Quilter Plc · LSE:QLT
Quilter — FY2020 Earnings Presentation
39 slides from Quilter's earnings presentation, Mar 10, 2021
Slide 1: Full year results 2020
Quilter Basic rBand Guidelines Our brand a ssets 1 Full year results 2020 10 March 2021
Slide 2: Disclaimer
Disclaimer This presentation should be read in conjunction with the announcement published by Quilter plc on 10 March 2021. This presentation may contain certain forward-looking statements with respect to certain Quilter plc’s plans and its current goals and expectations relating to its future finan
Slide 3: Presentation agenda
Presentation agenda Business review Paul Feeney Financial review Mark Satchel Strategic outlook Paul Feeney Q&A 3
Slide 4: Managing through COVID-19 and beyond for all our stakeholders
Managing through COVID-19 and beyond for all our stakeholders Strategic delivery Corporate resilience Growth & efficiency plans Platform transformation Advisers supporting clients Expect continued improving project completed through market volatility momentum in flows Advice acquisitions lar
Slide 5: Executive summary: Delivering through disruption
Executive summary: Delivering through disruption Key Performance Indicators 2020 2019 ∆ Consensus-beating out-turn in a challenging AuMA and flows: environment NCCF £bn 1.6 0.3 +433% Stable gross flows, significantly improved net Integrated net flows £bn 2.3 2.6 (12%) flows, improved retention A
Slide 6: Flows: trends remained resilient and improved year-on-year
Flows: trends remained resilient and improved year-on-year Net client cash flow £bn 2019 Integrated flows: £2.6bn 2020 Integrated flows: £2.3bn 1 2019 DB to DC flows: £0.8bn 2020 DB to DC flows: £0.9bn 0.8 0.6 0.4 0.2 0 -0.2 -0.4 -0.6 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Quilter Investors
Slide 7: Strong investment performance
Strong investment performance Quilter Cheviot: £25.3bn Quilter Investors: £23.2bn Medium and long-term performance broadly Cirilium Active: £8.5bn outperformed ARC benchmarks Performance improved sharply through 2020 Solid performance on a one-year basis Continued strong longer-term perfor
Slide 8: Improving cohesion between our business capabilities
Improving cohesion between our business capabilities Financial advice Platforms & wrappers Investment solutions 2020 Gross Flows 2020 Gross Flows Source Destination £5.7bn Advised by Managed by £5.7bn 16% £1.5bn 21% Quilter (2019: 13%) Quilter Financial £1.8bn £1.6bn Investors (2019: 20%) Planning £
Slide 9: Platform Transformation Programme: Completed safely
Platform Transformation Programme: Completed safely 2017 2018 2019 2020 Early 2021 Functional testing & Build Soft launch Phased migrations migration planning Design Testing Final system code Migration Migration Migration Final delivery migration rehearsals 1 2 40k+ 2.5bn+ £62.5bn 600k+ 490k+ e-lear
Slide 10: Positioned to capture growth with our Platform (£62.5bn AuA)
Positioned to capture growth with our Platform (£62.5bn AuA) Our Platform priorities for 2021 and beyond Broaden Deepen relationships Innovate relationships Attracting back-books Drive incremental flow Developing strategic plans RFPs with client Capturing share of IFAs who use QIP as The future of O
Slide 11: Quilter Investors: Broader client solutions gaining traction
Quilter Investors: Broader client solutions gaining traction Development of Quilter Investors’ solution mix £bn £23.2bn CAGR £21.6bn Solutions launched and legacy funds consolidated in +12% response to adviser feedback, structured to meet client £18.5bn needs £17.8bn Blend and Passive: value eve
Slide 12: QFP: Simplifying our Advice proposition, organising around our customers
QFP: Simplifying our Advice proposition, organising around our customers Disciplined adviser growth, driving integrated flows and delivering value across business areas Customers Investment Advice Restricted Adviser Key priorities proposition brand Financial Planners model • Integrated proposition Q
Slide 13: Improving cohesion between our business capabilities: Trend history
