5 March 2025

Quilter plc preliminary results for the year ended 31 December 2024

Quilter reports a 17% increase in adjusted profit to £196 million and a two-percentage point improvement in operating margin to 29%

Steven Levin, Chief Executive Officer, said:

"2024 was an excellent year in terms of net inflows, revenue momentum, cost discipline and profit growth. Both our High Net Worth and Affluent segments delivered good profit progress and significantly higher new business levels. These results demonstrate the benefit of our scale dual-distribution model which has made us the UK's largest and fastest growing retail advised platform provider. We have started the year well and look forward to building on this momentum in 2025 and beyond."

Highlights:

·      Total Assets under Management and Administration ("AuMA") increased by 12% over the year to £119.4 billion reflecting net inflows of £4.8 billion coupled with supportive markets. Core net inflows of £5.2 billion represented 5% of opening AuMA (4% reported after non-core net outflows). More importantly, our net inflow momentum continued to build over the course of the year with the fourth quarter the strongest of the year.

·      Adjusted profit before tax increased by 17% to £196 million (2023: £167 million) with a two-percentage point improvement in the operating margin to 29% (2023: 27%).

·      Revenues grew by 7% to £670 million (2023: £625 million) reflecting higher management fee revenue on higher asset levels combined with increased investment revenue generated on shareholder funds. Cost control was maintained which limited cost growth to 3%, taking the expense base to £474 million (2023: £458 million).

·      Simplification programme now achieved £35 million of savings on a run-rate basis, with the remaining £15 million of the £50 million target expected to be delivered by the end of 2025, on a run-rate basis.

·      Adjusted diluted earnings per share of 10.6p increased by 13% (2023: 9.4p) with higher operating profit partially offset by a higher tax charge.

·      Ongoing Advice Review: Skilled Person Review expected to complete during Q2 2025. Customer remediation exercise provision of £76 million recognised.

·      IFRS loss after tax of £34 million (2023: £42 million IFRS profit after tax).

·      Proposed Full Year Dividend of 5.9 pence per share versus 5.2 pence per share in 2023, representing an increase of 13%, in line with EPS growth.

·      Solvency II ratio of 219% after payment of recommended final dividend (2023: 271%).

Key financial highlights

We assess our financial performance using a variety of measures including alternative performance measures ("APMs"), as explained further on pages 17 to 19. In the headings and tables presented, these measures are indicated with an asterisk: *.

Quilter plc results for the year ended 31 December 2024

Steven Levin, CEO, and Mark Satchel, CFO, will give a presentation via webcast at 08:30am (GMT) today, 5 March 2025. The presentation will be followed by a Q&A session.

The presentation will be available to view live via the webcast or can be listened to via a conference call facility. Details on how to join online or via conference call can be found on our website: 2025 results and presentations | Quilter plc

Note: Neither the content of the Company's website nor the content of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.

Disclaimer

This announcement may contain forward-looking statements with respect to certain Quilter plc's plans and its current goals and expectations relating to its future financial condition, performance and results.

By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Quilter plc's control including amongst other things, international and global economic and business conditions, the implications and economic impact of global conflicts, economic political uncertainty, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing and impact of other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation and other regulations in the jurisdictions in which Quilter plc and its affiliates operate. As a result, Quilter plc's actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in Quilter plc's forward-looking statements.

Quilter plc undertakes no obligation to update the forward-looking statements contained in this presentation or any other forward-looking statements it may make.

Chief Executive Officer's statement

When I took on the role of CEO in late 2022, it was clear that we needed to apply more urgency to our transformation plans. Our net inflows were running at 2% of opening assets, our operating margin was well below peers, and we needed to improve efficiency. As a result of our efforts over the last two years, I am pleased to report that Quilter is in much stronger shape today. We have a well-positioned High Net Worth franchise and the UK's largest, fastest growing, scale adviser platform in our Affluent segment. We are primed for future growth. Below I discuss my review of the year and our plans to take our business forward.

2024 Performance

In 2024, we delivered:

·      revenue growth of 7%, four percentage points higher than cost growth of 3%. That led to a two-percentage point increase in our operating margin to 29%;

·      record core net inflows of £5.2 billion, with incrementally higher gross and net inflows achieved in each successive quarter of the year; and

·      record adjusted profit of £196 million, an increase of 17% (2023: £167 million).

Across our two segments:

·      Our High Net Worth segment increased revenue by 7% to £226 million (2023: £211 million). After maintaining growth investment, we delivered a 17% increase in adjusted profit before tax to £48 million (2023: £41 million).

·      Affluent segment revenues increased by 8% to £424 million (2023: £393 million) reflecting higher advice and management fee revenues combined with a higher contribution from interest income on the shareholder capital which supports the segment. This revenue growth combined with strong cost management led to a 19% increase in adjusted profit to £148 million (2023: £124 million).    

