Quilter Plc · LSE:QLT
Quilter — FY2022 Earnings Presentation
39 slides from Quilter's earnings presentation, Mar 8, 2023
Slide 1: Full Year 2022 Results
Quilter Basic rBand Guidelines Our brand a ssets 1 Full Year 2022 Results 8 March 2023
Slide 2: Disclaimer
Disclaimer This presentation should be read in conjunction with the announcement published by Quilter plc on 8 March 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 financ
Slide 3: Business update
Business update Steven Levin 8 March 2023
Slide 4: Results overview - robust delivery in challenging markets
Results overview - robust delivery in challenging markets Quilter highlights FY 2022: Steady Business Adjusted diluted Increased total Robust profit operating transformation earnings per share dividend2 margin in progress1 £134m 22% £65m – Optimisation 7.9p 4.5p (3%) y-o-y no change £23m – Simplific
Slide 5: Business reshaped towards a UK centric focus since Listing
Business reshaped towards a UK centric focus since Listing Refocused on High Net Worth and Affluent segments Market leading platform built on robust technology Two scale distribution channels Capital discipline Significant cost reduction programmes c.£1bn returned to shareholders since Listing 5
Slide 6: Industry context – secular growth with cyclical challenges
Industry context – secular growth with cyclical challenges UK Wealth market has strong secular growth potential Cyclical equity and bond market headwinds in 2022 Economic downturn, higher interest rates, cost-of-living challenges impacting flows Adviser consolidation causing market disruption 6
Slide 7: Quilter: strategically well positioned across the UK wealth industry
Quilter: strategically well positioned across the UK wealth industry Three broadly equal revenue streams from our three core franchises High Net Worth c.£200m Affluent c.£400m Strategic focus: Strategic focus: Improving productivity High Net Worth Integrated Advice Greater RFP alignment Discreti
Slide 8: Planned actions to drive business improvement
Planned actions to drive business improvement Building Distribution Grow relationships with larger IFA firms Increase alignment/retention in Quilter Financial Planning Add Investment Managers and Advisers in High Net Worth/QPCA Enhancing Proposition Driving Efficiency Refresh our investment solution
Slide 9: AuMA £100bn
Quilter FY 2022 AuMA Advice Platform Investment Note: Assets rounded to Administered Managed Gross Net flows / Net flows3 opening the nearest flows3 AuMA % billion Quilter Cheviot QuilterCheviot Quilter Cheviot High Net £25bn 3% Worth £26bn £26bn £26bn HNW £2.3bn £0.9bn 3% IFA originated AuMA £100bn
Slide 10: High Net Worth flows – resilient and stable
High Net Worth flows – resilient and stable Quilter channel Quilter channel Gross Net flows flows 2.6 2.7 IFA incl. Direct channel £bn 1.1 IFA incl. Direct channel £bn 2.3 0.9 0.5 0.5 0.4 2.1 0.4 0.5 0.3 0.5 0.7 0.4 0.4 0.5 (0.1) 2.1 2.2 1.6 1.8 (1.2) 2019 20201 2021 20222 (0.8) 2019 20203 2021 2022
Slide 11: Retail Market gross flows – 2022 a challenging year
Retail Market gross flows – 2022 a challenging year Total retail advised market gross platform flow £bn Quilter market 3 3 2 1 Gross flow market share rank share position moved from 3rd to 1st following introduction of new platform New platform (19%) introduced 82.3 66.8 59.1 59.3 2019 2020 2021 2
Slide 12: Quilter channel Platform flows – continued strong performance
Quilter channel Platform flows – continued strong performance Gross flows £bn Net flows £bn2 Quilter channel 2.6% 3.0% 3.2% 3.8% flows market New platform share %1 introduced 2.6 2.6 % of Net 20% 16% 19% 15% flows/opening AuMA 1.8 1.8 1.8 1.6 1.1 1.2 2019 2020 2021 2022 2019 2020 2021 2022 Breakdown
Slide 13: IFA Platform flows – key focus for improvement
IFA Platform flows – key focus for improvement Gross flows 7.6% 6.6% 7.7% 7.4% IFA flows market Net flows £bn2 share %1 £bn1 6.3 New platform % of Net introduced - 1% 3% 1% flows/opening 4.9 AuMA 4.5 3.9 1.7 0.4 0.4 2019 2020 2021 2022 (0.2) Breakdown 2019 2020 2021 2022 Net flows £0.4bn £bn 4.9 (1.
