Quilter Plc · LSE:QLT
Quilter — H1 2021 Earnings Presentation
39 slides from Quilter's earnings presentation, Aug 11, 2021
Slide 1: Interim results 2021
Quilter Basic rBand Guidelines Our b rand a ssets 1 Interim results 2021 11 August 2021
Slide 2: Disclaimer
Disclaimer This presentation should be read in conjunction with the announcement published by Quilter plc on 11 August 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 fina
Slide 3: Presentation agenda
Presentation agenda Business review Paul Feeney Financial review Mark Satchel Concluding remarks Paul Feeney Q&A 3
Slide 4: Quilter in the market context
Quilter in the market context Market and fiscal uncertainty underpins demand for financial advice and guidance Digitalisation fundamentally shifting how we engage and interact Fragmented structural growth market continuing to consolidate Demand for ESG integration across entire value chain 4
Slide 5: H1 2021 summary: Strong results underpinned by growth and efficiency
H1 2021 summary: Strong results underpinned by growth and efficiency Financial momentum Operational improvement Strategic progress Strong improvement in gross Optimisation initiatives on Platform migrations completed flows. Net flows more than track to deliver c.£65m cost successfully. Now see
Slide 6: Significantly improved net flows
Significantly improved net flows Net client cash flow £bn Quilter Investors Quilter Cheviot Quilter Investment Platform Quilter International Total net flows 1.8 1.2 0.6 0 -0.6 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Strong investment performance across Quilter Cheviot & Quilter
Slide 7: Quilter Financial Planning: reducing complexity, unlocking opportunity
Quilter Financial Planning: reducing complexity, unlocking opportunity RFP headcount mix 1,842 (6%) 1,701 Expect slowing adviser attrition in H2 2021, with net growth in RFPs from 2022 QPCA National Continued focus on productivity and strategic Network alignment Investing to upgrade infrastruc
Slide 8: Investment platform: key driver of growth
Investment platform: key driver of growth Significant improvement in flows across both IFA and RFP Gross flows building momentum £bn distribution channels +50% 4.3 4.5 Capturing greater share of Quilter RFP flows 3.0 3.0 +60% Pleasing uptake in new product offerings from existing 3.2 QFP advis
Slide 9: Key focus for H2 2021 and beyond
Key focus for H2 2021 and beyond Sustain improved net flows, driving momentum to 6%+ medium-term target Complete Optimisation and build towards 2023/25 operating margin targets Reposition QFP, delivering a highly productive, client-focused adviser base Return final £100 million of £375 million capit
Slide 10: Financial review
Financial review Mark Satchel 11 August 2021
Slide 11: Executive summary: strong performance
Executive summary: strong performance Key Performance Indicators H1 2021 H1 2020 ∆ Financial: Significant improvement in flows NCCF £bn 2.5 1.1 +127% NCCF/opening AuMA1 % 4 2 +2pp Adjusted diluted earnings per share Integrated net inflows £bn 1.9 1.4 +36% of 5.0p, +43% year-on-year AuMA £bn 126.
Slide 12: Reminder of 2021 transitional items
Reminder of 2021 transitional items Quilter Recoverable costs: Reclaim through Utmost TSA – focused on managing down International Unallocated costs: c.£5m head office and IT expenses previously allocated to Quilter International now expenses absorbed by continuing business FNZ Platform Operat
Slide 13: Continuing business demonstrating strong growth
Continuing business demonstrating strong growth NCCF Average AuMA Revenue £bn £bn £m Integrated Revenue 1.3 2.0 +16% 51 48 flows (£bn) margin (bps) +133% +9% 2.1 100.2 304 0.9 86.5 279 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 Expenses Adjusted profit before tax Adjusted diluted EPS £m £m Penc
Slide 14: 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 Investors Quilter plc (Continuing) 80 70 60 50 40 30 20 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Note: Revenue margin progression including Quil
Slide 15: Continued disciplined expense management
Continued disciplined expense management 12 11 32 10 5 264 248 232 External environment Management action £m H1 2020 o/w Quilter International H1 2020 Inflation FSCS levies Tactical 2020 Optimisation H1 2021 - Total business - Continuing business & regulatory fees savings unwind 15
Slide 16: Platform business efficiency a key focus post-PTP
Platform business efficiency a key focus post-PTP NCCF / Opening AuA¹ Average AuA² Revenue Expenses Adjusted profit £bn £m £m £m Operating +18% +16% 29% 27% margin +14% +3pp +9% 64.7 91 66 6% 54.7 57 3% 80 23 25 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 Deligh
Slide 17: Continued strong solvency and holding company cash position
Continued strong solvency and holding company cash position Solvency II ratio (2%) 2% (11%) Solvency II ratio reduced by 14% (3%) (11%) principally due to the Share buyback, with spend on strategic initiatives offset by 217% profit generation 203% 192% Solvency at PTP and Movement in Share buyback
Slide 18: H1 21 dividend and capital returns
H1 21 dividend and capital returns Dividend Capital return programme Board declared 2021 interim dividend of 1.7p 10% reduction in share count since programme inception c.£265m returned, with current tranche to complete by end-August Represents pay-out in upper end of 40-60% range PRA appr
Slide 19: Sale of Quilter International: timetable remains on track
