risk
Appetite Principles (“SRAP”), as well as customer outcome and satisfaction indicators including net promoter and Trust Pilot scores,
investment performance data and a qualitative assessment of evidence of broader customer focus.
Audited
Customer and Risk
Performance measures Executive Director
Weighting as
% of total STI
opportunity Key achievements in the year
Outcome as
% of max
Risk Management
Framework
Effectiveness
Steven Levin
(appointed
1 November 2022)
10% · Strong support of a risk aware culture, promoting speaking
up and constructive engagement with second line.
· Sound understanding of risk profile and top risks across the
business clearly reflected in governance forum discussions,
with constructive engagement and challenge.
60%
Risk Management
Framework
Effectiveness
Mark Satchel 10% · Strong risk focus, including through Capital Management Forum
and constructive engagement with second line.
· Balanced focus on cost control with managing risks, ensuring risks
fully identified and mitigating actions in place.
· Capital and liquidity management strong and effective, ensuring
Quilter’s financial position remains resilient and within risk appetite.
· Consideration of risk factors embedded in business planning
process and provided clear view of risks associated with plan.
· Proactive and open engagement with regulators, particularly
in relation to the Tier 2 debt refinancing.
60%
Risk Management
Framework
Effectiveness
Paul Feeney
(stood down
31 October 2022)
10% · Strong tone at the top, ensured effective discussions and
considerations on key risk issues.
· Clear understanding of risk profile and challenged management
team to ensure effectiveness of mitigating actions.
· Balance between commercial drivers and broader associated
risks could be strengthened in some decision making.
50%
Customer Outcomes Steven Levin,
Mark Satchel and
Paul Feeney
10% · The Committee considered performance against a 50:50 balance
of customer SRAP measures and customer satisfaction and
delight measures.
· Quilter’s Trustpilot score remained steady over 2022, ending the
year at 4.2 with 78% of reviews being 4/5 stars and Quilter’s overall
satisfaction score was at 82%. This performance compared
favourably to peers.
· Strong investment performance across our WealthSelect
MPS range (8 portfolios 1st or 2nd quartile over 1 and 3 years),
though the Cirilium Active range lagged industry benchmarks
(5 portfolios 3rd or 4th quartile over 1 and 3 years).
· Key propositional launches including WealthSelect Plus
and the Climate Assets Growth fund.
· Launch of the Quilter Family Office campaign.
· Launch of the Quilter Customer App for the Quilter
Investment Platform.
· Further ESG integration into the advice process to support
customer preferences on responsible investing.
79%
Annual Report on Remuneration
continued
96 Quilter Annual Report 2022
Annual Report on Remuneration
continued
Strategic personal performance – achievement
Personal objectives represented a maximum of 20% of total STI opportunity. A performance commentary is given in the table below.
Audited
Executive Director
Weighting as
% of total STI
opportunity Overview Key achievements in the year
Outcome as
% of max
Steven Levin
(appointed
1 November 2022)
20% Priorities following
appointment were to
become quickly
established in the Group
CEO role, build the right
leadership capability at
the executive table and
start to drive forward the
key strategic priorities
facing the business.
· Timely reorganisation of the Quilter Executive Committee to
provide strong leadership and delivery against the Company’s
strategic priorities and transformation plans.
· Strong start to the Group Chief Executive Officer role, with
early identification and grasp of pressing business issues,
focused on execution.
· Effective early engagement with key stakeholders as Group
Chief Executive Officer, including customers, shareholders,
employees and regulators to ensure the Company is focused
on delivery for the benefit of all.
· Diverse representation targets for females and ethnic
minorities in senior leadership roles were underachieved,
with 36% female representation against a target of 38% and
4% ethnic minority representation against a target of 5% at
the end of 2022.
75%
Mark Satchel 20% Objectives focused on
delivery of financial KPIs
with a particular focus on
expenses, conclusion of
the general ledger
rationalisation
programme, completion
of return of capital and
share buyback
programmes, resolution
of the Group Capital
regime and preparation
of a new or rolling bond
instrument ahead of the
first call redemption on
the Company’s existing
Tier 2 bond in Q1 2023.
· In conjunction with the Chief Executive Officer, responded
decisively to the rapidly changing macro-environment
following Russia’s invasion of Ukraine by implementing strong
cost discipline for 2022, accelerating the delivery of planned
cost reductions and delivering costs well below plan.
· Business Simplification initiatives generated annual run-rate
savings of £23 million, more than double the original target
and ahead of plan.
· Led successful execution of the capital return of £328 million
in surplus proceeds from the sale of Quilter International to
shareholders by way of a B Share Scheme followed by a Share
Consolidation.
· Led preparatory work for a new Tier 2 bond issue as part
of the Company’s debt refinancing plans.
· Provided strong and stable leadership during a period of
exceptional market conditions and played an integral role
in supporting the transition of Group CEO and Group Chair.
· Diverse representation targets for females and ethnic
minorities in senior leadership roles were underachieved,
with 36% female representation against a target of 38% and
4% ethnic minority representation against a target of 5% at
the end of 2022.
75%
Paul Feeney
(stood down
31 October 2022)
20% Objectives focused on
overall delivery of the
Company’s business and
operating plans, strategic
propositional
developments,
continuing to improve the
control environment and
developing the
responsible wealth
manager strategy, whilst
achieving strong core
business performance
and creating value for
shareholders.
· Overall business performance was solid in difficult market
conditions and good progress was made against strategic
priorities.
· Important uplift to our investment proposition with the
launch of Wealth Select Plus, including a full suite of
responsible and sustainable portfolios, as well as an improved
digital proposition with the launch of a Customer App for
the Platform.
· RFP numbers fell short of business plan targets, reflecting
a difficult environment for adviser recruitment and retention
amid consolidation in the industry, whilst Investment
Manager numbers were in line with target.
· Demonstrated visible and responsible leadership against a
difficult backdrop in 2022, with particular focus on the wider
workforce including a one-off cost-of-living payment and
improving the Company’s culture score to 7.4 out of 10 in line
with the target set at the start of the year.
· Diverse representation targets for females and ethnic
minorities in senior leadership roles were underachieved,
with 36% female representation against a target of 38% and
4% ethnic minority representation against a target of 5% at
the end of 2022.
55%
97Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
As part of its performance assessment, the Committee considered whether the overall STI outcomes were appropriate in the context
of overall business performance and individual strategic/personal objectives, and whether any exceptional risk events occurred which,
in the Committee’s opinion, may have materially affected the STI outcome. The Committee, jointly with the Board Risk Committee, also
considered an annual risk report and the recommendations of the Chief Risk Officer in respect of the incidence and materiality of any risk
issues arising during the year and an overall assessment of risk management relative to the Board’s risk appetite and risk culture across
the business.
Following the identification of an unintended consequence relating to the application of a particular contractual term following account
closure within the pension and bond products on the UK Platform, the Company decided to make voluntary remediation payments to
customers impacted over the last 10 years. This resulted in total costs of £6 million for the remediation payments, which had the effect
of reducing the Chief Executive’s STI outcome by £14k (a reduction of 14% of the outcome) and the Chief Financial Officer’s STI outcome
by £63k (a reduction of 13% of the outcome). The Committee concluded that the 2022 financial impact of the additional costs was already
appropriately reflected in the 2022 STI outcomes and a further explicit risk adjustment was not required.
Deferral policy
In line with our Policy, 50% of the Executive Directors’ 2022 STI awards will be deferred into a conditional award of ordinary shares under
the Share Reward Plan and will vest in equal annual instalments over a three-year period, subject to continued employment and malus
and clawback provisions in accordance with the rules of the Share Reward Plan.
Audited
Total Deferred bonus To be paid in cash
Executive Director £’000 % of salary £’000 % of salary £’000 % of salary
Steven Levin (appointed 1 November 2022) 89.0 93% 44.5 46% 44.5 46%
Mark Satchel 417.5 93% 208.8 46% 208.8 46%
Paul Feeney (stood down 31 October 2022) 466.0 83% 233.0 41% 233.0 41%
STI for 2023
In line with our Policy, both Executive Directors are eligible to receive STI awards up to 200% of base salary. Performance will be based
on a combination of Group financial targets as well as customer, risk, strategic and personal measures (including inclusion and diversity
measures). From 2023, the profit component of the STI scorecard will be based on Adjusted Profit instead of IFRS profit (excluding
amortisation, policyholder tax adjustments and other one-off items).
Actual targets for 2023 have not been disclosed due to commercial sensitivity. These targets will be disclosed in the 2023 Report.
No other changes to the scorecard metrics or weightings are proposed.
Annual Report on Remuneration
continued
98 Quilter Annual Report 2022
Vesting of 2020 LTI awards
On 31 December 2022, the 2020 LTI awards granted under the PSP reached the end of their performance period. These awards will vest
on 27 March 2023, with the vested shares subject to a further two-year post-vesting holding period. The performance conditions which
applied to the 2020 LTI award and the performance achieved are set out below.
Audited
Performance condition Weighting
Threshold
1
(25% vesting)
Maximum
1
(100% vesting)
Performance
Achieved
2
Weighted
Percentage of
Award Vesting
EPS CAGR (2019-22)
3
70% 6%
4
17%
4
9.1% 46.2%
Relative TSR
5
30% Median Upper
quartile
102 out of 157
companies
6
0.0%
Award Outcome 32.4%
1
Straight-line interpolation between points.
2
The Committee adjusted the EPS CAGR performance condition to reflect the sales of Quilter Life Assurance and Quilter International.
3
Adjusted EPS, pre-dividend excluding amortisation and goodwill.
4
The Committee adjusted the EPS CAGR threshold and maximum targets from 5-15% to 6-17% to reflect an expectation of higher growth excluding discontinued operations.
This had the effect of increasing the level of challenge in the targets, and reducing the outcome for the EPS metric for 2019-22 from 56% to 46%.
5
Ranking relative to the constituents of the FTSE 250 excluding Investment Trusts.
6
Quilter achieved TSR of -27% over the period compared to median TSR for the comparator group of -9% and upper quartile of 21%.
To ensure that earnings growth could be fairly and consistently assessed and the outcome appropriately reflective of the underlying
performance achieved, the Committee, supported by independent expert advice, considered the impact of the sale of Quilter Life
Assurance, which completed on 31 December 2019, and the sale of Quilter International, which completed on 30 November 2021.
The Committee decided to exclude Quilter Life Assurance and Quilter International profits, adjusted for stranded costs, from the base
year of the Adjusted EPS CAGR calculation to ensure the earnings growth was measured on a like-for-like basis between the end year
and the base year, which was consistent with the treatment applied to the 2018 and 2019 LTI awards at vesting. The Committee also fixed
the share count in both years to neutralise the benefit of a reduction in share count over the period resulting from the share buyback
programme funded by the proceeds from the sale of Quilter Life Assurance and the Share Consolidation following the capital return of
surplus proceeds from the sale of Quilter International. Finally, the Committee reassessed the target CAGR range to reflect an expectation
of higher growth excluding discontinued operations and concluded on increasing the EPS CAGR threshold and maximum targets from
5-15% to 6-17%. This had the effect of increasing the level of challenge in the targets and reducing the outcome for the EPS metric for
2019-22 from 56% to 46% of maximum.
Audited
Performance condition
2019
£m
2022
£m Outcome
Adjusted Profit (before tax)
1
235 134
less Quilter Life Assurance profit (53) –
plus Quilter Life Assurance stranded costs (12) –
less Quilter International profit (55) –
plus Quilter International stranded costs (10) –
Revised Adjusted Profit (before tax) 105 134
Revised Adjusted Profit (after tax) 89 115
Weighted average number of shares (million)
2
1,835 1,835
Adjusted EPS (pence) 4.8 6.3
Adjusted EPS CAGR (2019-22) 9.1%
1
Pre-dividend excluding amortisation and goodwill.
2
Share count in the measurement year has been adjusted to match the share count in the base year (1,835 million) to neutralise any benefit arising from a reduction in share
count on the basis that the earnings of Quilter Life Assurance (the proceeds of which funded the share buyback programme) and the earnings of Quilter International (following
which a Share Consolidation took place) have been excluded from the calculation.
Annual Report on Remuneration
continued
99Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
The Committee considered whether the performance had been achieved within the Company’s agreed risk appetite and the impact
of any risk events during the performance period and concluded that no further discretionary adjustment to the outcome was required.
The Committee also considered whether the vesting of awards may give rise to any windfall gains for the Executive Directors and noted
that the awards were granted at a share price of 123p, considerably higher than the likely vesting price, with the three-month average
share price for the period to the end of 2022 being 96p.
As a result of the 2020 LTI awards vesting at 32.4%, the Executive Director outcomes are as follows:
Audited
Executive Director
Number of
shares granted
Share-settled
dividend
equivalents
% of Awards
vesting
Number of
shares vesting
Value of shares
vesting (£000)
1
Steven Levin (appointed 1 November 2022)
2
15,776 1,877 32.4% 5,720 5.5
Mark Satchel 730,223 86,870 32.4% 264,738 254.8
Paul Feeney (stood down 31 October 2022) 1,095,335 130,306 32.4% 397,108 382.2
1
Deemed value based on the average share price of the final three-month period ended 31 December 2022 of £0.9625, the actual value will be based on the share price when
the awards vest on 27 March 2023. The amount of this figure, which includes share dividend equivalents, attributable to share price depreciation is valued at £1,591 for Steven
Levin, £73,638 for Mark Satchel and £110,457 for Paul Feeney as at 31 December 2022.
2
Steven Levin’s awards are pro-rated for his qualifying services only, which are two months of the thirty-six month performance period.
LTI awards granted in 2022
Executive Directors are eligible to participate in the PSP, which is an LTI plan. The awards granted in 2022 are subject to the following
performance conditions:
Audited
2022 LTIP Performance Metrics Weighting %
Threshold
1
(25% vesting)
Maximum
1
(100% vesting)
Earnings per share · Cumulative Adjusted EPS 2022-24 (pre-dividend excluding
amortisation and goodwill)
40% 24.6p 37.0p
Operating margin · 2024 pre-tax Adjusted Profit divided by total net fee revenue 25% 27.5% 32.5%
Total shareholder return · Ranking relative to the constituents of the FTSE 250 excluding
investment trusts
25% Median
of index
Upper quartile
of index
ESG
2
· Carbon intensity of Quilter’s operations (tonnes of carbon
dioxide (tCO2e) per full-time employee/contractor)
2.5% 2,050 1,650
· Responsible investing (Principles for Responsible Investment
(“PRI”) aggregate modules rating)
3
7.5% 12 stars 20 stars
1
Straight-line interpolation between threshold and maximum.
2
Given ESG is an emerging area of focus for the Committee, we will keep the approach to measuring ESG progress under review and may make adjustments to the metrics
or weightings for future awards.
3
If the score for any module is less than 3 stars, it will not count towards the total.
Annual Report on Remuneration
continued
100 Quilter Annual Report 2022
At the end of the three-year performance period, the Committee will critically assess whether the formulaic vesting outcome produced
by the criteria is justified. To do this, the Committee will look at several factors, including whether the result is reflective of underlying
performance and has been achieved within the Company’s agreed risk appetite. If such considerations mean that the formulaic outcome
of the vesting schedule is not felt to be justified, then the Committee can exercise downward discretion.
The following LTI awards were granted in respect of the 2022 performance year:
Audited
Executive
Director Form of award Date of award
Basis of award
(% of salary)
Share price
at the date
of grant
Nil cost
options
awarded
Face value
of award
1
% vesting at
threshold
Performance
period
Steven Levin
2
Nil cost options 27 March 2022 200% £1.3765 209,872 £288,889 25% 2022–2024
Mark Satchel Nil cost options 27 March 2022 200% £1.3765 653,832 £900,000 25% 2022–2024
Paul Feeney
3
Nil cost options 27 March 2022 200% £1.3765 980,748 £1,350,000 25% 2022–2024
1
The face value of the award figure is calculated by multiplying the number of shares awarded by the closing share price on the working day before the award was granted,
of £1.3765.
2
Steven Levin’s awards were granted prior to being appointed Chief Executive Officer, his awards are pro-rated for his qualifying services only, which are twenty-six months
of the thirty-six month performance period.
3
Upon vesting, Paul Feeney’s award will be pro-rated for the proportion of the vesting period served.
LTI awards to be granted in 2023
The Committee intends to grant awards to the Executive Directors in March 2023 over nil cost options under the PSP with a face value
at grant of 200% of base salary.
2022 LTIP Performance Metrics Weighting %
Threshold
1
(25% vesting)
Maximum
1
(100% vesting)
Earnings per share · Cumulative Adjusted EPS 2023-25 (pre-dividend excluding
amortisation and goodwill)
40% 19p 28p
Operating margin · 2025 pre-tax Adjusted Profit divided by total net fee revenue 25% 23% 27%
Total shareholder return · Ranking relative to the constituents of the FTSE 250
excluding investment trusts
25% Median
of index
Upper quartile
of index
ESG
2
· Carbon intensity of Quilter’s operations (tonnes of carbon
dioxide (tCO2e) per full-time employee/contractor)
2.5% 1,800 1,450
· Responsible investing (Principles for Responsible Investment
(“PRI”) aggregate modules rating)
3
7.5% 12 stars 20 stars
1
Straight-line interpolation between threshold and maximum.
2
Given ESG is an emerging area of focus for the Committee, we will keep the approach to measuring ESG progress under review and may make adjustments to the metrics
or weightings for future awards.
3
If the score for any module is less than 3 stars, it will not count towards the total.
The Committee may apply discretion to adjust the formulaic outcome upon vesting based on a review of the extent to which windfall
gain considerations apply.
No further changes are proposed for the approach.
All-employee share plans
In 2022, the Company invited all eligible UK employees, including Executive Directors, to enter the Save As You Earn (“SAYE”) scheme. The
scheme allows participants to save up to a maximum of £500 across all savings contracts on a monthly basis for either a three or five-year
term. At the end of the savings period, participants have the option to purchase Company shares at a discounted option price, which was
set at the beginning of the scheme. This year’s scheme commenced on 1 July 2022 with an option price of 117 pence.
In 2022, Steven Levin entered into a three-year savings contract, providing an option at maturity over 15,384 Quilter shares and Mark
Satchel entered into a five-year savings contract, providing an option at maturity over 25,641 shares.
Steven Levin and Mark Satchel also participated in the three-year 2019 SAYE scheme with an option price of 125 pence, which matured
on 1 July 2022. The options under this scheme lapsed at the end of the six-month exercise period following maturity due to the prevailing
share price being lower than the option price, and savings were returned to participants.
