Quilter PLC Interim Results Show Profit Decline to £13m Amid Remediation Provision

Well now, Quilter’s interim results have landed with a bit of a thud – a £13m profit after tax, down sharply from £46m this time last year. But before you hit the panic button, let’s peel back the layers. This isn’t a story of a business in freefall. In fact, underneath that headline figure, there’s some rather interesting machinery at work.

The Headline Grabber: That Profit Dip

The £13m profit figure looks stark, but it’s heavily skewed by one significant item: the ongoing customer remediation provision. Quilter set aside £76m at the end of 2024 related to potential redress for historical ongoing advice issues within its Quilter Financial Planning network. By June 2025, £7m had been utilised (mainly admin costs), leaving £70m on the balance sheet. This provision whacked the reported profit. Strip that out, and things look rather different.

The Underlying Engine: Adjusted Profit Growth

This is where Quilter wants investors to focus, and frankly, it’s a more meaningful gauge of the day-to-day business health. Adjusted profit before tax actually rose 3% to £100m (H1 2024: £97m). This metric excludes the remediation provision, acquisition accounting quirks, business transformation costs, and other one-offs.

What drove this?

• Affluent Segment Strength: The powerhouse, encompassing the platform (Quilter Investment Platform), multi-asset funds (Quilter Investors), and advice network (Quilter Financial Planning), delivered adjusted profit of £79m (up from £72m). Fee income here was robust.
• High Net Worth Resilience: Quilter Cheviot and its financial planning arm held steady, contributing £24m (slightly down from £25m), reflecting a solid performance in discretionary management despite market conditions.
• Cost Discipline: While investing in simplification (£16m of the £17m business transformation costs), overall operating expenses were tightly managed.

The Remediation Elephant in the Room

You can’t gloss over this. The provision stems from the FCA-mandated Skilled Person Review into historical ongoing advice practices (2017-2023). The review concluded H1 2025, and discussions with the FCA are ongoing. Quilter expects some form of customer remediation will be required.

Key points:

• The Estimate: The £70m provision is Quilter’s current best estimate for redress (refunds + interest) and admin costs, based on extrapolating the Skilled Person’s findings and past experience. Crucially, it assumes remediation focuses on cohorts deemed at “highest likelihood” of not receiving the expected service.
• Significant Uncertainty: Quilter is refreshingly clear: the final scope, methodology, and cost are still being thrashed out with the FCA. The provision could swing materially. A 10% change in key assumptions (like the proportion of affected customers or response rates) could move the provision by £14-15m either way.
• Timing: Redress payments are expected to roll out over 18 months, finishing around Dec 2026. £48m of the provision is expected to be paid within the next year.
• Recovery Hope? Quilter notes it may seek reimbursement from the relevant appointed representative firms who benefited from the fees, but recognises this as only a potential contingent asset at this stage – wisely not banking on it.

Financial Position & Returns: Holding Steady

Despite market movements reducing total assets (down to £62.4bn from £67.8bn at Dec 2024), the group’s capital and liquidity are deemed strong. Stress tests (including 40% equity falls) support the going concern basis.

For shareholders:

• Dividend: The board declared an interim dividend of 2.0p per share (£27m), payable in September 2025. This follows the 4.2p final dividend for 2024 paid in May.
• EPS: Basic IFRS EPS crashed to 1.0p (from 3.4p), but the more telling adjusted basic EPS was a healthier 5.6p (H1 2024: 5.4p).

The Verdict: A Tale of Two Results

Quilter’s H1 2025 is a classic Jekyll and Hyde report:

• Dr Jekyll (The Underlying Business): Is performing well. The core Affluent and High Net Worth segments are generating decent adjusted profit growth (£100m). Fee income is holding up, costs are controlled, and the dividend continues. This suggests the operational strategy is working.
• Mr Hyde (The Legacy Issue): The substantial remediation provision (£70m) is a drag on reported profits and a significant overhang. While prudently provided for, the ultimate cost and reputational impact remain uncertain pending FCA discussions.

For investors, the focus now is twofold: 1) Can the underlying business momentum continue in H2? and 2) How quickly and conclusively can the remediation cloud be dispelled? The underlying engine seems sound, but that lingering provision ensures these results leave a slightly bittersweet taste. One to watch closely as the FCA discussions progress.