Improving cohesion between our business capabilities: Trend history Quilter Investment Platform AuMA Quilter Investment Platform AuMA by adviser channel by investment management channel £62.5bn £62.5bn £49.6bn £49.6bn £9.7bn £13.1bn 16% 17% 20% 20% 21% 9% 11% 13% 2017 2018 2019 2020 2017 2018 2019 2
Slide 14: Quilter International: Under strategic review
Quilter International: Under strategic review Reviewing strategy to drive shareholder value Invest to grow Reposition to reduce costs Consider disposal Core Quilter strategy more focused on UK market – Quilter International a good business with revenue growth challenges Recent profit sta
Slide 15: Financial review
Financial review Mark Satchel 10 March 2021
Slide 16: Robust performance
Robust performance NCCF Average AuMA Total net fee revenue £bn £bn £m Integrated 2.6 2.3 Revenue net flows 55 51 (£bn) margin (bps) 12.4 +2% (4%) 107.9 5.8 105.7 712 +433% 682 1.6 0.3 2019 2020 2019 2020 2019 2020 Market performance Expenses Adjusted profit Adjusted diluted EPS £m £m Pence (3%) Oper
Slide 17: Revenue margin progression in line with long-standing guidance
Revenue margin progression in line with long-standing guidance Revenue margin bps Quilter Cheviot Quilter Investment Platform Quilter International Quilter Investors Quilter plc 80 70 60 50 40 30 20 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 17
Slide 18: Continued disciplined expense management
Continued disciplined expense management 3 Broadly flat 11 14 after acquisitions 3 9 5 7 24 23 10 15 12 5% decline 42 after acquisitions 573 555 External Management External Management Investment environment action 530 Investment environment action 514 £m 2018 Acquisitions Property Inflation FSCS le
Slide 19: Operating margin progression
Operating margin progression Revenues Expenses 26 26 25 External Management Investment Business growth environment Investment External environment actions % 2018 2019 Acquisitions Platform Market & NCCF Mix shift Interest Provision Acquisitions Property Inflation FSCS COVID-19 Optimisation Tactical
Slide 20: Cost outlook: continued focus on Optimisation and efficiency
Cost outlook: continued focus on Optimisation and efficiency 2021 outlook £m 2020 operating margin bolstered by tactical savings and stronger markets in 2H 2020 Assuming ‘steady’ markets, 2021 expenses will reflect Increased FSCS levy Normalised staff compensation accrual Normalised develo
Slide 21: 2020 dividend and capital returns
2020 dividend and capital returns Dividend Share count reduction Board recommending 2020 final dividend of 3.6p 6% reduction in share count 2020 total dividend of 4.6p £175m share buyback completed, with £200m remaining Total dividend represents pay-out at upper end of 40-60% range Regul
Slide 22: Continued strong solvency and holding company cash position
Continued strong solvency and holding company cash position Solvency II ratio 36% (9%) (22%) (7%) (2%) (23%) Solvency II ratio reduced by 4% principally 221% 217% due to the OLO and Share buyback, 194% partially offset by reductions in profit generation and capital requirements Solvency at 31 Dec
Slide 23: Updated financial guidance
Updated financial guidance Previous guidance Updates to guidance No change to target over the medium-term Target: NCCF of 5% of opening AuMA per annum over Net client cash flow Expect to build back to target following PTP completion and medium-term once impact of COVID-19 market volatility fad
Slide 24: Outlook and financial summary
Outlook and financial summary Outlook Tight control of expenses maintained – 2021 focused on growth and efficiency Earnings Expenses Balance sheet Cost targets exceeded Prudently capitalised liquid Adjusted profit (8%) to £168m Improving operational leverage, balance sheet 8.5p EPS, decl
Slide 25: Concluding remarks
Concluding remarks Paul Feeney 10 March 2021
Slide 26: Modern, UK-focused wealth manager, positioned for growth
Modern, UK-focused wealth manager, positioned for growth Our transformation since IPO has delivered: A modern wealth manager with two broad distribution channels One of the largest, leading advice forces across the UK Most technologically advanced, multi-award-winning Strong foundation for our next