Annual Report on Remuneration
continued
101Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Non-executive Director total remuneration
The total remuneration for the services to Quilter Non-executive Directors is set out in the table below. Non-executive Directors are
not entitled to any benefits, pension or pension equivalents, or awards under any of the equity plans. All Non-executive Directors have
a service contract with a three-months’ notice period and an initial three-year term from appointment, subject to annual re-election
at the AGM, as detailed in the Policy. As at 31 December 2022, the regular Non-executive Director fees were paid at the following rate:
Annual fees (Quilter Board)
Fee as at
31 December
2022
Chair £350,000
Basic annual fee £65,000
Additional fees:
Senior Independent Director £20,000
Chairs of Board Audit, Board Risk, Board Remuneration and Board Technology and Operations Committee £25,000
Members of the above Board Committees £10,500
Members of the Board Corporate Governance and Nominations Committee £5,500
Audited
Non-executive Director
Fees for
2022
£’000
Taxable
benefits
1
2022
£’000
Fees for
2021
£’000
Taxable
benefits
1
2021
£’000
Ruth Markland 182.0 2.6 126.0 –
Neeta Atkar 41.2 0.3 – –
Tim Breedon
2
96.3 – 91.5 0.2
Tazim Essani 86.0 0.1 64.8 0.1
Moira Kilcoyne 100.5 20.7 100.5 –
Paul Matthews
3
86.0 7.1 86.0 3.2
George Reid
4
119.4 29.6 111.0 12.5
Chris Samuel
5
86.0 1.5 43.0 0.9
Former Non-executive Directors
Glyn Barker
6
36.2 1.4 – –
Rosie Harris 37.0 7.8 111.0 7.6
Glyn Jones 137.1 – 375.0 –
1
Taxable benefits relate to travel and subsistence expenses, and tax thereon, which were required to carry out duties as a Non-executive Director. Taxable benefits were not
disclosed in the prior year. Such expenses were significantly lower in the prior year due to the global pandemic restricting travel. They have been included in the table above
in order to ensure comparability.
6
Glyn Barker attended Board Audit Committee meetings and he did not receive a fee.
Where applicable, additional fees are paid for a Non-executive Director who also serves on a subsidiary company within the Group. The current
subsidiary Board and Committee fees are listed below, and details of fees paid are disclosed in the financial statements of the relevant legal entity.
Subsidiary Board fees:
Fee as at
31 December
2022
Chair of Subsidiary Boards £80,000
Board Member of Quilter Financial Planning (“QFP”), Quilter Investors (“QI”), Quilter Cheviot (“QC”) £45,000
Members of the Subsidiary Board Committees £5,000
The following Non-executive Directors received additional fees for subsidiary appointments during 2022:
2
Tim Breedon is the Chair of Quilter Investors Limited.
3
Paul Matthews is a Director of Quilter Financial Planning Limited and is a member of its Audit Committee and Risk & Governance Committee. He was in receipt of a temporary
uplift in his Quilter Financial Planning Limited fees from 1 January 2021 until 30 June 2022, which reflects the additional time commitment required in the business area.
4
George Reid is the Chair of the UK Platform business, which comprises Quilter Life and Pensions Limited and Quilter Investment Platform Limited.
5
Chris Samuel is the Chair of Quilter Financial Planning Limited. He was in receipt of a temporary uplift in his Quilter Financial Planning Limited fees from 1 January 2021 until
30 June 2022, which reflects the additional time commitment required in the business area.
Further details on Non-executive Directors’ Board and Committee responsibilities and dates of appointment can be found on pages 52 to 58
of the Chair’s Introduction to Corporate Governance.
Annual Report on Remuneration
continued
102 Quilter Annual Report 2022
TSR performance graphic over the period since Admission
60
90
120
150
Jun 2018 Dec 2018 Jun 2019 Dec 2019 Jun 2020 Dec 2020 Jun 2021
Dec 2022
Jun 2022Dec 2021
Quilter FTSE 250 excluding Investment Trusts
£
The graph above shows the Company’s TSR performance versus the FTSE 250 excluding Investment Trusts over the period ended
31 December 2022. The FTSE 250 has been chosen as the Company is a member of that index.
Group Chief Executive Officer pay
The table below contains the Chief Executive Officer’s annual remuneration since the Company listed in 2018:
Financial year Name
Total
remuneration
£’000
Annual bonus as
% of maximum
LTIP vesting as
% of maximum
2022 Steven Levin (appointed 1 November 2022) 201.4 46% 32.4%
2022 Paul Feeney (stood down 31 October 2022) 1,475.1 41% 32.4%
2021 Paul Feeney 2,393.1 66% 56.5%
2020 Paul Feeney 1,487.3 0% 48.7%
2019 Paul Feeney 1,896.3 79% n/a
2018 Paul Feeney 2,778.9 93% n/a
Percentage change in Directors’ remuneration compared to the average employee
The table below sets out the annual percentage change in salary or fee and STI between the Directors and average employee from 2019
to 2022. The annual change in salary is based on the salary of permanent UK employees as at 31 December, and the annual change in STI
excludes employees that are not eligible for bonus.
The annual increase in salary for the average employee reflects the inflationary environment and the strategic initiatives which have targeted
efficiencies in workforce. The annual decrease of the average employee and Executive Directors’ STI in 2022 reflects the challenging
market conditions we have been operating in, the negative market movements and lower revenues have impacted the financial metrics
driving the STI outcomes for all employees, and resulted in the weighted outcome of the financial aspect of the Executive Directors’
scorecard being 50% lower than prior year. The annual changes in Non-executive Directors’ fees are driven by changes in commitments,
the Chair of the Board fee change in 2022 is the only Board or Committee fee change since Listing.
As Executive Directors’ benefits are aligned to other UK employees, the analysis of movement in average benefits was not considered
practical or meaningful and therefore not included in the below comparison. Further detail of Executive Directors’ benefits can be found
on page 94 of this Report.
Executive Directors Independent Non-executive Directors
1
Remuneration
outcome
Average
employee
Steven
Levin
2
Mark
Satchel
Paul
Feeney
2
Ruth
Markland
Tim
Breedon
George
Reid
Moira
Kilcoyne
Paul
Matthews
Tazim
Essani
Chris
Samuel
Neeta
Atkar
2021-2022
Salary/fees 4% n/a 0% 0% 15% 3% 5% 0% (7%) 33% 15% n/a
STI (12%) n/a (32%) (37%) n/a n/a n/a n/a n/a n/a n/a n/a
2020-2021
Salary/fees 5% n/a 0% 0% 2% 122% (1%) 0% 24% n/a n/a n/a
STI
3
78% n/a 100% 100% n/a n/a n/a n/a n/a n/a n/a n/a
2019-2020
Salary/fees 5% n/a 0% 0% 6% n/a (2%) 0% 10% n/a n/a n/a
STI
3
(49%) n/a (100%) (100%) n/a n/a n/a n/a n/a n/a n/a n/a
1
Non-executive Directors’ annual fee percentage changes have been updated to reflect the total actual fees received during the year for all plc and subsidiary commitments,
previously the fees used to calculate the percentage change were based on plc Committee and Board appointments as at 31 December. Details of each Non-executive Directors’
Board and Committee appointments can be found on page 102 of this Report.
2
Steven Levin was appointed Chief Executive Officer on 1 November 2022, Paul Feeney stood down as Chief Executive Officer on 31 October 2022. The outcomes in the above
table are calculated using the remuneration from the time served as an Executive Director only.
3
During 2020, on the recommendation of the Executive Directors, the Committee exercised its discretion to reduce the Executive Directors’ STI outcome to zero, which impacts
the year-on-year percentage change in 2020 and 2021.
Annual Report on Remuneration
continued
103Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Chief Executive Officer pay ratio
The table below sets out the ratio between the Chief Executive Officer’s total remuneration and the median, 25th and 75th percentile
of the total remuneration of full-time equivalent UK employees paid during the year.
Total remuneration
Pay ratio All employees £
Year Method 25th percentile Median 75th percentile 25th percentile Median 75th percentile
2022 Option A 46:1 30:1 17:1 36,196 56,092 96,835
2021 Option A 70:1 47:1 26:1 33,963 51,399 93,358
2020 Option A 55:1 36:1 21:1 29,663 45,349 78,368
2019 Option B 62:1 39:1 27:1 30,478 48,486 69,114
Salary
Pay ratio All employees £
Year Method 25th percentile Median 75th percentile 25th percentile Median 75th percentile
2022 Option A 23:1 16:1 9:1 28,359 42,456 70,000
2021 Option A 27:1 18:1 11:1 25,000 37,600 63,325
2020 Option A 28:1 19:1 11:1 24,000 36,350 61,000
2019 Option B 28:1 18:1 14:1 24,333 37,001 48,667
Total remuneration includes salary, benefits, pension, short-term incentives and any value vested from long-term incentives during
the year. As some 2022 STI amounts across the wider workforce are subject to change until after the publication of this Report, the total
remuneration may not be exact. However, any STI changes are expected to be minimal and it is unlikely the pay ratios will change
significantly once the STI amounts are determined. The 2021 total remuneration ratios above have been updated to reflect the actual STI
and LTI amounts paid. The Chief Executive Officer remuneration is based on the combined salary and total single figure for Paul Feeney
and Steven Levin for their qualifying services during the year. Our Chief Executive Officers have a higher proportion of variable pay in total
remuneration, which is the main factor driving the difference in the ratios between salary and total remuneration.
From the three options disclosed in the regulations regarding the methodology to identify the employees at median, 25th and 75th
percentiles for comparison between those and the Chief Executive Officer, we recognise that the most precise method, and therefore
often referred to as the preferred method, is Option A, which calculates the single figure for each UK employee. We have adopted
Option A from 2020 and intend to continue reporting under this method in future years.
The year-on-year salary variances at each quartile reflect the lower Chief Executive Officer salary and strategic initiatives which have
targeted efficiencies in our workforce in 2022, reduction and change in profile of our workforce following the launch of our new platform
in early 2021 and the sale of Quilter Life Assurance at the end of 2019, in addition to the adoption of Option A methodology from 2020.
The year-on-year total remuneration variances reflect the lower Chief Executive Officer variable compensation in 2022, which is largely
due to the decreased 2022 share price of the LTI, in addition to the targeted efficiencies in our workforce, and the outer years are largely
due to the recommendation of the Chief Executive Officer to receive zero STI for 2020 due to the impact of the COVID-19 pandemic on
the business and its employees in 2020.
The Committee continues to carefully consider the macroeconomic conditions on the Company’s employees, in addition to application
of the Policy, and apply discretion where necessary, to ensure all aspects of Executive Directors remuneration remain aligned to the wider
workforce. The Committee therefore believes the median pay ratio is consistent with pay, reward and progression policies for the
Company’s UK employees taken as a whole.
Gender pay gap
The Company reported a median gender pay gap of 30% and a median bonus gap of 44% for 2022. The results reflect the under-
representation of women in senior roles, which we recognise is a systemic issue facing the wealth management industry and will require
ongoing, multi-year efforts to resolve. Further details regarding our gender pay gap figures can be found on page 30 of the Responsible
Business Report.
Annual Report on Remuneration
continued
104 Quilter Annual Report 2022
Relative importance of spend on pay
The following table sets out the profit, dividends and overall spend on pay in the years ended 31 December 2022 and 31 December 2021:
2022 2021 % Change
Adjusted profit before tax
1
(£m) 134 138 (3%)
Dividends
2
(£m) 61 64 (5%)
Employee remuneration costs
1,3
(£m) 292 290 1%
1
On a continuing business basis and therefore excludes Quilter International in 2021 for the period before the sale completed on 30 November 2021, including Quilter International,
adjusted profit before tax is £188 million and employee remuneration costs are £329 million in 2021. Adjusted profit before tax is included in the above table as the Company
considers it an important Key Performance Indicator.
2
In 2021, the Company paid an Interim Dividend of 1.2 pence and a Final Dividend of 2.8 pence on a continuing basis. Including Quilter International, the Company paid an Interim
Dividend of 1.7 pence and a Final Dividend of 3.9 pence and a total dividend payment of £90 million. For the 2022 financial year, the Company paid an Interim Dividend of 1.2 pence,
a capital distribution equal to the 20 pence in the form of a B Share Scheme and Share Consolidation, and recommend a Final Dividend of 3.3 pence.
3
Employee remuneration costs represent the underlying employee costs within the adjusted profit view for Quilter, excluding the impact of one-off items.
Executive Directors’ shareholding and interests in Quilter share plans
The table below shows the Executive Directors’ interests, which include shares held by connected persons, in Company share plans which
will vest in future years subject to performance and/or continued service at 31 December 2022 together with any additional interests in
shares held beneficially by the Executive Directors outside of Group share schemes. The share price at 31 December 2022 was £0.9292.
During the period 31 December 2022 to 8 March 2023, there were no exercises or dealings in the Company’s share awards by the Directors.
Audited
Performance condition
Scheme interests at 31 December 2022
Legally owned
(shares)
Subject to SIP
(shares)
Subject to SAYE
(options)
Deferred STI and
other awards not
subject to
performance
conditions
(shares)
Subject to
performance
conditions under
the LTIP (shares)
Steven Levin (appointed 1 November 2022)
1
414,555 1,418 29,784 224,494 878,130
Mark Satchel 863,459 1,418 40,041 347,633 2,077,935
Paul Feeney (stood down 31 October 2022)
2
1,382,336 709 24,000 496,835 3,116,905
1
Steven Levin’s scheme interests are unadjusted for qualifying services.
2
The share interests for Paul Feeney are as at the day he stood down from the Board, 31 October 2022.
Annual Report on Remuneration
continued
105Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Executive Directors’ shareholding requirements
In line with the Policy, each Executive Director is required to acquire and maintain a shareholding equivalent to 300% of base salary
(including shares beneficially held by the individual or his/her spouse), the net of tax value of unvested share interests within Company
share plans which are not subject to performance conditions and 25% of the value of beneficially held shares purchased by the individual
or his/her spouse since the post-cessation shareholding policy came into effect.
As at 31 December 2022, neither Steven Levin or Mark Satchel satisfy the minimum shareholding requirement due, in part, to the material
reduction in Quilter’s share price over the past year compared to historic averages. Each Executive Director has up to five years from the
date of their appointment to achieve the minimum, which is 1 November 2027 for Steven Levin and 13 March 2024 for Mark Satchel.
As per our Policy, Paul Feeney will be subject to the post-cessation shareholding requirement to hold the value of his shares detailed
below – less any shares he is obliged to sell or transfer when they vest as part of a Court Order relating to his divorce settlement – until
31 October 2024, which is two years following cessation of his directorship. The shares are held in a corporate sponsored nominee
account and permission to deal will need to be granted by the Company Secretary.
Audited
Name
Value
1
£’000
Multiple of
base salary
Steven Levin (appointed 1 November 2022) 514.5 90%
Mark Satchel 1,009.8 224%
Paul Feeney (stood down 31 October 2022)
2
1,584.6 235%
1
Includes the estimated net value of unvested share awards which are not subject to performance conditions. For the purposes of the minimum shareholding requirement,
the calculation is based on the average share price of the final three-month period ended 31 December 2022 of £0.9625. The actual value will be based on the share price
when the awards vest.
2
The shareholding for Paul Feeney is calculated as at the day he stood down from the Board on 31 October 2022.
Directors’ personal holding and beneficial share interests
As at 31 December 2022 and 31 December 2021, the Executive and Non-executive Directors held the following legal and beneficial
interests in ordinary shares:
Audited
Name
31 December
2022
1
31 December
2021
1
Steven Levin
2
415,973 n/a
Mark Satchel 864,877 696,304
Moira Kilcoyne 29,556 34,482
George Reid 17,733 20,689
Ruth Markland 100,000 20,689
Paul Matthews 25,714 30,000
Tazim Essani 12,428 –
Tim Breedon 10,000 –
Chris Samuel 18,028 20,000
Neeta Atkar – –
Former Directors
Glyn Jones
3
685,714 800,000
Rosie Harris
3
14,778 17,241
Paul Feeney
3
1,383,045 1,171,207
Glyn Barker
3
88,858 –
1
2021 shareholdings are in 7 pence ordinary shares, 2022 shareholdings are in 8 1/6 pence ordinary shares following Share Consolidation on 23 May 2022.
2
Steven Levin was appointed to the Board on 1 November 2022.
3
The shareholdings for Glyn Jones and Rosie Harris who stood down from the Board on 12 May 2022 and 30 April 2022, respectively, are as at 23 May 2022 following the Share
Consolidation. The 2022 shareholding for Paul Feeney is as at the day he stood down from the Board, 31 October 2022. The shareholding for Glyn Barker is as at the day he
stood down from the Board, 11 November 2022.
During the period 31 December 2022 to 8 March 2023, there were no other changes to the interests in shares held by the Directors as set
out in the table above.
Annual Report on Remuneration
continued
106 Quilter Annual Report 2022
Audited
Payments within the year to past Directors
During 2022, there were no payments made to any past Directors.
Departure arrangements for Paul Feeney
As detailed in the Company’s market announcement on 10 October 2022, Paul Feeney will be treated as a Good Leaver under the Policy
after stepping down as Chief Executive Officer on 31 October 2022. He will continue to receive his salary and benefits until the end of his
six-month notice period and remained eligible for a 2022 STI award. He will remain eligible for the vesting of outstanding deferred share
awards on the normal vesting dates, subject to the satisfaction of performance conditions and pro-rating for the proportion of the
vesting periods served where applicable, the rules of the relevant share plans and additional post-termination conditions. He was
entitled to a capped contribution of £60,000 + VAT toward legal fees and other related support.
External directorships
The table below sets out external directorships held by the Executive Directors.
Executive Directors External directorships held
Fees received
and retained
Steven Levin None –
Mark Satchel None –
External advisers
During 2022, Deloitte provided advice covering application of the newly approved Policy, annual remuneration report and policy disclosures,
market practice and incentive design. Deloitte also support the Group with risk advisory, tax compliance and consulting services. As part
of the procurement and contracting process, appropriate safeguards were put in place to ensure no conflict of interest arises.
The Committee appointed Deloitte in April 2021, and remain satisfied that the advice received is objective and independent, and the firm
is a member of the Remuneration Consultants Group, whose voluntary Code of Conduct is designed to ensure objective and independent
advice is given to Committees. The total fees paid in respect of remuneration advice during 2022 are as follows:
Name Key areas of advice received
Total fees
2022
Deloitte Policy review, application, disclosures, governance and market practice £71,880
Statement of shareholder voting
During the Company’s AGM in May 2022, a resolution to approve the Report was proposed, and the proportion of votes from shareholders
cast For was 96% and cast Against was 4%. Total votes Withheld were 122,580, which is 0.01% of issued share capital.
A resolution to approve the new Policy was also proposed, and the proportion of votes from shareholders cast For was 96% and cast
Against was 4%. Total votes Withheld were 127,420, which is 0.01% of issued share capital. The next resolution to approve the Policy will
be in 2025 as the current Policy is intended to be in place for three years.
The Company did not receive a significant percentage of votes Against the resolutions at the 2022 AGM or prior years.
Annual Report on Remuneration
continued
107Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
The Directors present their Report
for the financial year ended
31 December 2022
Cautionary statement
This Annual Report has been prepared for, and only for, the
members of the Company, as a body, and no other persons.
The Company, its Directors, employees, agents or advisers do not
accept or assume responsibility to any other person to whom this
document is shown or into whose hands it may come and any such
responsibility or liability is expressly disclaimed. By their nature,
the statements concerning the risks and uncertainties facing
the Group in this Annual Report involve uncertainty since future
events and circumstances can cause results and developments
to differ materially from those anticipated. The forward-looking
statements reflect knowledge and information available at the
date of preparation of this Annual Report and the Company
undertakes no obligation to update these forward-looking
statements. Nothing in this Annual Report should be construed
as a profit forecast.
