Quilter Plc · LSE:QLT
Quilter — FY2018 Earnings Presentation
42 slides from Quilter's earnings presentation, Mar 12, 2019
Slide 1: Preliminary results 2018
Quilter Basic rBand Guidelines Our brand a ssets 1 Preliminary results 2018 12 March 2019
Slide 2: Disclaimer
Disclaimer This presentation should be read in conjunction with the announcement published by Quilter plc on 12 March 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 – 2018 performance Tim Tookey Financial review – 2019 and beyond Mark Satchel Concluding remarks Paul Feeney Q&A 3
Slide 4: 2018: A landmark year
2018 : A landmark year Quilter plc successfully listed on LSE and JSE Single Strategy asset management business sold and 12.0p special dividend paid Significant progress on Platform Transformation Programme; soft launch now underway FCA investigation into treatment of long-standing clients of closed
Slide 5: Executive summary: Strong performance in 2018
Executive summary: Strong performance in 2018 Key Performance Indicators 2018 2017 ∆ Strong adjusted profit growth, up 11% Financial: Adjusted diluted earnings per share of NCCF/opening AuMA1 % 5 9 (4) pp 12.3p up 15% Integrated flows1 £bn 4.7 5.2 (10%) Recommended final dividend of AuMA £bn 1
Slide 6: Controlling the things we can, mitigating those we can’t
Controlling the things we can, mitigating those we can’t Market challenge Quilter response 1 Brexit and global concerns impacting Adviser-led model, supporting and guiding clients client sentiment and flows through volatility and uncertainty 2 Dual-stream advice strategy: Demand vs. supply of financ
Slide 7: Business model supports robust integrated flows
Business model supports robust integrated flows FTSE 1001 FTSE All Share1 NCCF excl. Quilter Life Assurance2 Integrated flows Integrated flows £5.2bn3 £4.7bn3 2.3 2.0 1.9 1.9 1.5 1.4 1.3 1.2 1.2 1.1 1.0 1.0 1.0 0.7 0.7 0.6 £m Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2017 2018 1. Sou
Slide 8: Our integrated offering drives increasing value
Our integrated offering drives increasing value Quilter Wealth Solutions NCCF¹,² Quilter Wealth Solutions AuMA 2017: 9% 2018 2018 £3.1bn £49.9bn 11% 35% Source 2017: 27% 65% 89% Quilter Restricted advisers Third party independent advisers 2018 2018 £3.1bn £49.9bn 19% 2017: 17% Destination 48% 52% 81
Slide 9: Quilter’s multi-channel advice model
Quilter’s multi-channel advice model Designed with customer choice in mind High Net Worth Affluent Mass Affluent 1 3rd party FAs Open market, financial advisers 2 Advice: Network Quilter Financial Planning 3 Advice: National Quilter Private Client Advisers Investment Discretionary Fund Managed Portf
Slide 10: Quilter’s multi-channel advice model
Quilter’s multi-channel advice model Designed with customer choice in mind High Net Worth Affluent Mass Affluent 1 3rd party FAs Open market, financial advisers 2 Advice: Network Quilter Financial Planning 3 Advice: National Quilter Private Client Advisers Quilter Financial Advisers Investment Discr
Slide 11: Charles Derby Group: Delivering a step-change in our national advice strategy
Charles Derby Group: Delivering a step-change in our national advice strategy Strategic investment to acquire the remainder of Charles Derby Group we did not own, to fast track development of national advice business, focused on affluent customers Builds upon success of already profitable PCA –
Slide 12: New UK Platform: strong progress made; in soft launch phase
New UK Platform: strong progress made; in soft launch phase 1 2 3 System with full Test and adviser Soft launch implement functionality complete Complete for Soft Launch Entered Early Summer 2019 Migration phases commence Ongoing for future phases early Autumn 2019 High quality delivery is of utmost
Slide 13: 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 14: Financial review – 2018 performance
Financial review – 2018 performance Tim Tookey 12 March 2019
