Quilter Plc · LSE:QLT
Quilter — H1 2023 Earnings Presentation
38 slides from Quilter's earnings presentation, Aug 8, 2023
Slide 1: Interim Results 8 August 2023
Interim Results 8 August 2023 2023
Slide 2: Disclaimer
Disclaimer This presentation should be read in conjunction with the announcement published by Quilter plc on 8 August 2023. 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: Business update
Our three key areas of focus Business update Building Distribution Building Distribution Driving efficiency Increase the number of advisers Be more responsive to customers Modernise our process by investing driving flows into our investment and the market, continue to in new technology and removing
Slide 4: Steven Levin, Chief Executive Officer: Introduction
Our three key areas of focus Steven Levin Chief Executive Officer Introduction Building Distribution Building Distribution Driving efficiency Increase the number of advisers Be more responsive to customers Modernise our process by investing driving flows into our investment and the market, continue
Slide 5: Results overview: strong first half performance
Results overview: strong first half performance Highlights H1 2023: Improved Business Strong profit Adjusted diluted operating transformation Dividend performance earnings per share margin in progress £76m 24% £33m¹ 4.3p 1.5p +25% y-o-y +4ppts y-o-y Simplification +34% y-o-y +25% y-o-y 1Annualised r
Slide 6: H1 2023 AuMA and flows: good Quilter channel performance
H1 2023 AuMA and flows: good Quilter channel performance Gross Net Net / opening AuMA flows flows % (annualised) Quilter Channel £2.6bn £0.3bn £0.2bn 17% High Net Worth IFA/Direct Channel £23.3bn £0.9bn £(0.1)bn (1)% Quilter Channel £15.9bn £1.8bn £0.9bn 11% Affluent IFA Channel £55.8bn £2.6bn £0.0b
Slide 7: Delivery against our three strategic priorities underway
Delivery against our three strategic priorities underway Building Distribution Cirilium Active portfolio manager RFP Adviser stability changes Simplification Phase I accelerated Rolling out Quilter Partners Cirilium Active reprice £45m Simplification benefit to be Increased flow from t
Slide 8: Building distribution
Building distribution Adviser numbers: QFP & PCA Backbook transfers year-to-date £m Gross flows 350 2.4 2.3 2.4 2.3 2.7 (annualised) per adviser 300 1,701 1,623 250 1,567 1,502 1,511 +9 200 150 100 50 0 H1 2021 FY 2021 H1 2022 FY 2022 H1 2023 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Platform market
Slide 9: Delivery against our three strategic priorities underway
Delivery against our three strategic priorities underway Enhancing Propositions Cirilium Active portfolio RFP Adviser stability manager changes Simplification Phase I accelerated Rolling out Quilter Partners Cirilium Active reprice £45m Simplification benefit to be Increased flow from
Slide 10: Delivery against our three strategic priorities underway
Delivery against our three strategic priorities underway Driving Efficiency Cirilium Active portfolio manager RFP Adviser stability changes Simplification Phase I accelerated Rolling out Quilter Partners Cirilium Active reprice £45m Simplification benefit to be Increased flow from targ
Slide 11: Driving efficiency
Driving efficiency Operating expense £m (5)% 248 242 236 Operating margin % +6 ppts 24% 20% 18% H1 2021 H1 2022 H1 2023 Adjusted profit +36% 76 £m 61 H1 2021 H1 2022 H1 2023 56 H1 2021 H1 2022 H1 2023 11
Slide 12: Strategic initiatives underway
Strategic initiatives underway High Net Worth Affluent Distribution: High Net Worth Integrated Advice Grow financial adviser base Discretionary investment Advice, platform administration and investment solutions Proposition: Distribution: High Net Worth management and advice Quilter channel Discre
Slide 13: Strategic initiatives underway
Strategic initiatives underway High Net Worth Affluent Distribution: High Net Worth Integrated Advice Grow financial adviser base Discretionary investment Advice, platform administration and investment solutions Proposition: Distribution: High Net Worth management and advice Quilter channel Discre
Slide 14: Strategic initiatives underway
