Quilter Plc · LSE:QLT
Quilter — FY2023 Earnings Presentation
43 slides from Quilter's earnings presentation, Mar 6, 2024
Slide 1: Full Year Results 2023
Full Year Results 6 March 2024 2023
Slide 2: Disclaimer
Disclaimer This presentation should be read in conjunction with the announcement published by Quilter plc on 6 March 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 cond
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: 2023, a strong year of delivery
Results overview: 2023, a strong year of delivery Highlights FY 2023: Profit Operating Business Adjusted diluted Dividend performance margin transformation earnings per share £167m 27% £53m¹ 9.4p 5.2p Simplification +25% y-o-y +5ppts savings +19% +16% 1 Annualised run-rate cost savings. £45m for Pha
Slide 6: Delivery against our three strategic priorities well underway
Delivery against our three strategic priorities well underway Building Enhancing Driving Distribution Propositions Efficiency ✓ Quilter Partners ✓ CashHub on Platform ✓ c.£750m back book transfers ✓ Simplification Phase One ✓ Tiered adviser charging completed one year early ✓ Leading market share fo
Slide 7: 2023 AuMA and flows: good Quilter channel performance
2023 AuMA and flows: good Quilter channel performance Gross Net AuMA Net / opening flows flows Quilter Channel £2.9bn £0.5bn £0.4bn 17% High Net Worth IFA / Direct Channel £24.1bn £1.7bn £(0.5)bn (2%) Quilter Channel £17.2bn £3.6bn £1.6bn 10% Affluent IFA Channel £58.7bn £5.3bn £(0.2)bn 0% Funds on
Slide 8: Quilter investment solutions' managed flows
Quilter investment solutions’ managed flows Net flows AuM mix £27bn MPS HNW £0.1bn £2bn ➢ Launched new MPS strategies (£0.2bn) (£0.1bn) DPS £25bn ➢ Good performance v ARC benchmark DPS MPS Net Of c.£0.9bn on Quilter Platform, £28bn c.50% switched into WealthSelect and c.25% into passive /Blend Other
Slide 9: Delivering the Affluent segment's potential
Delivering the Affluent segment’s potential Distribution features Platform features Quilter channel Platform ➢ Leading adviser platform by c.£74bn AuA stock and flow ➢ Consistent strong flows ➢ 3% net flows of opening AuA ➢ Adviser transformation programme driving efficiency/profit growth ➢ Market l
Slide 10: Building distribution: Affluent
Building distribution: Affluent Quilter Platform market share¹: gross flows and assets Quilter adviser numbers and productivity: QFP & QCFP % Gross flows 15% Total share of gross flows Total share of stock 2.3 2.3 2.8 per Quilter adviser 14% (£m) 13% 12% 1,623 11% 1,502 1,489 10% 9% Pre-PTP Post-PTP
Slide 11: Three key initiatives to deliver a 30% operating margin
Three key initiatives to deliver a 30% operating margin Affluent High Net Worth Improve advice productivity through technology transformation Advice Adviser operating model transformation Transformation IT and operations simplification Moving to single legal/regulatory entities HNW Evolution Evolvin
Slide 12: Advice Transformation: building a next generation advice proposition
Advice Transformation: building a next generation advice proposition Delivering today and building for tomorrow 1 2 3 Building the network of Supporting the firms of Recruiting the advisers of tomorrow tomorrow tomorrow Transforming Advice Return to recruitment From School to Academy Quilter Partner
Slide 13: High Net Worth evolution
High Net Worth evolution Business initiatives: Rebrand first visible step in moving to a single operating model Distribution: ➢ Expanded financial planning team – planners in every UK office, and introduced into Jersey and Dublin offices ➢ Broadening range of offering with professional connections p
Slide 14: Organisational Simplification: phase one delivered; phase two underway
Organisational Simplification: phase one delivered; phase two underway Simplification phases 2021 2022 2023 2024 2025 Phase One Simplification Phase One (Original plan: 2021-2024): £45m Underpins 25% by 2025 operating margin target Achieved 2023: Team rationalisation and consolidation Full implement
Slide 15: A business model that is fit for purpose in a Consumer Duty world
