TIDMQLT
RNS Number : 2567L
Quilter PLC
12 May 2022
12 May 2022
Quilter plc
2022 AGM Speeches
Quilter Chair's 2022 AGM Statement
Good morning and welcome to Quilter's 2022 Annual General
Meeting. I am Glyn Jones, the Chair of your Board of Directors, and
I am delighted that I can welcome you all here today in person at
our new Head Office, Senator House. This is a particularly poignant
moment for me as I will be stepping down as Chair and as a Director
of the Company at the conclusion of this meeting.
Let me set out the three areas that I will cover this
morning:
-- First, as this will be my last AGM, I want to briefly reflect on some of the journey we have been on since I was
appointed Chair, prior to our Listing in June 2018;
-- Secondly, I will provide some context on the changes to your Board since the last AGM; and
-- Finally, I'll make some observations on financial strength, capital returns and dividends.
Let me take each of these in turn.
As I look back over my tenure as your Chair, it is clear we have
achieved a major transformation. Taking what was Old Mutual Wealth
in 2016, a subsidiary of a quoted FTSE-100 company with a business
mix largely reflecting historical decisions, and turning it into
the strategically cohesive, UK wealth manager that Quilter is today
has been a major achievement.
This required a "managed separation" from our former parent:
building a new Board and putting governance structures in place
that were fit for purpose for a newly quoted PLC and Listing the
business on the London and Johannesburg stock exchanges in June
2018.
Although a lot of hard work was required to get the Company to
the point of Listing, we then had the task of reshaping and
refocusing the business to ensure that it was well positioned to
compete in the UK wealth management market. To achieve this, inter
alia we undertook three significant divestitures: Old Mutual Global
Investors in 2018, Quilter Life Assurance in 2019 and Quilter
International in 2021.
Today, these disposals have made Quilter a smaller but far
simpler, more focused UK business. Disposals have generated gross
cash of GBP1.5 billion of which around GBP1.0 billion will have
been returned to shareholders between Listing in June 2018 and June
2022, with a further GBP300 million up streamed to our former
parent, pre-listing. These actions have firmly established our
capital discipline credentials as a quoted company.
But our journey as a listed Company has not just been about
selling businesses.
The Board has also supported and encouraged the Executive team
as they focused on making the business more operationally efficient
and delivered business critical projects such as our Platform
Transformation Programme and our business Optimisation plans which
targeted cost savings of around GBP65 million. Management has also
set out further Simplification plans to reduce operating costs by a
further GBP45 million by the end of 2024.
Since Listing, our Executive team has also been significantly
strengthened, and our back-office functions overhauled to drive
best practices.
At our Capital Markets Day in November 2021, we announced a
reorganisation of the Company into two new operational segments,
Affluent and High Net Worth. This brings greater clarity and focus
to the business as it looks to capitalise on the opportunities we
see ahead.
Within each segment, we pursue a dual distribution strategy -
own distribution based on our own restricted advisers and
third-party distribution through our relationships with independent
financial advisers. A strong position in each of these channels is
unique to Quilter and stands us in good stead versus our peers.
I should also say a few words on the sale of Quilter
International which completed in November 2021 and concluded the
reshaping of our corporate perimeter.
Gross proceeds of GBP481 million were received from the sale.
After allowing for costs associated with the transaction and
retained proceeds of GBP90 million to fund further business
simplification and investment, we intend to return approximately
GBP350 million to shareholders. GBP25 million will be returned in
the next few days through a contribution from Quilter International
to the Quilter 2021 Full Year dividend and the remaining amount
through a capital return. The General Meeting which follows this
meeting will deal with that capital return so I will not dwell on
those matters further here.
Let me now turn to changes on your Board since the last AGM.
In 2021 we saw two additions to the Board with Tazim Essani and
Chris Samuel being appointed as Non-executive Directors in March
2021 and July 2021 respectively.
Tazim's experience in senior executive roles at regulated
financial services businesses has equipped her well to provide
strategic guidance and constructive challenge to Quilter's
leadership team. In addition to now serving on our Board
Remuneration and Board Audit Committee, Tazim is also one of our
Workforce Engagement Directors who bring the voice of the employee
into our Boardroom with a particular focus on diversity.
Chris is an experienced Non-executive Director and has chaired
the Quilter Financial Planning Board with distinction for the past
eighteen months. He has considerable experience in financial
services, particularly in the areas of investment and asset
management. This experience has enabled him to provide challenge,
advice and support to Quilter's management team on business
performance and operational matters.
In January 2022, Rosie Harris, who has been Chair of the Quilter
Board Risk Committee since 2017, announced that she would not stand
for re-election at this AGM as a recent external appointment
created practical difficulties for her attending Quilter meetings.
Rosie stood down from the Quilter Board on 30 April. A search for a
successor to Rosie as Chair of the Board Risk Committee is under
way and well advanced. In the meantime, George Reid has agreed to
take on this important role until a permanent successor is in
place.
