21st Apr 2020 08:29
(Alliance News) - Quilter PLC on Tuesday warned it will not meet its annual operating margin target, as it expects to Covid-19 pandemic to dent revenue.
The wealth manager, updating on its trading in the three months to March 31, said it still will proceed with its planned shareholder returns.
Quilter posted an 8.0% year-on-year fall in assets under management and administration to GBP95.3 billion from GBP103.6 billion.
First quarter gross sales climbed 6.5% to GBP3.3 billion from GBP3.1 billion last year.
Chief Executive Paul Feeney said: "After a good start to the quarter in terms of flows, revenues and profitability, the global health crisis caused by Covid-19 has significantly altered economic and market expectations for the foreseeable future. The path and timing of the reversion to a more normal environment remain unclear and we expect this to be reflected in further market volatility."
Quilter warned that lower assets under management and administration "will lead to a materially lower run-rate of revenues".
"While the group is undertaking a number of management actions to reduce expenses, it no longer expects to achieve its 27% operating margin target in 2020," Quilter said.
But promisingly for Quilter's investors, it said it still will recommend paying a final dividend for 2019, continue with the first tranche of a GBP375 million buyback, and undertake a previously announced odd-lot offer.
In March, Quilter began a programme to repurchase up to GBP375 million of its stock, to reduce its share capital.
At the end of March, about GBP28 million worth of shares had been repurchased during the first tranche of the buyback.
The odd-lot offer, unveiled in March, will see Quilter's shareholders with fewer than 100 shares be able to sell stock at a 5% premium to the market price.
Quilter in March explained it has "an unusually large" number of small shareholders for a company of its size.
The recurring costs of administration from the large number of shareholders are disproportionate to the size of a small shareholding and affect shareholders as a whole, Quilter explained.
Quilter shares were down 3.2% at 111.75 pence each in London early on Tuesday, and they were 2.9% lower at ZAR26.31 in Johannesburg.
By Eric Cunha; [email protected]
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