Quilter plc (LON:QLT) announced today that Cathy Turner and Suresh Kana will not seek re-election at the Company’s Annual General Meeting on 14 May 2020, and will stand down from the Board with effect from the end of the AGM.
Ms Turner has recently taken up an appointment as a Board member and Chair of the Remuneration Committee at a FTSE 100 company and can no longer commit the required time to her duties on the Quilter Board.
Dr Kana’s decision to step down is primarily driven by the extensive travel required as a result of his serving on a UK public company Board from South Africa, in addition to his other existing international commitments. He believes that this is an appropriate time to step down now that Quilter’s governance processes are well established.
Commenting, Glyn Jones said, “Cathy has made a significant contribution to the establishment by Quilter of remuneration policies and structures appropriate for an independent public company. Suresh’s insight into South African corporate governance practices has been very valuable during our formative period as a dual-listed entity. We wish them every success in their future endeavours.”
Ruth Markland, our Senior Independent Director, who has served as a member of the Board Remuneration Committee since she joined the Board in June 2018, has agreed to succeed Cathy as Chair of our Board Remuneration Committee. An external search agency has been appointed to help us identify successors for both Ms Turner and Dr Kana.
The company also announced that it has today launched an Odd-lot Offer, pursuant to which shareholders holding fewer than 100 ordinary shares in Quilter (the “Odd-lot Holders”) will be offered the opportunity to sell their shares at a 5% premium to the market price.
Background and reasons for the Odd-lot Offer
At the Company’s Annual General Meeting held on Thursday 16 May 2019 (the “2019 AGM”), shareholders authorised the Directors to make and implement an Odd-lot Offer at any time within the 18 month period following the 2019 AGM.
The history of the Company, which includes the original demutualisation and listing of Old Mutual plc in 1999 and the managed separation of the Company from Old Mutual plc implemented on 25 June 2018, has resulted in it having an unusually large number of small shareholders for a company of its size. Quilter has a total of more than 460,000 shareholders, of which approximately 220,000 (48%) are small shareholders who hold fewer than 100 ordinary shares and, in aggregate, represent 0.89% of the total number of ordinary shares in issue.
The recurring costs of administration resulting from the relatively large number of shareholders (including elevated printing and postage costs) are disproportionate to the size of a small shareholding and affect shareholders as a whole. By carrying out an Odd-lot Offer, the Directors will be able to engage with active shareholders, and help them to manage their shares efficiently and support those Odd-lot Holders who wish to divest themselves of their shares at a 5% premium.
ELIGIBLE SHAREHOLDERS CAN ELECT TO RETAIN THEIR SHAREHOLDING IN QUILTER, IF THEY CHOOSE.
The maximum number of ordinary shares eligible to participate in the Odd-lot Offer is approximately 17 million, representing 0.89% of the ordinary shares in issue as at Tuesday 10 March 2020. If all eligible Odd-lot Holders were to participate in the Odd-lot Offer, the maximum cash consideration payable to such Odd-lot Holders, based on a closing price of 132.8 pence, would be up to approximately £24 million.
Quilter plc also announced their preliminary results for the year ended 31 December 2019.
A year of significant strategic progress, underlying profit performance ahead of market expectations and £375 million capital return with additional c.£30 million Odd-lot Offer announced
Highlights (including Quilter Life Assurance (“QLA”))
- Adjusted profit before tax up 1% to £235 million (2018: £233 million excluding Single Strategy business; 2018: £259 million including Single Strategy business) of which £53 million (2018: £57 million) from QLA.
- Adjusted diluted earnings per share of 11.3 pence (2018: 13.5 pence, of which 1.2 pence is in respect of the Single Strategy business).
Management basis – continuing business (excludes QLA)
- Adjusted profit before tax for the Group up 3% to £182 million (2018: £176 million); for further details see overleaf.
- Adjusted diluted earnings per share from continuing operations of 8.6 pence (2018: 8.9 pence) reflecting more normal tax charge.
- Recommended final dividend of 3.5 pence per share (2018: 3.3 pence per share), bringing the total dividend for the year to 5.2 pence per share (2018: 3.3 pence per share, excluding the special dividend of 12.0 pence per share).
- Assets under Management/Administration (“AuMA”) up 13% from 31 December 2018 to £110.4 billion (2018: £97.7 billion).
- Operating margin stable at 26% (2018: 26%), despite investment in distribution, supported by optimisation initiatives.
- Net Client Cash Flow (“NCCF”) of £0.3 billion (2018: £4.7 billion).
- Integrated net flows of £2.6 billion (2018: £4.7 billion). Statutory results
- IFRS loss before tax attributable to equity holders from continuing operations of £53 million (2018: profit of £41 million) reflecting a higher policyholder tax charge due to the increase in market levels during 2019.
- Diluted earnings per share of 7.8 pence (2018: 26.5 pence).
- Solvency II ratio of 221% after payment of the recommended final dividend (2018: 190% (including QLA)).
Strategic progress
- The sale of the QLA business to ReAssure Group for £425 million (plus interest of £21 million) completed on 31 December 2019. The net surplus proceeds of £375 million are planned to be returned to shareholders. A share buyback on both the London and Johannesburg Stock Exchanges will commence imminently.
- Odd-Lot Offer to reduce number of shareholders by up to c.50% at a cost of up to c.£30 million announced alongside full year results.
- UK Platform Transformation Programme – initial migration of 38,500 accounts from 25,000 clients representing AuA of £4.3 billion successfully transitioned over the weekend of 22/23 February 2020, in line with plan.
- Business optimisation and cost saving initiatives ahead of plan with £14 million of savings realised during the year with an end-2019 run rate benefit of £24 million.
- Integration of Charles Derby completed and Lighthouse Group plc progressing in line with plan. Charles Derby rebranded to Quilter Financial Advisers early in 2020.
- Quilter Investors disengagement from Transition Service Agreement with Merian completed six months ahead of schedule and on budget.
Paul Feeney, Quilter plc Chief Executive Officer, said:
“2019 was a pivotal year for Quilter. Not only were we pleased with a 3% increase in adjusted profit to £182 million, excluding QLA, after business investment via acquisitions and new premises expenditure of around £10 million, it was also a great year for delivering on our transformation agenda.
Our optimisation plans remain on track and our advice acquisitions will contribute to flows in the coming years. Quilter Investors is now a highly scalable business with a broader range of solutions to meet client needs. Quilter International delivered strong performance in 2019 supported by a focus on cost containment to offset revenue pressures.
The Board has proposed a final dividend of 3.5 pence per share to provide a full year dividend of 5.2 pence per share. We intend to undertake a capital return of £375 million to shareholders from the net surplus proceeds from the Quilter Life Assurance sale, and a share buyback will commence imminently. We have also announced an Odd-Lot Offer to provide small shareholders with a cost effective means of selling their shares.
2020 began well but the sharp Coronavirus induced market correction beginning in late February has created a level of uncertainty as to the outlook for the remainder of 2020. It is currently too early to ascertain what impact market volatility will have on investor sentiment, NCCF and the consequential impact this may have on revenues and profitability.
Notwithstanding short term market sentiment, we remain optimistic on the long-term secular opportunity across our markets and Quilter is strategically well positioned to benefit from this. Completing the first migration onto our new UK platform in early February was a major milestone for the Group. We are now focussed on delivering the second and final migration to a high quality outcome in the summer. Our new platform will strengthen the cohesion between our different business capabilities and be a catalyst for faster growth.”