A business model that is fit for purpose in a Consumer Duty world Consumer Duty and ongoing advice: ✓ Further enhanced vulnerable customer support The unbundled Quilter model is well ✓ Announced Platform fee reduction / interest sharing positioned and focused on delivering ✓ Introduced tiered Advise
Slide 16: What we are driving for
What we are driving for Operating margin ➢ 27% achieved in 2023, exceeding target of 25% in 2025 ➢ Group now focused on 30% medium-term goal ➢ Simplification phase two savings of £50m targeted to be delivered by the end of 2025 Net flows / opening AuMA ➢ Incremental improvement in 2024 ➢ 4-5% net fl
Slide 17: 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 18: 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 19: 2023 results: summary
2023 results: summary Key financials FY 2023 FY 2022 ∆ Continuing operations Net flows / Opening – Core % 1 2 (1) ppts ➢ Strong growth in adjusted profit Net flows / Opening – Reported % 0 2 (2) ppts ➢ Broadly stable revenue margins Adjusted profit before tax £m 167 134 +25% ➢ Increased investment r
Slide 20: 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 £bn – Reported basis 48 47 Revenue margin £bn +3% (bps) Core business 2.1 (1%) 625 606 16 62 Investment revenue (62%) 100 86 Other revenue 102.8 Reported basis 1.8 0.8 102.1 (94%) 490 477 Net manage
Slide 21: Driving efficiency and profitability: progress since sale of Quilter International
Driving efficiency and profitability: progress since sale of Quilter International Adjusted diluted EPS momentum: Operating margin Adjusted profit indicative trajectory +81% +55% +8 ppts 30% 167 9.4 27% 7.4 7.9 22% 22% 138 19% 134 5.2 108 £m p per share FY20 FY21 FY22 FY23 Medium- pro forma term FY2
Slide 22: Segments: resilient High Net Worth, strong Affluent performance
Segments: resilient High Net Worth, strong Affluent performance High Net Worth Affluent £m £m Revenues¹ Expenses Adj. profit Revenues¹ Expenses Adj. profit +2% - 212 211 387 393 Investment revenues 1 6 Investment 8 31 21 revenues Advice fees² 20 7 Advice fees³ 79 Interest margin 13 70 +2% Interest m
Slide 23: Revenue margins in line with expectations
Revenue margins in line with expectations High Net Worth Affluent Managed Managed Administered Revenue margin progression Revenue margin progression Revenue margin progression bps bps bps (3) (2.5) 2.5 (3) (3) 2 47 72 27 27 71 41 FY22 Mix effects Interest FY23 FY22 Cirilium Asset mix FY23 FY 2022 Ex
Slide 24: Interest rate sensitivity manageable
Interest rate sensitivity manageable Quilter and clients’ revenue share High Net Worth Affluent (Platform) Head Office/ Group Capital £m £m £m 80 80 80 QLT Client QLT Client 70 70 70 60 60 60 50 50 50 40 40 40 30 30 30 20 20 20 10 10 10 0 0 0 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 Quilter achieved interest r
Slide 25: Continued expense discipline driving operating margin improvement
Continued expense discipline driving operating margin improvement As a 2023 expense progression Cost analysis £m percentage of (£m) revenues 2023 2022 2023 2022 (8) 4 Support staff costs 115 118 (7) 20 Operations 21 22 Technology 32 35 (23) Property 30 31 Other base costs¹ 29 30 Sub-total base costs
Slide 26: Sources of expense out-performance
Sources of expense out-performance 2023 expense delivery outperformance £m Sources of outperformance in 2023 ▪ Simplification phase two and additional management expense control 22 ▪ FSCS levies 244 ▪ Lower than anticipated change activity 480 Drivers of expense growth in 2024¹ 458 ➢ Inflation ➢ Bra
Slide 27: Strong solvency ratio and cash position
Strong solvency ratio and cash position Solvency II ratio 14% (12%) 15% 10% (3%) 19% (2%) ➢ Strong Solvency II ratio 271% ➢ January: issue of £200 million 230% of 8⅝% Fixed Rate Reset Subordinated Notes due April 2033, with a call option in January 2028 Regulatory solvency at Business transformation
Slide 28: Dividend
Dividend Dividend Odd-lot Offer complete ➢ Board recommends a 2023 dividend of 5.2p, an increase of 16% ➢ Odd-lot Offer approved at the 2023 AGM ➢ Dividend pay-out ratio of 61% (FY 2022: 57%) ➢ Acquired 16 million shares at c.88p/share from holders of less than 200 shares. This represented a 5% prem
