Quilter shows strong earnings despite mounting uncertainty caused by Brexit

By Sandile Mchunu Time of article published Mar 13, 2019

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DURBAN – Quilter plc brushed aside Brexit fears by reporting strong earnings for the year to end December, with the share price gaining more than 5percent on the JSE after the group reported an 11percent increase in adjusted profit before tax to £233million (R4.37billion).

Quilter produced this performance despite a 4percent decline in assets under management and administration, to £109.3bn, as a result of lower asset prices. However, the share price climbed to R26.15 a share during the day and closed 5.05percent higher at R26 on the JSE yesterday.

Chief executive Paul Feeney said although Brexit did create uncertainty in the market, however, the group was resilient to withstand those challenges.

“The year 2019 will throw up other challenges for Quilter. Brexit and market uncertainty are having an impact upon investors’ appetite to put new money to work,” Feeney said.

Quilter was listed separately on the London Stock Exchange and the JSE last June after a managed separation from Old Mutual plc. During the period net client cash flow, the difference between money received from and returned to customers during the period for the group or for the business indicated, was £4.7bn, representing 5percent of opening assets under administration.

Quilter targets 5percent growth to net inflows a year, excluding its run-off portfolio of assets, Quilter Life Assurance. The group also reported diluted earnings a share of 26.5pence (R4.97) a share, up from 8.6p and adjusted diluted earnings a share of 12.3p, which was up by 15 percent compared to last year’s 10.7p.

The group declared a final dividend of 3.3p a share and this was in line with its dividend policy.

Feeney said that the group performed well in 2018, despite increasingly challenging market conditions as the year progressed.

“Although deteriorating investor sentiment over the course of the year made net client cash flows more challenging, the resilience in our integrated flows demonstrated that our business model is generating real traction with our customers,” Feeney said. 

Looking ahead, the group said that the UK wealth management industry continued to offer strong secular growth potential, despite the short-term headwinds.

“As it became apparent in the second half of 2018 that global macro and geopolitical uncertainty was impacting flows and market sentiment, we increased our focus on cost management and accelerated some of the benefits we expected to deliver from our first stage optimisation initiatives,” Feeney said.

In the beginning of 2019 the group said that it had seen a partial recovery in markets, with assets under management and administration increasing to £113bn by the end of February, up from £109.3bn at year end.

“While this recovery in markets has been ahead of our expectations, the trend in net client cash flows has remained subdued.

“Brexit and market uncertainty continue to temper momentum in year-to-date flows and, therefore, we remain cautious on net flows going into 2019,” Feeney said.


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