Group adjusted profit before tax of £196 million represents the Group's IFRS result, adjusted for specific items that management consider to be outside of normal operations or one-off in nature. The Group's IFRS loss after tax was £34 million compared to a profit of £42 million in 2023. Principal differences between adjusted profit and the IFRS result are due to non-cash amortisation of intangible assets, business transformation expenses (which are pre-funded and expensed as incurred), finance costs, the impact of policyholder tax positions on the Group's results and, in 2024, the customer remediation exercise provision in respect of the cost of undertaking additional work, together with the potential cost of client redress. We expect business transformation expenses to remain elevated in 2025, reflecting remaining spend on our Simplification programme, but to reduce substantially thereafter.

Total Group adjusted diluted earnings per share were 10.6 pence, an increase of 13% (2023: 9.4 pence). On an IFRS basis basic EPS was (2.5) pence per share compared to 3.1 pence per share for 2023, with the decline largely reflecting the provision in respect of the Ongoing Advice Review and costs of undertaking the review.

Shareholder returns and capital

Our increased profit in 2024 supports an increased recommended final dividend of 4.2 pence per share (2023: 3.7 pence). Together with the interim dividend of 1.7 pence per share, this brings the recommended total shareholder payment to 5.9 pence per share, an increase of 13%, in line with EPS growth. This represents a pay-out ratio of 59% (2023: 61%).

We have a strong balance sheet with a Solvency II ratio of 219% after an accrual for payment of the final dividend and allowing for the customer remediation exercise provision of £76 million. Given the strength of our balance sheet, once the Ongoing Advice Review is more advanced, the Board expects to undertake a review of our capital needs, foreseeable requirements and expected future cash and capital generation to consider whether the Group has excess capital and whether the current distribution strategy remains appropriate.

Ongoing advice

Delivering advice is central to how we operate, and we have policies in place that underline the need for advisers to meet their ongoing servicing obligations. We believe that a well-delivered ongoing advice service, tailored to the individual needs of the client, should be the foundation of an enduring beneficial and trusted relationship between client and adviser to help people make the most of their money. As such, we welcome the announcement made by the FCA on 24 February 2025 regarding ongoing advice services.

In June 2024, a Skilled Person was appointed to conduct a review and provide a view to the FCA on whether the delivery of ongoing advice services by Appointed Representative firms in the Quilter Financial Planning (QFP) network was compliant with applicable regulatory requirements. This work is well advanced, and the final report is expected to be submitted to the FCA in the second quarter of 2025.

As the review has progressed, the analysis of our historical data and practices has supported our view that, except in limited cases, where clients have paid for ongoing service, this has been provided. We also note that the actual number of customer complaints received by Quilter on this issue remains low. Although the Skilled Person Review is yet to complete and will be the subject of further discussions with the FCA, we have concluded that in those limited instances where clients may not have been provided with the expected level of service from their adviser, some form of client remediation is likely to be appropriate. Our best estimate of the cost of undertaking this work, together with potential cost of client remediation (plus interest), amounts to some £76 million and accordingly we have recognised a provision for this amount.

In line with FCA guidance, we would encourage any clients who believe that they have paid for and not received an ongoing advice service from their adviser to contact us directly rather than approaching a Claims Management Company. This will ensure that any amounts that may be due to them are received in full.

We also have the ability to seek appropriate reimbursement from the relevant advisers who have been unable to demonstrate that the ongoing servicing paid for by the client was provided. 

As the broader advice regulatory landscape continues to evolve, including through the Advice Guidance Boundary Review, we are fully supportive of the FCA's intention to review the rules on ongoing advice to make sure that they remain fit for the future and help as many people as possible to access high quality support to build brighter financial futures for themselves.

Flows and investment performance

·      Our business generated excellent inflows in 2024, reflecting the strategic initiatives put in place over the last few years. Most importantly, our performance accelerated over the course of the year with each quarter incrementally stronger. Total net inflows in our core business were 5% of opening assets, or 4% after non-core net outflows. Both High Net Worth and Affluent performed well relative to their respective market peers.

·      Our High Net Worth segment continued to deliver very good levels of new business flows. This performance was achieved despite experiencing higher than historical average outflows predominantly reflecting increased investor activity, including that associated with pre-UK Budget tax planning in the latter part of the year.

·      Within our Affluent segment, we were particularly pleased with the improvement in net inflows onto our Platform. We were the leading advised platform for new business flows and remain the largest single discrete UK retail advised platform by assets.

