Quilter swings to profit as it completes transformation programme

Quilter reported full-year results ahead of market expectations on Wednesday, with adjusted profit before tax on a continuing management basis falling to £168m from £182m.

The FTSE 250 wealth management company said its adjusted diluted earnings per share from continuing operations slipped to 8.5p from 8.6p year-on-year, reflecting a reduced share count due to its capital return programme.

Its board declared a final dividend of 3.6p per share, up from 3.5p year-on-year, taking the total dividend for the year to 4.6p per share, down from 5.2p in 2019.

Assets under management and administration were up 7% at year-end on 31 December, to to £117.8bn, as net client cash flow increased significantly to £1.6bn, from £0.3bn a year earlier.

Integrated net inflows totalled £2.3bn, falling from £2.6bn a year earlier.

Quilter said its IFRS profit before tax attributable to equity holders from continuing operations came in at £50m, swinging from a loss of £53m in the prior year.

The board said the company’s operational efficiency delivered a reduction in full-year operating expenses of £16m, or 3%, despite incremental costs from acquisitions of around £12m, higher FSCS levies and regulatory expenses of £7m, and other cost headwinds including Covid-19 costs of about £5m.

Quilter said the reduction in operating expenses reflected further cost savings from its optimisation programme, and tactical savings of around £40m from management actions.

It described its operating margin as “resilient” at 25%, down slightly from 26%, with the board saying the decline was limited to one percentage point due to management actions largely offsetting the challenging market environment.

On a statutory basis, Quilter said it swung to IFRS profit after tax from continuing operations of £89m from a loss of £21m in 2019, while basic earnings per share on the same basis came in at 5.1p, compared to losses of 1.1p per share.

Diluted earnings per share from continuing operations were 5p, swinging from losses of 1.1p, as the firm’s Solvency II ratio was 217% after payment of the recommended final dividend, compared to 221% at the end of 2019.

“The successful completion of our platform transformation programme is a significant milestone - it not only proves our organisational capability to manage a project on this scale safely, but also sets us up for more accelerated growth in the huge UK wealth market,” said chief executive officer Paul Feeney.

“We responded quickly to the changed [Covid-19] environment in the second quarter by identifying tactical cost savings of £30m and over-achieved against this target leading to a 3% decline in year-on-year costs despite other meaningful expense headwinds.”

Feeney said he was “excited” by the company’s outlook in 2021 and beyond.

“Since we Listed, our focus has been on transforming Quilter into the business we planned; a modern UK focussed wealth manager built around the core tenets of trusted financial advice, value for money, responsible and sustainable investment solutions and excellent customer service, all enabled and supported by the most advanced technology platform.

“Now with significant progress made on our transformation, we are wholly focussed on driving growth and efficiency through even better customer outcomes.”

At 0817 GMT, shares in Quilter were up 3.14% at 151.15p.