Corporate governance statement
The information that fulfils the requirements of the corporate
governance statement for the purposes of the FCA’s DTRs can be
found in the governance section of the Annual Report on pages 52
to 107 (all of which forms part of this Directors’ Report) and in this
Directors’ Report.
Information included in the Strategic Report
The Company’s Strategic Report is on pages 2 to 51 and includes
the following information that would otherwise be required to be
disclosed in this Directors’ Report:
Subject matter Page reference
Likely future developments in the business 5-7
Events since the end of the financial year 193
Engagement with employees 33
Engagement with suppliers, customers and others 22-35
Employment of disabled persons 33
Greenhouse gas emissions, energy consumption
and energy efficiency action 31
Financial risks 47
Information to be disclosed under Listing Rule 9.8.4R
Subject matter Page reference
Details of long-term incentive schemes 99-101
Shareholder waivers of dividends 108
Shareholder waivers of future dividends 108
Financial instruments and risk management
The information relating to financial instruments and financial risk
management objectives and policies can be found on pages 131
to 134, 161 to 162, and 186 to 193.
Branches
During 2022, in addition to its offices in the UK, the Group has
operated branches in Jersey and the United Arab Emirates.
Profit and dividends
Statutory profit after tax from continuing operations for 2022 was
£175 million (2021: £23 million).
The Directors have recommended a Final Dividend for the financial
year ended 31 December 2022 of 3.3 pence per Ordinary Share
which will be paid out of distributable reserves, subject to approval
by shareholders at the 2023 Annual General Meeting (“AGM”).
Further information regarding the dividend, including key dates,
can be found at plc.quilter.com/dividends. On 10 August 2022,
the Board declared an Interim Dividend of 1.2 pence per Ordinary
Share. The Interim Dividend was paid on 20 September 2022 to
shareholders on the UK and South African share registers.
Shares are held in the Quilter Employee Benefit Trust (“EBT”)
and the Equiniti Share Plans Trust (“ESPT”) in connection with the
operation of the Company’s share plans. Dividend waivers are in
place for those shares that have not been allocated to employees.
Directors
The names of the current Directors of the Company, along with
their biographical details, are set out on pages 56 to 58 and are
incorporated into this Report by reference. Changes to Directors
during the year are set out below:
Name Role
Effective date of
appointment/resignation
Rosie Harris Non-executive Director Resigned 30 April 2022
Glyn Jones Non-executive Director Resigned 12 May 2022
Glyn Barker Non-executive Director Appointed 1 June 2022
Resigned 11 November 2022
Neeta Atkar Non-executive Director Appointed 11 August 2022
Paul Feeney Executive Director Resigned 31 October 2022
Steven Levin Executive Director Appointed 1 November 2022
Details of the Directors’ interests in the share capital of the
Company are set out in the Annual Report on Remuneration
on pages 94 to 107.
The powers given to the Directors are contained in the Company’s
Articles of Association and are subject to relevant legislation and,
in certain circumstances, including in relation to the issuing or
buying back by the Company of its shares, subject to authority
being given to the Directors by shareholders in general meeting.
The Articles of Association also govern the appointment and
replacement of Directors. The Board has the power to appoint
additional Directors or to fill a casual vacancy amongst Directors.
Any such Director only holds office until the next AGM and may
offer themselves for election.
Articles of Association
The Articles of Association may be amended in accordance
with the provisions of the Companies Act 2006 by way of a special
resolution of the Company’s shareholders. The following information
summarises certain provisions in the Articles of Association in
force as at the date of this Report.
108 Quilter Annual Report 2022
Directors’ Report
Share capital and control
The Company has Ordinary Shares in issue with a nominal value
of 8 1/6 pence each, representing 100% of the total issued share
capital as at 31 December 2022 and as at 3 March 2023 (the latest
practicable date for inclusion in this report). Details regarding
changes in the Company’s share capital, including information
on the B Share Scheme and Share Consolidation implemented
on 23 and 24 May 2022, can be found in note 25 of the financial
statements on page 172. The rights attaching to the Ordinary
Shares are set out in the Articles of Association and are
summarised below.
Voting rights of members
On a show of hands, every member or authorised corporate
representative present has one vote and every proxy present
has one vote except if the proxy has been duly appointed by more
than one member and has been instructed by (or exercises his
discretion given by) one or more of those members to vote for the
resolution and has been instructed by (or exercises his discretion
given by) one or more other of those members to vote against it,
in which case a proxy has one vote for and one vote against the
resolution. On a poll, every member present in person or by proxy
has one vote for every share of which he is a holder. In the case
of joint holders, the vote of the person whose name stands first
in the register of members and who tenders a vote is accepted
to the exclusion of any votes tendered by any other joint holders.
Unless the Board decides otherwise, a member shall not be
entitled to vote, either in person or by proxy, at any general meeting
of the Company in respect of any share held by him unless all calls
and other sums presently payable by him in respect of that share
have been paid.
Transfers
Save as described below, the Ordinary Shares are freely
transferable.
A member may transfer all or any of his shares in any manner
which is permitted by any applicable statutory provision and
is from time to time approved by the Board. The Company shall
maintain a record of uncertificated shares in accordance with
the relevant statutory provisions.
A member may transfer all or any of his certificated shares by an
instrument of transfer in any usual form, or in such other form as
the Board may approve. The instrument of transfer shall be signed
by or on behalf of the transferor and, except in the case of a fully
paid share, by or on behalf of the transferee. The Board may, in its
absolute discretion, refuse to register any instrument of transfer
of any certificated share which is not fully paid up (but not so as to
prevent dealings in listed shares from taking place on an open and
proper basis) or on which the Company has a lien. The Board may
also refuse to register any instrument of transfer of a certificated
share unless it is left at the registered office, or such other place
as the Board may decide, for registration, accompanied by the
certificate for the shares to be transferred and such other
evidence (if any) as the Board may reasonably require to prove
title of the intending transferor or his right to transfer shares;
and it is in respect of only one class of shares. If the Board refuses
to register a transfer of a certificated share it shall, as soon as
practicable and in any event within two months after the date
on which the instrument was lodged, give to the transferee notice
of the refusal together with its reasons for refusal. The Board must
provide the transferee with such further information about the
reasons for the refusal as the transferee may reasonably request.
Unless otherwise agreed by the Board in any particular case, the
maximum number of persons who may be entered on the register
as joint holders of a share is four.
Variation of rights
If at any time the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided
by the terms of issue) may, whether or not the Company is being
wound up, be varied with the consent in writing of the holders of
three-fourths in nominal value of the issued shares of that class
or with the sanction of a special resolution of the holders of the
shares of that class.
Exercisability of rights under an employee share scheme
An EBT operates in connection with certain of the Group’s
employee share plans (“Plans”). The Trustee of the EBT may
exercise all rights attaching to the shares in accordance with their
fiduciary duties other than as specifically restricted in the relevant
Plan governing documents. The Trustee of the EBT has informed
the Company that their normal policy is to abstain from voting in
respect of the Quilter shares held in trust. The Trustee of the
Quilter Share Incentive Plan (“SIP”) will vote as directed by SIP
participants in respect of the allocated shares but the Trustee
will not otherwise vote in respect of the unallocated shares held
in the SIP Trust.
Purchase of own shares
On 27 January 2022, Quilter completed the £375 million share
buyback programme (the “Programme”), first announced on
11 March 2020 to distribute to shareholders the net surplus
proceeds arising from the sale of Quilter Life Assurance.
In 2019 when the Board approved the sale of Quilter Life
Assurance, the Board engaged with its major shareholders to
obtain their views on the use of the sale proceeds. Having also
discussed the matter with the Group’s brokers, the Board agreed
to return the sale proceeds to shareholders by way of the
Programme. In February 2020, we reconfirmed with our major
shareholders that they remained supportive of the launch of
the Programme.
The Programme was executed using the authorities granted by
shareholders at the AGMs held on 14 May 2020 and 13 May 2021,
to purchase up to 10% of the Company’s issued Ordinary Share
capital in the period beginning on the date of each AGM and up
to the date of the following year’s AGM. A breakdown of the
Programme is noted in the following table.
Year
Number of
Ordinary Shares
purchased
1
Total
consideration
paid
Average price
paid per share
Percentage
of the issued
share capital
2
2020 118,282,047 £152,963,992 £1.2932 6.22%
2021 128,141,834 £195,593,129 £1.5264 7.18%
2022
3
17,704,132 £26,437,862 £1.4933 1.07%
1
Nominal value 7 pence each.
2
Calculated based on the total number of shares in issue at the beginning of each
financial year.
3
In addition to the Programme, the Company purchased four additional shares
on 12 May 2022 as part of the Share Consolidation, as explained overleaf.
109Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Directors’ Report
continued
Shares bought back on the Johannesburg Stock Exchange (“JSE”)
were purchased pursuant to contingent purchase contracts with
each of (a) J.P. Morgan Equities South Africa Proprietary Limited
and (b) Goldman Sachs International, which were approved by
shareholders at the 2020 and 2021 AGMs. The contracts enabled
the Company to buy back its shares on the JSE in similar fashion
and subject to the same overall limits as on-market purchases
on the London Stock Exchange. The shares acquired under
the Programme were cancelled upon acquisition.
Details of the impact on earnings per share and total shareholder
return can be found on pages 37 and 15 respectively, and how these
metrics are factored into remuneration decisions on pages 99 to 100.
At the AGM held on 12 May 2022, shareholders passed resolutions
to authorise the Company to purchase a maximum of 163,812,308
Ordinary Shares of 7 pence each, representing 10% of the Company’s
issued Ordinary Share capital as at 21 March 2022, which was the
latest practicable date prior to publication of the Notice of AGM.
Four Ordinary Shares with a nominal value of 7 pence each were
purchased under these authorities for an average price of £1.2485
per share. The four shares were purchased prior to the Share
Consolidation in order to ensure that the number of the Company’s
Ordinary Shares of 7 pence each was exactly divisible by the
denominator in the Share Consolidation ratio (which was seven).
The authorities granted at the AGM held on 12 May 2022 were
updated at the General Meeting held later that day to approve
a B Share Scheme and six for seven Share Consolidation, with the
Company authorised to purchase up to 140,410,550 new Ordinary
Shares of 8 1⁄6 pence nominal value each. The authorities granted
at the General Meeting in respect of the new Ordinary Shares have
not been used and will expire at the 2023 AGM. In accordance with
institutional guidelines and the Company’s established practices,
the Directors are seeking renewal of the authorities for the purchase
of shares at the 2023 AGM. Further information on the shares
purchased during the year under review is in note 25 on page 172.
Return of Capital relating to the sale of Quilter International
At the General Meeting on 12 May 2022, shareholders passed
resolutions to approve the return of £328m of the net proceeds
of the sale of Quilter International as a return of capital through a
B Share Scheme accompanied by a six for seven Share Consolidation,
whilst retaining around £90m to fund planned business initiatives.
The Company allotted and issued 1,638,123,081 B Shares and the
Company’s new Ordinary Shares of 8 1⁄6 pence each were admitted
to trading on 23 May 2022. The B Shares were redeemed on
24 May 2022. Payments in respect of the proceeds of the B Share
Scheme were dispatched to shareholders on or around 6 June 2022.
For more information on the return of capital, please refer to the
circular to shareholders that accompanied the Notice of the General
Meeting held on 12 May 2022 available at plc.quilter.com/gm.
Odd-lot Offer
The Directors are seeking shareholder approval at the 2023 AGM
together with requisite regulatory approvals to implement an Odd-lot
Offer at any time within the next 18 months. This will enable the
Company to purchase, at a 5% premium, the Ordinary Shares held
by those shareholders who hold less than 200 Ordinary Shares in
the Company and who do not choose to retain their shareholding.
No Odd-lot Offer will be implemented unless and until such
approvals have been obtained on terms satisfactory to the Directors.
For more information on the Odd-lot Offer, please refer to the 2023
Notice of AGM available at plc.quilter.com/gm.
Significant agreements (change of control)
All the Company’s share plans contain provisions relating to a
change of control. In the event of a change of control, outstanding
awards and options may be lapsed and replaced with equivalent
awards over shares in the new company, subject to the Board
Remuneration Committee’s discretion. Alternatively, outstanding
awards and options may vest and become exercisable on a change
of control subject, where appropriate, to the assessment of
performance at that time and pro-rating of awards. Exceptionally,
the Board Remuneration Committee may exercise its discretion
to waive pro-rating.
Short-term incentive (“STI”) awards may continue to be paid in
respect of the full financial year pre and post change of control,
or a pro-rated STI award may be paid in respect of the portion
of the year that has elapsed at the point of change of control.
On a change of control, including following a takeover bid, the
Company is required to enter into negotiations in good faith with
the lenders under the Group’s Revolving Credit Facility in respect
of any changes to its terms. If after such negotiations no agreement
has been reached, the Revolving Credit Facility would be cancelled
and existing drawdowns would become repayable.
The Group is also party to a number of supplier agreements
that may be terminated upon a change of control of the Company,
including following a takeover bid. In many cases, whether this
may apply depends on the identity or characteristics of the new
controller. This may result in the provision of certain services and
software licences being terminated early.
Directors’ indemnities
Qualifying third-party indemnity provisions (as defined by section
234 of the Companies Act 2006) were in force during the course
of the financial year ended 31 December 2022 for the benefit of
the then Directors and, at the date of this Report, are in force
for the benefit of the Directors in relation to certain losses and
liabilities which they may incur (or have incurred) in connection with
their duties, powers and office. In addition, the Company maintains
Directors’ and Officers’ Liability Insurance which gives appropriate
cover for legal action brought against its Directors.
Donations
Quilter does not make monetary donations or gifts in kind to
political parties, elected officials or election candidates. Accordingly,
no such donations were made in 2022. However, the Directors are
seeking to renew the Company’s and its subsidiaries’ authority to
make political donations not exceeding £50,000 in aggregate at the
2023 AGM. This is for the purposes of ensuring that neither the
Company nor its subsidiaries inadvertently breach Part 14 of the
Companies Act 2006 by virtue of the relevant definitions being
widely drafted. Further information is available in the 2023 Notice
of AGM. For information on our engagement with shareholders
following the 2022 AGM, please refer to the Chair’s statement
on pages 3 to 4.
110 Quilter Annual Report 2022
Directors’ Report
continued
Major shareholders
As at 31 December 2022, the Company had been notified, in
accordance with Rule 5 of the FCA’s DTRs, of the following holdings
of voting rights in its Ordinary Share capital:
Name of shareholder
Number of
voting rights
attached to
Quilter shares
% interest in
voting rights
attached to
Quilter shares
1
Nature of
holding
notified
BlackRock Inc.
2
111,805,973 6.81% Direct
Coronation Asset
Management (Pty) Ltd 195,332,204 13.91% Direct
Equiniti Trust (Jersey)
Limited
3
42,996,532 3.06% Direct
Ninety One UK Ltd
2
82,416,634 5.01% Indirect
Norges Bank 44,285,747 3.15% Direct
Old Mutual Limited 68,070,687 4.84% Indirect
Public Investment
Corporation of the
Republic of South Africa 210,834,490 15.01% Direct
1
The percentage of voting rights detailed above was calculated at the time of the
relevant disclosures made in accordance with Rule 5 of the FCA’s DTRs.
2
The number of voting rights reflects the position at the time of notification, prior to the
May 2022 Share Consolidation.
3
These shares are held by Equiniti Trust (Jersey) Limited in its capacity as Trustee of the
Quilter EBT.
As at 3 March 2023, the latest practicable date for inclusion in this
Report, the following voting rights had been notified, in accordance
with Rule 5 of the FCA’s DTRs:
Name of shareholder
Number of
voting rights
attached to
Quilter shares
% interest in
voting rights
attached to
Quilter shares
1
Nature of
holding
notified
BlackRock Inc.
2
111,805,973 6.81% Direct
Coronation Asset
Management (Pty)
Limited 181,651,900 12.93% Direct
Equiniti Trust (Jersey)
Limited
3
42,996,532 3.06% Direct
Ninety One UK Ltd
2
82,416,634 5.01% Indirect
Norges Bank 44,285,747 3.15% Direct
Old Mutual Limited 68,070,687 4.84% Indirect
Public Investment
Corporation of the
Republic of South Africa 210,834,490 15.01% Direct
1
The percentage of voting rights detailed above was calculated at the time of the
relevant disclosures made in accordance with Rule 5 of the FCA’s DTRs.
2
The number of voting rights reflects the position at the time of notification, prior to the
May 2022 Share Consolidation.
3
These shares are held by Equiniti Trust (Jersey) Limited in its capacity as Trustee of the
Quilter EBT.
Information provided to the Company by major shareholders
pursuant to the FCA’s DTRs is published via a Regulatory Information
Service and is available at plc.quilter.com/investor-relations.
Directors’ responsibility statements
The Directors are responsible for preparing the Annual Report
of the Parent Company and consolidated financial statements
in accordance with applicable law and regulations.
The Directors consider that the Annual Report and Accounts, taken
as a whole, are fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s
and the Group’s position and performance, business model
and strategy.
Each of the Directors in office as at the date of this report, whose
names are listed on pages 56 to 58, confirms that, to the best of his
or her knowledge:
· the consolidated financial statements, which have been prepared
in accordance with International Financial Reporting Standards
as endorsed by the UK, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company
and the Group; and
· the Strategic Report and Directors’ Report include a fair review
of the development and performance of the business and the
position of the Company and the Group, together with a
description of the principal risks and uncertainties that they face.
For further information on the comprehensive process followed
by the Board in order to reach these conclusions please refer
to the Board Audit Committee Report on pages 69 to 74.
Disclosure of information to external auditors
Each person who is a Director of the Company as at the date
of approval of this Report confirms that:
a) so far as the Director is aware, there is no relevant audit
information of which the Company’s external auditors are
unaware; and
b) the Director has taken all the steps that he or she ought to
have taken as a Director in order to make him/herself aware of
any relevant audit information and to establish that the Company’s
external auditors are aware of that information.
Independent auditors
The Directors are recommending the reappointment of
PricewaterhouseCoopers LLP as the Company’s statutory auditor
at the 2023 AGM.
AGM
The Quilter plc 2023 AGM will be held at Senator House,
85 Queen Victoria Street, London EC4V 4AB on Thursday 18 May
2023 at 11:00am (UK time). Details of the business to be transacted
at the 2023 AGM, along with details of how you can ask questions
and join the meeting, are included in the Quilter plc 2023 Notice
of AGM which can be found on our GM Hub at plc.quilter.com/gm.