Slide 29: Operating environment: maintaining our focus on delivery
Operating environment: maintaining our focus on delivery Management ➢ Interest rates remain stable and start to decline from mid-2024 expectations ➢ Flows and market levels improve as interest rates fall + client revenue 2024 impact + flows − investment revenue Bolt-on Management Increased growth Co
Slide 30: Group targets and 2024 guidance
Group targets and 2024 guidance FY 2023 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 ➢ High Net Worth managed assets stable around 70 bps Reve
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: Well positioned to capture flow recovery as market improves
Well positioned to capture flow recovery as market improves 2023 challenges Response Cost-of-living squeezing flows Improving gross flow market share: #1 advised retail platform Lower levels of investor engagement Proposition enhancements to support adviser productivity Adviser consolidation Stabili
Slide 33: The opportunity: industry dynamics supportive of long-term growth
The opportunity: industry dynamics supportive of long-term growth UK wealth management ecosystem outlook Large, structurally supportive market, with ample growth opportunity for those who can: ‘Face-to-face advice’ AuMA¹ c.£2.5 – 2.7tn Target clients Build trusted Communicate earlier in their +6-7%
Slide 34: Building the UK's best-in-class wealth manager
Building the UK’s best-in-class wealth manager Delivering our strategy of efficiency and faster growth UK-wide recognised Grow Quilter adviser wealth manager and IM numbers Support access to advice: through adviser Advice and productivity and solutions technology investment Customer Delivering focus
Slide 35: 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 36: Appendix
Appendix Quilter
Slide 37: The Quilter model
The Quilter model Covering the market with two distribution channels, two scale businesses, two investment approaches Two channels driving gross flows¹ Two relationship segments Two investment approaches Quilter channel IFA channel Discretionary HNW: £27bn HNW IFA channel IFA channel £24bn £24bn 1.7
Slide 38: Movement in assets and flows
Movement in assets and flows Note: for modelling purposes, Quilter channel 2023 Platform discrete gross flows and net flows were £2,934m and £2,074m, respectively, with closing AuMA of £13.9bn. 1. Inter-segment dual assets reflect funds sold by Quilter Cheviot and managed by Quilter Investors and th
Slide 39: Client pricing: open, unbundled, with choice at the heart
Client pricing: open, unbundled, with choice at the heart Average fees example, reflecting current predominant choice by clients & their advisers % of investment Total Upfront Ongoing p.a. Equivalent p.a. Total Financial p.a/ Wrapper / Investment Total Advice Total Advice A+B Advice 10 Years Admin M
Slide 40: Post-year end movement in RFP headcount
Post-year end movement in RFP headcount Total: 1,489 Quilter Cheviot 70 Financial 70 Planning RFPs (HNW) 27 Quilter Financial 1,419 Planning Quilter Financial RFPs 1,392 Planning (Affluent) RFPs (Affluent) 31 Dec' 2023 QCFP advisers Adviser firm departure 31 Dec' 2023 directly authorised to QC pro f
Slide 41: Quilter Investors: investment performance
Quilter Investors: investment performance As at 31 December 2023 Investment performance Since Fund vs IA Sector comparator 1Y 3Y 5Y 10Y inception¹ Cirilium Conservative Portfolio 4 4 4 2 2 Cirilium Active Cirilium Balanced Portfolio 3 4 3 2 1 ➢ WealthSelect managed portfolio continued to deliver Cir
Slide 42: High Net Worth: investment performance
High Net Worth: investment performance Investment Performance Highlights 31 December 2023 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-
Slide 43: Investor Relations programme
Investor Relations programme Financial calendar Upcoming investor conferences in H1 2024 Date Event Date Event 24 April Q1 2024 trading statement 13 March Avior Corporate Summit, Cape Town 23 May Annual General Meeting 20 March Berenberg UK Corporate Conference, London 7 August 2024 Interim results