Quilter (QLT) H2 2018 earnings summary

Executive summary

• Adjusted profit before tax rose 11% to £233m; adjusted diluted EPS increased 15% to 12.3p.

• NCCF excluding Quilter Life Assurance was £4.7bn, equal to 5% of opening AuMA and in line with the medium-term target.

• 2018 included a successful LSE and JSE listing, the sale of the Single Strategy asset management business and a 12.0p special dividend.

Financial highlights

• Revenue increased 8% to £788m; expenses rose 7% to £555m.

• IFRS profit after tax was £488m versus £157m in 2017, including discontinued operations; continuing-operations PBT was £5m versus a £5m loss.

• Recommended final dividend was 3.3p per share, subject to shareholder approval at the 2019 AGM.

Outlook and guidance

• Phase 1 optimisation targets a ~2 percentage-point operating margin improvement by 2020 and a further 2 points by 2021, assuming broadly normal markets and steady net flows.

• Optimisation phase 1 is expected to cost £75m one-off, with ~50% incurred by end-2019; total programme costs include £7m incurred in 2018.

• 2019 costs, excluding acquisitions, are targeted to be broadly flat YoY to partly offset weaker revenue expectations; Charles Derby is expected to add ~£15m to both revenue and costs.

• UK Platform Transformation Programme costs are expected towards the top of the £120m–£160m range; an extension into H1 2020 would add modest costs above the range.

• Medium-term NCCF target remains 5% of opening AuMA excluding Quilter Life Assurance; 2019 outlook is cautious amid market and economic uncertainty.