DURBAN - QUILTER plc’s shares rose more than 8 percent on the JSE yesterday after the wealth manager returned to profitability in the year to the end of December, delivering results that were ahead of market expectations.
The group reported a profit after tax from continuing operations of £89 million (about R1.9 billion) compared with a loss of £21m last year and basic earnings per share from continuing operations increased to 5.1 pence a share compared with a loss of 1.1p a year earlier. However, adjusted diluted earnings per share from continuing operations of 8.5p were almost flat compared with the 8.6p reported last year.
Quilter said the adjusted earnings reflected a reduced share count due to its capital return programme.
The group returned £375m to its shareholders by way of a share buyback programme after the sale of Quilter Life Assurance to Reassure Group plc for £425m.
Chief executive Paul Feeney said 2020 was a year of extraordinary challenges. “I am pleased that we have not only come through the year well but also strategically and operationally stronger. The successful completion of our Platform Transformation Programme is a significant milestone,” Feeney said.
Quilter had demonstrated its ability to outperform on cost expectations in challenging market conditions, he said.
“We responded quickly to the changed environment in the second quarter by identifying tactical cost savings of £30m and over-achieved against this target leading to a 3 percent decline in year-on-year costs despite other meaningful expense headwinds,” Feeney said.
The group reported a 7 percent increase in assets under management and administration to £117.8bn, up from £110.4bn, while net client cash flow increased to £1.6bn compared with £300m reported last year.
The group declared a final dividend of 3.6p a share, bringing the total dividend for the year to 4.6p, down from last year’s 5.2p.
Looking ahead, Feeney said markets globally entered 2021 on an optimistic note. “We are hopeful that flow momentum will continue to improve in 2021, with the year having started well in this regard. “Boosting accessibility to our Wealth Select range by including it in our restricted proposition in Quilter Financial Planning will improve asset retention and integrated flows.
“While this may have an adverse impact on the revenue margin in Quilter Investors, these actions should be accretive to assets under management and administration which drive revenue generation,” he said.
Nesan Nair, a senior portfolio manager at Sasfin Securities, said the results were ahead of market expectations.
“A surprisingly strong result indeed, especially considering that financial shares have struggled in the last year. Their earnings were almost flat on a per share basis and management is still confident enough to pay a dividend – hard to get that these days,” Nair said.
The share closed 8.74 percent higher at R33.96 on the JSE yesterday.
BUSINESS REPORT