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News release
QUILTER PLC
Incorporated under the Companies Act 1985 (UK) with registered number 06404270
and re-registered as a public limited company under the Companies Act 2006) (UK)
ISIN CODE: GB00BDCXV269
8 August
JSE SHARE 2023
CODE: QLT
Quilter plc (the "Company")
Quilter plc interim results for the period ended 30 June 2023
8 August 2023
Quilter plc interim results for the period ended 30 June 2023
Quilter delivers 25% increase in adjusted profit and improved operating margin.
Further growth and efficiency initiatives underway
Steven Levin, Chief Executive Officer, said:
“We have delivered a strong improvement in first half profitability, pleasing flow
outcomes in the Quilter channel and improved our market share of new advised
platform flows. Our business model is fully aligned with the principles of the
Consumer Duty regime and my focus is on doing more for our customers to improve
business momentum in the near-term, and deliver faster growth and higher returns
to shareholders in the longer-term. We are targeting an additional £50 million of
Simplification savings by 2025 and we expect consensus profit estimates for this
year to increase materially.”
Highlights
• Assets under Management and Administration (“AuMA”) of £101.7 billion at the
end of June 2023, increased by 2% on 31 December 2022 (£99.6 billion)
principally due to positive market movements of £1.9 billion and:
o Core business gross inflows of £5.5 billion in the first half which were
broadly evenly spread between each quarter. Core net inflows in the first
half were £0.7 billion (Q1: £409 million, Q2: £247 million). This reflected
a good performance from the Quilter channel in both High Net Worth and
Affluent with a more muted performance from our IFA/Direct channels across
both segments. Market share of gross platform flows increased in both
quarters. Notably, Q2 flows were up 5% year-on-year despite a 9% decline
in the overall market over the same period.
o Non-core net outflows of £0.5 billion (H1 2022: £0.2 billion) which relate
to assets we still manage on behalf of businesses we have sold.
• Adjusted profit before tax increased by 25% to £76 million (H1 2022: £61
million). Revenue increased by 3% to £312 million (H1 2022: £303 million)
supported by revenue generated on corporate cash balances. This was coupled
with strong expense discipline which delivered a third consecutive decline in
first half costs, despite inflationary pressures, and supported an increase in
the operating margin to 24% (H1 2022: 20%).
• We expect to deliver our target £45 million Simplification cost savings by
end 2023, a year earlier than planned. An additional £50 million of
Simplification (Phase 2) savings are targeted for delivery by the end of 2025,
with initiatives in train to improve each of our businesses.
• Stabilisation in Quilter restricted adviser headcount which increased by nine
financial planners on December 2022 levels.
• Adjusted diluted earnings per share increased 34% to 4.3 pence (H1 2022: 3.2
pence) supported by the share count reduction from our capital return programme
in 2022.
• IFRS profit after tax attributable to shareholders of £5 million (H1 2022:
£151 million) with the period-on-period variance largely due to market
valuation changes in the policyholder tax charge. Basic earnings per share of
0.4 pence (H1 2022: 9.8 pence).
• Interim Dividend of 1.5 pence per share versus 1.2 pence per share for 2022,
representing an increase of 25%.
• Solvency II ratio of 240% after payment of the Interim Dividend (31 December
2022: 230%).
• Basic headline earnings per share of 0.4 pence (H1 2022: 10.2 pence). The basic
headline earnings per share figures for the prior period have been re-presented
as disclosed in note 8 in the full announcement.
• Diluted headline earnings per share of 0.4 pence (H1 2022: 10.1 pence). The
diluted headline earnings per share figures for the prior period have been re-
presented as disclosed in note 8 in the full announcement.
Key financial highlights
We assess our financial performance using a variety of measures including
alternative performance measures (“APMs”), as explained further on pages 19 to 21
of the full announcement. In the headings and tables presented, these measures
are indicated with an asterisk: *.
