Release Date: March 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Quilter PLC (JSE:QLT, Financial) achieved a 25% increase in adjusted profit to GBP167 million, the highest profit with the current portfolio of businesses.
- Operating margin improved to 27%, surpassing the 2025 target.
- Earnings per share increased by 19%, and the Board proposed a total dividend of 5.2p, a 16% increase.
- The company completed its simplification program a year early, driving efficiency and cost savings.
- Quilter PLC (JSE:QLT) became the largest adviser platform by assets and new business flows, with significant growth in the Affluent segment.
Negative Points
- Net flows in the core business were just under half of their level a year ago, indicating challenges in maintaining growth momentum.
- The company saw a rise in outflows in the IFA and Direct channels due to higher interest rates and IFA consolidation.
- Gross flows per adviser increased, but the overall number of restricted advisers remained flat year on year.
- The Affluent Managed revenue margin declined due to the planned reprice of Cirilium Active portfolios and mix effects from inflows into lower-cost products.
- The company is conducting a review of historical data and practices regarding ongoing adviser servicing, which may lead to remedial costs.
Q & A Highlights
Q: Could you give us some context around how your CRM and adviser data and monitoring cope with ongoing servicing requests, and how you can adapt the business model to changes in regulatory requirements?
A: We've kicked off a review and have not seen any increase in complaints. We have clear policies and procedures in place. We believe ongoing advice is critical for delivering outcomes, and advisers must confirm and justify with every customer that they need and want ongoing advice.
Q: Can we have an update on the investment performance of the active side and any optimism around flows going back into the Cirilium Active range?
A: We made changes to the Cirilium Active investment team over a year ago. Performance last year was okay, considering it was a year of significant transition. We are comfortable with the team and processes in place and have received positive feedback from advisers and clients.
Q: What's the thought on the GBP80 million benefit from the risk margin change?
A: It's too early to decide. The Board will continue to deliberate on dividends and capital positions as we move forward.
Q: Can you give us the numbers in the Adviser school today and how many graduated in the last year?
A: We had 48 graduates last year, with around 100 people typically in the school. We aim to grow this number, with a target of over 80 graduates by 2025.
Q: Are you still expecting to grow adviser numbers despite the headwind of 27 advisers leaving in Q1?
A: We aim to grow from the base we've disclosed, but we will not chase deals that don't deliver value. We are focused on responsible growth.
Q: Can you confirm whether the current system to log client interactions has been consistent over the years?
A: The adviser systems have been the same and were not affected by the platform transformation.
Q: What's the differential in productivity between new graduates from the adviser school and existing advisers?
A: New graduates have materially lower productivity initially, but we expect our changes to the academy to accelerate their growth. It still takes a few years for new advisers to reach the productivity levels of established advisers.
Q: Do you expect regulatory changes to impact the trend of more IFA businesses becoming restricted?
A: Advisers will be increasingly attracted to quality. Quilter's strong brand, technology, and proposition will help drive this trend. Our diversified business model also provides a natural strength.
Q: How much of the positive flow outlook is market-driven versus improvements in your business?
A: It's a combination of market improvements, market share gains, and the success of our initiatives. The slowdown in consolidation may also contribute, but we believe our business improvements are the primary driver.
Q: What are your thoughts on M&A and where do you see the most interesting parts for the business?
A: We are open to deals in the advice space and High Net Worth segment. We will be responsible in our approach and look for opportunities that align with our strategic goals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
