Quilter Plc · LSE:QLT
Quilter — Investor Presentation (2020)
47 slides from Quilter's investor presentation, 2020
Slide 1: Investor presentation Spring 2020
Quilter Basic rBand Guidelines Our b rand a ssets 1 Investor presentation Spring 2020
Slide 2: Investment overview and Quilter's journey to date
Investment overview and Quilter’s journey to date
Slide 3: Quilter: a leading, UK-centric full-service wealth manager
Quilter: a leading, UK-centric full-service wealth manager Key Performance Indicators from continuing operations excluding QLA 2019 2018 ∆ Adjusted profit: Leading UK and cross-boarder wealth Adjusted profit before tax incl. QLA £m 235 233 +1% manager with £100bn+ of customer assets - o/w QLA £m 5
Slide 4: Quilter has scale and leading position in chosen capabilities
Quilter has scale and leading position in chosen capabilities Comparison with listed UK peers Advice Platforms Solutions Total AuMA1 (£bn) Restricted Independent Advised International Multi-asset Discretionary (CF30’s)2 advisers Platform £110bn3 2,703 4,000+ firms £57bn AuA £21bn AuA £21bn
Slide 5: Large and growing UK wealth market
Large and growing UK wealth market UK national wealth¹ Long-term savings market² (AUM, £trn) 12 4.5 0.1 Decumulation - Drawdown +11% Growth driven by structural 0.2 Decumulation - Annuity, ER +4% trends, including: +5% 0.5 Individual Pension - SIPP & PP +12% – Demographics +6% 4 Long term savings
Slide 6: Regulatory and fiscal changes driving disruption
Regulatory and fiscal changes driving disruption Provides customers with opportunity for consolidation and flexibility to manage retirement assets Pension reform Demand and complexity driving need for advice Increased longevity of client relationships for wealth managers versus compulsory annu
Slide 7: Fiscal changes driving complexity, changing client behaviour and need for advice
Fiscal changes driving complexity, changing client behaviour and need for advice Annual pension allowance ISA annual allowance £’000 Allowance £’000 tapered for over Junior ISA CAGR £150k earners 255 ISA 235 245 -16% 20.0 20.0 50 50 50 40 40 40 40 40 CAGR +11% 15.2 15.2 2008/09 2009/10 2010/11 2011/
Slide 8: Advice: shift in how advisers serve their clients
Advice: shift in how advisers serve their clients Regulatory and market changes driving better quality of advice for fewer clients Adviser average client portfolio¹ Number of clients % Clients seen annually % active clients Adviser trend to serve fewer active clients: 350 Passive clients (seen les
Slide 9: Platform: savings and investments consolidating onto Platforms, particularly pensions
Platform: savings and investments consolidating onto Platforms, particularly pensions Pensions and investments Pension is ‘anchor’ product on Platforms play an important role in modern wealth consolidating onto platforms Platform management Total UK platform market Fund platforms by product AUA £bn1
Slide 10: Investment Solutions: continued growth in outcome-based, client-focussed solutions
Investment Solutions: continued growth in outcome-based, client-focussed solutions Global AuM split1 Quilter Solutions Typical asset allocation2 % / US$ trn Typical 40-85% mixed asset fund asset Discretionary portfolio service allocation 38 74 100% 100% Dedicated Quilter investment manager to desi
Slide 11: Business models adapted to changing regulation and evolving value chain
Business models adapted to changing regulation and evolving value chain Typical older / Pre-RDR Insurance Modern Wealth Manager models Customers • Product driven sales, ‘pushed’ • Customer driven solutions through incentive driven distribution channels • Commission models driving • Adviser focus ong
Slide 12: Quilter has adapted its business model
Quilter has adapted its business model Our journey to deliver a modern UK focussed wealth manager UK & European Modern UK-focussed Life Assurer wealth manager Our transition to becoming ‘one Quilter’ Italy Acquired and built Sold European life books, single strategy Switzerland Advice Network & Na
Slide 13: Our journey to deliver a focussed UK wealth management business
Our journey to deliver a focussed UK wealth management business Sold Quilter Life Listed as Quilter plc Acquisition of Assurance; Old Mutual Wealth on LSE and JSE Lighthouse plc £375m return to Capital Markets shareholders confirmed Special Dividend: Showcase I Return of proceeds Sale of European li
Slide 14: Quilter's multi-channel advice-led model