Finally, in terms of Chair succession, Ruth Markland, our Senior
Independent Director is chairing a newly constituted Sub-Committee
of the Board Corporate Governance and Nominations Committee to
identify and recommend to the Board an appropriate individual to be
appointed as the next Chair of Quilter. As I will be stepping down
at the end of this meeting, Ruth will become interim Chair of
Quilter until a successor is in place. As Ruth will mention later,
we are well advanced in that search. Tim Breedon has agreed to take
on Ruth's responsibilities as Senior Independent Director while
Ruth acts as Interim Chair.
In terms of governance, I am pleased to report that the Quilter
Board meets the recommendations of the FTSE Women Leaders Review
(formerly the Hampton-Alexander Review) for one third of its
members to be women. This requirement has been met at all times
since the Group's Listing in June 2018. During the year, three of
the Board's five Committees were chaired by female Directors. We
also meet the Parker Review recommendation that all boards should
have at least one ethnic minority Director.
Finally, I would like to say a few words on financial strength
and capital returns.
When Quilter Listed back in 2018, your Board deliberately
adopted prudent cash and capital policies so as to ensure our
balance sheet was conservatively positioned. Our strengths in this
regard have served us well throughout moments of exceptional market
volatility during this period and continue to do so during current
market volatility.
Unlike many FTSE-350 companies, this financial strength allowed
us to continue to pay dividends during the Covid-19 pandemic, as
well as returning capital to shareholders through a share buyback
programme and an Odd-lot Offer to small retail shareholders which
shrank our share register by nearly half.
The net surplus proceeds of the Quilter Life Assurance sale were
also returned to shareholders through a phased GBP375 million
buyback programme which we started in early 2020 and completed in
January 2022.
In respect of the 2021 results, your Board are recommending a
final dividend of 3.9 pence per share which, if approved later in
this meeting, will bring our total dividend for 2021 to 5.6 pence
per share, with the overall pay-out ratio at the low-end of our
revised 50% - 70% range which we announced at the Capital Markets
Day in November.
So, in summary, 2021 was a year of significant progress for
Quilter, a year in which we completed the reshaping of our
corporate perimeter, have enhanced our customer propositions,
delivered good profit growth, and reorganised our business into two
new segments. We are now focused on organic growth and delivering
strong profit growth from our simpler UK centric business.
On behalf of the Board, I would like to thank our management
team and all our colleagues for their efforts, focus and commitment
to achieving our goals in what has continued to be challenging
business conditions, involving a combination of virtual and
physical working environments. I am humbled by our staff's
resilience, dedication, and over-riding focus on delivering for our
customers and clients with this all the more evident over the past
two years of heightened Covid-19 driven uncertainty.
Thank you also to our shareholders for your continued
support.
The role of your Board is to steward your Company so that it is
well positioned whatever the external environment. Over the six
years of my chairmanship, we have faced numerous external
challenges, but I am pleased to say that we have navigated those
periods of turbulence well. I believe Quilter is better positioned,
strategically and financially today than at any point in our
history.
Before I hand over to our CEO, Paul Feeney, to summarise our
business performance in 2021, I would like to finish by saying the
last six years have not only been an incredibly exciting journey
for Quilter, but it has also been immensely fulfilling for me
personally.
It has been an absolute pleasure to work alongside Paul Feeney,
Mark Satchel and my board colleagues to oversee the reshaping of
Quilter into the business it is today, a firm that is incredibly
well positioned strategically, performing well and has many years
of continued success ahead of it. I wish the management team, all
our colleagues and wider stakeholders all the best for the
future.
Over to you Paul.
Quilter Chief Executive Officer's 2022 AGM Statement
Many thanks Glyn.
Before I summarise our business achievements in 2021, I wanted
to take a moment to record my appreciation for all you have done
for us as Chair of the company over the last six years.
Back in 2016 when our former parent, Old Mutual, fired the
starting gun on managed separation, we knew we had a mountain to
climb - you shared my vision of what Quilter could be, and built a
Board of many-talents to guide us on our path.
And what can I say, our journey has certainly been eventful - we
have had to contend with a number of external shocks and surprises
from Brexit and the Pandemic, to financial markets volatility and
more besides.
Throughout that period, you have been steadfast in both your
support and challenge as we have navigated those uncertainties and
reshaped Quilter into the strongly positioned business it is today,
ready to deliver on its potential, as a modern UK Wealth Management
business.
And on a personal level, I appreciate all the wise counsel you
have provided and the direct and constructive input that you have
given. Thank you again for all you have done for us and for me, and
you have all of our best wishes for the future.
Now let me turn to the progress of the Company during 2021. We
are pleased with both the strategic reshaping of the business and
the financial performance achieved in the year.
Let me start with a summary of the major strategic steps we took
in 2021:
-- The most notable event happened early in the year when we completed the migration of advisers and clients onto
our new platform.
-- We have already seen the benefit of that with net flows onto our platform more than doubling in 2021.
-- We also took some tough decisions around our adviser base to make it more focused and more productive.
