Quilter Plc · LSE:QLT
Quilter — H1 2024 Earnings Presentation
40 slides from Quilter's earnings presentation, Aug 7, 2024
Slide 1: Interim Results 2024
Interim Results 7 August 2024 2024
Slide 2: Disclaimer
Disclaimer This presentation should be read in conjunction with the announcement published by Quilter plc on 7 August 2024. This presentation may contain forward-looking statements with respect to certain Quilter plc’s plans and its current goals and expectations relating to its future financial con
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: H1 2024, continued strong delivery
Results overview: H1 2024, continued strong delivery Highlights H1 2024: Adjusted diluted Core net flows Adjusted PBT Operating margin Dividend EPS £1.7bn £97m 29% 5.2p 1.7p +164% y-o-y +28% y-o-y +5ppts +21% +0.2p 5
Slide 6: Delivering against our three strategic priorities
Delivering against our three strategic priorities Building Enhancing Driving Distribution Propositions Efficiency Growing CashHub balances on Meaningfully higher gross and net Delivered £26m of £50m target cost Platform flows savings WealthSelect on third party Largest advised Platform by
Slide 7: Ongoing Advice Evidence Review
Ongoing Advice Evidence Review February March April May June By early 2025 FCA data request Quilter voluntarily Following discussion Review/tender Skilled Person Update on Skilled on delivery of decides to review with the FCA, the process to agree formally appointed Person progress ongoing advice hi
Slide 8: H1 2024 flows: Group perspective – strong YoY growth
H1 2024 flows: Group perspective – strong YoY growth Quilter plc reported Quilter plc reported – long-term flow trend £bn £bn Gross flows Net flows 8.0 YoY growth: +34% +669% 6.0 4.0 2.0 0.0 Net/opening¹: 3.6 3.8 3% -2.0 -4.0 -6.0 0.7 0.8 -8.0 H1'22 H2'22 H1'23 H2'23 H1'24 Q1'24 Q2'24 Q1'24 Q2'24 Gr
Slide 9: H1 2024 flows: High Net Worth – consistent strong new business momentum
H1 2024 flows: High Net Worth – consistent strong new business momentum High Net Worth High Net Worth flows by channel £bn £bn Gross flows Net flows 2.0 YoY Growth: +33% +98% 1.5 0.8 0.8 1.0 0.5 Net/opening¹: 0.0 0.6 0.6 1% -0.5 0.0 -1.0 0.1 0.2 0.2 -1.5 0.1 0.2 0.0 -2.0 (0.2) H1'22 H2'22 H1'23 H2'2
Slide 10: H1 2024 flows: Affluent – strong momentum increasing into Q2
H1 2024 flows: Affluent – strong momentum increasing into Q2 Affluent: Quilter Platform Affluent: including funds on third-party platforms £bn £bn Gross flows Net flows Gross flows Net flows YoY Growth: +41% +114% +36% +158% 2.9 2.7 Net/opening¹: 6% Net/opening¹: 1.8 2.0 5% 3.1 3.0 1.2 1.1 0.4 0.5 0
Slide 11: Affluent: Quilter channel – higher productivity and stronger flows
Affluent: Quilter channel – higher productivity and stronger flows Quilter channel net flows to Platform Quilter channel backbook transfers £m £m +£0.8m Productivity¹ £2.4m £2.3m £2.4m £2.3m £2.7m £2.8m £3.2m 1,400 1,400 c.450 1,300 1,200 1,200 1,000 1,100 800 c.420 1,000 600 900 400 c.330 800 700 2
Slide 12: Affluent adviser recruitment and Academy update
Affluent adviser recruitment and Academy update RFP headcount movement highlights¹ New adviser recruitment team gaining momentum with firms Strong pipeline in o/w RFP joiner pipeline more than doubled since December 2023 H2 2024 of c.45% retired 130 RFPs with assets Attracting greater number of
Slide 13: Affluent: Continued improvement in IFA market share
Affluent: Continued improvement in IFA market share Quilter Platform market share¹: gross flows and assets Quilter Platform IFA channel net transfer trends by source of funds² % H1 2023 vs H1 2024 15% H1 2023 H1 2024 Total share of gross flows Total share of stock 14% 13% 12% 11% 10% 9% 8% 7% Pre-PT
Slide 14: Affluent: Benefits from integration