High Net Worth investment performance has been strong. Discretionary client portfolios outperformed the ARC PCI Steady Growth peer group indices over 1, 3 and 5 years; and in the ARC PCI Equity Risk category, they outperformed over 1 and 5 years, with a small 25bps underperformance over 3 years (figures to end December 2024). High Net Worth Core Managed Portfolio Solutions outperformed the respective IA sectors over all time periods. Within Affluent, we continued to deliver good performance from our WealthSelect managed portfolio range. Cirilium Passive and Blend also continued to perform as expected given relative underweight positions in the Magnificent-7 US stocks. Over the last few years, our WealthSelect MPS range has overtaken Cirilium as the preferred solution for advisers and reflects the increasing shift by independent advisers to outsourcing their client investment solutions to managed portfolios on platforms.

Business improvement

Distribution

In our High Net Worth segment, we continue to invest in our advice capability across the UK and internationally in our Dublin and Jersey offices, increasing the size and breadth of the client types we can attract. We plan to grow our client-facing professional headcount (Investment Managers and Restricted Financial Planners) to around 300 over time through developing existing staff and external recruitment.

The Quilter channel across both segments is building distribution on three fronts. We are targeting increased:

·      adviser numbers, where the position has broadly stabilised versus the reductions seen in recent years. Total adviser headcount declined in the first half of the year reflecting a combination of natural attrition and retirements but increased modestly in the second half;

·      adviser productivity. In 2024, we achieved a 14% increase in annual gross flow per adviser to £3.2 million (2023: £2.8 million). This means that while adviser numbers declined modestly in 2024, during the year the Quilter channel delivered a 46% increase in net inflows to £2.9 billion (2023: £2.0 billion); and

·      adviser assets managed within our propositions. During 2024, we undertook back-book transfers, of c.£800 million (2023: c.£750 million).

Proposition

Our Platform and investment solutions are both market-leading propositions. Both are competitively positioned and offer consistent value to our customers. Initiatives to improve our market share of new business flows delivered strong results which, in turn, led to a significant increase in net inflows. IFA gross inflows onto the Platform increased by 66% to £8.8 billion (2023: £5.3 billion). This reflects the quality of our core platform and adviser support staff, and improvements in our sales effectiveness which has led to increased market share. We continue to enhance our proposition through the provision of value-added tools and services, such as family linking pricing, faster payment services and our CashHub cash management offering.

Our dual distribution strategy means that all Quilter products and services are available to both our advisers and independent financial advisers. The strong usage of products and solutions by third parties demonstrates that they are competitive with market alternatives and are both customer focused and competitively priced. Our unbundled pricing is fully aligned with the Consumer Duty principles and puts client choice at the heart of our business.

In September 2024 we acquired NuWealth, a small online Direct to Consumer (D2C) business. This acquisition accelerates our digital capabilities, enabling us to onboard clients directly. The acquisition will broaden our propositions and add another channel to our distribution capability. It is not our intention to compete directly with the established players in the D2C market. Instead, our goal is that NuWealth will support advisers to nurture early-stage clients who can grow into core advisory relationships over time.

Through NuWealth, we will provide financial education and intuitive tools which are aligned with our advice processes to foster better investing habits and put customers in control of their financial journey. This will allow Quilter to support clients at an earlier stage in their lifetime wealth journey, before their assets have reached a level that would normally require face-to-face advice. As these clients' wealth and financial complexities evolve, they will be able to transition to a more tailored advisory service, thereby creating an additional pipeline for future growth.

Strategic transformation

Our change programmes remain on track and are contributing to improved performance.

1. High Net Worth

Following FCA approval of our application to provide financial advice from the Quilter Cheviot legal entity, we have been focused on getting the necessary administration and IT updates formalised ahead of taking up the permissions. From the second quarter, Quilter Cheviot will operate as a directly authorised, fully integrated business, allowing a more seamless approach to client servicing and providing scope for business efficiencies.

2. Affluent: Quilter channel

Having declined in the first half, our number of restricted advisers increased modestly in the second half of 2024. Natural attrition and retirements was partially offset by recruitment and graduates from our Academy, with increased adviser productivity supporting an increase in gross new business flows.

We continued to invest in our Quilter Partners hubs, which combine increased investment and Platform alignment with the entrepreneurial drive and focus of owner-operated businesses. By the end of February 2025, nine firms had joined Quilter Partners which is in line with our initial plans.

Our goal of building a more efficient operating model to deliver further improvements in adviser productivity and client experience is progressing to plan, with expected delivery over a two to three-year horizon. 

3. Simplification Phase II

We remain on track to achieve our second stage Simplification target of £50 million of cost savings by end 2025 on a run-rate basis. The programme covers the simplification of our governance and internal administration processes, together with our Advice Transformation and High Net Worth initiatives. By end-2024, £35 million of these savings were delivered on a run-rate basis. Completion of this programme will support our ambition of operating sustainably above a 30% operating margin over the medium term.