Slide 14: Non-core business and other platforms
Non-core business and other platforms As at 31 December 2022 AuMA Gross Flows Net Flows Structural outflows will continue in Non-core assets on non-core business £1bn £35m1 £(75)m1 Quilter Platform Migration of Quilter advised assets on third party platforms to Quilter channel £4bn £0.7bn £(0.2)
Slide 15: Group flow expectations – driving incremental improvement
Group flow expectations – driving incremental improvement Advice Platform Net flow / Opening AuMA % Targets AuMA 2022 Weighted contribution to Expectation Group net flow (%) High Net Quilter Cheviot Worth £25bn HNW 4-5% c.1-11⁄2 % £26bn 2%+ in 2023, building to £50bn 1-2% in 2023, building to c.1% i
Slide 16: Focus on driving Quilter channel growth and adviser productivity
Focus on driving Quilter channel growth and adviser productivity Gross sales Quilter channel £m Adviser productivity - gross 1.8 2.3 2.3 sales per Quilter adviser £m Adviser productivity - gross 1.2 1.8 1.9 sales (onto Quilter Platforms including HNW) per Quilter adviser £m 4,018 3,661 Quilter chann
Slide 17: What we are driving for
What we are driving for Operating margin 25% in 2025 30% longer term goal Net flows / opening AuMA Incremental improvement in 2023, targeting 2%+ flows 4-5% net flows / opening AuMA when markets normalise, and aspire to build momentum further 17
Slide 18: Financial review
Financial review Mark Satchel 8 March 2023
Slide 19: FY 2022 results: summary
FY 2022 results: summary Improved persistency of 92% Key financials FY 2022 FY 2021 ∆ (FY21: 91%) Continuing operations Revenue margins in line with Net flows / Opening AuMA % 2 4 (2)ppt guidance Adjusted profit before tax £m 134 138 (3)% Cost discipline IFRS profit after tax £m 175 23 n/a R
Slide 20: Adjusted profit before tax summary
Adjusted profit before tax summary Adjusted Profit before tax Adjusted Profit before tax 2022 £m £105m £45m £(16)m 6 11 13 £500m Net Management fees £483m £118m Other revenue £123m 138 134 £(480)m Operating expenses £(472)m 2021 Affluent High Net worth Head Office 2022 20
Slide 21: Cost discipline supporting adjusted profit
Cost discipline supporting adjusted profit Average AuMA Revenue Net flows £m £bn £bn Revenue 48 47 margin (bps) (55)% (2)% (2)% 4.0 105.3 102.8 618 606 118 Other revenue : 123 Of which £23m interest income earned on cash and capital resources for FY 2022 1.8 500 483 Net management fee FY 2021 FY 202
Slide 22: High Net Worth: investing for growth
High Net Worth: investing for growth Investment Revenues £m - 212 212 FY 2022 highlights Expenses £m Quilter Private Client Advisers 23 (9)% 21 +7% Stable revenue within High Net Worth 167 156 Investment Manager headcount Adj. profit £m increased by 9 year-on-year Operating 1% 26% 21% margin Qui
Slide 23: Affluent: resilient performance in challenging markets
Affluent: resilient performance in challenging markets Investment Revenues £m (5)% FY 2022 highlights 406 387 Expenses £m Solid financial performance supported Advice 90 fees (14)% 77 by strong cost management (4)% 295 282 Changed management of Cirilium Administration 127 Active fees (5)% 121 Ad
Slide 24: Revenue margin progression broadly in line with guidance
Revenue margin progression broadly in line with guidance Revenue margin bps Quilter Cheviot Affluent Administered Affluent Managed Quilter plc 80 70 60 50 40 30 20 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Revenue margins in line with
Slide 25: Expense discipline contributing to lower cost outcome
Expense discipline contributing to lower cost outcome As a Cost analysis percentage of (£m) revenues FY FY FY FY 2022 2021 2022 2021 FY 2022 expense progression Support staff costs 118 127 £m Operations 22 27 6 4 5 8 Technology 35 42 26 8 Property 31 31 16 Other base costs¹ 30 25 3 Sub-total base co