Strategic initiatives underway High Net Worth Affluent Distribution: Integrated Advice Grow financial adviser base High Net Worth Discretionary investment Advice, platform administration Proposition: Distribution: and investment solutions Quilter channel High Net Worth management and advice Intr
Slide 15: Advice: unique breadth of proposition and distribution
Advice: unique breadth of proposition and distribution Quilter Platform AuMA c.£70bn 30% 80% IFA Channel Quilter Channel National 100% c.£2bn Network Additional Percentage of flows in Quilter solutions c.£10bn c.£6bn on 3rd party platforms IFA Channel: Increase primary platform Strategic partners
Slide 16: A scalable and efficient advice operating model
A scalable and efficient advice operating model Transforming our advice technology and processes to unlock proposition and cost benefits • Reduce IT costs Integrated technology framework • Reduce business complexity • Reduce operating costs A market leading advice Back office operating efficiency •
Slide 17: Continuing our efficiency journey
Continuing our efficiency journey 2019 2020 2021 2022 2023 2024 2025 • Sale of Quilter International to Utmost (TSA until end 2023) Corporate Activity • Sale of QLA to ReAssure • Revised operating model, moving from 5 businesses to 2 segments • Creation of Shared function centres of excellence • Dec
Slide 18: Managing through all market conditions
Managing through all market conditions Challenges Response Cost-of-living squeezing flows Improving gross flow market share: #1 advised retail platform Uncertain markets weigh on investor sentiment Proposition enhancements to support adviser productivity Adviser consolidation leading to market disru
Slide 19: What we are driving for
What we are driving for Operating margin 25% in 2025 30% longer term goal Simplification phase II savings of £50m delivered by the end of 2025 Net flows / opening AuMA Incremental improvement in 2023 4-5% net flows / opening AuMA when markets normalise, and aspire to build momentum further
Slide 20: Financial review
Our three key areas of focus Financial review Building Distribution Building Distribution Driving efficiency Increase the number of advisers Be more responsive to customers Modernise our process by investing driving flows into our investment and the market, continue to in new technology and removing
Slide 21: Mark Satchel, Chief Financial Officer: Introduction
Our three key areas of focus Mark Satchel Chief Financial Officer Introduction Building Distribution Building Distribution Driving efficiency Increase the number of advisers Be more responsive to customers Modernise our process by investing driving flows into our investment and the market, continue
Slide 22: H1 2023 results: summary
H1 2023 results: summary Key financials H1 2023 H1 2022 ∆ Continuing operations Net flows / Opening AuMA - % 1 3 (2) ppts Core business Persistency on a reported basis of 89% Net flows / Opening AuMA - % 0 3 (3) ppts (H1 2022: 92%) Reported basis Adjusted profit before tax £m 76 61 +25% Revenue
Slide 23: H1 2023 results: adjusted profit contribution
H1 2023 results: adjusted profit contribution Adjusted Profit before tax H1 2023 £54m £23m £(1)m Year on year movement 0 8 7 £247m Net Management fees £242m £53m Other revenue £42m 76 61 £3m Investment revenue £28m £(242)m Operating expenses £(236)m H1 2022 Affluent High Net worth Head Office H1 202
Slide 24: Operating leverage drives strong growth in adjusted profit and EPS
Operating leverage drives strong growth in adjusted profit and EPS Average AuMA Revenue Net flows £m £bn – Reported basis £bn 47 48 Revenue margin +3% (bps) (3)% 303 312 Core business 1.6 105.3 101.8 3 28 Investment revenue (56)% 53 42 Other revenue Net management fee Reported basis 1.4 0.7 247 242
Slide 25: High Net Worth: resilient performance
High Net Worth: resilient performance Gross flows Net flows £bn £bn 1.3 1.2 0.2 1.0 0.3 0.5 0.2 0.4 0.2 1.1 0.2 Quilter channel 0.1 Quilter channel 0.8 0.9 IFA incl. Direct channel IFA incl. Direct channel 0.3 0.2 0.2 H1 2022 H2 2022 H1 2023 (0.1) H1 2022 H2 2022 H1 2023 Financials £m Revenues - Hig
Slide 26: Affluent: strong profit performance, stable Quilter channel flows