Culture

During 2024, we undertook a strategic refresh of our purpose which is "brighter financial futures for every generation". This was supported by an employee led refresh of our values - do the right thing; always curious; embrace challenge; and stronger together - which our colleagues strive to achieve every day.

Looking forward

As I have outlined, I am very pleased by the progress we have made to position Quilter for the future. The strength and breadth of our businesses means Quilter is uniquely positioned in the UK wealth market:

·     In our High Net Worth segment our 14 onshore offices provide nationwide coverage. We offer an integrated advice and investment management proposition to those clients who require this, or each service separately for those clients who do not need both from us. Our approach is relationship led and our business balances meeting complex client needs while retaining the intimacy and client focus of a traditional wealth manager.

·     Our Affluent segment is a leading large-scale player in UK Wealth. Our Platform and investment solutions businesses benefit from operating leverage as assets grow and economies of scale are realised. Reflecting this, our strategy is to maximise distribution by supporting advice through both our restricted and independent channels.

When we look across the UK savings and investment landscape, it is clear that too many people have insufficient savings. Quilter believes UK Government policy should be directed at encouraging those individuals to build greater financial self-sufficiency. For those who do save, many do so disproportionately in cash savings with numerous studies concluding that the UK consumer over-saves but under-invests. We are concerned that this may lead to a wealth-gap emerging for future pensioners, with them living on lower incomes than could have been attained through better financial planning.

Studies conducted by Quilter show that consumers who take financial advice tend to have a greater proportion of their wealth in long-term investments and achieve better financial outcomes relative to those who do not. Financial advisers across the market use Quilter as a gateway to access a wide range of fund solutions on an industry-leading platform which supports their clients' investment goals. Instilling a wider long-term investing culture in the UK would increase the likelihood of a well-funded retirement for most individuals. As the UK's second largest advice firm, Quilter will play a leading role in supporting consumers who want to build themselves a brighter financial future.

Over the next decade, we expect a transformation in the way that financial advice is delivered to customers, both through technological change facilitating higher adviser productivity, and regulatory changes such as the expected outputs from the Advice Guidance Boundary Review. We will ensure our business is at the forefront of embracing these changes.

With the business now primed for growth, we are evolving our strategic goals towards a more outward focus:

1.     Grow distribution

We achieved our Core net inflow target of 5% of opening balances in 2024. We expect the environment for UK savings to remain constructive. UK households need to invest more, lower interest rates should heighten focus on longer-term investment products, and lower inflation increases the ability to invest. We aim to deliver market leading net new business flows. By gradually improving our share of a growing market, while maintaining persistency levels in line with long-term trends, we expect to continue delivering net flows of around 5% of opening balances, through the cycle.

2.     Enhance propositions

Our open, unbundled business model is, by its nature, highly customer-centric. We will continue to innovate and anticipate future client needs. We will create new propositions to support the development of a stronger UK investment culture. Our investment in NuWealth will allow us to accelerate development of digital distribution and propositions. Delivering brighter financial futures for our customers is central to our philosophy.

3.     Be future fit

We will complete our current Simplification programme and further improve our operating margin, over time, while investing in our business to deliver our growth objectives. We will continue to evolve our culture and talent to ensure we are regarded as a high-performing organisation.

Outlook

Business performance was excellent in 2024, and we look to 2025 and beyond with confidence. Our customer-centric business model, dual channel distribution, and commitment to operational efficiency, backed by a strong balance sheet, positions us well to support our clients on their wealth-building journey. We have started 2025 well with net inflows running ahead of the corresponding period in 2024. Our current view of the remainder of the year embeds the following assumptions:

·      Market levels sustain the solid momentum that has characterised early 2025 and the broader environment remains conducive to improving new business flows.

·      In line with Bank of England commentary, we expect UK interest rates to gradually decline from current levels, albeit the pace of easing remains uncertain. Although this will reduce the investment income generated on shareholder cash, it should increase demand for longer-term investment products from clients and be supportive to equity market valuation levels.

·      We see a strong opportunity to continue to capture market share and are primed for growth. As a result, we expect cost growth of around 5% in 2025, before the benefit from Simplification, as we increase growth investment spend.

·      In addition, we expect a £5 million increase (annualised) in costs arising from the change in Employer's National Insurance rates. We also expect the FSCS levy to double to approximately £8 million from 2024 levels.

As a result of the above, we expect a cost base of around £500 million in 2025. This is expected to lead to a mid to high single digit increase in adjusted profit in 2025, with the pace of cost investment broadly matched to that of revenues and with accelerating profit growth in 2026 and beyond.