Slide 27: Key focus for 2021: Moving to a new phase of growth and efficiency
Key focus for 2021: Moving to a new phase of growth and efficiency Drive a sustained improvement in net flows Complete Optimisation and develop next stage of business efficiencies Complete the repositioning of QFP to drive a highly productive advice base Complete and implement International strategi
Slide 28: Q&A
Q&A Thank you for watching Quilter’s 2020 Results presentation. The live Q&A session will now commence. If you are watching the presentation via the webcast, you can continue to listen to the Q&A session through the webcast and may ask questions via the question box on-screen. Alternatively, if you
Slide 29: Q&A: Joining the live Q&A
Q&A Joining the live Q&A: Stephen Gazard Steven Levin Andy McGlone Paul Simpson Paul Feeney Mark Satchel Chief Executive Chief Executive Chief Executive Chief Executive Chief Executive Chief Financial Officer, Officer, Officer, Officer, Officer Officer Quilter Financial Quilter Investment Quilter Ch
Slide 30: Appendix
Appendix 10 March 2021 Quilter
Slide 31: Environmental, Social & Governance credentials
Environmental, Social & Governance credentials Quilter’s ESG strategy is set out in our Shared Prosperity Plan Theme 2025 commitments Lead KPIs UN SDGs Create secure financial futures for customers by delivering quality Customer asset retention products and service % colleagues feeling confide
Slide 32: Advice and Wealth Management
Advice and Wealth Management Revenue Expenses Adjusted profit £m £m £m (3%) +1% Operating 25% 23% margin 407 396 304 306 (13%) 103 90 2019 2020 2019 2020 2019 2020 Advice revenues up 11% as benefits from prior-years’ acquisitions offset the impact KPIs 2019 2020 of COVID-19 restrictions on attract
Slide 33: Investment performance
Investment performance Quilter Cheviot returns Cirilium & WealthSelect MPS Quilter Cheviot performance vs. ARC Sterling PCI, as at 31 Dec’ 2020 Performance vs respective Investment Association sector average Cumulative returns: as at 31 Dec’ 2020 –0.7 +0.3 -0.1 Relative % vs ARC PCI Relative % +0.1
Slide 34: Wealth Platforms
Wealth Platforms Revenue Expenses Adjusted profit £m £m £m Operating (6%) 37% 40% margin (10%) 2% 302 285 190 171 112 114 2019 2020 2019 2020 2019 2020 Quilter Investment Platform’s net fee decreased despite higher average asset levels. The decline was due to new business margin being lower than e
Slide 35: Optimisation: making Quilter more streamlined and operationally efficient
Optimisation: making Quilter more streamlined and operationally efficient Initiatives to conclude in 2021 to achieve target, with additional savings identified for modest accretion to plan Complete implementation of new, and Optimisation decommissioning of legacy, head-office systems Original targ
Slide 36: Updated financial guidance
Updated financial guidance Previous guidance Updates to guidance Optimisation: £75m one-off costs to deliver optimisation Optimisation initiatives to support two percentage point phase 1 initiatives, with c.50% incurred by end of 2019 operating margin improvement in 2021 versus 2020 outturn, T
Slide 37: Updated financial guidance continued
Updated financial guidance continued Previous guidance Updates to guidance No change to target over the medium-term Target: NCCF of 5% of opening AuMA per annum over Net client cash flow Expect to build back to target following PTP completion medium-term and once impact of COVID-19 market vola
Slide 38: Updated financial guidance continued
Updated financial guidance continued Previous guidance Updates to guidance Debt costs £200m subordinated debt at 4.478% No change Approximately 80% of post-tax operating profit from continuing operations into free cash, partially used to No change Cash conversion fund debt servicing costs an
Slide 39: Quilter Basic r B and Guidelines Our brand a ssets
Quilter Basic rBand Guidelines Our brand a ssets 1