JOHANNESBURG - JSE-listed financial services group Quilter plc is forging ahead with a dividend payment and share buyback programme in 2020, despite market volatility caused by the Covid-19 outbreak.
Quilter, formerly known as Old Mutual Wealth, reported an 8percent decline in assets under management and administration (AuMA) to £95.3billion (R2.23trillion) for the first quarter to end March, down from £103.6bn compared to the same quarter last year. The group said yesterday that it had reviewed its financial budgets and operating plans in response to Covid-19 and an unpredictable operating outlook.
“The group recognises that lower AuMA will lead to a materially lower run-rate of revenues, and while the group is undertaking a number of management actions to reduce expenses, it no longer expects to achieve its 27percent operating margin target in 2020.
Chief executive Paul Feeney said while lower levels of AuMA would have an impact on revenues, the vast majority of their revenues are recurring by nature. “Our capital and cash levels are in a strong position and our board, therefore, continues to recommend approval of the 2019 final dividend at the 2020 annual general meeting (AGM). We remain in the market to facilitate the first tranche of the buyback from the proceeds of the Quilter Life Assurance sale and we are proceeding with the odd-lot offer, which shareholders approved at the 2019 AGM,” Feeney said.
At the end of the quarter Quilter reported that it had £750m of cash across its holding companies after completing £28m of its initial buyback tranche of £45m at an average price of 110pence a share.
In March Quilter also declared a final dividend of 3.5p a share to take the full year dividend to 5.2p in the year to end December results.
During the quarter, Quilter also reported net inflows of £500m, but the group said this was offset by significant negative market movements towards the end of the quarter. Its gross sales for the quarter increased by 6percent to £3.3bn compared to last year’s £3.1bn.
Feeney said after a good start to the quarter in terms of flows, revenues and profitability, the global health crisis caused by Covid-19 has significantly altered economic and market expectations for the foreseeable future.
“The path and timing of the reversion to a more normal environment remain unclear and we expect this to be reflected in further market volatility. Quilter has a robust business model and the fundamentals that underpin our investment proposition remain strong. I am confident we will emerge from this crisis in good shape and even more connected to our customers, our advisers and ourselves,” he said.
Quilter's share price closed 2.55percent lower at R26.40 on the JSE yesterday.