Steven Levin

Chief Executive Officer

Financial review

Review of financial performance

Overview

The Group delivered strong growth in 2024, with record adjusted profit before tax of £196 million, an increase of 17% on the prior year (2023: £167 million). This was driven by higher average AuMA supported by strong net inflows and positive markets, together with higher interest rates benefitting investment returns on shareholder cash, and continued delivery of our Simplification programme. The Group's reported closing AuMA was £119.4 billion, a 12% increase on the opening position (2023: £106.7 billion).

Alternative Performance Measures ("APMs")

We assess our financial performance using a variety of measures including APMs, as explained further on pages 17 to 19. In the headings and tables presented, these measures are indicated with an asterisk: *.

Key financial highlights

In the core business, net inflows of £5.2 billion increased by 525% (2023: £0.8 billion) in 2024. This reflected an improvement in the macro environment and investor sentiment, as well as the effectiveness of building out our distribution capabilities and enhancing our proposition. Gross flows of £16.0 billion (2023: £11.1 billion), reflects continued strong flows in the Quilter channel and a significant increase in IFA channel flows onto the Platform, due to increased new business levels and improved market share from IFA firms. Productivity, representing Quilter channel gross sales per Quilter Adviser, increased by 14% to £3.2 million (2023: £2.8 million).

In the Affluent segment, we experienced strong contributions from both the Quilter and IFA channels:

·      Quilter channel: Gross flows of £4.1 billion were 14% higher than the prior year (2023: £3.6 billion), whilst net inflows of £2.3 billion were 43% ahead (2023: £1.6 billion). As part of our continued strategic objective of aligning our Advice business, back book transfers of c.£800 million of assets under advice by Quilter Financial Planning were transferred onto our Platform from external platforms. Net inflows as a percentage of opening AuMA for the Quilter channel were 13% (2023: 10%).

·      IFA channel: Gross flows of £8.8 billion onto the Quilter Platform increased by 68% (2023: £5.3 billion), demonstrating our continued strategic initiatives in building out our distribution and improving our market share of new business. The Platform continues to maintain the leading share of gross flows against our retail advised platform peers, based on the latest Fundscape data (Q4 2024). Net inflows were £3.0 billion (2023: £0.2 billion net outflow) representing a significant improvement on the prior year, as we continued to win flows from competitor platforms. Net inflows as a percentage of opening AuMA for the IFA channel onto the Platform were 5% (2023: nil).

·      Funds via third-party platforms reported net outflows of £400 million, compared to £316 million in the previous year.

Asset retention of 89% for the Affluent segment remains stable compared to the prior year (2023: 89%).

Within the High Net Worth segment, gross flows of £3.1 billion were 42% higher than the prior year (2023: £2.2 billion), whilst net inflows of £0.6 billion were also up (2023: £0.1 billion net outflow). Whilst both the Quilter channel, and the IFA and direct channel, recorded net inflows for the year, the latter experienced a loss of a large value low margin account during the first half of the year. Asset retention of 91% for the High Net Worth segment remained in line with the previous year (2023: 91%).

The Group's core business AuMA of £116.3 billion is 12% ahead of the opening position (2023: £103.4 billion) reflecting positive market movements of £7.7 billion and net inflows of £5.2 billion. The Affluent segment AuMA increased by 14% to £88.5 billion (2023: £77.5 billion) of which £29.5 billion is managed by Quilter, versus the opening position of £25.5 billion. The High Net Worth segment AuM was £29.5 billion, up 9% from the opening position of £27.0 billion, with all assets managed by Quilter.

In total, £58.5 billion, representing 50% of core business AuMA, is managed by Quilter across the Group (2023: £52.2 billion, 50%).

The Group's revenue margin of 44 bps was 3 bps lower than the prior year (2023: 47 bps).

In the Affluent segment, the administered revenue margin was 25 bps, 2 bps lower than the prior year (2023: 27 bps). This is primarily the result of reduced Platform administration fees charged to clients in the second half of 2023 and all of 2024 following the Platform repricing undertaken during 2023, and the impact from our tiered pricing structure. The managed revenue margin decreased by 5 bps to 36 bps (2023: 41 bps) following the reprice of the Cirilium Active range in 2023 and the introduction of AuM scale discounts. Within our Managed Solutions, as previously guided, the proportion of total client assets invested in the Cirilium Active range, our highest revenue bps contributor, remained in net outflow during the year. Within our MPS range, WealthSelect remains one of the largest MPS offerings in the industry and continues to grow with AuMA of £18.4 billion at the end of 2024 (2023: £13.7 billion), reflecting the shift towards managed portfolios on platforms.

The revenue margin in the High Net Worth segment decreased by 1 bp to 70 bps (2023: 71 bps).