Affluent: Benefits from integration Gross flows onto Platform and into Quilter managed solutions £bn £5.6bn +41% y-o-y £2.2bn +35% y-o-y Quilter 1.8 c.80% solutions 1.4 channel integration IFA 3.8 channel c.20% solutions 0.8 integration Platform Solutions Note: Year-on-year growth is calculated on a
Slide 15: Affluent: Step change in IFA net Platform flows
Affluent: Step change in IFA net Platform flows Initiatives driving year-on-year improvement • Refocused sales incentives on deepening relationships with existing advisers on Platform • Reviewed sales segmentation model • Changes to leadership and sales team structures Cumulative Platform weekly net
Slide 16: Affluent: Faster growth in higher margin, longer duration assets
Affluent: Faster growth in higher margin, longer duration assets Quilter Platform net flows by relationship Quilter Platform net flows by product £bn £bn % opening Pension Investment bond ISA Unwrapped AuMA/AuA £2.2bn +6% £2.2bn Y-o-Y growth +106% 1.1 +11% % opening AuMA/AuA +3% £1.0bn £1.0bn +91% A
Slide 17: Transformation: Building a scalable and efficient operating model
Transformation: Building a scalable and efficient operating model Advice Transformation Programme High Net Worth evolution Organisational simplification Transforming our advice technology and Evolving our commercial proposition and Continuing our efficiency journey towards a processes to improve cli
Slide 18: What we are driving for …
What we are driving for … Net flows/opening AuMA Building on H1 2024 flow momentum 4-5% net flows/opening AuMA as markets normalise Operating margin Above 2025 target, focused on 30% medium-term goal Simplification phase two: targeted savings of £50m to be delivered by the end of 2025 18
Slide 19: 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 20: 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 21: H1 2024 results: Continued strong delivery
H1 2024 results: Continued strong delivery Remain well Continued cost Adjusted profit Operating margin Revenue growth capitalised and discipline before tax progress liquid 268%² £329m¹ £232m £97m 29% Solvency II +5% y-o-y (2%) y-o-y +28% y-o-y +5ppts (3ppts) 1. 45bps revenue margin, (3bps) y-o-y. 2.
Slide 22: Operating leverage drives strong growth in adjusted profit and EPS
Operating leverage drives strong growth in adjusted profit and EPS Average AuMA Revenue¹ Net flows £m 1.7 £bn – Reported basis 48 45 Revenue margin £bn +5% (bps) +8% 329 +164% 312 28 37 Investment revenue Core business 0.7 47 Other revenue 42 +669% 1.5 110.0 101.8 242 245 Net management fee Reported
Slide 23: Revenue margins tracking in line with expectations
Revenue margins tracking in line with expectations High Net Worth Affluent Managed Managed Administered Revenue margin progression Revenue margin progression Revenue margin progression bps bps bps 71 40 26 25 70 37 FY23 exit run rate Other H1 2024 FY23 exit run Mix Other H1 2024 FY23 exit run rate 2
Slide 24: Segment revenues: Solid performance
Segment revenues: Solid performance High Net Worth Affluent Average AuMA Average AuMA H1 2024 H1 2024 revenues earned revenues earned £112m +4% £206m +6% Y-o-Y Y-o-Y 71bps DFM fee 25bps Platform fee £94m £98m £28bn £77bn 37bps management fee £53m Share of fees¹ c.65bps advice fee £29bn £30bn £39m £1
Slide 25: Simplification: Efficiency driving capacity to invest and grow
Simplification: Efficiency driving capacity to invest and grow H1 2024 expense progression Cost analysis As a £m percentage of (£m) revenues H1 H1 H1 H1 2024 2023 2024 2023 236 (2) 8 232 9 (19) Support staff costs 51 54 10 Head 11 Office Operations 6 8 Technology 10 12 High Net 85 87 Worth Property
Slide 26: Segment financials: Strong year-on-year growth
Segment financials: Strong year-on-year growth High Net Worth Affluent Group Revenues Adjusted profit Revenues before tax¹ £112m £206m 25 +9% Y-o-Y Expenses Expenses £97m £87m £134m +33% Y-o-Y Profit before tax Profit before tax 72 Operating margin Operating margin £25m 22% +1ppt Y-o-Y £72m 35% +7pp