Slide 15: Operational performance
Operational performance Strong performance in 2018 NCCF (excl. Quilter Life Assurance) £bn AuMA Revenue Integrated £bn £m 5.2 4.7 Revenue flows (£bn) -4% 56 57 margin (bps) -38% +8% 114.4 109.3 7.6 728 788 4.7 2017 2018 2017 2018 2017 2018 Expenses Adjusted profit before tax Adjusted diluted EPS £m
Slide 16: Advice and Wealth Management: Powering our growth
Advice and Wealth Management: Powering our growth Strong growth in revenue across all three business £m 2018 2017 ∆ units, notably in Quilter Investors: Revenue 373 316 +18% Quilter Financial Planning: +14% Quilter Investors: +45% Expenses (271) (234) (16%) Quilter Cheviot: +7% Adjusted prof
Slide 17: Investment performance: Quilter Investors
Investment performance: Quilter Investors Cirilium Wealth Select Performance vs respective Investment Association benchmarks Performance vs respective Investment Association benchmarks Cumulative returns: at 31 December 2018 Cumulative returns: 3 year at 31 December 2018; 5 year at 28 February 2019¹
Slide 18: Investment performance: Quilter Cheviot
Investment performance: Quilter Cheviot Cumulative returns Quilter Cheviot PCI performance vs. peers, as at 30 September 2018 40% Relative +1.6% Relative +2.2% 30% Relative +2.8% 3 year 20% 10% 0% Balanced Steady Growth Equity Risk 50% Relative +2.6% Relative +2.7% 40% Relative +3.4% 5 year 30% 20%
Slide 19: Wealth Platforms: Solid performance, adjusted profit up 3%
Wealth Platforms: Solid performance, adjusted profit up 3% Strong Quilter Wealth Solutions performance £m 2018 2017 ∆ offsets run-off in Quilter Life Assurance, with Revenue 414 411 +1% revenue growth/decline of: Quilter International: +5% Expenses (252) (253) – Quilter Life Assurance: (10%)
Slide 20: Head office and items excluded from adjusted profit
Head office and items excluded from adjusted profit In line with or better than expectations £m 2018 Comment Performance better than guided due to cost management and increased allocations Head office 31 to business segments Below the line items (2018/19/20 one-off): UK Platform Transformation Progr
Slide 21: Continued strong solvency and cash position
Continued strong solvency and cash position Solvency II ratio (18%) 190% 41% (5%) 7% (5%) Holding company cash at 31 December 2018 154% 16% of £416m Reductions in own funds of £221m for special dividend and £61m for final dividend Provides liquidity for committed strategic investments includin
Slide 22: Financial review – 2019 and beyond
Financial review – 2019 and beyond Mark Satchel 12 March 2019
Slide 23: Continued disciplined expense management
Continued disciplined expense management Expense management is a key focus Operating margin 29% 30% 555 13 5 (11) 519 18 18 11 17 105 89 120 120 293 312 £m 2017 expenses Inflation Managed separation Quilter Investors build Investment Reductions achieved 2018 expenses stand alone, LTIP out in Caerus
Slide 24: Optimisation focussed on addressable cost base
Optimisation focussed on addressable cost base Total 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 T
Slide 25: Holding company cash
Holding company cash Net capital movement: £336m Net operational movements: (£60m) (300) 576 (19) (221) (200) 2 61 (54) 167 500 (6) (65) 416 £m 36 1 Jan '18 Short term Loans repaid Single Short term Costs of Special Managed External debt Capital Cash Other 31 Dec '18 Final dividend loan & Tier 2 to
Slide 26: 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 27: Updated financial guidance
Updated financial guidance Guidance to market at time of Listing Updates to guidance Optimisation: n/a £75m one-off costs to deliver optimisation phase 1 Target: 30% operating margin (excl. interest) by 2020 after initiatives, with c.50% incurred by end of 2019 Optimisation & impact of additio
Slide 28: Financial summary