By order of the Board
Clare Barrett
Company Secretary
8 March 2023
111Quilter Annual Report 2022
Strategic Report
Governance Report
Financial statements Other information
Directors’ Report
continued
112
Quilter Annual Report 2022
Group Consolidated Financial Statements
113 Statement of Directors’ responsibilities
114 Auditors’ report
121 Consolidated income statement
122 Consolidated statement of comprehensive income
123 Consolidated statement of changes in equity
124 Consolidated statement of financial position
125 Consolidated statement of cash flows
Basis of Preparation and Significant Accounting Policies
126 1: Basis of preparation
127 2: New standards and amendments to standards, and
interpretations adopted by the Group
127 3: Future standards, amendments to standards, and
interpretations not early-adopted in these financial statements
128 4: Significant changes in the year
128 5: Significant accounting policies
Notes to the Consolidated Financial Statements
140 6: Business combinations
142 7: Alternative performance measures (“APMs”)
147 8: Segmental information
150 9: Details of revenue
151 10: Details of expenses
153 11: Tax
155 12: Earnings per share
156 13: Dividends
157 14: Goodwill and intangible assets
159 15: Property, plant and equipment
160 16: Loans and advances
160 17: Financial investments
161 18: Derivative financial instruments – assets and liabilities
161 19: Categories of financial instruments
162 20: Fair value methodology
168 21: Structured entities
169 22: Trade, other receivables and other assets
169 23: Contract costs
170 24: Cash and cash equivalents
172 25: Share capital, capital redemption reserve
and merger reserve
172 26: Share-based payments
175 27: Investment contract liabilities
176 28: Provisions
179 29: Tax assets and liabilities
181 30: Borrowings and lease liabilities
182 31: Trade, other payables and other liabilities
182 32: Contract liabilities
182 33: Post-employment benefits
185 34: Master netting or similar arrangements
185 35: Contingent liabilities
186 36: Commitments
186 37: Capital and financial risk management
193 38: Fiduciary activities
193 39: Related party transactions
193 40: Events after the reporting date
Appendix
194 A: Related undertakings
Financial Statements of the Company
196 Financial statements
198 Notes to the Company financial statements
Index to the consolidated financial statements
For the year ended 31 December 2022
Contents
113
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
The Directors are responsible for preparing the Annual Report and
the Group and Parent Company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent
Company financial statements for each financial year. Under that law, the
Directors have prepared the Group financial statements in accordance
with UK-adopted international accounting standards and the Parent
Company financial statements in accordance with UK Accounting
Standards. Additionally, the Financial Conduct Authority’s Disclosure
Guidance and Transparency Rules require the Directors to prepare the
Group financial statements in accordance with international financial
reporting standards as adopted by the United Kingdom.
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Parent Company and of the profit
or loss of the Group for that period. In preparing the financial statements,
the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· state whether, for the Group, applicable UK-adopted international
accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
· state whether, for the Parent Company, applicable UK Accounting
Standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
· make judgements and estimates that are reasonable and prudent; and
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group and Parent Company will
continue in business.
The Directors are also responsible for safeguarding the assets of the
Group and Parent Company and hence for taking reasonable steps for
the prevention and detection of fraud and irregularities.
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s and the Parent
Company’s transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Parent Company and enable
them to ensure that the financial statements and the Directors’
Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the
Parent Company’s website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Responsibility statement of the Directors in respect
of the Annual Report and financial statements
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the applicable
sets of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Parent Company
and the undertakings included in the consolidation taken as a
whole;and
· the Strategic Report includes a fair review of the development and
performance of the business and the position of the Parent Company
and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties
that they face.
We consider that the Annual Report, taken as a whole, is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy.
Signed on behalf of the Board
Steven Levin Mark Satchel
Chief Executive Officer Chief Financial Officer
8 March 2023
Statement of Directors’ responsibilities
in respect of the Annual Report and the financial statements
114
Quilter Annual Report 2022
Opinion
In our opinion:
· Quilter plc’s Group financial statements and Company financial
statements (the “financial statements”) give a true and fair view of the
state of the Group’s and of the Company’s affairs as at 31 December
2022 and of the Group’s profit and the Group’s cash flows for the year
then ended;
· the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards as
applied in accordance with the provisions of the Companies Act 2006;
· the Company financial statements have been properly prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, including FRS 101
“Reduced Disclosure Framework”, and applicable law); and
· the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual
Report, which comprise: the Consolidated statement of financial position
and Company statement of financial position as at 31 December 2022;
the Consolidated income statement, the Consolidated statement of
comprehensive income, the Consolidated statement of changes in equity,
the Consolidated statement of cash flows and the Company statement of
changes in equity for the year then ended; and the notes to the financial
statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Board Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the
audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the financial statements in
the UK, which includes the FRC’s Ethical Standard, as applicable to listed
public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit
services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 10 to the Group’s financial statements,
we have provided no non-audit services to the Company or its controlled
undertakings in the period under audit.
Our audit approach
Context
We were appointed as auditors by the Directors on 19 May 2020,
therefore this is our third year of involvement. In planning for our audit of
the Quilter plc Group (“the Group”) for the current year, we met with the
Board Audit Committee and members of management across the
business, to discuss and understand significant changes during the year,
and to understand their perspectives on associated business risks. We
used this insight, in addition to our experience from the previous year’s
audit approach, when forming our views regarding the business updates,
as part of developing our audit plan and when scoping and performing
our audit procedures.
Overview
Audit scope
· At 31 December 2022, the Group comprised two operating segments
together with head office activities, each of which contain several
reporting components. We conducted audit testing over twelve
components in total, which we selected based on their financial
significance to the consolidated results.
· Five components were subject to an audit of their complete financial
information.
· Specific audit procedures were also performed on certain balances
and transactions in respect of a further seven components.
· Taken together, the procedures we performed over the five significant
components provided us with coverage of over 78% of total revenue
and 63% of adjusted profit.
· We have also considered the potential impact of climate change related
factors in our audit, including challenging management on its
assessment of how climate change related risks and opportunities
impact the financial statements.
Key audit matters
· Compensation provisions (Group)
· Goodwill impairment assessment (Group)
· Impairment assessment of investments in subsidiaries (parent)
Materiality
· Overall Group materiality: £6,092,352 (2021: £6,769,500) based
on 1% of total revenue excluding investment return.
· Overall Company materiality: £27,595,520 (2021: £32,490,000)
based on 1% of total assets.
· Performance materiality: £4,569,264 (2021: £5,077,000) (Group)
and £20,698,140 (2021: £24,367,500) (Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed
the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional
judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were
addressed in the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Sale of Quilter International (Group), which was a key audit matter last
year, is no longer included because of the sale occurring in 2021 having no
direct bearing on the 2022 audit. Otherwise, the key audit matters below
are consistent with last year.
Independent auditors’ report to the members of Quilter plc
Report on the audit of the financial statements
115
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Key audit matter How our audit addressed the key audit matter
Compensation provisions (Group)
Refer to page 71 of the Board Audit Committee Report
and note 28 to the Group’s financial statements.
The Group holds a number of provisions, including
relating to customer redress. These relate to a number
of cases across different parts of the Group.
The positions are evolving and there is judgement
and complexity in calculating a redress estimate,
in particular for those related to unsuitable defined
benefit to defined contribution pension transfer advice.
We assessed the Group’s accounting policy for the recognition of redress provisions
to ensure it was in line with the requirements of IAS 37.
We tested the key assumptions and data used in the Group’s calculations that included
initial transfer values, unsuitability assessments and redress percentages to underlying
supporting evidence from pension schemes and recent settlement experience. Where
suitability assessments and redress calculations had been completed for specific cases,
we agreed the data in the Group’s calculations with that provided by management’s expert,
whose competency and objectivity we also reviewed.
No material differences were identified from our testing.
Goodwill impairment assessment (Group)
Refer to page 71 of the Board Audit Committee Report
and note 14 to the Group’s financial statements.
The goodwill balance of £306 million (2021: £306
million) is subject to an annual impairment review. No
impairment charge has been recorded by management
against the goodwill balance in the current year.
Judgement is used to determine the appropriate
level at which to perform the impairment assessment.
Management analyses discounted cash flows at the
operating segment level to calculate the value-in-use
for each operating segment as opposed to an individual
cash generating unit (“CGU”).
This has not been determined to be a significant audit
risk due to the large amount of headroom available in
the model. However, this has been an area of audit
focus due to the inherent subjectivity in the
assumptions used within the model.
We checked that the cash flow forecasts used by management in the assessment of goodwill
impairment were consistent with the approved three-year Business Plan.
We evaluated the historical accuracy of the cash flow forecasts, including a comparison
of the current year actual results with the 2022 figures included in the prior year forecast.
For certain key assumptions which underpinned the forecast performance, such as growth
of assets under management in the Business Plan period, we corroborated these against
external market data where available.
We challenged management on the inclusion of certain cash flows where these looked
to include future enhancements (such as revenues from new products) or future
restructuring activity.
We found that the forecasts have been completed on a basis consistent with prior years
and were an appropriate basis upon which management could base their conclusions.
We considered the appropriateness of performing the impairment assessment at the
operating segment level. This included consideration of how the financial information of
the business is presented to the Chief Operating Decision Maker. We determined that the
performance of the impairment review on an operating segment level remains appropriate.
We engaged our internal valuation experts to independently calculate a reasonable range
for both the discount rate and long-term growth rate assumptions used within the
value-in-use calculations. We found the discount rate assumption to be more conservative
than our expected range, while the long-term growth rate was slightly above our expected
amount. However, sensitivity analyses and reperformance of the calculation using our
independent assumptions confirms that no impairment would be required.
We obtained and understood management’s sensitivity calculations over the impairment
assessment, as well as performing further sensitivity scenarios ourselves.
We determined that the impairment assessment was not highly sensitive to any of the
key assumptions, being the discount rate and the forecast growth (including the long-term
growth rate) of cash flows. For each operating segment we calculated the degree to which
these assumptions would need to move before an impairment was triggered. We
considered the likelihood of such a movement and concurred with management’s
conclusion that an impairment was not required.
Independent auditors’ report to the members of Quilter plc
116
Quilter Annual Report 2022
Key audit matter How our audit addressed the key audit matter
Impairment assessment of investments
in subsidiaries (parent)
Refer to note 4 to the Parent Company financial
statements.
The Company holds investments in subsidiaries
of £2,150 million (2021: £2,130 million). Whilst these
eliminate on consolidation in the Group financial
statements, they are recorded in the Company financial
statements. Management have performed an
impairment assessment, utilising consistent
methodology to that described in the impairment of
goodwill key audit matter above, and have concluded
that an impairment reversal of £20m was required.
We have determined the impairment assessment over
the investments in subsidiaries to be a significant risk in
light of the identified impairment as well as the Group
market capitalisation being lower than the Company
equity value at the balance sheet date.
The impairment assessment leveraged management’s calculations for the Group goodwill
impairment assessment referred to above.
The key judgement used by management in their impairment assessment is the underlying
assumption that the Company’s investments in Quilter Holdings Limited and Quilter
Investors represents the lowest level at which largely independent cash inflows are
generated. This assumption allows headroom to be transferred between subsidiary entities.
We challenged management over this assumption on the basis that the Business Plan is
prepared at a more disaggregated level and requested management to provide us with
further analyses to demonstrate the significant degree of integration between the
businesses included in their defined cash generating unit. We have corroborated the
explanations we received through discussion with the relevant component audit teams
and review of historical relevant correspondence with the regulator identifying some
of the interdependencies.
For non-trading subsidiaries the fair value less costs to sell is deemed by management
to be represented by their net asset position.
Due to the net asset position of one such component increasing within the year an
impairment reversal has been recognised accordingly. We have agreed the accuracy of this
calculation and corroborated the net asset position to the unaudited year-end trial balance.
Overall we are satisfied that there is sufficient evidence to support the basis of
management’s impairment assessment and therefore concur with the reversal
of impairment that has been recognised.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough
work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the Group and the Company, the
accounting processes and controls, and the industry in which they operate.
Quilter plc has two operating segments – High Net Worth and Affluent.
Within these segments there are several reporting units, of which five
are considered financially significant due to their contribution to Group
revenues, and were subject to an audit of their complete financial
information. In addition, a further seven reporting entities were in scope
for specific audit procedures, as these components contributed either
towards a significant risk area, or a significant proportion of certain
financial statement line items. Together with the procedures performed
at the Group level, including auditing the consolidation and financial
statement disclosures, taxation, and goodwill impairment assessment,
this gave us the evidence we needed for our opinion on the financial
statements as a whole. Almost all of the Group’s trading is based in the
UK resulting in all of the audit procedures being performed locally by
the UK audit team. Of the twelve components we have performed audit
procedures over, none of these components was based outside the UK.
We applied materiality of £380,830,443 to the classification of unit-linked
assets and liabilities in the consolidated statement of financial position,
the related line items in the consolidated income statement and related
notes, determined with reference to a benchmark of total unit linked assets,
of which it represents 1%. This materiality was applied solely for our work
on matters for which a misstatement is likely only to lead to a reclassification
between line items, in accordance with FRC Practice Note 20 The audit of
Insurers in the United Kingdom. The Group contains several regulated
trading entities and is a regulated insurance group itself. Some activities are
outsourced to third party providers across the Group, such as investment
and platform administration. In respect of the outsourced service providers
we were able to gain appropriate audit evidence through a combination of
evaluating the providers’ published assurance reports on internal control
and performing substantive procedures.
The impact of climate risk on our audit
As part of our audit, we made enquiries of management to understand
the process management adopted to assess the extent of the potential
impact of climate risk on the Group’s financial statements and support
the disclosures made within the Annual Report. In addition to enquiries
with management, we also challenged the completeness of
management’s climate risk assessment by comparing the consistency of
management’s climate impact assessment with internal climate plans and
board minutes, including whether the time horizons management have
used take account of all relevant aspects of climate change such as
transition risks.
Independent auditors’ report to the members of Quilter plc
117
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – Group Financial statements – Company
Overall materiality £6,092,352 (2021: £6,769,500). £27,595,520 (2021: £32,490,000).
How we determined it 1% of total revenue excluding investment return 1% of total assets
Rationale for benchmark
applied
Based on the performance metrics used in the Annual
Report, total revenue is considered to be one of the
primary measures used by shareholders in assessing
performance of the Group and is a generally accepted
auditing benchmark.
A benchmark of total assets has been used as the
Company’s primary purpose is to act as a holding
company with investments in the Group’s subsidiaries,
not to generate operating profits and therefore a
profit-based measure was not considered appropriate.
For each component in the scope of our Group audit, we allocated a
materiality that is less than our overall Group materiality. The range of
materiality allocated across components was £1,381,382 to £5,540,596.
Certain components were audited to a local statutory audit materiality
that was also less than our overall Group materiality.
We use performance materiality to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use
performance materiality in determining the scope of our audit and the
nature and extent of our testing of account balances, classes of
transactions and disclosures, for example in determining sample sizes.
Our performance materiality was 75% (2021: 75%) of overall materiality,
amounting to £4,569,264 (2021: £5,077,000) for the Group financial
statements and £20,698,140 (2021: £24,367,500) for the Company’s
financial statements.
In determining the performance materiality, we considered a number of
factors – the history of misstatements, risk assessment and aggregation
risk and the effectiveness of controls – and concluded that an amount at
the upper end of our normal range was appropriate.
We agreed with the Board Audit Committee that we would report to them
misstatements identified during our audit above £500,000 (Group audit)
(2021: £500,000) and £1,379,876 (Company audit) (2021: £1,624,500) as
well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Group’s and the
Company’s ability to continue to adopt the going concern basis of
accounting included:
· Obtained the Directors’ updated going concern assessment and
challenged the rationale for assumptions on growth of assets under
management/administration and asset returns using our knowledge of
Quilter’s business performance, and corroborating to external market
evidence where available. Our assessment included reviewing
management’s stress testing and scenario analyses.
· Obtained management’s estimated Solvency capital position and
evaluated this for consistency of available information and against
management’s own target capital ratios. We found that the Group
maintained internal targets for its Group Solvency Capital Requirement
(SCR) ratio, and is forecast to remain compliant with all external
regulatory capital requirements for the period covered by the going
concern assessment; and
· Confirmed compliance with the debt covenants of the Group’s
borrowings, and the forecast continued compliance for the duration
of the period covered by the going concern assessment.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s and the Company’s
ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the Directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
However, because not all future events or conditions can be predicted,
this conclusion is not a guarantee as to the Group’s and the Company’s
ability to continue as a going concern.
In relation to the Directors’ reporting on how they have applied the UK
Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the Directors’ statement in the financial
statements about whether the Directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect
to going concern are described in the relevant sections of this report.
Independent auditors’ report to the members of Quilter plc
118
Quilter Annual Report 2022
Reporting on other information
The other information comprises all of the information in the Annual
Report other than the financial statements and our auditors’ report
thereon. The Directors are responsible for the other information, which
includes reporting based on the Task Force on Climate-related Financial
Disclosures (“TCFD”) recommendations. Our opinion on the financial
statements does not cover the other information and, accordingly, we do
not express an audit opinion or, except to the extent otherwise explicitly
stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements
or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency
or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that
fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also
considered whether the disclosures required by the UK Companies Act
2006 have been included.
Based on our work undertaken in the course of the audit, the Companies
Act 2006 requires us also to report certain opinions and matters as
described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit,
the information given in the Strategic Report and Directors’ Report for the
year ended 31 December 2022 is consistent with the financial statements
and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company
and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic Report and
Directors’ Report.
Directors’ remuneration
In our opinion, the part of the Annual Report on Remuneration to be
audited has been properly prepared in accordance with the Companies
Act 2006.
Corporate governance statement
The Listing Rules require us to review the Directors’ statements in relation
to going concern, longer-term viability and that part of the corporate
governance statement relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code specified for our review.
Our additional responsibilities with respect to the corporate governance
statement as other information are described in the Reporting on other
information section of this report.
Based on the work undertaken as part of our audit, we have concluded
that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and
our knowledge obtained during the audit, and we have nothing material
to add or draw attention to in relation to:
· The Directors’ confirmation that they have carried out a robust
assessment of the emerging and principal risks;
· The disclosures in the Annual Report that describe those principal risks,
what procedures are in place to identify emerging risks and an
explanation of how these are being managed or mitigated;
· The Directors’ statement in the financial statements about whether
they considered it appropriate to adopt the going concern basis of
accounting in preparing them, and their identification of any material
uncertainties to the Group’s and Company’s ability to continue to do so
over a period of at least twelve months from the date of approval of the
financial statements;
· The Directors’ explanation as to their assessment of the Group’s and
Company’s prospects, the period this assessment covers and why the
period is appropriate; and
· The Directors’ statement as to whether they have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period of its assessment,
including any related disclosures drawing attention to any necessary
qualifications or assumptions.
Our review of the Directors’ statement regarding the longer-term viability
of the Group and Company was substantially less in scope than an audit
and only consisted of making inquiries and considering the Directors’
process supporting their statement; checking that the statement is in
alignment with the relevant provisions of the UK Corporate Governance
Code; and considering whether the statement is consistent with the
financial statements and our knowledge and understanding of the Group
and Company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit,
we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
· The Directors’ statement that they consider the Annual Report, taken
as a whole, is fair, balanced and understandable, and provides the
information necessary for the members to assess the Group’s and
Company’s position, performance, business model and strategy;
· The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems; and
· The section of the Annual Report describing the work of the Board
Audit Committee.