Quilter’s multi-channel advice-led model An open, transparent, full-service model serving customers across the wealth spectrum High Net Worth Affluent Mass Affluent Open market, financial advisers Financial advice Quilter Private Client Quilter Financial Planning Quilter Financial Advisers Advisers
Slide 15: Performance
Performance Quilter
Slide 16: 2019 highlights: pivotal year for Quilter
2019 highlights: pivotal year for Quilter Continued strategic Solid financial performance progress Delivering for shareholders Robust revenue growth & First PTP migration completed 3.5p final dividend per share disciplined cost management Invested in revenue generation – 46% pay-out ratio ca
Slide 17: What drives our business: 2019 results
What drives our business: 2019 results Advice and Wealth Management Wealth Platforms Head office AuMA1 £45.8bn £77.7bn Revenue £407m £302m £3m Financial Quilter Quilter Wealth Quilter AuMA Planning Cheviot Investors Solutions International £0.8bn £24.2bn £20.8bn £57.2bn £20.5bn NCCF (£0.8bn) £0.5bn
Slide 18: 2019: Robust performance
2019: Robust performance NCCF Average AuMA Total net fee revenue £bn £bn £m Integrated 4.7 2.6 4% Revenue net flows 55 55 (£bn) margin (bps) 12.4 101.9 105.7 -94% 5% 4.7 0.3 712 679 (7.3) 2018 2019 2018 2019 2018 2019 Market movement contribution Expenses Adjusted profit Adjusted diluted EPS £m £m P
Slide 19: 2019 flows: flow trends impacted by lower DB transfers and IM departures
2019 flows: flow trends impacted by lower DB transfers and IM departures 5 Gross sales Gross outflows Net flows 5 o/w DB transfers o/w QC departures 4 4 3 3 2 2 Gross sales / outflows (£bn) 1 1 Net flows (£bn) 0 0 -1 -1 -2 -2 -3 -3 -4 -4 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3
Slide 20: Business initiatives
Business initiatives Quilter
Slide 21: UK Platform Transformation Programme
UK Platform Transformation Programme Jul – Nov 2017 Mar – Dec 2019 2020 2018 Functional testing & Phased Build Soft launch migration planning migrations Design Testing Final system Migration Migration Migration code delivery rehearsals 1 2 Final mile of the journey… First migration implemented, with
Slide 22: UK Platform Transformation Programme: first migration achieved
UK Platform Transformation Programme: first migration achieved Delivers the full experience to first phase of advisers and their customers in a controlled, measured way Pleased with supportive early feedback Enhanced monitoring and support in place to identify and manage areas requiring servic
Slide 23: Optimisation: a phased, multi-year programme
Optimisation: a phased, multi-year programme Laying the path to Quilter becoming the best version of itself that it can be Phase 1: Phase 2: Operational efficiencies Streamline Widen scope of efficiency plan to Efficiency initiatives to deliver streamline the business post-PTP improvements in operat
Slide 24: Optimisation focussed on addressable cost base
Optimisation focussed on addressable cost base FY18 costs Addressable costs Contribution to Optimisation: A phased, multi-year approach optimisation 555 18 Phase: 1. Operational efficiencies 105 • Efficiency initiatives to deliver Programme improvements in operational of activity: performance 120 Ta
Slide 25: Optimisation Phase 1: £14m saving delivered, £24m run-rate achieved
Optimisation Phase 1: £14m saving delivered, £24m run-rate achieved What we have done What we have left to do Simplification and unification of central support functions Fully transform our support functions into centres commenced of excellence Quick win tactical efficiencies delivered Gener
Slide 26: Quilter Life Assurance sale complete: capital return
Quilter Life Assurance sale complete: capital return Sale proceeds available for distribution (£m) Sale price 425 £375m surplus net proceeds to be returned; Interest accrued to completion 21 consulted shareholders on method of return Cash received 446 Rolling share buyback¹ programme to Dividend
Slide 27: Cash and capital
Cash and capital Quilter
Slide 28: Continued strong solvency position
Continued strong solvency position Solvency II ratio 221% (41%) Solvency II ratio reduced by 10% 190% 52% (pro forma) principally due to QFP acquisitions (12%) 180% (3%) (5%) (5%) 4% Provides capacity for strategic investments including UK Platform Transformation Programme and bolt-on advice acq
Slide 29: Holding company cash
Holding company cash (65) 446 (375) (200) Totaling ~£120m 307 815 (61) (31) (4) (49) (9) 416 c.250 £m 1 Jan 2019 2018 Final Interim dividend Head office costs External debt Cash remittances Capital Other QLA proceeds 31 Dec 2019 Final dividend Capital return Odd-Lot Offer PTP London Property Optimis