Quilter highlights from continuing operations1 H1 2023 H1 2022
Assets and flows – core business
AuMA* (£bn) 98.3 95.2
Gross flows* (£bn) 5.5 5.8
Net inflows* (£bn) 0.7 1.6
Net inflows/opening AuMA* (annualised) 1% 3%
Assets and flows – reported
AuMA* (£bn) 101.7 98.7
Gross flows* (£bn) 5.5 5.9
Net inflows* (£bn) 0.2 1.4
Net inflows/opening AuMA* (annualised) 0% 3%
Profit and loss
IFRS profit before tax attributable to equity holders
7 182
(£m)
IFRS profit after tax (£m) 5 151
Adjusted profit before tax* (£m) 76 61
Operating margin* 24% 20%
Revenue margin* (bps) 48 47
Adjusted diluted EPS from continuing operations*
4.3 3.2
(pence)2
Interim dividend per share from continuing operations
1.5 1.2
(pence)
Basic earnings per share from continuing operations
0.4 9.9
(pence)2
1Continuing operations represent Quilter plc, excluding the results of
discontinued operations relating to the sale of the Single Strategy business
in 2018.
2The Financial Reporting Council published a thematic review on earnings per
share in September 2022. The EPS figures for H1 2022 have been restated
following the publication of this guidance as disclosed in note 8 to the
interim financial statements.
2 Quilter Interim Results 2023
Financial review
Review of financial performance
Overview
During the first half of 2023, the Group achieved a strong improvement in profit
performance. Global market indices experienced a modest recovery in the period,
underpinning growth in Assets under Management and Administration (“AuMA”). The
European Central Bank and the Bank of England continued to raise interest rates,
supporting investment revenue, and management continued to demonstrate strong cost
control.
The Group's reported AuMA was £101.7 billion at the end of the period, representing
a 2% increase on the opening position, with positive market movements of £1.9
billion and net inflows of £0.2 billion. The average AuMA for the period was
£101.8 billion, compared to £105.3 billion in the same period last year, a decrease
of 3%. Adjusted profit before tax of £76 million increased 25% on the comparable
period (H1 2022: £61 million). This growth reflects effective cost management in
an inflationary environment as well as higher investment revenue resulting from
interest income earned on cash and capital resources. This offset a decline in
net management fee revenue of 2% due to average AuMA being 3% lower during the
period.
Alternative Performance Measures (“APMs”)
We assess our financial performance using a variety of measures including APMs,
as explained further on pages 19 to 21 of the full announcement. In the headings
and tables presented, these measures are indicated with an asterisk: *.
Key financial highlights
We have changed our reporting where we share a margin on client cash. This margin
is now included in net management fee revenue rather than other income. Comparative
figures have been restated. This change brings us into line with peers across the
industry. For the first half the benefit of interest margin on client balances
was £6 million in High Net Worth and £1 million in Affluent (H1 2022: £2 million
in High Net Worth and £nil million in Affluent).
Reporting of assets and flows have been restated to show non-core AuMA outside of
core business AuMA reporting. Non-core AuMA and associated gross and net flows
represents assets managed on behalf of businesses we have previously sold together
with some legacy funds which are in run-off and remain in outflow, with the run-
rate of decline included in prior periods. The core business AuMA and movements
therein better represents the performance of the Group.