Adjusted profit before tax increased by 17% to £196 million (2023: £167 million). Net management fees of £502 million increased 5% (2023: £477 million) primarily due to an increase in reported average AuMA year-on-year of 11% to £113.2 billion (2023: £102.1 billion) partially offset by the planned reductions in net management fee margins that were implemented during 2023 and asset mix shifts.

Interest revenue generated from client funds included within net management fees were £31 million (2023: £23 million) reflecting the increased interest rates year-on-year and the changes made to the Platform charging structures in 2023. Other revenue of £97 million, which mainly comprises our share of income from providing advice, was up 13% on prior year (2023: £86 million) reflecting higher average levels of assets under advice. Investment revenue, predominantly interest income generated on shareholder cash and capital resources, of £71 million increased by £9 million (2023: £62 million) due to higher average interest rates in 2024 compared to the prior year.

Operating expenses of £474 million increased by 3% on the prior year (2023: £458 million) as a result of inflationary increases and planned business investment, partially offset by Simplification cost savings. The Group operating margin improved by 2 percentage points to 29% (2023: 27%).

The Group's IFRS loss after tax was £34 million compared to a £42 million IFRS profit after tax for 2023. This reflects the variances in policyholder tax outcomes due to market gains in the year, the customer remediation exercise provision and the cost of the Skilled Person Review. This is partially offset by an improvement in the adjusted profit result.

Adjusted diluted earnings per share increased 13% to 10.6 pence (2023: 9.4 pence).

Total net revenue*

Total net revenue for the Affluent segment was £424 million, an increase of 8% from the prior year (2023: £393 million). Net management fees were £304 million, £12 million ahead of the prior year (2023: £292 million). Within net management fees, £19 million (2023: £10 million) relates to interest sharing arrangements on cash balances held on the Platform. This was offset by changes to the mix of assets and planned changes to the margins generated in 2023, predominantly the Cirilium Active reprice and the new Platform pricing policy.

Other revenue within the Affluent segment, mainly consisting of our share of income from providing advice within Quilter Financial Planning, was £84 million, 20% more than the prior year (2023: £70 million). This includes higher recurring charges from higher average levels of assets under advice. Investment revenue of £36 million (2023: £31 million) represents interest earned on shareholder capital held to meet the regulatory capital requirements of the business.

Total net revenue of £226 million in the High Net Worth segment was 7% higher in the year (2023: £211 million). Net management fees were £13 million ahead of the prior year at £198 million (2023: £185 million) largely due to higher average AuM, partially offset by changes to fee structures introduced in 2023. Net management fees include interest margin earned on client cash balances of £12 million (2023: £13 million). Investment revenue, representing revenue earned on regulatory capital to support the business, of £7 million was £1 million higher (2023: £6 million) due to higher average interest rates. Other revenue of £21 million, predominantly reflecting revenue generated in Quilter Cheviot Financial Planning, was marginally higher than the prior year (2023: £20 million).

Operating expenses*

Operating expenses increased by 3% to £474 million (2023: £458 million). This increase reflects our planned investment in the business and inflationary increases, whilst focusing on our continued sustainable cost savings through Simplification activities.

We announced at our 2023 half-year results, a further £50 million of annualised run rate savings from Phase II of the Simplification programme with this anticipated to be delivered on a run-rate basis by the end of 2025. At 31 December 2024, the programme had delivered £35 million of these savings, on a run-rate basis, largely through the continued rationalisation of the Group's technology and property estate, IT and operations efficiencies from our investment in Advice technology, and a reduction in support costs as we continue to simplify our governance and internal administration processes. These benefits were partially offset by the impact of inflation on our cost base during the year. As a result, base costs as a percentage of revenues reduced 3 percentage points to 33% (2023: 36%).

Revenue-generating staff base costs increased by 5% to £101 million (2023: £96 million) and remains at a similar proportion of revenues as we continue to invest in our people and proposition across our business segments to drive growth.

Variable staff compensation of £82 million (2023: £74 million) increased by 11%, driven by an increased share price impacting the cost of deferred awards, National Insurance changes and improved business performance. Other variable costs of £51 million (2023: £45 million) were above that of the previous year, mainly driven by the increase in the average AuMA experienced over the year and increased business investment including M&A activity.

Regulatory and insurance costs increased by 13% to £18 million (2023: £16 million) reflecting increased Regulatory fees.

Taxation

The effective tax rate ("ETR") on adjusted profit before tax was 24% (2023: 23%). The Group's ETR is broadly in line with the UK headline corporation tax rate of 25%. The Group's ETR is dependent on a number of factors, including tax rates on profits in jurisdictions outside the UK and the value of non-deductible expenses or non-taxable income.