Sale of Quilter International: timetable remains on track Shareholder vote Shareholder’s overwhelmingly approved transaction on 17 June Progress on regulatory approvals from Isle of Man, Ireland, Dubai International Financial Centre, Hong Kong and Regulatory & Singapore regulators driven by Utmo
Slide 20: Updated financial guidance
Updated financial guidance Previous guidance Updates to guidance Target NCCF growth of at least 6% of opening AuMA per Net client cash flow annum over medium-term from 2022 onwards, with a higher No change percentage growth rate from the Quilter Investment Platform Expect the Group’s overall a
Slide 21: Outlook and financial summary
Outlook and financial summary Earnings Expenses Balance sheet Prudently capitalised liquid Strong momentum in EPS, Improving operational leverage, balance sheet supported by lower share count supported by further efficiency and tax benefit plans Capital discipline credentials maintained Outl
Slide 22: Concluding remarks
Concluding remarks Paul Feeney 11 August 2021
Slide 23: Quilter: focused on growth and efficiency
Quilter: focused on growth and efficiency Growing top-line and delivering significant improvement in flows Scalable business – opportunities to drive operating leverage Strong balance sheet with further capital return to come Capital Markets Day: 3 November 2021
Slide 24: Q&A
Q&A Thank you for watching Quilter’s 2021 Interim 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,
Slide 25: Q&A: Joining the live Q&A
Q&A Joining the live Q&A: Steven Levin Stephen Gazard Chief Executive Andy McGlone Paul Feeney Mark Satchel Karin Cook Chief Executive Officer, Chief Executive Chief Executive Chief Financial Chief Operating Officer, Quilter Investment Officer, Officer Officer Officer Quilter Financial Platform & Qu
Slide 26: Appendix
Appendix 11 August 2021 Quilter
Slide 27: Focus on leveraging strengths and capabilities
Focus on leveraging strengths and capabilities Customers Financial advice Platform and wrappers Investment solutions Third-party funds Quilter Quilter Cheviot Private Client Advisers £27bn Independent financial advisers bespoke High Net Worth solutions Quilter Investment Platform Third-party solutio
Slide 28: 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 29: Executive summary: Continuing business only
Executive summary: Continuing business only Key Performance Indicators H1 2021 H1 2020 ∆ Financial: NCCF £bn 2.1 0.9 +133% NCCF/opening AuMA1 % 4 2 +2pp Integrated net inflows £bn 2.0 1.3 +54% AuMA £bn 104.8 88.3 +19% Asset retention % 91 92 (1pp) Adjusted profit before tax £m 56 47 +19% A&WM adjust
Slide 30: Robust performance: including International
Robust performance: including International NCCF Average AuMA Revenue £bn £bn £m Integrated Revenue 1.4 1.9 +15% 52 48 flows (£bn) margin (bps) +127% +7% 2.5 121.1 357 335 1.1 105.1 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 Expenses Adjusted profit before tax Adjusted diluted EPS £m £m Pence 2
Slide 31: 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 Investors Quilter plc (Continuing) Quilter International Quilter plc (Total) 80 70 60 50 40 30 20 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 31
Slide 32: Advice and Wealth Management
Advice and Wealth Management Revenue Expenses Adjusted profit £m £m £m Operating 21% 21% +8% +8% margin 197 213 168 156 +10% 41 45 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 1 H1 2021 2 Segment achieved 15% increase in average AuMA over the period, supporting growth KPIs H1 2021 H1 2020 in revenues R
Slide 33: Investment performance
Investment performance Quilter Cheviot returns Cirilium & WealthSelect MPS Quilter Cheviot performance vs. ARC Sterling PCI, as at 31 March 2021 Performance vs respective Investment Association sector average Cumulative returns: as at 30 June 2021 -1.2 Relative % Relative % +0.4 -0.3 -0.2 +4.3 +1.6
Slide 34: Quilter Investors: Strong growth in core Cirilium and Wealth Select propositions
Quilter Investors: Strong growth in core Cirilium and Wealth Select propositions CAGR +10% £24.8bn £23.2bn £21.6bn £18.5bn £17.8bn Wealth CAGR Select +17% £8.0bn¹ Wealth Select £4.6bn¹ Cirilium range CAGR £13.1bn +17% Cirilium range £7.5bn 2017 2018 2019 2020 H1 2021 Cirilium Active Cirilium Passive
Slide 35: Wealth Platforms
Wealth Platforms Revenue Expenses Adjusted profit £m £m £m Operating +6% 35% 38% margin +1% 144 +15% 136 89 90 47 54 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 Significant improvement in gross and net flows across the segment KPIs H1 2021 H1 2020 Revenue margin bps 31 36 Quilter Internation
Slide 36: Updated financial guidance continued
Updated financial guidance continued Previous guidance Updates to guidance Target NCCF growth of at least 6% of opening AuMA per annum over medium-term from 2022 onwards, with a Net client cash flow No change higher percentage growth rate from the Quilter Investment Platform Expect the Group’s
Slide 37: Updated financial guidance
Updated financial guidance Previous guidance Updates to guidance Optimisation initiatives to support two percentage point operating margin improvement in 2021 versus 2020 outturn, adjusted for Tactical Savings Optimisation & Expect to achieve additional c.£15m savings with costs to operating mar
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 b rand a
Quilter Basic rBand Guidelines Our b rand a ssets 1