We have nothing to report in respect of our responsibility to report when
the Directors’ statement relating to the Company’s compliance with the
Code does not properly disclose a departure from a relevant provision
of the Code specified under the Listing Rules for review by the auditors.
Independent auditors’ report to the members of Quilter plc
119
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities, the
Directors are responsible for the preparation of the financial statements
in accordance with the applicable framework and for being satisfied that
they give a true and fair view. The Directors are also responsible for such
internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group’s and the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either
intend to liquidate the Group or the Company or to cease operations,
or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that
the principal risks of non-compliance with laws and regulations related
to breaches of UK regulatory principles, such as those governed by the
Prudential Regulation Authority (PRA) and the Financial Conduct Authority
(FCA), and unsuitable or prohibited business practices, and we considered
the extent to which non-compliance might have a material effect on the
financial statements. We also considered those laws and regulations that
have a direct impact on the financial statements such as the Companies
Act 2006 and listing rules. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial statements
(including the risk of override of controls), and determined that the principal
risks were related to posting inappropriate journal entries to either inflate
revenue or reduce expenditure of the Group and the Company, and
management bias in accounting estimates and judgemental areas of the
financial statements, such as provisions. The group engagement team
shared this risk assessment with the component auditors so that they
could include appropriate audit procedures in response to such risks in
their work. Audit procedures performed by the group engagement team
and/or component auditors included:
· Discussions with the Board, management, internal audit, management
involved in the risk and compliance functions and the Group and
Company’s legal function, including consideration of known or suspected
instances of non-compliance with laws and regulation and fraud.
· Reviewing correspondence between the Group, the PRA, the FCA
and HMRC in relation to compliance with laws and regulations.
· Assessment of matters reported on the Group’s whistleblowing
register including the quality and results of management’s investigation
of such matters.
· Reviewing Board minutes as well as relevant meeting minutes, including
those of the Board Audit Committee, Board Remuneration Committee,
the Board Technology and Operations Committee and the Board
Risk Committee.
· Reviewing data regarding policyholder complaints, the Group’s
and Company’s register of litigation and claims, internal audit reports,
compliance reports in so far as they related to non-compliance with
laws and regulations and fraud.
· Challenging assumptions made by management in accounting
estimates and judgements, in particular in relation to the impairment
assessments of goodwill and investments in subsidiaries, and the
valuation of the DB to DC conduct provisions described in the related
key audit matters.
· Identifying and testing journal entries, in particular any journal entries
posted with unusual account combinations, such as a credit to revenue
and a debit to the statement of financial position (other than to
expected accounts), which may be indicative of the overstatement
or manipulation of revenue.
· Designing audit procedures to incorporate unpredictability around
the nature, timing or extent of our testing.
· Detailed testing over the classification of costs allocated to business
transformation costs, which are considered as one-off and added back
to calculate the adjusted profit measure, in order to identify any
inappropriate classification which could be indicative of a material
manipulation of the adjusted profit measure.
There are inherent limitations in the audit procedures described above.
We are less likely to become aware of instances of non-compliance with
laws and regulations that are not closely related to events and
transactions reflected in the financial statements. Also, the risk of not
detecting a material misstatement due to fraud is higher than the risk
of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations,
or through collusion.
Our audit testing might include testing complete populations of certain
transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for
testing, rather than testing complete populations. We will often seek
to target particular items for testing based on their size or risk
characteristics. In other cases, we will use audit sampling to enable
us to draw a conclusion about the population from which the sample
is selected.
A further description of our responsibilities for the audit
of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the
Company’s members as a body in accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any other purpose or
to any other person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent in writing.
Independent auditors’ report to the members of Quilter plc
120
Quilter Annual Report 2022
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if,
in our opinion:
· we have not obtained all the information and explanations we require
for our audit; or
· adequate accounting records have not been kept by the Company, or
returns adequate for our audit have not been received from branches
not visited by us; or
· certain disclosures of Directors’ remuneration specified by law are not
made; or
· the Company financial statements and the part of the Annual Report
on Remuneration to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Board Audit Committee, we were
appointed by the Directors on 19 May 2020 to audit the financial statements
for the year ended 31 December 2020 and subsequent financial periods.
The period of total uninterrupted engagement is three years, covering
the years ended 31 December 2020 to 31 December 2022.
Other matter
As required by the Financial Conduct Authority Disclosure Guidance
and Transparency Rule 4.1.14R, these financial statements form part of
the ESEF-prepared annual financial report filed on the National Storage
Mechanism of the Financial Conduct Authority in accordance with the
ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report
provides no assurance over whether the annual financial report has been
prepared using the single electronic format specified in the ESEF RTS.
Mark Pugh
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
8 March 2023
Independent auditors’ report to the members of Quilter plc
121
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
The notes on pages 126 to 195 form an integral part of these consolidated financial statements.
Notes
Year ended
31 December
2022
£m
Year ended
31 December
2021
£m
Income
Fee income and other income from service activities
9(a) 5 81 666
Investment return
9(b) (4 , 6 4 9 ) 4 , 0 02
Other income 28 18
Total income (4, 0 4 0 ) 4,686
Expenses
Change in investment contract liabilities
27 4 , 3 18 (3 , 293 )
Fee and commission expenses, and other acquisition costs
10(a) (54 ) (61 )
Change in third-party interests in consolidated funds 438 (599 )
Other operating and administrative expenses
10(b) (58 4 ) (63 6 )
Finance costs
10(e) (13 ) (14 )
Total expenses 4 ,1 0 5 (4 ,6 0 3 )
Profit on sale of subsidiary
6(a) – 2
Profit before tax from continuing operations 65 85
Tax credit/(expense) attributable to policyholder returns
11(a) 13 4 (7 3 )
Profit before tax attributable to equity holders from continuing operations 19 9 12
Income tax credit/(expense)
11(a) 11 0 (62 )
Less: tax (credit)/expense attributable to policyholder returns (13 4 ) 73
Tax (expense)/credit attributable to equity holders (24 ) 11
Profit after tax from continuing operations 17 5 23
Profit after tax from discontinued operations
6(b) – 13 1
Profit after tax 17 5 15 4
Attributable to:
Equity holders of Quilter plc 17 5 15 4
Earnings per Ordinary Share on profit attributable to Ordinary Shareholders of Quilter plc
Basic
From continuing operations (pence)
12(b) 12 . 2 1. 4
From discontinued operations (pence)
6(b) – 8 .0
Basic earnings per Ordinary Share (pence)
12(b) 12 . 2 9. 4
Diluted
From continuing operations (pence)
12(b) 12 . 0 1. 4
From discontinued operations (pence)
6(b) – 7. 8
Diluted earnings per Ordinary Share (pence)
12(b) 12 . 0 9. 2
Consolidated income statement
For the year ended 31 December 2022
122
Quilter Annual Report 2022
The notes on pages 126 to 195 form an integral part of these consolidated financial statements.
Note
Year ended
31 December
2022
£m
Year ended
31 December
2021
£m
Profit after tax 17 5 15 4
Exchange losses on translation of foreign operations – (1 )
Items that may be reclassified subsequently to income statement – (1 )
Total other comprehensive income, net of tax – (1 )
Total comprehensive income 17 5 153
Attributable to:
Continuing operations 17 5 22
Discontinued operations
6(b) – 13 1
Equity holders of Quilter plc 17 5 153
Consolidated statement of comprehensive income
For the year ended 31 December 2022
123
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
The notes on pages 126 to 195 form an integral part of these consolidated financial statements.
31 December 2022 Notes
Ordinary
Share
capital
£m
Ordinary
Share
premium
reserve
£m
B shares
£m
Capital
redemption
reserve
£m
Merger
reserve
£m
Share-based
payments
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Total
share-
holders’
equity
£m
Balance at 1 January 2022 116 58 – 17 25 42 (1 ) 1, 4 8 2 1,7 3 9
Profit after tax – – – – – – – 17 5 175
Total comprehensive income – – – – – – – 17 5 17 5
Dividends
13 – – – – – – – (78 ) (78 )
Ordinary Shares repurchased
in the buyback programme
1
25 (1 ) – – 1 – – – – –
Issue of B shares
2
25(a,c) – – 328 – (25 ) – – (3 03 ) –
Redemption of B shares
2
25(a) – – (328 ) 328 – – – (328 ) (328 )
Exchange rate movement
(ZAR/GBP)
3
Movement in own shares – – – – – – – 22 22
Equity share-based payment
transactions
26(e) – – – – – 1 – 23 24
Aggregate tax effects of items
recognised directly in equity – – – – – (2 ) – – (2 )
Total transactions with the
ownersof the Company (1 ) – – 329 (25 ) (1 ) – (668 ) (36 6 )
Balance at 31 December 2022 11 5 58 – 346 – 41 (1 ) 989 1, 5 4 8
31 December 2021 Notes
Ordinary
Share
capital
£m
Ordinary
Share
premium
reserve
£m
B shares
£m
Capital
redemption
reserve
£m
Merger
reserve
£m
Share-based
payments
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Total
share-
holders’
equity
£m
Balance at 1 January 2021 12 5 58 – 8 149 42 1 1, 49 5 1,87 8
Profit after tax – – – – – – – 15 4 15 4
Other comprehensive income – – – – – – (1 ) – (1 )
Total comprehensive income – – – – – – (1 ) 15 4 15 3
Dividends
13 – – – – – – – (8 9 ) (89 )
Ordinary Shares repurchased
in the buyback programme
1
25 (9 ) – – 9 – – – (20 4 ) (20 4 )
Release of merger reserve
25(c) – – – – (1 24 ) – – 12 4 –
Movement in own shares – – – – – – – (20 ) (20 )
Equity share-based payment
transactions
26(e) – – – – – (1 ) – 21 20
Aggregate tax effects of items
recognised directly in equity – – – – – 1 – – 1
Total transactions with the
owners of the Company (9 ) – – 9 (12 4 ) – – (16 8 ) (2 92 )
Transfer to retained earnings – – – – – – (1 ) 1 –
Balance at 31 December 2021 116 58 – 17 25 42 (1 ) 1,4 8 2 1,7 3 9
1
On 11 March 2020, the Company announced a share buyback programme to purchase Ordinary Shares up to a maximum value of £375 million, in order to return the net surplus
proceeds to shareholders arising from the sale of Quilter Life Assurance which had the impact of reducing the share capital of the Company. During the year ending 31 December
2022, the Company acquired 17.7 million shares (31 December 2021: 128.1 million) for a total consideration of £26 million (31 December 2021: £1 97 million) and incurred additional
costs of £1 million (31 December 2021: £3 million). The shares, which have a nominal value of £1 million (31 December 2021: £9 million), were subsequently cancelled, giving rise
to a capital redemption reserve of the same value as required by the Companies Act 2006. The share buyback was completed in January 2022.
2
On 9 March 2022, the Company announced a capital return of £328 million from the net surplus proceeds arising from the sale of Quilter International by way of a B Share
Scheme accompanied by a Share Consolidation. Refer to note 4 for further details of the capital return and Share Consolidation. Following the issue and redemption of the
B preference shares as part of the B Share Scheme, the Company transferred £328 million from retained earnings to the capital redemption reserve, as required under the
provisions of sections 688 and 733 of the Companies Act 2006, being an amount equal to the nominal value of the B shares redeemed in the year. The increase in the capital
redemption reserve results from the UK company law requirement to maintain the company’s capital when shares are redeemed out of the company’s distributable profits.
3
The South African Rand value of the proposed capital return for shares registered on the Johannesburg Stock Exchange was set on 9 March 2022. The impact of exchange rate
movements between the year-end Market Announcement on 9 March 2022 and the redemption of the B shares on 24 May 2022 on the pound sterling equivalent of payments
to JSE shareholders in South African Rand is recognised directly in equity. Additionally, the impact of exchange rate movements between the announcement date of dividends
payable and the payment date on the pound sterling equivalent of payments to JSE shareholders in South African Rand is recognised directly in equity. The Group held cash
in South African Rand equal to the expected cash outflows and therefore was economically hedged for the outflows.
Consolidated statement of changes in equity
For the year ended 31 December 2022
124
Quilter Annual Report 2022
Notes
31 December
2022
£m
31 December
2021
£m
Assets
Goodwill and intangible assets
14 413 457
Property, plant and equipment
15 11 2 13 1
Investments in associated undertakings 1 2
Contract costs
23 10 9
Loans and advances
16 34 29
Financial investments
17 4 3 , 617 47, 56 5
Deferred tax assets
29(a) 94 88
Current tax receivable
29(c) 10 –
Trade, other receivables and other assets
22 303 381
Derivative assets
18 40 14
Cash and cash equivalents
24 1, 7 8 2 2,06 4
Assets held for sale
6(e) 1 –
Total assets 4 6 , 4 17 5 0 , 74 0
Equity and liabilities
Equity
Ordinary Share capital
25(a) 115 11 6
Ordinary Share premium reserve
25 58 58
Capital redemption reserve
25(b) 346 17
Merger reserve
25(c) – 25
Share-based payments reserve
26 41 42
Other reserves (1 ) (1 )
Retained earnings 989 1, 4 8 2
Total equity 1, 5 4 8 1,7 3 9
Liabilities
Investment contract liabilities
27 38, 1 86 41, 0 71
Third-party interests in consolidated funds 5, 843 6, 898
Provisions
28 69 93
Deferred tax liabilities
29(b) 24 13 9
Current tax payable
29(c) 1 2
Borrowings and lease liabilities
30 29 0 299
Trade, other payables and other liabilities
31 436 4 84
Derivative liabilities
18 20 15
Total liabilities 44,869 49, 0 01
Total equity and liabilities 4 6 , 4 17 5 0 , 74 0
The financial statements on pages 121 to 195 were approved by the Board of Directors on 8 March 2023 and signed on its behalf by
Steven Levin Mark Satchel
Chief Executive Officer Chief Financial Officer
The attached notes on pages 126 to 195 form an integral part of these consolidated financial statements.
Consolidated statement of financial position
At 31 December 2022
125
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
The cash flows presented in this statement cover all the Group’s activities (continuing and discontinued operations) and include flows from both
policyholder and shareholder activities. All cash and cash equivalents are available for general use by the Group for the purposes of the disclosures
required under IAS 7 Statement of Cash Flows except for cash and cash equivalents in consolidated funds (as shown in note 24). Cash flows for
discontinued operations are shown separately in note 6(d).
Notes
Year ended
31 December
2022
£m
Year ended
31 December
2021
£m
Cash flows from operating activities
Cash flows from operating activities 1, 6 9 8 3 ,1 0 3
Taxation paid (2 2 ) (10 )
Total net cash flows from operating activities
24(b) 1,6 76 3,0 93
Cash flows from investing activities
Net acquisitions of financial investments (1,494 ) (2 , 839 )
Acquisition of property, plant and equipment
15 (3 ) (13 )
Acquisition of interests in subsidiaries
1
6(f) (5 ) (7 )
Net proceeds from the disposal of interests in subsidiaries – 2 18
Total net cash flows from investing activities (1, 5 0 2 ) (2,6 41 )
Cash flows from financing activities
Dividends paid to equity holders of the Company
13 (78 ) (89 )
Finance costs on external borrowings
10(e) (9 ) (9 )
Payment of interest on lease liabilities
30(b) (3 ) (2 )
Payment of principal of lease liabilities
30(b) (11 ) (10 )
Redemption of B shares
2
(328 ) –
Repurchase and cancellation of Ordinary Shares
3
(28 ) (19 7 )
Exchange rate movements paid to shareholders
4
(4 ) –
Total net cash flows from financing activities (4 61 ) (307 )
Net (decrease)/increase in cash and cash equivalents (287 ) 14 5
Cash and cash equivalents at the beginning of the year 2,06 4 1, 9 21
Effect of exchange rate changes on cash and cash equivalents 5 (2 )
Cash and cash equivalents at end of the year
24(a) 1,7 8 2 2 ,06 4
1
The acquisition of interests in subsidiaries outflow of £5 million results from contingent consideration payments relating to historical acquisitions (31 December 2021: £7 million).
2
On 9 March 2022, the Company announced a capital return of £328 million from the net surplus proceeds arising from the sale of Quilter International by way of a B Share
Scheme accompanied by a Share Consolidation. Please refer to note 4 for further details of the capital return and Share Consolidation.
3
The repurchase and cancellation of Ordinary Shares outflow relates to the cash movements associated with the share buyback programme. Further details are included within
the consolidated statement of changes in equity.
4
The exchange rate movements paid to shareholders relate to foreign exchange gains that have arisen on the capital return and dividend payments to JSE shareholders.
Further details are included within the consolidated statement of changes in equity.
Consolidated statement of cash flows
For the year ended 31 December 2022
The notes on pages 126 to 195 form an integral part of these consolidated financial statements.
126
Quilter Annual Report 2022
127
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
128
Quilter Annual Report 2022
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
129
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
130
Quilter Annual Report 2022
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
131
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
132
Quilter Annual Report 2022
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
133
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
134
Quilter Annual Report 2022
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
135
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
136
Quilter Annual Report 2022
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
137
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
138
Quilter Annual Report 2022
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
139
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Basis of preparation and significant accounting policies
For the year ended 31 December 2022 continued
140
Quilter Annual Report 2022
Notes to the consolidated financial statements
For the year ended 31 December 2022
141
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Notes to the consolidated financial statements
For the year ended 31 December 2022 continued
142
Quilter Annual Report 2022
Notes to the consolidated financial statements
For the year ended 31 December 2022 continued
143
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
Notes to the consolidated financial statements
For the year ended 31 December 2022 continued
144
Quilter Annual Report 2022
Notes to the consolidated financial statements
For the year ended 31 December 2022 continued
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Appendix A: Related undertakings
The Companies Act 2006 requires disclosure of certain information about the Group’s related undertakings which is set out in this note. Related
undertakings comprise subsidiaries, joint ventures, associates and other significant holdings. Significant holdings are where the Group either
has a shareholding greater than or equal to 20% of the nominal value of any share class, or a book value greater than 20% of the Group’s assets.
The definition of a subsidiary undertaking in accordance with the Companies Act 2006 is different from the definition under IFRS. As a result,
the related undertakings included within the list below may not be the same as the undertakings consolidated in the Group IFRS financial statements.
Refer to accounting policies note 5(a) Group Accounting for further detail on the principles of consolidation.
The Group’s related undertakings along with the country of incorporation, the registered address, the classes of shares held and the effective
percentage of equity owned at 31 December 2022 are disclosed below.
Quilter plc is the ultimate parent of the Group.
