Quilter Plc · LSE:QLT
Quilter — H1 2019 Earnings Presentation
33 slides from Quilter's earnings presentation, Aug 5, 2019
Slide 1: Interim results 2019
Quilter Basic rBand Guidelines Our brand a ssets 1 Interim results 2019 5 August 2019
Slide 2: Disclaimer
Disclaimer This presentation should be read in conjunction with the announcement published by Quilter plc on 5 August 2019. 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 Concluding remarks Paul Feeney Q&A 3
Slide 4: Our journey to deliver a focussed UK wealth management business
Our journey to deliver a focussed UK wealth management business Listed as Quilter plc Acquisition of Announce sale of Old Mutual Wealth on LSE and JSE Lighthouse plc Quilter Life Capital Markets Assurance Special Dividend: Showcase I Return of proceeds Sale of European life Sale of Old Mutual from s
Slide 5: H1 2019 highlights: financial, strategic and operational progress
H1 2019 highlights: financial, strategic and operational progress Financial Strategic Operational Solid financial Investing in advice PTP progressing well performance Charles Derby Group & Adjusted profit up 5% to £115m Lighthouse plc acquisitions UK Platform upgrade well in a challenging flow conso
Slide 6: Lower net flows in 2019 partly attributable to expected outflows
Lower net flows in 2019 partly attributable to expected outflows Integrated flows £2.2bn1 Integrated flows £5.2bn1 Integrated flows £4.7bn1 Integrated flows £1.3bn1 Asset retention 90%1 Asset retention 90%1 Asset retention 91%1 Asset retention 89%1 2.3 After expected outflows of: 0.6 IM departures 2
Slide 7: NCCF and AuMA growth
NCCF and AuMA growth AuMA evolution from continuing operations £bn Of which £1.1bn Of which £0.5bn Of which £0.4bn is DB to DC is DB to DC is DB to DC 56 57 1.7 56 3.0 0.0 (7.1) 9.1 2% 0.3 6% 0%1 (7%)1 9%1 1% XX 104.7 108.7 101.7 99.3 Opening NCCF Market 30 Jun 2018 NCCF Market 31 Dec 2018 NCCF Mark
Slide 8: NCCF and AuMA growth
NCCF and AuMA growth AuMA evolution from continuing operations £bn 56 (4.9) 6.0 56 9.1 0.3 99.3 1% 9%1108.7 101.7 108.7 1.1 (0.6) 108.7 99.3 (0.2) 0.3 Gross flows "Normal" Quilter Cheviot IM Quasi-institutional NCCF redemptions departures account H1 2019 NCCF excluding expected outflows 31 Dec 2018
Slide 9: UK Platform Transformation Programme: gearing up for migration
UK Platform Transformation Programme: gearing up for migration Mar – Dec Feb Jul – Nov 2017 Summer 2019 Rest of 2019/20 2018 2019 Functional testing & Phased Build Soft launch migration planning migration Design Testing Final system Migration code delivery rehearsals Final mile of the journey… Migra
Slide 10: Optimisation: good progress made
Optimisation: good progress made What we have done What we have left to do Initial simplification and unification of the Transform our support functions into shared services support functions Implement group wide cost categories Quick win tactical efficiencies delivered General ledger buil
Slide 11: Investment performance: Quilter Cheviot & Quilter Investors
Investment performance: Quilter Cheviot & Quilter Investors Quilter Cheviot Cumulative returns Cirilium & Wealth Select Quilter Cheviot PCI performance vs. peers, as at 31 March 2019 Performance vs respective Investment Association sector average Cumulative returns: at 28 June 2019 +2.3 +1.5 +1.3 Re
Slide 12: Financial review
Financial review Mark Satchel 5 August 2019
Slide 13: Executive summary: solid performance in H1 2019
Executive summary: solid performance in H1 2019 Key Performance Indicators from continuing operations including QLA H1 2019 H1 2018 ∆ Financial: Adjusted profit growth of 5% to £115m NCCF/opening AuMA2 % 1 6 (5pp) Integrated flows2 £bn 1.3 2.8 (54%) Adjusted diluted earnings per share of 5.5p in
Slide 14: Resilient performance
Resilient performance NCCF1 Average AuMA2 Revenue2 £bn £bn £m Integrated Revenue 2.8 1.3 - 57 57 flows (£bn) margin (bps) 9.1 114.5 114.4 -90% 3% 3.0 385 395 0.3 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 Market movement contribution Expenses2 Adjusted profit before tax2 Adjusted diluted EPS2 £
Slide 15: Continued disciplined expense management
Continued disciplined expense management Expenses, before impact of acquisitions, better than “broadly flat” guidance Operating 29% 29% margin 2 3 (11) 5 6 280 275 £m H1 2018 expenses Acquisitions Inflation Quilter Investors build FSCS levy Cost reductions H1 2019 expenses out 15
Slide 16: Strong organic growth after impact of acquisitions
Strong organic growth after impact of acquisitions 395 115 13 (1) 90 +10% 280 26 14 335 +3% 245 +1% 110 47 21 £m H1 2019 Revenue H1 2019 Expenses H1 2019 Adjusted profit 16 Quilter Life Assurance Underlying business Acquisitions Total Underlying business year on year growth