The Group's IFRS income tax expense was a charge of £69 million for the year ended 31 December 2024, compared to a charge of £46 million for the prior year. The income tax expense or credit can vary significantly year-on-year as a result of market volatility and the impact that this has on policyholder tax. The recognition of the income received from policyholders to fund the policyholder tax liability (which is included within the Group's income) has historically been volatile due to timing differences between the recognition of policy deductions and credits and the corresponding policyholder tax expense, resulting in the need for significant adjustments to the adjusted profit to remove these distortions. The Group has made changes to its unit pricing policy during 2024 relating to policyholder tax charges which will reduce future volatility in these timing differences. These changes are expected to reduce the value of adjustments made to future periods adjusted profit, set out in note 5(b)(vii) in the condensed consolidated financial statements.

Reconciliation of adjusted profit before tax* to IFRS result

Adjusted profit before tax represents the Group's IFRS result, adjusted for specific items that management considers to be outside of the Group's normal operations or one-off in nature, as detailed in note 5(a) in the condensed consolidated financial statements. The exclusion of certain adjusting items may result in adjusted profit before tax being materially higher or lower than the IFRS profit or loss after tax.

Adjusted profit before tax does not provide a complete picture of the Group's financial performance, which is disclosed in the IFRS consolidated statement of comprehensive income but is instead intended to provide additional comparability and understanding of the financial results.

The impact of acquisition and disposal-related accounting costs of £40 million (2023: £39 million) includes amortisation of acquired intangible assets and acquired adviser schemes.

Business transformation costs of £26 million were incurred in 2024 (2023: £28 million). During 2024, the Group spent £24 million on delivering Simplification initiatives (2023: £25 million). The implementation costs to deliver the remaining £15 million of annualised run-rate savings for the programme are estimated to be £40 million. Investment in business costs of £2 million (2023: £1 million) were incurred as the Group continues to enable and support advisers and clients and improve productivity through better use of technology.

Skilled Person Review costs of £10 million (2023: £nil) include the estimated external cost and direct cost of internal resources to support and perform the Skilled Person Review of historical data and practices across the Quilter Financial Planning network of Appointed Representative firms. This cost is excluded from adjusted profit as management considers it to be outside of the Group's normal operations and one-off in nature.

Customer remediation exercise costs of £76 million (2023: £nil) include the estimated redress payable to customers, comprising a refund of ongoing advice charges and interest payable for customers impacted, and administrative costs, which represents the costs to perform a potential customer remediation exercise across the Quilter Financial Planning network of Appointed Representative firms (see note 16 in the condensed consolidated financial statements). This cost is excluded from adjusted profit as management considers it to be outside of the Group's normal operations and one-off in nature.

For 2023, the other customer remediation expense of £6 million reflected £4 million of legal, consulting and other costs and a £2 million provision increase related to non-British Steel Pension Scheme redress payments. This was the result of the Group-managed past business review of defined benefit to defined contribution ("DB to DC") pension transfer advice suitability by an independent expert. For 2024, the provision for redress decreased by £3 million as a result of the redress calculations performed for customers being lower than forecast in 2023 due to the changes in assumptions used to perform the calculations and market movements of the pension scheme values during 2024. Further details of the provision are provided in note 16 in the condensed consolidated financial statements.

In 2024, income of £1 million was recognised (2023: £2 million expense) due to foreign exchange movements on cash held in South African Rand in preparation for payments of dividends to shareholders. Cash was converted to South African Rand upon announcement of the dividend payments to provide an economic hedge for the Group. The foreign exchange movements are fully offset by an equal amount taken directly to retained earnings.

Policyholder tax adjustments to adjusted profit were a credit of £90 million for 2024 (2023: £62 million credit). Adjustments to policyholder tax are made to remove distortions arising from market volatility that can, in turn, lead to volatility in the policyholder tax adjustments between years. The recognition of the income received from policyholders to fund the policyholder tax liability (which is included within the Group's income) can vary in timing to the recognition of the corresponding tax expense, creating volatility in the Group's IFRS profit or loss before tax. During 2024, the Group made changes to its unit pricing policy relating to policyholder tax charges which will reduce the value of these timing differences in future years. These changes, together with current year market movements, have resulted in the unwind of most of the opening timing difference.

Review of financial position

Capital and liquidity

Solvency II

The Group's solvency surplus is £851 million at 31 December 2024 (31 December 2023: £972 million), representing a solvency ratio of 219% (31 December 2023: 271%). The solvency information for the year to 31 December 2024 has been prepared based on the PRA rules and policy material that replaced Solvency II assimilated law on 31 December 2024 ("UK Solvency II"). Comparative figures for regulatory capital for 2023 are presented on a Solvency II basis. The solvency information for the year to 31 December 2024 contained in this results disclosure has not been audited.

The Group's solvency capital position is stated after allowing for the impact of the foreseeable dividend payment of £57 million (31 December 2023: £50 million).