Company name Share class % Held
United Kingdom
Senator House, 85 Queen Victoria Street, London, EC4V 4AB
Blueprint Distribution Limited Ordinary 100
Blueprint Financial Services Limited Ordinary 100
Blueprint Organisation Limited Ordinary 100
Caerus Capital Group Limited Ordinary 100
Caerus Holdings Limited Ordinary 100
Caerus Wealth Limited Ordinary 100
Caerus Wealth Solutions Limited Ordinary 100
Charles Derby Group Limited Ordinary 100
Charles Derby Private Clients Limited Ordinary 100
Charles Derby Wealth Management Limited Ordinary 100
Cheviot Capital (Nominees) Limited Ordinary 100
Falcon Financial Advice Limited Ordinary 100
Forward Thinking Wealth Management Limited Ordinary 100
Lighthouse Advisory Services Limited Ordinary 100
Lighthouse Benefits Limited Ordinary 100
Lighthouse Corporate Services Ltd Ordinary 100
Lighthouse Financial Advice Limited Ordinary 100
Lighthouse Group Limited Ordinary 100
Lighthouse Support Services Limited Ordinary 100
Lighthouse Wealth Management Limited Ordinary 100
LighthouseWealth Limited Ordinary 100
LighthouseXpress Limited Ordinary 100
Luceo Asset Management Limited Ordinary 100
Quilter Perimeter Limited Ordinary 100
Quilter Perimeter (GGP) Limited Ordinary 100
Quilter Perimeter UK Limited Ordinary 100
Quilpep Nominees Limited Ordinary 100
Quilter Business Services Limited Ordinary 100
Quilter Cheviot Holdings Limited Ordinary 100
Quilter Cheviot Limited Ordinary 100
Quilter CoSec Services Limited Ordinary 100
Quilter Financial Advisers Limited Ordinary 100
Quilter Financial Limited Ordinary A 100
Quilter Financial Planning Limited Ordinary 100
Quilter Financial Services Limited Ordinary 100
Quilter Holdings Limited Ordinary 100
Quilter Investment Platform Limited Ordinary 100
Quilter Investment Platform Nominees Limited Ordinary 100
Quilter Investors Limited Ordinary 100
Quilter Investors Portfolio Management Limited Ordinary 100
Quilter Life & Pensions Limited Ordinary 100
Quilter Mortgage Planning Limited Ordinary 100
Quilter Nominees Limited Ordinary 100
Quilter Pension Trustees Limited Ordinary 100
Company name Share class % Held
Quilter Private Client Advisers Limited Ordinary 100
Quilter UK Holding Limited Ordinary 100
Quilter Wealth Limited Ordinary 100
Quilter Perimeter Holdings Limited Ordinary 100
Violet No.2 Limited Ordinary 100
Quilter House, Portland Terrace, Southampton, SO14 7EJ
IFA Services Holdings Company Limited Ordinary A 95
Ordinary B 100
Riverside House, The Waterfront, Newcastle upon Tyne, NE15 8NY
Quilter Financial Planning Solutions Limited Ordinary 100
Think Synergy Limited Ordinary 100
C/O Teneo Restructuring Limited, 156 Great Charles Street, Queensway,
Birmingham, West Midlands, B3 3HN
Charles Jacques Limited (in liquidation
since 4 October 2021) Ordinary 100
Commsale 2000 Limited (in liquidation
since 21 September 2022) Ordinary 100
IFA Holding Company Limited (in liquidation
since 21 September 2022) Ordinary 100
Intrinsic Cirilium Investment Company Limited
(in liquidation since 21 September 2022) Ordinary 100
Premier Planning Limited (in liquidation
since 19 March 2018) Ordinary 100
Prescient Financial Intelligence Limited
(in liquidation since 4 October 2021) Ordinary 100
The Falcon Group Limited (in liquidation
since 10 November 2022) Ordinary 100
C/O Addleshaw Goddard LLP, 19 Canning Street, Edinburgh, Scotland, EH3 8EH
Financial Services Advice & Support Limited Ordinary 100
Ireland
Hambleden House, 19-26 Lower Pembroke Street, Dublin 2, D02 WV96
Pembroke Quilter (Ireland) Nominees Limited Ordinary 100
Quilter Cheviot Europe Limited Ordinary 100
Isle of Man
33-37 Athol Street, Douglas, IM1 1LB
Quilter Perimeter (IOM) Limited Ordinary 100
Third Floor, St George’s Court, Upper Hill Street, Douglas, IM1 1EE
Quilter Insurance Company Limited Ordinary 100
Jersey
3rd Floor, Windward House, La Route de la Liberation, St Helier, JE1 1QJ
C.I.P.M. Nominees Limited Ordinary 100
QGCI Nominees Limited Ordinary 100
Quilter Cheviot International Limited Ordinary 100
Germany
Wiesenhüttenstraße 11, 60329 Frankfurt am Main
Old Mutual Europe GmbH (in liquidation
since 1 September 2022) Ordinary
100
Skandia Retail Europe Holding GmbH (in liquidation
since 1 September 2022) Ordinary 100
United Kingdom – associate
12-14 Upper Marlborough Road, St Albans, Hertfordshire, AL1 3UR
360 Dot Net Limited Ordinary A
17.5
Appendix
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The Quilter Foundation (registered charity no. 1175555) is an independent
charity. The Quilter Foundation’s sole member, Quilter Holdings Limited
appoints the trustees of the charity.
In addition, the following funds are consolidated and constitute related
undertakings, as described in note 5(a).
Some of the funds in the table below are subfunds of umbrella funds. The
following umbrella funds are operated or represented by Quilter entities:
Quilter Investors Balanced OEIC, Quilter Investors Charity Authorised
Investment Funds, Quilter Investors Cirilium OEIC, Quilter Investors ICAV,
Quilter Investors Multi-Asset OEIC, Quilter Investors OEIC, Quilter Investors
Portfolio OEIC, Quilter Investors Series I and Quilter Investors Trust.
Share Class
A Accumulation
B Income
Fund name Share class % Held
United Kingdom
Senator House, 85 Queen Victoria Street, London, EC4V 4AB
Quilter Investors Absolute Return Bond Fund A 63
Quilter Investors Asia Pacific (ex Japan) Equity Fund A 62
Quilter Investors Asia Pacific (ex Japan) Large-Cap
Equity Fund A 59
Quilter Investors Asia Pacific Fund A 64
Quilter Investors Bond 1 Fund B 63
Quilter Investors Bond 3 Fund B 97
Quilter Investors Cirilium Adventurous Passive Portfolio A 45
Quilter Investors Cirilium Adventurous Portfolio A 38
Quilter Investors Cirilium Balanced Passive Portfolio A 42
Quilter Investors Cirilium Conservative Passive Portfolio A 33
Quilter Investors Cirilium Conservative Portfolio A 32
Quilter Investors Cirilium Dynamic Passive Portfolio A 41
Quilter Investors Cirilium Moderate Passive Portfolio A 42
Quilter Investors Corporate Bond Fund A 60
Quilter Investors Creation Balanced Portfolio A 30
Quilter Investors Creation Dynamic Portfolio A 31
Quilter Investors Creation Moderate Portfolio A 29
Quilter Investors Diversified Bond Fund A 60
Quilter Investors Emerging Markets Equity Fund A 64
Fund name Share class % Held
Quilter Investors Emerging Markets Equity Growth Fund A 64
Quilter Investors Emerging Markets Equity Growth Fund A 64
Quilter Investors Emerging Markets Equity Income Fund A 63
Quilter Investors Europe (ex UK) Equity Fund A 60
Quilter Investors Europe (ex UK) Equity Growth Fund A 61
Quilter Investors Europe (ex UK) Equity Income Fund A 63
Quilter Investors Global Dynamic Equity Fund A 55
Quilter Investors Global Equity Absolute Return Fund A 62
Quilter Investors Global Equity Value Fund A&B 64
Quilter Investors Investment Grade Corporate
Bond Fund A&B
50
Quilter Investors Japanese Equity Fund A 60
Quilter Investors Monthly Income & Growth Portfolio A&B 46
Quilter Investors Monthly Income Portfolio A&B 46
Quilter Investors Natural Resources Equity Fund A 54
Quilter Investors North American Equity Fund A 63
Quilter Investors Precious Metals Equity Fund A 59
Quilter Investors Sterling Corporate Bond Fund A&B 50
Quilter Investors Sterling Diversified Bond Fund A&B 59
Quilter Investors Timber Equity Fund A 64
Quilter Investors UK Equity Fund A 62
Quilter Investors UK Equity 2 Fund A 100
Quilter Investors UK Equity Growth Fund A 55
Quilter Investors UK Equity Income Fund A 63
Quilter Investors UK Equity Large-Cap Income Fund A&B 57
Quilter Investors UK Equity Mid-Cap Growth Fund A 55
Quilter Investors UK Equity Opportunities Fund A 58
Quilter Investors US Equity Growth Fund A 41
Quilter Investors US Equity Income Fund A 59
Quilter Investors US Equity Small/Mid-Cap Fund A 52
Appendix
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Notes
31 December
2022
£m
31 December
2021
£m
Assets
Investments in subsidiary undertakings
4 2,150 2,130
Loans and advances
5 462 453
Deferred tax assets
6 4 6
Current tax assets 12 7
Other receivables and other assets
7 27 32
Cash and cash equivalents
8 126 503
Total assets 2,781 3,131
Equity and liabilities
Equity
Ordinary Share capital 115 116
Ordinary Share premium reserve 58 58
Capital redemption reserve 346 17
Merger reserve
9 1,359 1,687
Share -based payments reserve 41 42
Retained earnings (including profit/(loss) for the financial year of £81 million (2021: £319 million)) 637 966
Total equity 2,556 2,886
Liabilities
Provisions
10 4 4
Borrowings
11 203 202
Other payables
12 18 39
Total liabilities 225 245
Total equity and liabilities 2,781 3,131
Approved by the Board of Quilter plc on 7 March 2023.
Steven Levin Mark Satchel
Chief Executive Officer Chief Financial Officer
Company registered number: 06404270
Company statement of financial position
At 31 December 2022
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Company statement of changes in equity
For the year ended 31 December 2022
31 December 2022 Note
Ordinary
Share
capital
4
£m
Ordinary
Share
premium
4
£m
B shares
£m
Capital
redemption
reserves
4
£m
Merger
reserve
4
£m
Share-
based
payments
reserve
4
£m
Retained
earnings
£m
Total
share-
holders’
equity
£m
Balance at 1 January 2022 116 58 – 17 1,687 42 966 2,886
Profit for the year – – – – – – 81 81
Total comprehensive income – – – – – – 81 81
Dividends
5
– – – – – – (78) (78)
Ordinary Shares purchased in the
buyback programme
1
(1) – – 1 – – – –
Issue of B shares
2
– – 328 – (328) – – –
Redemption of B shares
2
9
– – (328) 328 – – (328) (328)
Exchange rate movement (ZAR/GBP)
3
– – – – – – (4) (4)
Equity share-based payments – – – – – (1) – (1)
Total transactions with the owners of
the Company (1) – – 329 (328) (1) (410) (411)
Balance at 31 December 2022 115 58 – 346 1,359 41 637 2,556
31 December 2021 Note
Ordinary
Share
capital
£m
Ordinary
Share
premium
£m
B shares
£m
Capital
redemption
reserve
£m
Merger
reserve
£m
Share-
based
payments
reserve
£m
Retained
earnings
£m
Total
share-
holders’
equity
£m
Balance at 1 January 2021 125 58 – 8 1,811 42 816 2,860
Profit for the year – – – – – – 319 319
Total comprehensive income – – – – – – 319 319
Dividends – – – – – – (89) (89)
Release of merger reserve
9
– – – – (124) – 124 –
Ordinary Shares purchased in the buyback
programme
1
(9) – – 9 – – (204) (204)
Total transactions with the owners of
the Company (9) – – 9 (124) – (169) (293)
Balance at 31 December 2021 116 58 – 17 1,687 42 966 2,886
1
On 11 March 2020, the Company announced a share buyback programme to purchase Ordinary Shares up to a maximum value of £375 million, in order to return the net surplus
proceeds to shareholders arising from the sale of Quilter Life Assurance which had the impact of reducing the share capital of the Company. During the year ending 31 December
2022, the Company acquired 17.7 million shares (31 December 2021: 128.1 million) for a total consideration of £26 million (31 December 2021: £197 million) and incurred additional
costs of £1 million (31 December 2021: £3 million). The shares, which have a nominal value of £1 million (31 December 2021: £9 million), were subsequently cancelled, giving rise
to a capital redemption reserve of the same value as required by the Companies Act 2006. The share buyback was completed in January 2022.
2
On 9 March 2022, the Company announced a capital return of £328 million from the net surplus proceeds arising from the sale of Quilter International by way of a B Share
Scheme accompanied by a Share Consolidation. Refer to note 4 on the consolidated financial statements for further details of the capital return and Share Consolidation.
Following the issue and redemption of the B preference shares as part of the B Share Scheme, the Company transferred £328 million from retained earnings to the capital
redemption reserve, as required under the provisions of sections 688 and 733 of the Companies Act 2006, being an amount equal to the nominal value of the B shares redeemed
in the year. The increase in the capital redemption reserve results from the UK company law requirement to maintain the Company’s capital when shares are redeemed out of the
Company’s distributable profits.
3
The South African Rand value of the proposed capital return for shares registered on the Johannesburg Stock Exchange was set on 9 March 2022. The impact of exchange rate
movements between the year-end Market Announcement on 9 March 2022 and the redemption of the B shares on 24 May 2022 on the pound sterling equivalent of payments
to JSE shareholders in South African Rand is recognised directly in equity. Additionally, the impact of exchange rate movements between the announcement date of dividends
payable and the payment date on the pound sterling equivalent of payments to JSE shareholders in South African Rand is recognised directly in equity. The Company held cash
in South African Rand equal to the expected cash outflows and therefore was economically hedged for the outflows.
4
Please refer to the SOCIE of the Group financial statements for further information.
5
Details of dividends proposed and paid during the year are disclosed in the notes to the financial statements of the Group.
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1: General information
Quilter plc (the “Company”) is a public limited company incorporated in England and Wales and domiciled in the United Kingdom with registration
number 06404270.
The Company’s Registered Office is Senator House, 85 Queen Victoria Street, London EC4V 4AB.
2: Basis of preparation
The financial statements of Quilter plc for the year ended 31 December 2022 have been prepared in accordance with Financial Reporting Standard 101,
‘Reduced Disclosure Framework’ (“FRS 101”). The financial statements have been prepared on a going concern basis and under the historical cost
convention, as modified by the revaluation of certain financial instruments which have been recognised at fair value through profit or loss, and in
accordance with the Companies Act 2006.
The accounting policies adopted are the same as those set out in note 1 to the Group financial statements with the exceptions noted below.
These accounting policies have been applied consistently.
First-time application of FRS 101
The Company has transitioned to FRS 101 for the first time in 2022 for the purposes of preparing the Parent Company financial statements. In the prior
year, the Parent Company financial statements were prepared in accordance with international accounting standards. No material adjustments have
been required to the prior year in respect of the change in reporting approach.
The preparation of financial statements in conformity with FRS 101 requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement
or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in the critical accounting estimates
and judgements section below.
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in accordance with
FRS101:
· Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’ (details of the number and weighted average exercise prices of share options,
and how the fair value of goods or services received was determined).
· IFRS 7, ‘Financial instruments: Disclosures’.
· Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs used for fair value measurement of assets
and liabilities).
· Paragraph 38 of IAS 1, ‘Presentation of financial statements’ – comparative information requirements in respect of:
– paragraph 79(a)(iv) of IAS 1 (reconciliation of shares outstanding);
– paragraph 73(e) of IAS 16, ‘Property, plant and equipment’ (reconciliation of carrying amount); and
– paragraph 118(e) of IAS 38, ‘Intangible assets’ (reconciliations between the carrying amount at the beginning and end of the period).
· The following paragraphs of IAS 1, ‘Presentation of financial statements’:
– 10(d) (statement of cash flows);
– 16 (statement of compliance with all IFRS);
– 38A (requirement for minimum of two primary statements, including cash flow statements);
– 38B-D (additional comparative information);
– 111 (statement of cash flows information); and
– 134-136 (capital management disclosures).
· IAS 7, ‘Statement of cash flows’.
· Paragraphs 30 and 31 of IAS 8, ‘Accounting policies, changes in accounting estimates and errors’ (requirement for the disclosure of information when
an entity has not applied a new IFRS that has been issued but is not yet effective).
· Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation).
· The requirements in IAS 24, ‘Related party disclosures’, to disclose related party transactions entered into between two or more members of a group
· The requirements of the second sentence of paragraph 110 and paragraphs 118, 119(a) to (c), 120 to 127 and 129 of IFRS 15 Revenue from Contracts
with Customers.
The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its own income statement in these
financial statements.
Critical accounting estimates and judgements
The preparation of financial statements requires management to exercise judgement in applying accounting policies and make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. Critical accounting estimates and
judgements are those that involve the most complex or subjective assessments and assumptions. Management uses its knowledge of current facts
and circumstances and applies estimation and assumption setting techniques that are aligned with relevant accounting guidance to make predictions
about future actions and events. Actual results may differ significantly from those estimates.
Notes to the financial statements of the Company
For the year ended 31 December 2022
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For the year ended 31 December 2022 continued
2: Basis of preparation continued
Critical accounting estimates and judgements continued
The areas where judgements and estimates have the most significant effect on the amounts recognised in these financial statements are summarised
below:
Area Critical accounting judgements Note
Investments in subsidiaries –
measurement
Management has applied judgement in its impairment assessment in respect of determining the
cash-generating unit (“CGU”), which is the level at which largely independent cash inflows occur. The
Company’s investments in Quilter Holdings Limited and Quilter Investors Limited each contain cash flows
generated from within the Affluent segment and management has taken the judgement that aggregating
cash flows from these investments represents the lowest level at which largely independent cash inflows
are generated.
4
Other principal estimates
The Company’s assessment of its investment in subsidiaries for impairment uses the latest cash flow forecasts from the Group’s three-year Business
Plan to calculate the recoverable value of its trading subsidiaries. These forecasts include estimates relating to equity market levels and growth in AuMA
in future periods, together with levels of new business growth, net client cash flow, revenue margins, and future expenses and discount rates (see note 14
of the Group financial statements). Management does not believe that the use of these estimates has a significant risk of causing a material adjustment
to the carrying amount of the assets within the next financial year.
3: Capital and financial risk management
The material risks faced by the Company are described below.
3(a): Operational risk
Operational risk is the risk of loss arising from inadequate or failed internal processes, or from personnel and systems, or from external events,
resulting in an adverse impact to earnings or reduced solvency. Operational risk includes all risks resulting from operational activities, excluding
the risks detailed below and excluding strategic risks and risks resulting from being part of a wider group of companies.
Operational risk includes the effects of failure of administration processes, IT and Information Security maintenance and development processes,
people and HR processes, legal risks, poorly managed responses to regulatory change, change and physical and certain transitional financial risks
arising from climate change, risks relating to the relationship with third-party suppliers and outsourcers, and the consequences of financial crime
and business interruption events.
3(b): Credit risk
Credit risk is the risk of adverse movements in credit spreads (relative to the reference yield curve), credit ratings or default rates leading to a
deterioration in the level or volatility of assets, liabilities or financial instruments resulting in loss of earnings or reduced solvency. This includes
counterparty default risk, counterparty concentration risk and spread risk.