Slide 26: Strong solvency ratio and cash position
Strong solvency ratio and cash position Solvency II ratio 275% (56)% 230% 12% (10)% (5)% 14% Strong Pro forma Solvency II ratio January - issue of £200 million of 8⅝% Fixed Rate Reset Subordinated Notes due April 2033, with a call option from January 2028 T2 bond: 32% Solvency at Capital return
Slide 27: FY 2022 dividend and capital returns
FY 2022 dividend and capital returns Dividend Return of Quilter International proceeds Recommended FY 2022 dividend of 4.5p, up 13% on a continuing £328m capital return via ‘B’ share mechanism and share basis consolidation Improved dividend pay-out ratio of 57% versus 2021 6 for 7 share cons
Slide 28: Stable operating margin and EPS progression
Stable operating margin and EPS progression Stable operating margin with positive forward trends Stable operating margin of 22%, in line with the prior year 30% Revised target of 25% in 2025, with 30% still our aspiration 25% 22% 22% 19% 2020 2021 2022 2023 2024 2025 Long term goal Adjusted dilu
Slide 29: Group targets / 2023 guidance
Group targets / 2023 guidance Capital Market Day Targets Revised Group target Target net inflow growth of at least 6% of opening AuMA per c.4-5% of opening AuMA per annum as markets normalise, Net flows annum through the cycle, with a higher percentage growth rate and aspire to build momentum fu
Slide 30: 2022 in summary
2022 in summary Robust results in a challenging market Strong balance sheet supporting shareholder returns Strategically well placed across the UK wealth management sector Repositioning business from a position of strength 30
Slide 31: Concluding remarks
Concluding remarks Steven Levin 8 March 2023
Slide 32: Our 2023 priorities
Our 2023 priorities Building Distribution Enhancing Proposition Driving Efficiency Improving Profitability 32
Slide 33: Appendix
Appendix 8 March 2023 Quilter
Slide 34: Quilter: a differentiated model with clear benefits to clients and shareholders
Quilter: a differentiated model with clear benefits to clients and shareholders Model Benefits Customer segmentation Customer High Net Worth Quality assured choice segment Affluent Affluent High Net Worth £50-£500k investible From £250k investible assets assets Advice Breadth and strategic control o
Slide 35: Affluent Managed performance
Affluent Managed performance Investment performance from largest product in a challenging market Strong performance across all strategies in 2022, with exception of Cirilium Active. Cirilium fund range now £26bn under single team £25bn £23bn Cirilium Active (£7bn) £22bn 10-year track record re
Slide 36: Movement in assets and flows
Movement in assets and flows Of which managed by AuMA* AuMA* Quilter as at 31 as at 31 AuM as at 2022 YTD gross flows, net flows & AuMA (£bn), December Gross Net December 31 December unaudited 2021 flows* (£m) Flows* (£m) 2022 2022 AFFLUENT SEGMENT Quilter channel 11.7 2,554 1,823 11.7 7.8 IFA chann
Slide 37: Quilter Investors: investment performance
Quilter Investors: investment performance As at 31 December 2022 Investment performance Fund vs IA Sector comparator 1Y 3Y 5Y 10Y Since inception1 Cirilium Conservative Portfolio 3 3 3 1 1 Cirilium Conservative Blend Portfolio 1 1 1 Strong performance in 2022. All Conservative WealthSelect Managed
Slide 38: High Net Worth: investment performance
High Net Worth: investment performance Investment performance in a challenging market Investment performance Quilter Cheviot performance vs. ARC Sterling PCI Index, at 30 September 2022 Relative % vs ARC PCI Balanced Steady Growth Equity Risk 2022 was a challenging year for investment performance 3
Slide 39: Quilter Basic r B and Guidelines Our brand a ssets
Quilter Basic rBand Guidelines Our brand a ssets 1