Slide 27: Driving continuous efficiency and profitability improvements
Driving continuous efficiency and profitability improvements Operating expenses £m Operating margin (6%) +11 ppts 29% 30% 248 242 236 232 24% 20% 18% H1 2021 H1 2022 H1 2023 H1 2024 Medium- H1 2021 H1 2022 H1 2023 H1 2024 term target Adjusted profit before tax Recycling cost savings into investment:
Slide 28: Strong solvency ratio and robust cash position
Strong solvency ratio and robust cash position Solvency II ratio (2%) 7% (4%) (4%) Strong Solvency II ratio 271% 268% Tier 2 capital represents 20% of Group Solvency II surplus Regulatory solvency at Business transformation costs Market variances Movement Interim Dividend Solvency at 31 Dec' 202
Slide 29: Dividend
Dividend Dividend 2024 Interim Dividend set at a third of 2023 Total Dividend Board will decide on 2024 Total Dividend after considering: underlying business performance operating environment balance sheet strength, and outcome of the Ongoing Advice Evidence review Dividend pay-out rat
Slide 30: Group targets and H2 2024 guidance
Group targets and H2 2024 guidance FY 2024 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 stable around 70 bps Revenue Affluent managed assets – around mid 30 bps,
Slide 31: 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 32: Summary: Quilter is a high quality, scaled and diversified business
Summary: Quilter is a high quality, scaled and diversified business Structural growth in a large fragmented UK wealth management market Scaled and integrated dual distribution, full-service model Clear success from strategic transformation driving total shareholder returns 32
Slide 33: 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 34: Appendix
Appendix Quilter
Slide 35: H1 2024 flows: Group perspective – strong YoY growth
H1 2024 flows: Group perspective – strong YoY growth Quilter plc core business Non-core Quilter plc reported £bn £bn £bn Gross flows Net flows Gross flows Net flows Gross flows Net flows YoY +35% +164% (7%) +56% +34% +669% Growth: 1H 1H Net/opening: Net/opening: 3.6 3.8 3.6 3.8 3% 3% 0.8 0.9 0.8 0.7
Slide 36: Movement in assets and flows
Movement in assets and flows 1. Quilter channel YTD Platform discrete gross flows and net flows were £1,777 million and £1,304 million respectively, with closing AuMA of £15.2 billion. 2. Inter-segment dual assets reflect funds managed by Quilter Cheviot and administered by Quilter Investors and the
Slide 37: Affluent: momentum building in both Platform channels
Affluent: momentum building in both Platform channels 2023 to H1 2024 cumulative weekly net flows by channel £bn 2.5 Quilter channel IFA channel 1.5 0.5 -0.5 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 2 4 6 8 10 12 14 16 18 20 22 24 26 2023 2024 37
Slide 38: Quilter Investors: investment performance
Quilter Investors: investment performance As at 30 June 2024 Investment performance Since Fund vs IA Sector comparator 1Y 3Y 5Y 10Y inception¹ Cirilium Conservative Portfolio 4 4 4 2 2 WealthSelect managed portfolio continued to deliver Cirilium Active Cirilium Balanced Portfolio 4 4 4 2 1 a stron
Slide 39: High Net Worth: investment performance
High Net Worth: investment performance Investment Performance Highlights 31 March 2024 Absolute Performance Steady Growth and Equity Risk clients received good absolute 1 Year 3 Year 5 Year returns and relative to Asset Risk Consultants PCI peer group returns Quilter Cheviot DPS Client year-on-yea
Slide 40: Investor Relations programme
Investor Relations programme Financial calendar Upcoming investor roadshows and conferences in H2 2024 Date Event Date Event 16 October 2024 Q3 2024 trading statement 4–6 South African shareholder roadshow, Cape Town September January 2025 Q4 2024 trading statement 16 September RMB Morgan Stanley co