The Company is exposed to credit and counterparty risk primarily arising from the investment of its shareholder funds. Sources of credit risk are
managed in line with the requirements of the Credit Risk Policy that ensures cash is placed with highly rated counterparties and is appropriately
diversified. Credit risk exposures of the Company are monitored regularly to ensure that counterparties remain creditworthy, that there is appropriate
diversification of counterparties and that exposures are within approved limits.
3(c): Market risk
Market risk is the risk of an adverse change in the level or volatility of market prices of assets, liabilities or financial instruments resulting in loss of
earnings or reduced solvency. Market risk arises from changes in equity, bond and property prices, interest rates and foreign exchange rates. Market
risk arises differently across the business depending on the types of financial assets and liabilities held. The Company recognises that climate change
can contribute to market risk. The Company is subject to material risk in the following areas:
Interest rate risk
Interest rate risk is defined as the risk of a deviation of the actual interest rates from the expected interest rates, resulting in the potential for a negative
impact on earnings or capital and/or reduced solvency.
An exposure exists as a result of four intercompany loans (see note 5) that are linked to an underlying variable interest rate, and so the value of these
interest payments will vary if the underlying interest rate changes.
The Company also has subordinated debt (see note 11) that has a fixed interest rate, where the present value of the loan would vary in the event
of a change in interest rates. Note 15 contains information on changes to debt financing after the reporting date.
3(d): Liquidity risk
Liquidity risk is the risk that there are insufficient assets or that assets cannot be realised in order to settle financial obligations as they fall due.
TheCompany manages liquidity on a daily basis through maintaining adequate high-quality liquidity assets and banking facilities, regularly monitoring
forecast and actual cash flows, matching the maturity profiles of financial assets and liabilities and monitoring a number of key risk indicators to help in
the identification of a liquidity stress. The Company maintains and manages its local liquidity requirements according to its business needs, within the
overall liquidity framework established by the Company.
200
Quilter Annual Report 2022
3: Capital and financial risk management continued
3(e): Sensitivity tests
Sensitivity analysis has been performed by applying the following parameters to the statement of financial position and income statement as at the
reporting date.
Interest rate sensitivity
The impact of an increase and decrease in market interest rate of 1% is assessed (e.g. if the current interest rate is 5% the test allows for the effects
of an instantaneous change to 4% and 6% from the start of the year).
A decrease in interest rate of 1% would have decreased profit and shareholders’ equity by £4 million (2021: increase £1 million) after tax; an equal
change in the opposite direction would have increased profit by £4 million (2021: increase £6 million) after tax.
4: Investments in subsidiary undertakings
Investments in subsidiaries are stated at cost, less impairment in value. All shares held are Ordinary Shares.
31 December
2022
£m
31 December
2021
£m
Balance at the beginning of the year 2,130 2,254
Investment in subsidiary undertaking in relation to share-based payments (1) –
Reversal of impairment/(impairment) of subsidiary undertakings 21 (124)
Balance at the end of the year 2,150 2,130
Investment in subsidiary undertakings in relation to share-based payments
Quilter plc grants rights to its equity instruments to employees of its subsidiaries under various share-based payment arrangements. In so doing, the
subsidiaries receive services from employees that are paid for by Quilter plc, thereby increasing/(decreasing) the investment that Quilter plc holds in
those subsidiaries. Quilter plc recognises the equity-settled share-based payment in equity, with a corresponding increase/(decrease) in its investment
in the subsidiaries. The amount recognised as an additional investment is based on the grant date fair value of the share options granted, and is
recognised by Quilter plc over the vesting period of the respective share schemes. A decrease to the investment in subsidiary undertakings is
recognised when each share award vests, and shares are delivered to the employees.
During 2022, the Company marginally decreased its investments in subsidiaries in relation to share-based payments as listed below. In 2021,
its investments in relation to share-based payments marginally increased.
31 December
2022
£m
31 December
2021
£m
Quilter Business Services Limited (2) –
Quilter Cheviot Limited – 2
Quilter Financial Planning Limited – (2)
Quilter Investors Limited – 1
Other subsidiaries 1 (1)
Total investments in subsidiaries (1) –
Impairments of investments in subsidiary undertakings
In accordance with the requirements of IAS 36 Impairment of Assets, the investments in subsidiaries are tested annually for impairment by comparing
the carrying value of the underlying investments to the recoverable value, being the higher of the 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.
On 31 December 2021, the Company received a dividend from its subsidiary, Quilter Perimeter Holdings Limited. This resulted in a reduction in the
net asset value of Quilter Perimeter Holdings Limited and gave rise to an impairment of £124 million of the Company’s investment in Quilter Perimeter
Holdings Limited.
2022 impairment to investment in subsidiary
During 2022, the net asset value of Quilter Perimeter Holdings Limited and its subsidiaries increased, leading to the partial reversal of a previous
impairment, of £21 million. The Company does not consider the £21 million arising on reversal of impairment to be distributable.
Notes to the financial statements of the Company
For the year ended 31 December 2022 continued
201
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
5: Loans and advances
This note analyses the loans and advances the Company has made. The carrying amounts of loans and advances were as follows:
31 December
2022
£m
31 December
2021
£m
Loans to subsidiary undertakings 462 453
Total net loans and advances 462 453
All loans are held at amortised cost and repayable on demand. The loans to subsidiary undertakings are with Quilter Holdings Limited and are charged
at base rate plus 0.5% and 10%, Quilter Perimeter Holdings Limited, which is charged at base rate plus 0.5%, and the Employee Benefit Trust, which
attracts no interest. Given the profitability and net assets of these subsidiaries, the credit risk associated with these loans is considered minimal. There
have been no non-performing loans, loans subject to renegotiations or material impairments on loans and advances recognised in the financial year.
6: Deferred tax assets/liabilities
The following are the deferred tax balances recognised by the Company and the movements thereon, during the current and prior year.
Tax losses
£m
Closing deferred
tax asset
£m
Assets/(liabilities) at 1 January 2021 – –
Income statement (charge)/credit 6 6
Assets/(liabilities) at 31 December 2021 6 6
Income statement (charge)/credit (2) (2)
Assets/(liabilities) at 31 December 2022 4 4
Deferred tax assets or liabilities are recognised to the extent that temporary differences are expected to reverse in the foreseeable future. The timing
of reversals are estimated based on the Company’s annual Business Plan. Deferred tax assets are recognised to the extent that they are supported
by the Company’s Business Plan or where appropriate the Group’s Business Plan.
Deferred tax assets are recognised for tax losses carried forward only to the extent that realisation of the related tax benefit is probable, being where,
on the basis of all available evidence, it is considered more likely than not that there will be suitable taxable profits against which the reversal of the
deferred tax asset can be deducted.
Sensitivity analysis demonstrates headroom in the recoverable amount of the deferred tax asset over the taxable profits contained within the
three-year planning horizon. The impacts of a 20% decrease in profitability have been assessed and do not give rise to concerns over recoverability.
Sensitivity analysis shows a 20% reduction in Group future taxable profits will necessitate a £3 million write down in the value of the current deferred
tax asset.
The main rate of Corporation Tax is 19% for the financial year 2022. The rate will increase to 25% with effect from 1 April 2023. This change having been
substantively enacted has been used in recognising the Company’s deferred tax assets and liabilities for reversals expected to take place on or after
1April 2023.
Unrecognised deferred tax assets
The amounts for which no deferred tax asset has been recognised comprises:
31 December 2022 31 December 2021
Gross amount
£m
Tax
£m
Gross amount
£m
Tax
£m
Pre-April 2017 UK tax losses 16 4 16 4
Post-April 2017 UK tax losses 67 17 57 14
Total unrecognised deferred tax assets 83 21 73 18
A deferred tax asset has not been recognised as there is sufficient uncertainty to the extent it is probable there will be future taxable profits to utilise the
relevant losses. Unrecognised losses are available to carry forward with no expiry date, subject only to the continuation of the business.
Notes to the financial statements of the Company
For the year ended 31 December 2022 continued
202
Quilter Annual Report 2022
7: Other receivables and other assets
The note analyses total other receivables and other assets.
31 December
2022
£m
31 December
2021
£m
Due from subsidiary undertakings 27 32
Total other receivables and other assets 27 32
All amounts due from Group companies are unsecured, interest-free and settled on demand. The Directors consider that the carrying amount of other
receivables approximate their fair value.
8: Cash and cash equivalents
31 December
2022
£m
31 December
2021
£m
Cash at bank 11 21
Money market funds 115 482
Total cash and cash equivalents per the statement of financial position 126 503
All cash and cash equivalents are current, and recognised at amortised cost, apart from money market investments which are recognised mandatorily
at FV TPL.
Investments in money market funds are classified as cash and cash equivalents. Management holds these investment funds for short-term liquidity
purposes. The funds are highly liquid, have a strong credit rating and a very low risk of reduction in value.
9: Merger reserve
2021 Merger reserve
On 31 December 2021, there was a dividend payment made from Quilter Perimeter Holdings Limited to the Company. This reduced the net asset value
of Quilter Perimeter Holdings Limited, giving rise to a £124 million impairment in the Company’s investment in its subsidiary, and an associated release
of the merger reserve.
2022 Merger reserve
On 9 March 2022, the Company announced a capital return of £328 million from the net surplus proceeds arising from the sale of Quilter International,
by way of a B Share Scheme accompanied by a Share Consolidation. Note 4 on the consolidated financial statements contains further information on
the capital return.
These transactions attracted merger relief under section 612 of the Companies Act 2006.
10: Provisions
31 December
2022
£m
31 December
2021
£m
Balance at beginning of the year 4 7
Jupiter guarantee of revenue payment – (2)
Reassessment of provision – (1)
Total provisions 4 4
Revenue warranty in relation to the sale of the Single Strategy Asset Management business
In 2018, a restructuring provision was recognised as a result of the sale of the Single Strategy Asset Management business (now known as Jupiter
Investment Management (“Jupiter”)) to enable the remaining Quilter Investors business to function as a standalone operation going forward. The
remaining provision relates to various sale-related future commitments, the outcome of which was uncertain at the time of the sale and the most
significant of which is in relation to the guarantee of revenues for the seller in future years arising from funds invested by customers of Quilter. The
balance decreased to £4 million during 2021 as a result of the settlement of £2 million related to the 2020 measurement year. The balance has been
adjusted for the final calculations relating to the 2021 measurement year and for the latest estimate for the 2022 measurement year.
The expected range of payments based upon the latest information received from Jupiter and the Group’s reasonable expectations of the assets under
management invested within Jupiter funds during the 2022 assessment period is between £4 million and £5 million.
The provision outstanding is estimated to be payable within one year, with expected final settlement due in the first half of 2023.
Notes to the financial statements of the Company
For the year ended 31 December 2022 continued
203
Quilter Annual Report 2022
Strategic Report Governance Report
Financial statements
Other information
11: Borrowings
31 December
2022
£m
31 December
2021
£m
Subordinated debt
Subordinated loan at 4.478%
1
200 199
Funding – intercompany payables 3 3
Total borrowings 203 202
1
Commenced on 28 February 2018 and used for general corporate purposes.
Amounts borrowed are held at amortised cost.
On 28 February 2018, the Company issued a £200 million subordinated debt security in the form of a 10-year Tier 2 bond with a one-time issuer call
option after five years to J.P. Morgan Securities plc, paying a semi-annual coupon of 4.478% (the “Tier 2 Bond”). The bond is held at amortised cost of
£200 million at 31 December 2022 (2021: £199 million). The bond was remarketed and sold to the secondary market in full on 13 April 2018. The Bond
was listed and regulated under the terms of the London Stock Exchange. Note 40 to the Group financial statements contains information on changes
to debt financing after the reporting date.
In addition, the Company has entered into a £125 million revolving credit facility which remains undrawn and is being held for contingent funding
purposes across the Group.
12: Other payables
31 December
2022
£m
31 December
2021
£m
Due to subsidiary undertakings 15 9
Accruals 3 30
Total other payables 18 39
In 2021, other payables included an accrual for committed share purchases to complete the final tranche of the share buyback programme of £26 million;
the tranche completed in January 2022.
All amounts are current and short term i.e. repayable within one year.
Amounts due to subsidiary undertakings are unsecured, repayable on demand and usually settled quarterly.
13: Related party transactions
Key management personnel transactions
Key management personnel and members of their close family have undertaken transactions with the Group in the normal course of business.
The Directors and key management personnel of the Company are considered to be the same as for the Group. See note 39 of the Group financial
statements for further information.
Other related party transactions
There were no other related party transactions to disclose in the year ended 31 December 2022 and 31 December 2021 other than those referenced
in note 39 of the Group financial statements.
14: Loan covenants
Under the terms of the revolving credit facility, the Company is required to comply with certain financial covenants. Please refer to note 37(a) to the Group
financial statements for further information.
Notes to the financial statements of the Company
For the year ended 31 December 2022 continued
Contents
205 Shareholder information
209 Alternative Performance Measures
212 Glossary
204 Quilter Annual Report 2022
Other information
Shareholder information
Information for all shareholders
2023 key dates
The key dates for shareholders are:
18 April 2023 Last day for shares to trade cum dividend
in South Africa
19 April 2023 Shares start trading ex-dividend in South Africa
20 April 2023 Shares start trading ex-dividend in the UK
21 April 2023 Final Dividend record date – shareholders on
the register are eligible for the Final Dividend
18 May 2023 AGM at 11:00am (UK time)
22 May 2023 Final Dividend payment date
8 August 2023 Publication of 2023 half year results, including
any Interim Dividend details
Dates may be subject to change. Please check our website at plc.quilter.com
for further information.
Dividends
Dividend information
This year the Directors are recommending the payment of a Final
Dividend of 3.3 pence per share.
Dividend policy
The Quilter Board targets a dividend pay-out ratio of 50% to 70%
of post-tax, post-interest adjusted profit.
We expect to pay an Interim and a Final Dividend each financial
year. It is expected that the Final and Interim Dividends will be
paid in the approximate proportions of one-third (Interim dividend)
and two-thirds (Final Dividend) of the total dividends payable in
respect of a financial year, taking into account the underlying cash
generation, cash resources, capital position, distributable reserves
and market conditions at the time.
All key dividend dates such as ex-dividend date, record date and
payment date will be published on our website as soon as they
are announced.
Dividends paid by cheque –
shareholders on the UK share
register
Quilter only pays dividends to shareholders on the UK share
register by direct credit. We stopped paying dividend payments
by cheque in September 2022. Paying dividends by direct credit
straight into your bank or building society account rather than
by cheque is a safer, quicker and easier way for shareholders to
receive their dividends while the reduction in printing, paper and
postage supports our environmental objectives. There is no fee
charged by Quilter or our Registrar, Equiniti, for the direct credit
service. If you have not yet provided your bank details, it is
important that you take action as soon as possible so that you
continue to receive your dividend payments. You can do this:
Online
You can provide and maintain your UK bank or building society
account details via Shareview. Please visit www.shareview.co.uk
for details on how to register.
Telephone
You can provide your UK bank or building society account details
by telephoning Equiniti.
Post
You can download a Bank Mandate Form from plc.quilter.com.
Alternatively, please telephone Equiniti using the contact details
on page 208 and they will send a form to you for completion.
If you have any questions, please contact Equiniti using the
contact details on page 208.
Following approval by shareholders at a General Meeting held
on Thursday 12 May 2022, Quilter returned £328 million of the net
proceeds arising from the sale of Quilter International to shareholders
by way of a B Share Scheme and Share Consolidation. The B Share
Scheme was implemented through the issue of new redeemable
B shares to shareholders on Monday 23 May 2022, which Quilter
subsequently redeemed for cash on Tuesday 24 May 2022.
Through the B Share Scheme, shareholders on our UK share
register received 20 pence per old Ordinary Share. This equated to
a return of 401.33300 South African cents per old Ordinary Share
for shareholders on our South African share register, using an
exchange rate of 20.06665 South African cents to one pence,
the average rate achieved on 7 and 8 March 2022.
The Share Consolidation completed on Monday 23 May 2022 and
resulted in each shareholder receiving six new Ordinary Shares of
8 1/6 pence each for every seven old Ordinary Shares of 7 pence
each that they held on the record date of Friday 20 May 2022.
If you have not received your B Share Scheme payment or your new
share certificate following the Share Consolidation, please contact
Equiniti using the contact details on page 208.
Donation to The Quilter Foundation
£102,000
donated on behalf of shareholders
The fractional share entitlements arising from the Share
Consolidation were aggregated and sold in the market on behalf
of shareholders. As the proceeds from the sale of any fractional
entitlement were less than £3.00 per shareholder, the Board
decided to donate the aggregated proceeds to The Quilter
Foundation. More information on The Quilter Foundation and its
impact, achievements and focus can be found on our website at
plc.quilter.com.
Return of Capital to shareholders following the sale of Quilter
International
205Quilter Annual Report 2022
Strategic Report Governance Report Financial statements
Other information
Quilter 2023 AGM
AGM key dates
The key AGM dates for shareholders are:
12 May 2023
By no later than 5:00pm
(UK time)
Written shareholder questions to be
received by the Company Secretary
16 May 2023
By no later than 11:00am
(UK time)
Proxy Forms to be received by our
Registrar* and requests to join the
AGM by telephone to be received
by the Company Secretary
18 May 2023
11:00am (UK time)
AGM to be held
*Voting deadlines may vary depending on how you hold your shares. If you hold
your shares via a CSDP, broker or nominee, please contact them to confirm their
voting deadline.
More information about your AGM
Our Company Secretary, Clare Barrett, sets out information on
the AGM arrangements and how you can have your say in more
detail on pages 4 and 5 of the 2023 Notice of AGM.
Attending the AGM
We are pleased to invite you to Quilter plc’s 2023 AGM to be held
at 11:00am (UK time) on Thursday 18 May 2023 at Senator House,
85 Queen Victoria Street, London EC4V 4AB. We look forward to
welcoming you to our meeting and value the opportunity to engage
with our shareholders to review our performance and to answer
questions on the business of the meeting.
St Paul’s
Bank
Mansion
House
Blackfriars
Cannon
Street
Queen Victoria Street
Princes Street
Cheapside
Cannon Street
St Paul’s Churchyard
Upper Thames Street
Millennium Bridge
Senator House
Southwark Bridge
Blackfriars Bridge
A201
River Thames
Shakespeare’s Globe
Tate Modern
St Paul’s Cathedral
City of London School
How to get there
Senator House is within walking distance of the following
train and underground stations:
· Bank (Central, DLR, Northern and Waterloo & City lines)
· Blackfriars (Southeastern Railway, Thameslink and Circle
and District lines)
· Cannon Street (Southeastern Railway and Circle
and District lines)
· Mansion House (Circle and District lines)
· St Paul’s (Central line)
The venue can also be accessed via bus routes 4, 11, 15, 17, 26,
76, 388 and 521.
Asking a question
You can, if you wish, submit any questions you may have on the
business of the meeting to the Board ahead of the AGM by emailing
the Company Secretary at companysecretary@quilter.com by
5:00pm (UK time) on Friday 12 May 2023. If you do not plan to
attend the AGM in person, this will enable you to have your
questions answered before you vote your shares. The questions
and answers will be published on our GM Hub at plc.quilter.com/gm
in advance of the voting deadline. If you submit a question after this
time, we will respond to you as soon as possible.