Slide 17: Advice and Wealth Management: building foundations for growth
Advice and Wealth Management: building foundations for growth Revenue Expenses Adjusted profit £m £m £m Operating 26% 26% margin +8% +8% +6% 181 195 134 145 47 50 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 Quilter Investors revenues up 20% KPIs H1 2018 H1 2019 Revenue margin bps 65 67 Impro
Slide 18: Wealth Platforms: solid performance, stable profits
Wealth Platforms: solid performance, stable profits Revenue1 Expenses1 Adjusted profit1 £m -2% £m £m Operating 41% 41% margin -3% 203 -1% 198 120 116 83 82 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 Revenue decrease primarily due to run-off of closed life book KPIs H1 2018 H1 2019 Expense r
Slide 19: Quilter Life Assurance: key metrics
Quilter Life Assurance: key metrics Quilter Life Assurance key financial highlights H1 2019 FY 2018 Agreed sale of Quilter Life Assurance to Total revenue £m 47 109 ReAssure for consideration of £425m, Expenses £m (21) (52) subject to regulatory approval Adjusted profit before tax £m 26 57 Operati
Slide 20: Strong solvency position
Strong solvency position Solvency II ratio 190% XX% (4%) Reductions in own funds of £76m due to acquisitions (Charles Derby Group and Lighthouse plc) and £31m for (5%) interim dividend (3%) 6% 181% Provides capacity for strategic (3%) investments including UK Platform Transformation Programme 31
Slide 21: Holding company cash
Holding company cash (128) 175 (61) 2 (31) (25) (5) 416 374 £m 1 January 2019 Full year dividend Head office costs External debt interest Cash remittances Capital contributions Other movements 30 June 2019 Interim dividend including from subsidiaries & investments transformation costs 21
Slide 22: Financial summary
Financial summary Adjusted profit +5% to £115m Prudently capitalised liquid balance sheet Capital discipline credentials maintained Continued expense management a focus for second half of 2019 Improving operational leverage through to 2021, driven by optimisation Delivering in terms of g
Slide 23: Concluding remarks
Concluding remarks Paul Feeney 5 August 2019
Slide 24: Key tasks for H2 2019 and 2020
Key tasks for H2 2019 and 2020 Deliver platform and migrate existing customers/advisers Integrate acquisitions and deliver national advice business model Execute optimisation plans to drive operating leverage Close sale of QLA and consult on method of capital return Confident in prospects for 2020 a
Slide 25: Q&A
Q&A Quilter
Slide 26: Appendix
Appendix 5 August 2019 Quilter
Slide 27: Group performance excluding Quilter Life Assurance (unaudited)
Group performance excluding Quilter Life Assurance (unaudited) NCCF Average AuMA Revenue £bn £bn £m Integrated Revenue 2.8 1.9 1.3 56 56 56 flows (£bn) margin (bps) 102.1 346 348 101.4 3.0 99.6 333 1.7 0.3 H1 2018 H2 2018 H1 2019 H1 2018 H2 2018 H1 2019 H1 2018 H2 2018 H1 2019 Expenses1 Adjusted pro
Slide 28: Wealth Platforms excluding Quilter Life Assurance (unaudited)
Wealth Platforms excluding Quilter Life Assurance (unaudited) Revenue Expenses Adjusted profit £m £m £m - Operating 37% 37% margin - 151 151 - 95 95 56 56 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 Revenue, expenses and revenue margin in line with prior year KPIs H1 2018 H1 2019 Revenue margi
Slide 29: Quilter Life Assurance solvency (unaudited)
Quilter Life Assurance solvency (unaudited) Own Quilter Life Assurance MCEV funds At 31 December 2018 £m 536 484 Quilter receives: “Foreseeable” dividend paid March £m (90) (90) 2019 £425m in cash, with up to £30m being settled by After “foreseeable” dividend £m 446 394 way of a pre-completion div
Slide 30: Updated financial guidance
Updated financial guidance Guidance to market at time of Listing Updates to guidance £75m one-off costs to deliver optimisation phase 1 initiatives, Optimisation: n/a with c.50% incurred by end of 2019 Target: 30% operating margin (excl. interest) by 2020 after Targeting c.2 percentage point
Slide 31: Updated financial guidance continued
Updated financial guidance continued Guidance to market at time of Listing Updates to guidance No change to target but cautious on 2019 given expected Target: NCCF of 5% of opening AuMA (excluding QLA) per Net client cash flow Quilter Cheviot outflows, market conditions and economic annum over m
Slide 32: Updated financial guidance continued
Updated financial guidance continued Guidance to market at time of Listing Updates to guidance New Quilter Performance Shareplan will result in additional LTIP staff costs in 2018 and later years LTIP costs No change LTIP costs to increase steadily on a phased basis to approximately £15m per a
Slide 33: Quil t er Basic r B and Guidelines Our b r and a ss
Quilter Basic rBand Guidelines Our brand a ssets 1