Quilter Plc · LSE:QLT
Quilter — Investor Presentation (2021)
61 slides from Quilter's investor presentation, 2021
Slide 1: Investor presentation Autumn 2021
Quilter Basic rBand Guidelines Our b rand a ssets 1 Investor presentation Autumn 2021
Slide 2: Investment overview and Quilter's journey to date
Investment overview and Quilter’s journey to date
Slide 3: Quilter: a leading, UK-centric full-service wealth manager
Quilter: a leading, UK-centric full-service wealth manager Key Performance Indicators2 H1 2021 H1 2020 ∆ ✓ Leading UK wealth manager with Financial: £100bn+ of customer assets NCCF £bn 2.5 1.1 +127% NCCF/opening AuMA3 % 4 2 +2pp ✓ Advice-led investment solutions for Integrated net inflows £bn 1.9 1.
Slide 4: Quilter has scale and leading position in chosen capabilities
Quilter has scale and leading position in chosen capabilities Comparison with listed UK peers Advice Platform Solutions Total AuMA1 (£bn) Restricted Independent Advised Multi-asset Discretionary (CF30’s)2 advisers Platform £126.6bn3 ✓ 1,701 ✓ 4,000+ firms ✓ £68bn AuA ✓ £25bn AuM ✓ £27bn AuM Restrict
Slide 5: Industry dynamics: growth drivers will generate significant opportunity
Industry dynamics: operate in an industry whose growth drivers will generate significant opportunity ➢ Fifth largest wealth management market in the world¹ UK long-term savings market forecast² AuMA £trn ➢ A large and growing industry with continued secular growth drivers 2020-24 growth expected to
Slide 6: Industry dynamics: Robust saving trends through market cycles and COVID-19 downturn
Industry dynamics: Robust saving trends through market cycles and COVID-19 downturn UK Platform industry net client cash flow¹ (LHS) vs FTSE All Share (RHS) £bn // £ FTSE All Share 4,500 12 Retail advised sales¹ 10 UK economy growth – rising spending, 4,000 investments, exports & manufacturing Chine
Slide 7: Industry drivers: Retirement demographics continuing advice demand
Industry drivers: Retirement demographics continuing advice demand UK England & Wales Population¹ (‘000 by age year, 2018) Turned 60 in 2019 1,000 – potentially requiring retirement advice 925 900 Baby boomers born in 1947 800 787 700 600 700k+ people turned 65 and 925k+ turned 50 in 2019 – potentia
Slide 8: Regulatory and fiscal changes driving disruption
Regulatory and fiscal changes driving disruption ➢ Provides customers with opportunity for consolidation and flexibility to manage retirement assets Pension reform ➢ Demand and complexity driving need for advice ➢ Increased longevity of client relationships for wealth managers versus compulsory annu
Slide 9: Fiscal changes driving complexity, changing client behaviour and need for advice
Fiscal changes driving complexity, changing client behaviour and need for advice Annual pension allowance ISA annual allowance £’000 Allowance £’000 tapered for over Junior ISA CAGR 255 £150k earners 235 245 ISA -13% 20.0 20.0 20.0 20.0 20.0 50 50 50 40 40 40 40 40 40 40 40 CAGR +8% 2008/9 2009/10 2
Slide 10: Continued strong demand for Advice as cost of delivery increases
Continued strong demand for Advice as cost of delivery increases ➢ Adviser trend to serve fewer active clients continues: Market total revenue from adviser charges¹ Revenues on investment advice and related charges ➢ Compensation model from commission to fees £5.6bn ➢ New model built on ongoing clie
Slide 11: Advice: shift in how advisers serve their clients
Advice: shift in how advisers serve their clients Regulatory and market changes driving better quality of advice for fewer clients Adviser average client portfolio¹ Number of clients % Clients seen annually % active clients ➢ Adviser trend to serve fewer active clients: 350 Passive clients (seen les
Slide 12: Platform: savings and investments consolidating onto Platforms
Platform: savings and investments consolidating onto Platforms, particularly pensions Pensions and investments Pension is ‘anchor’ product on Platforms play an important role in modern wealth consolidating onto platforms Platform management Total UK platform market Fund platforms by product AUA £bn1
Slide 13: Investment Solutions: continued growth in outcome-based solutions
Investment Solutions: continued growth in outcome-based, client-focused solutions Global AuM split1 Quilter Solutions Typical asset allocation2 % / US$ trn Typical 40-85% mixed asset fund asset Discretionary portfolio service allocation 38 74 100% 100% ➢ Dedicated Quilter investment manager to desig