Quilter highlights from continuing operations1 H1 2023 H1 2022
Assets and flows – core business
AuMA* (£bn) 98.3 95.2
Gross flows* (£bn) 5.5 5.8
Net inflows* (£bn) 0.7 1.6
Net inflows/opening AuMA* (annualised) 1% 3%
Gross flows per adviser* (£m)2 2.7 2.4
Asset retention* (annualised) 90% 92%
Quilter Interim Results 2023 3
Assets and flows – reported
AuMA* (£bn) 101.7 98.7
Gross flows* (£bn) 5.5 5.9
Net inflows* (£bn) 0.2 1.4
Net inflows/opening AuMA* (annualised) 0% 3%
Profit and loss
IFRS profit before tax from continuing operations
7 182
attributable to equity holders (£m)
IFRS profit after tax from continuing operations (£m) 5 151
Adjusted profit before tax* (£m) 76 61
Operating margin* 24% 20%
Revenue margin* (bps) 48 47
Return on equity* (annualised) 7.5% 5.9%
Adjusted diluted EPS from continuing operations*
4.3 3.2
(pence)4
Interim dividend per share from continuing operations
1.5 1.2
(pence)
Basic earnings per share from continuing operations
0.4 9.9
(pence)4
Non-financial
Total Restricted Financial Planners (“RFPs”) in both
1,511 1,567
segments3
Discretionary Investment Managers in High Net Worth
178 176
segment3
1Continuing operations represent Quilter plc, excluding the results of
discontinued operations from the sale of the Single Strategy business in 2018.
2Gross flows per adviser is a measure of the value created by our Quilter
distribution channel.
3Closing headcount as at 30 June.
4The Financial Reporting Council published a thematic review on earnings per
share in September 2022. The EPS figures for H1 2022 have been restated
following the publication of this guidance as disclosed in note 8 to the
interim financial statements.
Detailed analysis on net flows by business segment is shown in the Supplementary
Information section of this announcement.
Net inflows for the core business of £0.7 billion for the first half of 2023 were
56% lower than the prior period (H1 2022: £1.6 billion). Gross flows of £5.5
billion declined by 5% on the prior period (H1 2022: £5.8 billion) while outflows
of £4.8 billion were 14% higher than the prior period reflecting increased
withdrawals from clients that are already in drawdown to offset the impact of
higher living costs, and for some clients who chose to repay debt obligations
given the higher interest rate environment.
In the Affluent segment core business, the Quilter channel delivered steady net
flows of £0.9 billion (11% of opening balances) compared to £0.9 billion (10% of
opening balances) in the prior period. We have changed our reporting of Quilter
channel flows, so this figure represents the net flows onto our Platform from
Quilter Financial Planning less the outflow from assets managed by our advisers
on other platforms. These balances largely represent back book transfers which
totalled £326 million in the first half of 2023. The revised disclosure provides
a better representation of performance of the activity within this channel. Gross
inflows of £1.8 billion were up 6% on the comparative period (H1 2022: £1.7
billion), despite lower volumes across the total retail advised market
demonstrating the continued strength of our integrated channel. Productivity,
representing Quilter channel gross flow per adviser, also increased in line with
4 Quilter Interim Results 2023
our business objectives. Outflows increased to £0.9 billion (H1 2022: £0.8 billion)
due to higher customer drawdown as previously referenced. This was partially
offset by a reduction in regretted outflows reflecting lower levels of consolidator
activity in this channel during the period.
Despite the subdued level of flows across the industry, IFA channel gross inflows
of £2.6 billion (H1 2022: £2.9 billion) held up against the prior period as we
continued to improve our market share of new business. Lower net inflows of £17
million (H1 2022: £654 million) reflected increased customer withdrawals and
ongoing consolidator activity. This latter item was more than offset by net
positive flows to the Quilter Platform from competitor platforms. At a net level,
inflows as a percentage of opening AuMA (annualised) for the IFA channel was 0%
(H1 2022: 2%).
Fund flows via third-party platforms gave rise to net outflows of £0.2 billion
(H1 2022: net outflows of £0.3 billion) predominantly due to planned fund closures
and a slowdown in the Compass fund range run-off.
The Quilter Investment Platform continues to maintain the leading market share of
gross sales, against our Retail Advised Platform peers, based on the latest
available Fundscape data (Q2 2023).
Persistency for the Affluent segment was below the prior period at 89% (H1 2022:
91%) as inflationary and interest rate pressures increased withdrawal activity as
already mentioned.
