Management basis – Continuing business (excluding Quilter International for comparative data)
- Assets under Management and Administration (“AuMA”) of £98.7 billion at the end of June 2022, a decrease of 12% from 31 December 2021 (£111.8 billion) principally due to adverse market movements of £14.5 billion and:
- Quilter Investment Platform net inflows of £1.6 billion (H1 2021: £1.8 billion) representing 4% of opening AuMA (H1 2021: 6%), reflecting an industry wide slowdown in new client flows during the second quarter.
- Quilter channel flows onto the Quilter Investment Platform of £954 million up 10% on the £868 million achieved in 2021.
- Quilter High Net Worth net inflows of £0.5 billion (H1 2021: £0.4 billion) representing 3% of opening AuMA (H1 2021: 4%).
- Net outflows of £0.6 billion (H1 2021: net outflows £0.3 billion) of assets held on third party platforms reflecting non-core, legacy business in run off and transition of assets advised by Quilter Financial Planning on other platforms to the Quilter Investment Platform.
- Leading to Group net inflows of £1.4 billion for the first half (H1 2021: 2.0 billion).
- Flat revenues and cost discipline drove a 9% increase in adjusted profit before tax to £61 million (H1 2021: £56 million).
- Improved operating margin of 20% (H1 2021: 18%), reflecting stable revenues and a reduction in expenses of 2% through lower FSCS levies and tight control of costs despite the inflationary environment and the return to more normalised investment spend post-pandemic.
- Adjusted diluted earnings per share decreased 5% to 3.7 pence (H1 2021: 3.9 pence), reflecting a more normal tax rate (as a result of the non-repetition of a deferred tax credit in the first half of 2021) partially offset by a reduced share count following completion of our capital return programme.
- Interim dividend of 1.2 pence per share unchanged on 2021 (excluding the contribution from Quilter International).
- IFRS profit before tax attributable to equity holders from continuing operations of £182 million (H1 2021: £(21) million), largely driven by policyholder tax credits of £145 million (H1 2021: tax charge £(48) million). This income tax credit/(charge) can vary significantly period-on-period as a result of market volatility and the impact this has on policyholder tax.
- Negotiations concluded with the insurers who provided professional indemnity cover for Lighthouse resulting in the payment of the full amount due under the policy of £15 million, including amounts received since the period end, with the benefit of this excluded from adjusted profit. Net cost of post-acquisition Lighthouse remediation totals £12 million.
- Basic earnings/(loss) per share from continuing operations of 11.3 pence (H1 2021: (0.9) pence).
- Diluted earnings/(loss) per share from continuing operations of 11.2 pence (H1 2021: (0.9) pence).
- Solvency II ratio of 219% after payment of the interim dividend (December 2021: 275%).
- Significant expansion of our successful WealthSelect managed portfolios, with a simpler charging structure. We now offer a full spectrum of portfolios to cover clients’ risk, investment preferences with an ESG overlay.
- Good progress building incremental platform flows from targeted IFA firms with 80 adviser firms adopting Quilter as a platform of choice during the period and contributing to incremental gross inflows.
- Continued build out of our integrated advice and investment proposition in the High Net Worth segment, with eight additional investment managers added since June 2021.
- Good initial progress with our £45 million Business Simplification programme, with annualised run-rate savings of £13 million achieved to date.
- Completion, in January 2022, of the £375 million share buyback programme from the Quilter Life Assurance sale proceeds. Since the programme’s inception, 264 million shares were purchased at an average price of 141.97 pence per share.
- £328 million capital return in June 2022, (20 pence per share) through B share scheme accompanied by a 6 for 7 share consolidation to return the net surplus proceeds from the sale of Quilter International to shareholders.
Paul Feeney, Chief Executive Officer, said:
“Operating conditions in the first six months of 2022 have been challenging. Global equity markets have experienced one of the worst periods of negative performance in recent years and traditional 60:40 multi-asset portfolios have had their largest negative year-to-date return on record. In that context, our overall AuMA has been relatively resilient, down 12% to £98.7 billion on the December 2021 level. Despite the market volatility, we generated net inflows of £1.6 billion (H1 2021: £1.8 billion) on the Quilter Investment Platform and a further £0.5 billion of net inflows (H1 2021 £0.4 billion) through our High Net Worth segment, modestly reducing the negative mark-to-market and third party platform net outflow impacts.
“Against this backdrop we delivered a 9% increase in our adjusted profit in the first half of 2022. Our focus remains on managing our business towards the targets set out at our Capital Markets Day last November, although an absence of an improvement in market levels and investor sentiment over the remainder of this year and 2023 may impact on the timing of delivery. My priorities continue to be growth in the IFA and Quilter adviser franchises, cost discipline to deliver a right-sized cost base for the new streamlined Quilter, investing for future growth through initiatives such as hybrid advice, and embedding ESG into the services we provide for clients and tools we provide for advisers”.
|Quilter highlights from continuing operations1||H1 2022||H1 2021|
|Assets and flows|
|AuMA (£bn)2, 5||98.7||106.4|
|Gross flows (£bn)2, 5||5.9||6.7|
|Net inflows (£bn)2, 5||1.4||2.0|
|Net inflows/opening AuMA2||3%||4%|
|Gross flows per adviser (£m)2, 3||2.4||2.4|
|Profit and loss|
|IFRS profit/(loss) before tax attributable to equity holders (£m)2||182||(21)|
|IFRS profit/(loss) after tax (£m)||151||(13)|
|Adjusted profit before tax (£m)2||61||56|
|Revenue margin (bps)2||47||48|
|Return on equity2||5.9%||7.3%|
|Adjusted diluted earnings per share (pence)2||3.7||3.9|
|Basic earnings/(loss) per share (pence)||11.3||(0.9)|
|Restricted Financial Planners (“RFPs”) in Affluent segment4||1,512||1,639|
|Discretionary Investment Managers in High Net Worth segment4||176||168|
|Quilter Private Client RFPs in High Net Worth segment4||55||62|
|1Continuing operations represent Quilter plc, excluding the results of Quilter International. Adjusted profit before tax for Quilter International in H1 2021 was £29 million. Adjusted diluted EPS from Quilter International in H1 2021 was 1.9 pence per share.|
|2Alternative Performance Measures (“APMs”) are detailed and defined on pages 4 to 6.|
|3Gross flows per adviser is a measure of the value created by our Quilter distribution channel.|
|4Closing headcount as at 30 June.|
5H1 2021 asset and flow comparators have been restated to exclude amounts relating to Quilter International to align with information presented at the Company’s Capital Markets Day on 3 November 2021 and its fourth quarter trading statement 2021 on 26 January 2022.