Slide 30: Capital management philosophy
Capital management philosophy Current year dividend On-going London office relocation cash needs Group capital requirements Working capital & interest Investing in the growth of the business Investing organically Platform Transformation Programme Optimisation programme Capital allocati
Slide 31: Investment case and 2020 outlook
Investment case and 2020 outlook
Slide 32: Quilter investment case
Quilter investment case A unique combination of capabilities, scale and market positions 1 Full service wealth manager providing choice and delivering good customer outcomes 2 Leading positions across one of the world’s largest wealth markets with strong structural growth drivers Multi-channel propo
Slide 33: Key focus for 2020
Key focus for 2020 Complete Platform Transformation Programme Integrate acquisitions and deliver flow growth Execute optimisation plans to drive operating leverage Return £375 million to shareholders 33
Slide 34: Building a modern, advice-led wealth manager
Building a modern, advice-led wealth manager Foundation Transformation Delivery 2020 & beyond Migrate remaining 2019 UK Platform Rebrand UK Platform & Quilter Life Assurance International 2018 sold Support adviser New UK Platform in soft acquisitions to drive flow Managed separation launch; Leverage
Slide 35: Appendix
Appendix Quilter
Slide 36: The new UK Platform is the heart of Quilter
The new UK Platform is the heart of Quilter Source 2019 Gross Flows 2019 Gross Flows Destination £6.0bn £6.0bn Advised by Managed by 13% £1.5bn 20% Quilter (2018: 11%) £1.8bn Quilter Investors Restricted Financial £1.5bn (2018: 19%) Planners 2019 UK Platform Switches AuA £57.2bn Third party £4.5bn £
Slide 37: Advice and Wealth Management: building foundations for growth
Advice and Wealth Management: building foundations for growth Revenue Expenses Adjusted profit £m £m £m Operating 27% 25% margin +9% +12% 407 304 7 373 +1% 271 102 103 2018 2019 2018 2019 2018 2019 Acquisitions Advice revenues up 18%, of which 16% from acquisitions KPIs 2018 2019 Lower productiv
Slide 38: Wealth Platforms: solid performance, improved profitability
Wealth Platforms: solid performance, improved profitability Revenue Expenses Adjusted profit £m £m £m (1%) (5%) Operating 34% 37% margin 7% 305 302 200 190 105 112 2018 2019 2018 2019 2018 2019 Wealth Solutions’ revenues up 4% KPIs 2018 2019 International revenues declined, with improved NCCF pe
Slide 39: Updated financial guidance
Updated financial guidance Previous guidance Updates to guidance Optimisation: £75m one-off costs to deliver optimisation phase 1 initiatives, with c.50% incurred by end of 2019 Target: Targeting c.2 percentage point improvement in operating margin by 2020 (27%) and a further 2 percentage Optimi
Slide 40: Updated financial guidance continued
Updated financial guidance continued Previous guidance Updates to guidance No change to target over the medium-term and expect to Target: NCCF of 5% of opening AuMA (excluding QLA) per Net client cash flow build back to target by mid-2021 following PTP annum over medium-term completion and once
Slide 41: 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 42: 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 • Improve access to financial guidance and advice for customers • Financial Adviser School graduates • Promote financial wellbeing for all our colle
Slide 43: Register structure by geography
Register structure by geography Company analysis vs key benchmark data Quilter General Financials FTSE 250 49% 50% 42% 24% 22% 18% 18% 14% 11% 11% 8% 7% 2% 2% 3% UK South Africa North America Rest of Europe Rest of World As at 16 March 2020 43
Slide 44: Register structure over time
Register structure over time Company analysis over time As at 16 March 2020 44
Slide 45: Contacts
Contacts Investor enquiries John-Paul Crutchley UK +44 207 002 7016 john-paul.crutchley@quilter.com Keilah Codd UK +44 207 002 7054 keilah.codd@quilter.com Media enquiries Jane Goodland UK +44 77 9001 2066 jane.goodland@quilter.com Tim Skelton-Smith UK +44 78 2414 5076 tim.skelton-smith@quilter.com
Slide 46: Disclaimer
Disclaimer This presentation should be read in conjunction with the announcement published by Quilter plc on 11 March 2020. 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 47: Quil t er Basic r B and Guidelines Our b r and a
Quilter Basic rBand Guidelines Our b rand a ssets 1