-- And we completed our Optimisation plans, delivering GBP61 million of cost savings by the end of 2021. We'll also
deliver another GBP45 million of savings over the next three years through the Simplification plans we set out at
our Capital Markets Day in November 2021.
As our Chair has already said, the other significant event was,
of course, the sale of Quilter International for GBP481 million
which completed the corporate reshaping to focus our business.
But what I'm really pleased about is that, as well as being busy
on the strategic front, we also delivered a strong financial
performance in 2021.
Both our segments - Affluent and High Net Worth - delivered 10%
revenue growth.
So, with revenue growth of 10% and cost growth limited to 5%, we
delivered a 28% increase in adjusted profit to GBP138 million.
And a low tax rate combined with a lower share count meant that
we delivered an increase in Earnings Per Share of 42%.
We're clearly moving in the right direction.
For me, one of the most important targets we set out at our
Capital Markets Day was to more than double our profit by 2025 off
the 2020 base.
And in 2021 we made great initial progress towards that
goal.
However, 2021 is behind us and we're now focused on driving our
business forward, to deliver the targets we set out to you at our
Capital Markets Day last November.
We've got clear plans to support those goals:
In our Affluent business:
-- We'll continue to improve productivity and grow adviser numbers
-- And we'll grow our base of independent advisers as well
-- We'll also continue to innovate to meet evolving client needs
-- And we'll leverage the capability of our Platform further and pilot our hybrid advice proposition
In our High Net Worth Segment:
-- We'll continue to build-out our integrated advice and investment management offering and grow the number of
client facing individuals;
-- And we're going to open up our High Net Worth propositions to independent advisers using our platforms;
-- And we'll continue to drive growth and deliver efficiencies to enhance operating leverage - and that'll create
value for all our stakeholder s.
Our strategy includes becoming the responsible wealth manager.
By that we mean acting and investing responsibly for our customers,
colleagues and society.
Across both segments of our business, ESG factors are already
integrated within our investment process, with this complemented by
our customer profiling tool to help advisers navigate this complex
area with their clients.
Following the enhancement of our WealthSelect managed portfolio
proposition and introduction of our new ESG Focused Discretionary
Portfolio Strategy, I'm delighted that our customers now have the
flexibility and choice of a dedicated suite of responsible and
sustainable investment solutions to meet their needs. Our Climate
Assets fund also continues to go from strength to strength.
This year we are developing a climate action plan across our
investments and business operations. We aim to align our plan with
the Science Based Targets initiative's net zero standard for
financial institutions, which is due to be published early in 2023.
We have already set a near term emissions reduction target in our
business operations - our Scope 1 and 2 emissions - an 80%
reduction by 2030, from a 2020 baseline.
Being the responsible wealth manager is also about our culture.
I want Quilter to be a place that is inclusive of all, celebrates
diversity and gives everyone the opportunity to be their best. We
will soon launch our Inclusion & Diversity Action Plan,
supporting our targets to further increase the representation of
women and ethnic minority groups across our Senior Leadership
Community.
So, in summary, we delivered a strong performance in 2021.
However, in 2022 market volatility from changing macroeconomic
conditions and increased geopolitical uncertainty, including the
war in Ukraine, has weighed on investor sentiment. So, we
anticipate gross new flows across the UK wealth savings market are
likely to remain subdued this year.
The Fundscape data released this morning shows that in first
quarter of 2022, we led our peers in gross sales and improved our
market share of net flows. As a result, I can tell you that up to
the end of April, year-to-date net inflows onto our UK Platform and
into our High Net Worth Segment are both broadly in line with the
comparable period of 2021, which is a satisfactory start to the
year. However, as we said in our first quarter market update, lower
equity markets and higher bond yields have obviously had a negative
impact on our AuMA which stood at GBP107 billion at the end of
March, down from GBP112bn at year-end.
As I stand here today, what is obviously beyond my control is
the market and our customers' response to geopolitical factors and
the awful events in Ukraine.
But what I can say is we've built firm foundations, have a plan
to deliver strong growth ahead and we are confident of delivering
upon it over the next three years.
And with that, let me hand back to our Chair.
-ends-
Enquiries:
Investor Relations:
John-Paul Crutchley +44 (0)7741 385 251
Keilah Codd +44 (0)7776 649 681
Company Secretary:
Patrick Gonsalves +44 (0) 7391 867 081
Camarco
G eoffrey Pelham-Lane +44 (0)20 3757 4985
About Quilter plc:
Quilter plc is a leading wealth management business in the UK
and internationally, helping to create prosperity for the
generations of today and tomorrow.
Quilter oversees GBP107.2 billion in customer investments (as at
31 March 2022).
It has an adviser and customer offering spanning: financial
advice, investment platforms, multi-asset investment solutions, and
discretionary fund management.
The business is being reorganised into two segments: Affluent
and High Net Worth.
Affluent encompasses the financial planning businesses, Quilter
Financial Planning, the Quilter Investment Platform and Quilter
Investors, the Multi-asset investment solutions business.
High Net Worth includes the discretionary fund management
business, Quilter Cheviot, together with Quilter Private Client
Advisers.
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