QUILTER, the UK-based investment and wealth management group, said yesterday that it would return £350 million (R7.36 billion) to shareholders and retain £90m for investment from the proceeds of the sale of Quilter International.
With the sale of Quilter International, the reshaping of the group’s perimeter was complete, and they were “able to pivot to a strategy which embraces growth and efficiency,” chief exeutive Paul Feeney said in a statement yesterday.
He said the £90m would help fund the group’s simplification programme and to invest in longer-term revenue growth initiatives, including the building of a hybrid advice distribution channel and further digitalisation.
The £350m proposed return to shareholders was expected to comprise an estimated £25m contribution to the full year dividend from a pro rata to 2021 earnings contribution from Quilter International, and a £325m special return to shareholders through either payment of a special dividend or through issuance and redemption of B-shares.
The special return would be accompanied by a share consolidation. The board anticipated that the capital return process would be completed during the first half of 2022.
Quilter also announced at an event to host its debt investors yesterday the reorganisation of the group into two client focused segments: High Net Worth and Affluent.
Assets and flows were disclosed from the two primary distribution channels of the business: the Quilter channel and the IFA channel.
As a result, the group would in future disclose flows by these segments and distribution channels. Third quarter flows, also released yesterday in a trading statement, were presented in this format, excluding the contribution from Quilter International. The sale of Quilter International was expected to be completed prior to year-end.
The group said in the trading statement it had achieved a strong third quarter with substantially improved year-on-year net flows.
Feeney said that since listing in June 2018, Quilter had focused on simplifying its business model, optimising its cost base, selling businesses it regarded as non-core and returning the proceeds from disposals to shareholders. The group reaffirmed its 6 percent plus annual net flow target from 2022 onwards and its operating margin targets of at least 25 percent by 2023 and 30 percent or more by 2025.
Updated cost targets for full-year continuing costs for the year to December 2021 were expected to be less than £500m. The group will announce a new simplification initiative to reduce operating costs by around £45m by end-2024 on a run-rate basis.
“Through delivery of these targets, Quilter expects its 2025 adjusted profit to be at least double the level achieved in 2020, on a continuing business basis,” said Feeney.
In addition, a new dividend policy set a target pay-out range of 50 to 70 percent of post-tax, post-interest adjusted profits, revised from 40 to 60 percent of post-tax adjusted profits previously, was announced.
Quilter’s share price closed 1.75 percent higher at R33.64 on the JSE yesterday.
edward.west@inl.co.za
BUSINESS REPORT ONLINE