Financial summary Adjusted profit +11% to £233m Prudently capitalised liquid balance sheet Capital discipline credentials established Expense management demonstrated in second half of 2018 Improving operational leverage through to 2021, supported by optimisation All guidance met or excee
Slide 29: Concluding remarks
Concluding remarks Paul Feeney 12 March 2019
Slide 30: 2019: Confident in the direction of travel
2019: Confident in the direction of travel Focusing on growing the business, maintaining cost discipline Strong positioning in a secular growth market Building out national advice strategy, positioning Quilter as the ‘go to’ business for the affluent and mass affluent segments Mobilising and
Slide 31: Q&A
Q&A Quilter
Slide 32: Appendix
Appendix 12 March 2019
Slide 33: NCCF and AuMA growth
NCCF and AuMA growth Solid NCCF in challenging markets AuMA evolution 56 57 Revenue £bn margin (bps) 5%1 9%1 (7%)2 9%2 (2.2) 114.4 6.9 (2.0) (7.8) 109.3 8.6 (2.7) 15.3 Quilter Life (1.3) 1.3 10.3 12.4 Assurance3 98.2 £4.7bn NCCF excl. Quilter Life Quilter Life Assurance3 15.5 Assurance £7.6bn NCCF e
Slide 34: NCCF – resilient integrated flows
NCCF – resilient integrated flows £bn 2018 2017 ∆ Quilter Investors 2.8 3.3 (15%) Quilter Cheviot 0.7 1.1 (36%) Advice & Wealth Management 3.5 4.4 (20%) Quilter Wealth Solutions 3.1 4.5 (31%) Quilter International 0.3 1.4 (79%) Quilter Life Assurance (2.3) (1.6) (44%) Wealth Platforms 1.1 4.3 (74%)
Slide 35: Investment performance: Quilter Investors
Investment performance: Quilter Investors Quilter Investors’ performance Cirilium – Cumulative returns Wealth Select – Cumulative returns Performance against peers Performance vs respective Investment Association benchmarks Performance vs respective Investment Association benchmarks: at 31 December
Slide 36: Investment performance: Quilter Cheviot
Investment performance: Quilter Cheviot Previous disclosure format Disclosure format going forward Quilter Cheviot PCI Quartile Ranking Quilter Cheviot PCI performance vs. peers ARC Private Client Index, as at 30 September 2018 (cumulative returns), as at 30 September 2018 Performance 40% Relative +
Slide 37: Guidance recap and impact of optimisation phase 1
Guidance recap and impact of optimisation phase 1 Guidance to market at time of Listing Updates to guidance Target: NCCF of 5% of opening AuMA (excluding QLA) per No change to target but cautious on 2019 given market Net client cash flow annum over medium-term conditions, and economic and politi
Slide 38: Guidance recap and impact of optimisation phase 1, cntd
Guidance recap and impact of optimisation phase 1, cntd Guidance to market at time of Listing Updates to guidance Aim for broadly flat costs (excl. acquisitions) in 2019 year- on-year, to partially offset weaker revenue outlook 2019 costs n/a Charles Derby expected to increase revenues and cos
Slide 39: Guidance recap and impact of optimisation phase 1, cntd
Guidance recap and impact of optimisation phase 1, cntd Guidance to market at time of Listing Updates to guidance Approximately 80% of post-tax operating profit from continuing operations into free cash, partially used to No change Cash conversion fund debt servicing costs and targeted distribut
Slide 40: Our focus for 2019 and beyond
Our focus for 2019 and beyond 4 2018 achievements Focus in 2019 Phase 1 planning Mobilise Phase 1 Optimisation complete initiatives Early savings achieved Protect PTP-related through cost management areas 3 2018 achievements Focus in 2019 Wealth Strong underlying UK Migration of PTP Plat
Slide 41: Our vision for Advice growth
Our vision for Advice growth Advice: National Advice: Network Business model now proven & delivering: A well established, mature business: Advice profitability Delivering consistent flows into Quilter solutions Higher than anticipated household wealth demographic Servicing mass-affluent cust
Slide 42: Quil t er Basic r B and Guidelines Our b r and a ss
Quilter Basic rBand Guidelines Our brand a ssets 1