Affluent: strong profit performance, stable Quilter channel flows Investment Gross flows Net flows £bn – Core business £bn – Core business 2.9 2.6 2.1 1.7 1.8 1.5 0.9 0.8 0.9 0.6 0.1 0.1 0.1 0.0 H1 2022 H2 2022 H1 2023 Quilter channel IFA channel on Quilter platform Funds via third party platforms (
Slide 27: Continued expense discipline driving operating margin improvement
Continued expense discipline driving operating margin improvement As a H1 2023 expense progression Cost analysis £m percentage of (£m) revenues H1 H1 H1 H1 2023 2022 2023 2022 Support staff costs 54 58 Operations 8 9 Technology 12 14 2 4 12 Property 15 16 12 Other base costs¹ 16 15 242 Sub-total bas
Slide 28: Strong solvency ratio and cash position
Strong solvency ratio and cash position Solvency II ratio 240% 230% 6% (3%) (3%) 10% Strong Solvency II ratio January: issue of £200 million of 8⅝% Fixed Rate Reset Subordinated Notes due April 2033, with a call option in January 2028 T2 T2 bond: bond: 32% 32% Solvency at Transformation costs Ma
Slide 29: Interim dividend and Odd-Lot Offer
Interim dividend and Odd-Lot Offer Interim dividend Odd-lot offer Board declared 2023 interim dividend of 1.5p, up 25% from Odd-lot Offer was approved by shareholder at the Company’s H1 2023 2023 Annual General Meeting Improved dividend pay-out ratio of 61% versus (H1 2022 55%) Entails Quilt
Slide 30: Operating environment: maintaining our focus on delivery
Operating environment: maintaining our focus on delivery Inflation and interest rates peak in late 2023 Management Interest rates to remain stable for an extended period expectations before starting to decline Flows and market levels pick up as inflation declines client revenue Likely flows ou
Slide 31: Group targets and 2023 guidance
Group targets and 2023 guidance FY 2022 Guided Group Targets Group target c.4-5% of opening AuMA per annum as markets normalise, and Net flows Unchanged aspire to build momentum further High Net Worth managed assets (Quilter Cheviot) stable around 70 bps Revenue Affluent managed asset mix de
Slide 32: Steven Levin, Chief Executive Officer: Concluding remarks
Our three key areas of focus Steven Levin Chief Executive Officer Concluding remarks Building Distribution Building Distribution Driving efficiency Increase the number of advisers Be more responsive to customers Modernise our process by investing driving flows into our investment and the market, con
Slide 33: Delivering faster growth, more efficiently: our investment case
Delivering faster growth, more efficiently: our investment case Revenues: focusing on improving net flows and front office productivity Costs: enhancing efficiency further through Simplification II Investing for growth: recycling bad costs into good Shareholder returns: moving up dividend pay-out ra
Slide 34: Q&A
Our three key areas of focus Q&A Building Distribution Building Distribution Driving efficiency Increase the number of advisers Be more responsive to customers Modernise our process by investing driving flows into our investment and the market, continue to in new technology and removing solutions an
Slide 35: Appendix
Appendix Quilter
Slide 36: Movement in assets and flows
Movement in assets and flows Of which managed by AuMA* AuMA* Quilter as at 31 as at 30 AuM as at December Gross Net June 30 June 2023 YTD gross flows, net flows & AuMA (£bn), unaudited 2022 flows* (£m) Flows* (£m) 2023 2023 AFFLUENT SEGMENT Quilter channel 15.4 1,775 863 15.9 12.2 IFA channel on Qui
Slide 37: Quilter Investors: investment performance
Quilter Investors: investment performance As at 30 June 2023 June- Since Fund vs IA Sector comparator 3Y 5Y 10Y 1 YTD inception Cirilium Conservative Portfolio 3 2 3 1 1 Investment performance Cirilium Balanced Portfolio 2 2 3 2 1 Cirilium Active Cirilium Moderate Portfolio 3 3 4 3 1 Continued to
Slide 38: High Net Worth: investment performance
High Net Worth: investment performance Investment Performance Highlights 30 June 2023 Absolute Performance 1 Year 3 Year 5 Year Our Growth oriented DPS continued to modestly outperform its benchmark over 1, 3 and 5 years Quilter Cheviot DPS Client 5.3% 14.5% 18.4% Growth Composite Balanced DPS w