Quilter (QLT) H2 2019 earnings summary

Executive summary

• Adjusted profit before tax excluding Quilter Life Assurance rose 3% YoY to £182m; AuMA increased 13% to £110.4bn.

• Integrated net flows were £2.6bn, down from £4.7bn in 2018; adjusted diluted EPS was 8.6p, down 3%.

• 2019 priorities included completing the first UK Platform migration, integrating advice acquisitions and launching a planned £375m shareholder return.

Financial highlights

• Adjusted PBT including Quilter Life Assurance was £235m vs £233m; excluding it, £182m vs £176m, up 3%.

• IFRS loss after tax was £28m vs £66m profit in 2018; total dividend was 5.2p per share, including 1.2p from Quilter Life Assurance.

• Total net fee revenue excluding Quilter Life Assurance was £808m, up 3%; expenses were £555m, down 3%.

• Expenses before acquisitions beat the “broadly flat” guidance; 2019 expense growth included acquisitions, inflation, property and FSCS levies.

Outlook and guidance

• Medium-term NCCF target remains 5% of opening AuMA; management expects a return to target by mid-2021 after platform migration and the fading impact of departed Investment Managers.

• Operating margin targets remain 27% for 2020 and 29% for 2021, subject to broadly normal markets and steady net flows; depressed markets could make them challenging.

• Effective tax rate is expected at 10–13%; the 2020 dividend payout ratio is expected at the top end of the 40–60% target range.

• Revenue margin is expected to decline gradually, reflecting platform repricing and normalisation of Quilter Investors’ margin progression.

• 2020 priorities: finish platform migration, integrate acquisitions, deliver flow growth, execute optimisation and return £375m to shareholders.