Slide 14: Industry dynamics: Business models adapted to changing regulation
Industry dynamics: Business models adapted to changing regulation and evolving value chain Typical older / Pre-RDR Insurance Modern Wealth Manager models Customers • Product driven sales, ‘pushed’ • Customer driven solutions through incentive driven distribution channels • Commission models driving
Slide 15: Quilter has adapted its business model
Quilter has adapted its business model Our journey to deliver a modern UK-focused wealth manager UK & European Modern UK-focused Life Assurer wealth manager Our transition to becoming ‘one Quilter’ Italy Acquired and built ➢ Sold European life books, single strategy Switzerland Advice proposition as
Slide 16: Our journey to deliver a focused UK wealth management business
Our journey to deliver a focused UK wealth management business Listed as Quilter plc Acquisition of Announced sale of on LSE and JSE Lighthouse plc Quilter International; minded to return Special Dividend: Sold Quilter Life Share buyback majority of c.£450m Old Mutual Wealth Return of proceeds Assur
Slide 17: Quilter's multi-channel advice-led model
Quilter’s multi-channel advice-led model An open, transparent, full-service model serving customers across the wealth spectrum High Net Worth Affluent Mass Affluent Open market, financial advisers Financial advice Quilter Private Client Quilter Financial Planning Quilter Financial Advisers Advisers
Slide 18: Business model in action
Business model in action Customers Financial advice Platform and wrappers Investment solutions Third-party funds Quilter Quilter Cheviot Private Client Advisers £27bn Independent financial advisers bespoke High Net Worth solutions Quilter Investment Platform Third-party solutions £68bn Quilter Finan
Slide 19: Performance
Performance Quilter
Slide 20: H1 2021 summary: Strong results underpinned by growth and efficiency
H1 2021 summary: Strong results underpinned by growth and efficiency Financial momentum Operational improvement Strategic progress ➢ Strong improvement in gross ➢ Optimisation initiatives on ➢ Platform migrations completed flows. Net flows more than track to deliver c.£65m cost successfully. Now see
Slide 21: What drives our business: H1 21 results
What drives our business: H1 21 results Advice and Wealth Management Wealth Platforms Head office AuMA1 £51.8bn £91.2bn Revenue £213m £144m Quilter Quilter Quilter Quilter Financial Investment AuMA Planning Cheviot Investors Platform International £27.0bn £24.8bn £68.0bn £23.2bn NCCF £0.4bn £0.4bn £
Slide 22: H1 21: Continuing business demonstrating strong growth
H1 21: Continuing business demonstrating strong growth NCCF Average AuMA Revenue £bn £bn £m Integrated Revenue 1.3 2.0 +16% 51 48 flows (£bn) margin (bps) +133% +9% 2.1 100.2 304 0.9 86.5 279 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 Expenses Adjusted profit before tax Adjusted diluted EPS £m
Slide 23: H1 21: significantly improved net flows
H1 21: significantly improved net flows Net client cash flow £bn Quilter Investors Quilter Cheviot Quilter Investment Platform Quilter International Total net flows 1.8 1.2 0.6 0 -0.6 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Strong investment performance across Quilter Cheviot & Q
Slide 24: Business initiatives
Business initiatives Quilter
Slide 25: Platform Transformation Programme: Completed safely
Platform Transformation Programme: Completed safely 2017 2018 2019 2020 Early 2021 Functional testing & Build Soft launch Phased migrations migration planning Design Testing Final system code Migration Migration Migration Final delivery migration rehearsals 1 2 40k+ 2.5bn+ £68bn 600k+ 490k+ e-learni
Slide 26: Optimisation: making Quilter more streamlined and operationally efficient
Optimisation: making Quilter more streamlined and operationally efficient Initiatives to conclude in 2021 to achieve target, with additional savings identified for modest accretion to plan ➢ Complete implementation of new, and Optimisation decommissioning of legacy, head-office systems Original targ
Slide 27: Buyback programme update and capital returns
Buyback programme update and capital returns Dividend Capital return programme ➢ Board declared 2021 interim dividend of 1.7p ➢ 10% reduction in share count since programme inception ➢ c.£265m returned, with current tranche to complete by end-August ➢ Represents pay-out in upper end of 40-60% range