If you attend the AGM in person or join the meeting by telephone,
you will also have the opportunity to ask a question on the day.
Joining the meeting by telephone
Shareholders can join the meeting by telephone. You will be able
to listen to the meeting and also have the opportunity to ask the
Board any questions relating to the business of the meeting. Please
note that shareholders joining by telephone will not be able to vote
on the day. We recommend that shareholders appoint the Chair of
the meeting as their proxy and register a voting instruction ahead
of the meeting.
How to join the AGM by telephone
If you would like to join the AGM by telephone,
please contact the Company Secretary at
companysecretary@quilter.com to request your
individual secure dial in details. Requests must be
received no later than 11:00am (UK time) on
Tuesday 16 May 2023. The telephone line will open shortly
before 11:00am (UK time) on the day of the meeting.
Voting results and AGM information available
to shareholders
The final voting results are expected to be released to the
London Stock Exchange and Johannesburg Stock Exchange on
Thursday 18 May 2023 as soon as practical after the AGM and will
be published on our GM Hub at plc.quilter.com/gm. We will also
make available the Chair’s statement. Please ensure you check
the GM Hub regularly for up to date information about our
AGM arrangements.
206 Quilter Annual Report 2022
Shareholder information
continued
Information for UK shareholders
Managing your shares and staying in touch
You do not have to receive paper shareholder documentation.
Many shareholders choose to receive their communications
electronically. Equiniti provide a free, convenient online service,
Shareview, where you can access your shareholding quickly and
easily. If you have not already done so, you can register for
Shareview by visiting www.shareview.co.uk. All you need is your
Quilter Shareholder Reference Number, which can be found on
your share certificate or dividend confirmation. We will email you
a notification when any shareholder statements are available and
when we announce our full and half year results. You can also use
Shareview to submit a voting instruction for any general meetings
and to find out when any dividends are due.
Keeping your personal information up to date
It is important that you keep the personal information we
hold up to date. That way correspondence advising you of any
changes that might affect your shareholding reaches you and
any dividends are paid to you promptly. You can do this online at
www.shareview.co.uk, via the Quilter Shareholder Helpline or by
post. Contact details are overleaf.
Fraud warning
Shareholders should be wary of any unsolicited calls or
documents offering unsolicited investment advice and offers to
buy shares at a discounted price. Fraudsters can use persuasive
and high-pressure tactics to lure shareholders into scams. You
are advised not to give out any personal details or to hand over
any money without ensuring that the organisation is authorised
by the UK Financial Conduct Authority (“FCA”) and doing further
research. If you are unsure, or think you may have been targeted,
you should report the organisation to the FCA using the share
fraud reporting form available at www.fca.org.uk/scams. You can
also report suspected share fraud through the FCA Helpline on
+44 (0)800 111 6768 or through Action Fraud on
+44 (0)300 123 2040.
Useful information
Quilter plc share register
Quilter plc listed on the London and Johannesburg Stock
Exchanges on 25 June 2018. Quilter plc has a premium listing
on the London Stock Exchange and a secondary listing on the
Johannesburg Stock Exchange. The shares track under the
QLT ticker.
New Ordinary Shares nominal value
Following the Share Consolidation, which was implemented
on Monday 23 May 2022, each shareholder received six new
Ordinary Shares of 8 1/6 pence each for every seven old Ordinary
Shares of 7 pence each that they held on the record date of
Friday 20 May 2022. The nominal value of the new Ordinary
Shares is 8 1/6 pence each.
Historical shareholder information
If you had shares in Old Mutual plc and have any questions about
your holding or any unclaimed dividends, you should contact our
Registrars using the contact details on page 208. Please have
your Shareholder Reference Number to hand.
Information for African shareholders
Managing your shares and staying in touch
You can go online to manage your shareholding at
https://investorcentre.jseinvestorservices.co.za. This enables
you to view your holding, check your dividend history and update
how you want us to communicate with you.
Quilter would like to send you information about your shares by
text message or email. We will text you a notification when your
biannual shareholder statement is available; when we announce
our results; when you can vote at any general meetings; and
when any dividends are due. If you have not already done so,
you can quickly and easily register your mobile phone and email
address with us as follows:
Online
Go to https://investorcentre.jseinvestorservices.co.za
and register for electronic communications by following
the instructions on screen. All you need is your postcode
and Shareholder Reference Number which can be found
on your share certificate.
By email
Write to investorenquiries@jseinvestorservices.co.za. Please
include your email address and mobile phone number and state
that these should be used for all future communications.
By telephone
Call your Quilter Shareholder Helpline number provided overleaf
and ask for your email and mobile number to be recorded.
Dividends
For your security, Quilter will only pay your dividends to the bank
account currently registered with our Registrar, JSE Investor
Services. To register your bank details please contact JSE Investor
Services using the contact details overleaf.
Dividend currency
All dividends will be declared in pounds sterling for shareholders
on the UK register and Rand for shareholders on the South African
register. The foreign exchange rate is determined the day before
the Directors declare the dividend.
Did you know?
You do not need to hold a paper share certificate. By holding
your shares electronically you can buy and sell shares more easily
and protect your holding to help prevent fraud. You can find out
more by contacting JSE Investor Services using the contact
details overleaf.
207Quilter Annual Report 2022
Strategic Report Governance Report Financial statements
Other information
Shareholder information
continued
Contact our African Registrars
Shareholders on the South Africa Register
Post
JSE Investor Services (Pty) Limited
PO Box 10462, Johannesburg, 2000, South Africa
Email
investorenquiries@jseinvestorservices.co.za
Telephone
086 140 0110/086 154 6566 (calling from South Africa)
+27 11 029 0251/+27 11 715 3000 (calling from overseas)
Shareholders in Namibia
Post
Transfer Secretaries (PTY) Limited
PO Box 2401
Windhoek, Namibia
Email
ts@nsx.com.na
Telephone
+264 (0)61 227 647
Shareholders in Malawi
Post
National Bank of Malawi plc
Legal Department
PO Box 945
Blantyre, Malawi
Email
legal@natbankmw.com
Telephone
+265 (0)182 0622/+265 (0)182 0054
Shareholders in Zimbabwe
Post
Corpserve Registrars (PVT) Ltd
PO Box 2208
Harare, Zimbabwe
Email
corpserve@escrowgroup.org
Telephone
+263 (0)242 751 559/+263 (0)242 751 561
Contact our UK Registrar, Equiniti
If you have a question about your shareholding,
please contact Equiniti.
Post
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Online
https://help.shareview.co.uk
Telephone
+44 (0)333 207 5953*
*Lines are open Monday to Friday between 08:30 and 17:30 (UK time),
excluding public holidays in England and Wales.
Contact information
208 Quilter Annual Report 2022
Shareholder information
continued
We assess our financial performance using a variety of alternative performance measures (“APMs”). APMs are not defined under IFRS,
but we use them to provide further insight into the financial performance, financial position and cash flows of the Group and the way
it is managed.
APMs should be read together with the Group’s consolidated financial statements, which include the Group’s income statement,
statement of financial position and statement of cash flows, which are presented on pages 121 to 125.
Further details of APMs used by the Group in its Financial review are provided below.
APM Definition
Adjusted profit before tax
Adjusted profit before tax represents the Group’s IFRS profit, adjusted for specific items that
management consider to be outside of the Group’s normal operations or one-off in nature, as detailed
on page 142 in the consolidated financial statements. The exclusion of certain adjusting items may
result in adjusted profit before tax being materially higher or lower than the IFRS profit after tax.
Adjusted profit before tax does not provide a complete picture of the Group’s financial performance,
which is disclosed in the IFRS income statement, but is instead intended to provide additional
comparability and understanding of the financial results.
Adjusted profit before tax is presented for the continuing Group (excluding Quilter International),
for discontinued operations (Quilter International), and for the total Group for continuing and
discontinued operations.
A detailed reconciliation of the adjusted profit before tax metrics presented, and how these reconcile
to IFRS, is provided on page 40 of the Financial review. Adjusted profit before tax is referred to
throughout the Chief Executive Officer’s statement and Financial review, with comparison to the prior
year explained on page 37.
A reconciliation from each line item on the IFRS income statement to adjusted profit before tax
is provided in note 7(d) to the consolidated financial statements on page 145.
Adjusted profit after tax
Adjusted profit after tax represents the post-tax equivalent of the adjusted profit before tax measure,
as defined above.
Adjusted profit before tax
after reallocation
Adjusted profit before tax after reallocation reflects adjusted profit before tax including certain costs
within continuing operations relating to Quilter International that did not transfer to Utmost Group
on completion of the sale, as detailed above.
A reconciliation from each line item on the IFRS income statement to adjusted profit before tax after
reallocation is provided in note 7(d) to the consolidated financial statements on page 145.
IFRS profit before tax
attributable to equity
holders
IFRS profit before tax attributable to equity holders represents the profit after policyholder tax (‘tax
attributable to policyholder returns’) but before shareholder tax (‘tax attributable to equity holders’).
The tax charge for the Group’s UK life insurance entity, Quilter Life & Pensions Limited, comprises
policyholder tax and shareholder tax. Policyholder tax is regarded economically as a pre-tax cost to
the Group, in that it is based on the return on assets held by the Group’s life insurance entity to match
against related unit-linked liabilities in respect of clients’ policies, and for which the Company charges
fees to clients. As such, policyholder tax can be a charge or credit in any period depending on
underlying market movements on those assets held to cover linked liabilities.
Shareholder tax is the remaining tax after deducting policyholder tax and is more reflective of the
profitability of the entity.
This metric is included on the face of the Group’s income statement on page 40 and is included
in the adjusted profit before tax to IFRS profit after tax reconciliation in note 7(a) to the consolidated
financial statements.
209Quilter Annual Report 2022
Strategic Report Governance Report Financial statements
Other information
Alternative Performance Measures
APM Definition
IFRS profit before tax from
continuing operations
(excluding amortisation,
policyholder tax
adjustments, business
disposal impacts and
other one-off items)
This profit metric is calculated using the Group’s IFRS profit before tax, from continuing operations
and is adjusted to exclude amortisation of intangible assets, policyholder tax adjustments, business
disposal impacts and other one-off items as disclosed in the reconciliation in the Group’s Annual
Report. This metric is used as the basis for remuneration, which is explained in the Remuneration
report in the Group’s Annual Report.
Revenue margin (bps)
Revenue margin represents net management fees, divided by average AuMA. Management use this
APM as it represents the Group’s ability to earn revenue from AuMA.
Revenue margin by segment and for the Group is explained on page 37 of the Financial review.
Operating margin
Operating margin represents adjusted profit before tax divided by total net fee revenue.
Management use this APM as this is an efficiency measure that reflects the percentage of total net fee
revenue that becomes adjusted profit before tax.
Operating margin is referred to in the Chief Executive Officer’s statement and Financial review,
with comparison to the prior year explained in the adjusted profit section on page 37.
Gross flows
Gross flows are the gross client cash inflows received from customers during the period and represent
our ability to increase AuMA and revenue. Gross flows are referred to in the Financial review on page 36.
Net flows
Net flows is the difference between money received from and returned to customers during
the relevant period for the Group or for the business indicated.
This measure is a lead indicator of total net fee revenue. Net flows is referred to throughout this
document, with a separate section in the Financial review on page 36.
Assets under
Management and
Administration
(“AuMA”)
AuMA represents the total market value of all financial assets managed and administered on behalf
of customers.
AuMA is referred to throughout this document, with a separate section in the Financial review
on page 37.
Average AuMA
Average AuMA represents the average total market value of all financial assets managed and
administered on behalf of customers. Average AuMA is calculated using a 7-point average (half year)
and 13-point average (full year) of monthly closing AuMA.
Total net fee revenue
Total net fee revenue represents revenue earned from net management fees and other revenue listed
below and is a key input into the Group’s operating margin.
Further information on total net fee revenue is provided on page 38 of the Financial review and note
7(d) in the consolidated financial statements.
Net management fees
Net management fees consist of revenue generated from AuMA, fixed fee revenues including charges
for policyholder tax contributions, less trail commissions payable. Net management fees are presented
net of trail commission payable as trail commission is a variable cost directly linked to revenue, which
is a treatment and presentation commonly used across our industry. Net management fees are a part
of total net fee revenue and is a key input into the Group’s operating margin.
Further information on net management fees is provided on page 38 and note 7(d) in the consolidated
financial statements.
Other revenue
Other revenue represents revenue not directly linked to AuMA (e.g. encashment charges, closed book
unit-linked policies, non-linked Protect policies, adviser initial fees and adviser fees linked to AuMA
in Quilter Financial Planning (recurring fees). Other revenue is a part of total net fee revenue, which
is included in the calculation of the Group’s operating margin.
Further information on other revenue is provided on page 38 and note 7(d) in the consolidated
financial statements.
210 Quilter Annual Report 2022
Alternative Performance Measures
continued
APM Definition
Operating expenses
Operating expenses represent the costs for the Group, which are incurred to earn total net fee
revenue and excludes the impact of specific items that management considers to be outside of the
Group’s normal operations or one-off in nature. Operating expenses are included in the calculation
of adjusted profit before tax and impact the Group’s operating margin.
A reconciliation of operating expenses to the applicable IFRS line items is included in note 7(a) to the
consolidated financial statements, and the adjusting items excluded from operating expenses are
explained in note 7(b). Operating expenses are explained on page 38 of the Financial review.
Cash generation
Cash generation is calculated by removing non-cash generative items from adjusted profit before tax,
such as deferrals required under IFRS to spread fee income and acquisition costs over the lives of the
underlying contracts with customers. It is stated after deducting an allowance for net cash required
to support the capital requirements generated by new business offset by a release of capital from
the in-force book.
Cash generation is explained on page 41 of the Financial review.
Asset retention
The asset retention rate measures our ability to retain assets from delivering good customer outcomes
and investment performance. Asset retention reflects the annualised gross outflows of the AuMA
during the period as a percentage of opening AuMA. Asset retention is calculated as: 1 - (annualised
gross outflow divided by opening AuMA).
Asset retention is provided for the Group on page 37.
Net inflows/opening
AuMA
This measure is calculated as total net flows annualised (as described above) divided by opening AuMA
presented as a percentage.
This metric is provided on page 37.
Gross flows per adviser
Gross flows per adviser is a measure of the value created by our Quilter distribution channel and is
an indicator of the success of our multi-channel business model. Gross flows per adviser is calculated
as gross flows generated by the Quilter channel through the Quilter Investment Platform, Quilter
Investors or Quilter Cheviot (annualised) per average Restricted Financial Planner in both segments.
Gross flows per adviser is provided on page 37.
Return on Equity (“RoE”)
Return on equity calculates how many pounds of profit the Group generates from continuing
operations with each pound of shareholder equity. This measure is calculated as adjusted profit
after tax divided by average equity. Equity is adjusted for the impact of discontinued operations,
if applicable.
Return on equity is provided on page 37.
Adjusted diluted
earnings per share
Adjusted diluted earnings per share represents the adjusted profit earnings per share, calculated
as adjusted profit after tax divided by the weighted average number of shares. Refer to page 155
and note 12 in the consolidated financial statements.
A continuing and discontinued view of diluted earnings per share has also been presented,
and the calculation of all EPS metrics, is shown in note 12 to the consolidated financial statements.
Headline earnings
per share
The Group is required to calculate headline earnings per share in accordance with the Johannesburg
Stock Exchange Limited Listing Requirements, determined by reference to the South African Institute
of Chartered Accountants’ circular 1/2021 Headline Earnings. This is calculated on a basic and diluted
basis. For details of the calculation, refer to note 12 of the consolidated financial statements.
211Quilter Annual Report 2022
Strategic Report Governance Report Financial statements
Other information
Alternative Performance Measures
continued
Glossary
Term Definition
Affluent
Customers with up to £500,000 of investable assets
AuA
Assets under administration, which unless stated otherwise, reflects gross AuA before
intra-group eliminations
AuM
Assets under management, which unless stated otherwise, reflects gross AuM before
intra-group eliminations
AuMA
Assets under management and administration – for more details see Alternative Performance
Measures on page 210
Brexit
The exit of the United Kingdom from the European Union, officially announced on 29 March 2017
CAGR
Compound annual growth rate
Company
Quilter plc
COVID-19
Coronavirus disease 2019
FCA
The UK Financial Conduct Authority
GHG
Greenhouse gas
Group
Quilter plc and its subsidiaries
High Net Worth
Customers with over £250,000 of investable assets
ICAAP
Internal Capital Adequacy Assessment Process
IFAs
Independent Financial Advisers, meaning advisers who provide advice on an independent basis,
based on a comprehensive analysis of the whole market and free from any restriction
IFRS
The International Financial Reporting Standards as adopted by the United Kingdom
Investment manager (IM)
Individual who provides investment advice and investment management services to private clients
of Quilter Cheviot in line with individual circumstances and investment objectives
IPO
Initial Public Offering
ISA
Individual Savings Accounts
JSE
Johannesburg Stock Exchange
Lighthouse
Lighthouse Group plc was acquired on 12 June 2019. The Company changed its name
to Lighthouse Group Limited on 19 February 2021
Listing
Reference to Quilter plc listing on the London and Johannesburg Stock Exchanges on 25 June 2018
LSE
London Stock Exchange
Managed Separation
Refers to the Managed Separation of Quilter plc from the Old Mutual Group
ORSA
Own Risk and Solvency Assessment
Own funds
Capital resources determined on the basis of the Solvency II balance sheet
PCA
Private Client Advisers – refers to Quilter Private Client Advisers
PRA
Prudential Regulation Authority
Productivity
Also referred to as ‘gross flows per adviser’. For definition, see Alternative Performance Measures
on page 211.
PTP
Platform Transformation Programme
Quilter
Quilter plc
Quilter Group
The group of companies that are ultimately owned by Quilter plc
QLA
Quilter Life Assurance – sold to ReAssure on 31 December 2019
Restricted Financial
Planners (RFPs)
Advisers who advise on a defined range of products and investment solutions, including investment
solutions offered by the Group and by third parties that have been pre-researched by the Group
Scope 1, 2 & 3 GHG emissions
Greenhouse gas emissions are categorised into three groups or ‘scopes’ by the most widely-used
international accounting tool, the Greenhouse Gas (GHG) Protocol. Scope 1 and 2 cover direct
emissions sources (e.g., fuel used in company vehicles and purchased electricity), Scope 3 emissions
cover all indirect emissions due to the activities of an organisation.
SCR
Solvency Capital Requirement, the regulatory capital requirement under the Solvency II Directive
SMCR
Senior Managers and Certification Regime
Standard Formula
The regulatory formula used to determine capital requirements for insurance entities under Solvency II.
This formula broadly represents the potential loss of own funds calibrated to a 1-in-200 likelihood level.
212 Quilter Annual Report 2022
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Quilter plc
Registered office:
Senator House
85 Queen Victoria Street
London EC4V 4AB
Registered number: 06404270.
Registered in England and Wales.
plc.quilter.com