AuMA*
AuMA* as at 30
as at 31 Gross Net June
December flows* Flows* 2023
2023 YTD 2022 (£bn) (£m) (£m) (£bn)
AFFLUENT SEGMENT
Quilter channel 15.4 1,775 863 15.9
IFA channel on Quilter Investment
54.1 2,557 17 55.8
Platform
Funds via third-party platform 2.0 144 (190) 1.6
Total Affluent segment core business 71.5 4,476 690 73.3
AuMA*
AuMA* as at 30
as at 31 Gross Net June
December flows* Flows* 2022
2022 YTD 2021 (£bn) (£m) (£m) (£bn)
AFFLUENT SEGMENT
Quilter channel 16.6 1,713 866 14.8
IFA channel on Quilter Investment
60.0 2,874 654 53.7
Platform
Funds via third-party platform 2.5 141 (326) 2.2
Affluent segment core business 79.1 4,728 1,194 70.7
The High Net Worth segment recorded gross inflows of £1.2 billion, 8% lower than
the first half of 2022 (£1.3 billion) reflecting lower market activity. Net inflows
of £0.1 billion were lower than the prior period (H1 2022: £0.5 billion), with
robust gross flows from the Quilter channel offsetting a slowdown in IFA flows
Quilter Interim Results 2023 5
and a small number of unrelated larger account losses, notably in the charity and
corporate account sector. Lower persistency of 91% (H1 2022: 95%) reflected some
clients opting to use existing investments to repay debt obligations given the
higher interest rate environment.
The Group’s core business AuMA ended the period at £98.3 billion, up 2% from the
opening position (FY 2022: £96.2 billion), due to positive market movements of
£1.4 billion and net inflows of £0.7 billion. The Affluent segment AuMA increased
by 3% to £73.3 billion (FY 2022: £71.5 billion) of which £23.4 billion is managed
by Quilter, versus the opening position of £22.7 billion. High Net Worth’s AuM
was £25.9 billion, up 2% from the opening position of £25.5 billion, with all
assets managed by Quilter.
In total, £49.0 billion or 50% of AuMA is managed by Quilter across the Group (FY
2022: £48.0 billion, 50%).
The Group’s revenue margin of 48 bps was 1 bp higher than the prior period (H1
2022: 47 bps). The revenue margin on administered assets within the Affluent
segment was 1 bp higher than the prior period at 27 bps. The revenue margin on
managed assets in the Affluent segment decreased by 4 bps to 43 bps as a result
of planned reprice of the Cirilium Active range which occurred early in the second
quarter. Within the High Net Worth segment the revenue margin increased by 2 bps
to 73 bps, supported by revenues from interest margin generated on client balances.
Adjusted profit before tax increased by 25% to £76 million (H1 2022: £61 million).
The decline in net management fees to £242 million of 2% (H1 2022: £247 million)
broadly matched the decline in average AuMA period-on-period of 3% (H1 2023:
£101.8 billion compared to H1 2022: £105.3 billion). Net management fees include
the investment return on client funds of which £7 million was generated in the
first half of 2023 (H1 2022: £2 million). Other revenue decreased by 21% to £42
million (H1 2022: £53 million) reflecting lower new business activity in our
mortgage and protection business, and lower equity market levels.
Investment revenue increased from £3 million in the first half of 2022 to £28
million in H1 2023, due to the increase in interest income earned on shareholder
cash and capital resources. Operating expenses in the first half of 2023 were £236
million, 2% lower than the prior period (H1 2022: £242 million) primarily due to
continued cost discipline, lower FSCS levies and Simplification cost initiatives
during the period offset by higher inflation. The Group’s operating margin improved
by 4 percentage points to 24% (H1 2022: 20%).
The Group’s IFRS profit after tax from continuing operations was £5 million
compared to £151 million for the first half of 2022. The year-on-year decrease in
IFRS profit is largely attributable to a variance in policyholder tax outcomes
which moved from an expense of £21 million in the period to June 2023 (due to net
market gains) to a credit of £145 million (due to market losses) in the period to
June 2022.