The Group solvency surplus decreased by £121 million from the 31 December 2023 position primarily due to the customer remediation exercise provision and costs relating to acquisitions, business transformation and financing, partly offset by the net profit recognised in the year.

The Group's own funds include the Quilter plc issued subordinated debt security which qualifies as capital under the UK Solvency II rules. The composition of own funds by tier is presented in the table below.

The Group SCR is covered by Tier 1 capital, which represents 191% of the Group SCR of £715 million. Tier 2 capital represents 23% of the Group solvency surplus.

Final Dividend

The Quilter Board recommended a Final Dividend of 4.2 pence per share at a total cost of £57 million. Subject to shareholder approval at the 2025 Annual General Meeting, the recommended Final Dividend will be paid on Tuesday 27 May 2025 to shareholders on the UK and South African share registers on Friday 11 April 2025 (the "Record Date"). For shareholders on our South African share register, a Final Dividend of 99.18040 South African cents per share will be paid, using an exchange rate of 23.61438.

Holding company cash

The holding company cash statement includes cash flows generated by the three main holding companies within the business: Quilter plc, Quilter Holdings Limited and Quilter UK Holding Limited. The flows associated with these companies will differ markedly from those disclosed in the statutory statement of cash flows, which comprises flows from the entire Quilter plc Group including policyholder movements.

Net capital movements in 2024, totalled an outflow of £73 million (2023: £85 million) relating to dividend payments to shareholders in the year.

Net operational movements were an outflow of £33 million in 2024 (2023: £48 million). This includes £34 million (2023: £43 million) of corporate and business transformation costs, finance costs of £17 million (2023: £18 million) relating to coupon payments on the Tier 2 bond and non-utilisation fees for the revolving credit facility, and £18 million (2023: £13 million) of net interest income on money market funds, intragroup loans and cash holdings.

The net inflow related to internal capital and strategic investments of £219 million (2023: £90 million) is principally due to £325 million (2023: £176 million) of cash remittances from the trading businesses, which includes a remittance of £80 million as a result of a change in the Solvency II calculation methodology in 2023. This is partially offset by £102 million (2023: £86 million) of capital contributions to support business operational activities and further investment in the underlying business, including strategic acquisitions.

Shareholder information - Final Dividend

The Quilter Board has agreed to recommend to shareholders the payment of a Final Dividend of 4.2 pence per share. The Final Dividend will be considered by shareholders at the Quilter plc Annual General Meeting which will be held on Thursday 22 May 2025. Subject to shareholder approval, the Final Dividend will be paid on Tuesday 27 May 2025 to shareholders on the UK and South African share registers on Friday 11 April 2025 (the "Record Date").

Dividend Timetable

From the opening of trading on Wednesday 5 March 2025 until the close of business on Friday 11 April 2025, no transfers between the London and Johannesburg registers will be permitted. Share certificates for shareholders on the South African register may not be dematerialised or rematerialised between Wednesday 9 April 2025 and Friday 11 April 2025, both dates inclusive.

Additional information 

For shareholders on our South African share register a Final Dividend of 99.18040 South African cents per share will be paid on Tuesday 27 May 2025, based on an exchange rate of 23.61438. Dividend Tax will be withheld at the rate of 20% from the amount of the gross dividend of 99.18040 South African cents per share paid to South African shareholders unless a shareholder qualifies for exemption. After the Dividend Tax has been withheld, the net Final Dividend will be 79.34432 South African cents per share. The Company had a total of 1,404,105,498 shares in issue at today's date.

If you are uncertain as to the tax treatment of any dividends, you should consult your own tax adviser.

Supplementary information

Alternative Performance Measures ("APMs")

We assess our financial performance using a variety of measures including APMs, as explained further on pages 17 to 19. These measures are indicated with an asterisk: *.

For the year ended 31 December 2024

1.     Key financial data

1. Affluent

The following table presents certain key financial metrics utilised by management with respect to the business units of the Affluent segment, for the years indicated.

2. High Net Worth

The following table presents certain key financial metrics utilised by management with respect to the business units of the High Net Worth segment, for the years indicated.

Financial performance by segment

The following table presents a breakdown of financial performance by segment and Quilter plc for the years indicated.

¹Net management fee includes the interest earned on client holdings in Quilter Cheviot and Quilter Investment Platform.

Alternative Performance Measures

We assess our financial performance using a variety of alternative performance measures ("APMs"). APMs are not defined under IFRS, but we use them to provide further insight into the financial performance, financial position and cash flows of the Group and the way it is managed.

APMs should be read together with the Group's condensed consolidated financial statements, which include the Group's statement of comprehensive income, statement of financial position and statement of cash flows, which are presented on pages 22 to 25.

Further details of APMs used by the Group in its Financial review are provided below.