The share price of UK-based Quilter, Old Mutual’s former wealth management business, shot up more than 10% on the JSE Tuesday after it reported a strong improvement in first-half profit and healthy fund inflows.
“We have delivered a strong improvement in first half profitability, pleasing flow outcomes in the Quilter channel and improved our market share of new advised platform flows,” CEO Steven Levin said.
Adjusted profit increased by 25% in the six months to June 30. On the JSE, Quilter’s share price was 11.85% higher at R19.25 on Tuesday afternoon – the price was R22.92 on the same day a year before. The share closed the day 13.31% higher at R19.50.
The interim dividend of 1.5 pence a share was 25% up on the 1.2 pence for 2022.
Levin said his focus was “on doing more for our customers to improve business momentum in the near term, and deliver faster growth and higher returns to shareholders in the longer term”.
He said they were targeting an additional £50 million (R1.2 billion) of “simplification savings” by 2025, and the group’s management expected that consensus profit estimates for this year would “increase materially”.
Assets under management and administration (AuMA) increased marginally by 2% to £101.7bn at the end of June compared with December 31, 2022, mainly due to positive market movements of £1.9bn and core business gross inflows of £5.5bn, which were broadly evenly spread between each quarter.
Core net inflows were £0.7bn (Q1: £409 million, Q2: £247m), which Levin said reflected a good performance from the Quilter channel in the High Net Worth and Affluent segments, with a more muted performance from the IFA/Direct channels across both segments.
Market share of gross platform flows increased in both quarters. Second quarter flows were up 5% year-on-year despite a 9% decline in the overall market over the same period, the group said.
There were non-core net outflows of £0.5bn that related to assets still managed on behalf of businesses that had been sold. Revenue increased 3% to £312m, supported by revenue on corporate cash balances. Costs fell, despite inflationary pressures. The operating margin increased to 24% from 20%.
Levin said the £45m simplification cost savings target for the end 2023 was on track, a year earlier than planned. An additional £50m of “Simplification (Phase 2)” savings were targeted for the end of 2025.
Adjusted diluted earnings per share increased 34% to 4.3 pence supported by the share count reduction from the capital return programme in 2022.
Quiliter said a modest recovery in global market indices had underpinned growth in AuMA. The European Central Bank and Bank of England continued to raise interest rates, supporting investment revenue.
Adjusted profit before tax of £76m reflects effective cost management as well as higher investment revenue resulting from interest income earned on cash and capital resources.
This offset a decline in net management fee revenue of 2%, due to average AuMA being 3% lower during the period.
Investment revenue increased from £3m in the first half of 2022 to £28m in the first half of 2023 due to the increase in interest income earned on shareholder cash and capital resources.
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