Adjusted diluted earnings per share for continuing operations increased 34% to
4.3 pence (H1 2022: 3.2 pence). This increased more than adjusted profit due to
the share consolidation in May 2022.
6 Quilter Interim Results 2023
Shareholder information
The Quilter Board has declared an Interim Dividend of 1.5 pence per share. The
Interim dividend will be paid on Monday 18 September 2023 to shareholders in the
UK and South African share registers on Friday 1 September 2023.
Dividend Timetable
Dividend announcement in pounds sterling Tuesday 8 August 2023
with South Africa ZAR equivalent
Last day to trade cum dividend in South Tuesday 29 August 2023
Africa
Shares trade ex-dividend in South Africa Wednesday 30 August 2023
Shares trade ex-dividend in the UK Thursday 31 August 2023
Record Date in UK and South Africa Friday 1 September 2023
Interim Dividend payment date Monday 18 September 2023
From the opening of trading on Tuesday 8 August 2023 until the close of business
on Friday 1 September 2023, no transfers between the London and Johannesburg
registers will be permitted. Share certificates for shareholders on the South
African register may not be dematerialised or rematerialised between Wednesday 30
August 2023 and Friday 1 September 2023, both dates inclusive.
Additional information
For shareholders on our South African share register an Interim Dividend of
35.69864 South African cents per share will be paid on Monday 18 September 2023,
based on an exchange rate of 23.79909. Dividend Tax will be withheld at the rate
of 20% from the amount of the gross dividend of 35.69864 South African cents per
share paid to South African shareholders unless a shareholder qualifies for
exemption. After the Dividend Tax has been withheld, the net Interim Dividend will
be 28.55891 South African cents per share. The Company had a total of 1,404,105,498
shares in issue at today's date.
If you are uncertain as to the tax treatment of any dividends, you should consult
your own tax adviser.
Odd-lot Offer
Following our Odd-lot Offer in 2020, as part of our continued drive for greater
efficiency and in line with our desire to act in the best interests of all our
shareholders, we plan to undertake another Odd-lot Offer for shareholders
registered on the London and Johannesburg Stock Exchanges. The potential Odd-lot
Offer was approved by shareholders at the Company’s 2023 Annual General Meeting
held in May 2023 and will launch within 18 months of the meeting.
The Odd-lot Offer entails Quilter making an offer to eligible shareholders (holders
of less than 200 shares) to repurchase their shares at a 5% premium to the volume
weighted average price of Ordinary Shares traded on the London Stock Exchange over
the five trading days prior to the date on which the offer price is finalised.
The Odd-lot Offer will reduce the complexity and cost to Quilter of managing our
unusually large shareholder base and will allow shareholders holding small numbers
Quilter Interim Results 2023 7
of shares to dispose of their holdings in a timely and cost-effective manner,
without any dealing fees. Eligible shareholders can, of course, elect to retain
their shareholding in Quilter plc.
Odd-lot Holders will receive the 2023 Interim Dividend on their Odd-lot Offer
shares providing they still hold their shares on the Interim Dividend Record Date,
Friday 1 September 2023.
Further information will be provided to eligible shareholders in due course.
This short-form announcement is the responsibility of the directors and is only
a summary of the information in the full announcement. Any investment decisions
by investors and/or shareholders should be based on consideration of the full
announcement as a whole.
The full announcement can be found on the Company’s website at Investor
relations | Quilter plc and the JSE cloudlink
https://senspdf.jse.co.za/documents/2023/JSE/ISSE/QLTE/HY23Result.pdf
Copies of the full announcement may also be requested at the company’s
registered office, by emailing investorrelations@quilter.com, at no charge,
during office hours.
JSE Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd.
8 Quilter Interim Results 2023
