Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net flows increased by 160% year-on-year, demonstrating strong growth momentum.
- Adjusted profit rose by 28% to GBP97 million, reflecting robust cost performance and higher revenues.
- Operating margin at 29% remains above the 2025 target, indicating efficient operations.
- Earnings per share increased by 21% to 5.2p, showcasing improved profitability.
- The Board proposed an interim dividend of 1.7p, reflecting confidence in future performance.
Negative Points
- Regulatory uncertainty due to the ongoing advice evidence review, with potential liabilities yet to be determined.
- Elevated outflows in the IFA and direct channels, driven by IFA consolidation and high-value client withdrawals.
- Decline in revenue margin to 45 basis points, influenced by last year's pricing adjustments.
- Exits of advisers due to natural attrition and consolidator activity, impacting adviser numbers.
- Potential negative impact on interest income from expected future interest rate cuts.
Q & A Highlights
Highlights of Quilter PLC (JSE:QLT, Financial) Earnings Call Transcript
Q: The productivity of your advisers increased to GBP3.2 million. Do you expect future growth to come from further productivity increases or from growth in the number of advisers?
A: (Steven Levin, CEO) We expect growth from both avenues: increasing adviser numbers and continued focus on productivity. We're investing in technology and our advice transformation program to make processes more efficient, allowing advisers to spend more time with clients.
Q: Can you give us some color on the reasons behind adviser departures not related to consolidation?
A: (Steven Levin, CEO) The main reasons are retirement and advisers choosing to become directly authorized. It's a natural cycle within a large adviser force, with different preferences at different stages of their careers.
Q: What sort of excess capital do you currently have, and how accessible is this liquidity in the event of a provision?
A: (Mark Satchel, CFO) We remain well-capitalized with a strong balance sheet and liquidity. We have around GBP400 million of cash available, with a good buffer for capital requirements, contingencies, liquidity management, and business investment.
Q: Can you comment on the revenue margins in NPS and the impact of the advice evidence process on complaints?
A: (Steven Levin, CEO) The biggest driver of margin in NPS is mix, not pricing decisions. Regarding the advice evidence process, the review period starts from 2017 as per FCA guidelines. We've seen a small increase in complaints, but they remain at relatively low levels.
Q: How much of the GBP7.4 billion reported gross flows in H1 was from peers experiencing disruption?
A: (Steven Levin, CEO) We're not providing specific details on competitors. Our strong platform, service, and distribution enhancements are driving sustainable gains. The fragmented platform market allows us to attract advisers looking for quality providers.
Q: Can you provide more details on the Wealth Select margins and the mix between active and passive?
A: (Mark Satchel, CFO) Within Wealth Select, active retains about 33-34 basis points, blend in the high 20s, and passive around 15 bps. Overall, Wealth Select operates in the high 20s to low 30s basis points range.
Q: What is the quantum of assets remaining for back book transfers in the Quilter Channel?
A: (Steven Levin, CEO) We estimate around GBP5 billion of assets remain for targeting, with many more years of capacity for the back book transfer program.
Q: Can you comment on the impact of lower rates on the P&L?
A: (Mark Satchel, CFO) For every 25 basis point reduction in interest income on shareholder balances, we expect about GBP3.5 million revenue impact on a full-year basis. The impact on client cash balances is less material.
Q: How many advisers are in the Academy today, and how many graduates can be absorbed into existing advice businesses?
A: (Steven Levin, CEO) We have just over 100 people in the Academy, with 80 expected to graduate next year. All graduates are absorbed into either the network or national business, with none becoming individual advisers.
Q: Given the changes in the high net worth business structure, will it operate as a stand-alone business by the end of the year?
A: (Steven Levin, CEO) The changes aim to improve client experience and synergies within the high net worth business. We see both affluent and high net worth segments as attractive growth areas.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