Slide 28: Sale of Quilter International
Sale of Quilter International
Slide 29: Strategic review concluded sale most value enhancing for shareholders
Strategic review concluded sale most value enhancing for shareholders ➢ Delighted to conclude sale terms with Utmost for c.£483m¹ ➢ Quilter International less strategically aligned to Quilter’s Quilter International’s business profile trend core UK proposition Policy count ➢ NCCF run-rate considerab
Slide 30: Capital discipline remains a key focus area
Capital discipline remains a key focus area Track record of returning value to Use of proceeds shareholders ➢ Minded to return majority of net proceeds to Culmination of a multi-year journey to be a simpler, UK centric wealth manager shareholders Minded to deliver capital ➢ Shareholder consultation
Slide 31: Delivering a higher growth, simpler, UK focused wealth manager
Delivering a higher growth, simpler, UK focused wealth manager ➢ Sale of Quilter International to Utmost, subject to Transaction consideration and use of proceeds £m shareholder, regulatory and anti-trust approvals Base consideration £460 million 5% interest charge¹ c.£23 million ➢ Achieves an attra
Slide 32: Planned path to driving operating margin to 30%+
Planned path to driving operating margin to 30%+ Current targets¹ 2020 operating margin By 2023 By 2025 2020 ➢ Aim to accelerate operating Profit 30%+ £168m² £57m³ margin improvement with before tax investment of residual 25%+ portion of net sale proceeds 5% ➢ Timing of achievement dependent on remo
Slide 33: Cash and capital
Cash and capital Quilter
Slide 34: Continued strong solvency and holding company cash position
Continued strong solvency and holding company cash position Solvency II ratio (2%) 2% (11%) ➢ Solvency II ratio reduced by 14% (3%) (11%) principally due to the Share buyback, with spend on strategic initiatives offset by 217% profit generation 203% 192% Solvency at PTP and Movement in Share buyback
Slide 35: Capital management philosophy
Capital management philosophy ➢ Current year dividend On-going cash needs ➢ Group capital requirements ➢ Working capital & interest Investing ➢ Investing in the growth of the business organically ➢ Optimisation programme Capital allocation ➢ To accelerate growth through bolt-on acquisitions Investin
Slide 36: Investment case and 2021 outlook
Investment case and 2021 outlook
Slide 37: Quilter investment case
Quilter investment case A unique combination of capabilities, scale and market positions 1 Full-service wealth manager providing choice and delivering good customer outcomes 2 Leading positions across one of the world’s largest wealth markets with strong structural growth drivers Multi-channel propo
Slide 38: Key focus for H2 2021 and beyond
Key focus for H2 2021 and beyond Sustain improved net flows, driving momentum to 6%+ medium-term target Complete Optimisation and build towards 2023/25 operating margin targets Reposition QFP, delivering a highly productive, client-focused adviser base Return final £100 million of £375 million capit
Slide 39: Quilter: focused on growth and efficiency
Quilter: focused on growth and efficiency Growing top-line and delivering significant improvement in flows Scalable business – opportunities to drive operating leverage Strong balance sheet with further capital return to come Capital Markets Day: 3 November 2021
Slide 40: Appendix
Appendix Quilter
Slide 41: Improving cohesion between our business capabilities
Improving cohesion between our business capabilities Financial advice Platforms & wrappers Investment solutions 2020 Gross Flows 2020 Gross Flows Source Destination £5.7bn Advised by Managed by £5.7bn 16% £1.5bn 21% Quilter (2019: 13%) Quilter Financial £1.8bn £1.6bn Investors (2019: 20%) Planning £
Slide 42: Executive summary: Continuing business only
Executive summary: Continuing business only Key Performance Indicators H1 2021 H1 2020 ∆ Financial: NCCF £bn 2.1 0.9 +133% NCCF/opening AuMA1 % 4 2 +2pp Integrated net inflows £bn 2.0 1.3 +54% AuMA £bn 104.8 88.3 +19% Asset retention % 91 92 (1pp) Adjusted profit before tax £m 56 47 +19% A&WM adjust
Slide 43: H1 21 robust performance: including International
H1 21 robust performance: including International NCCF Average AuMA Revenue £bn £bn £m Integrated Revenue 1.4 1.9 +15% 52 48 flows (£bn) margin (bps) +127% +7% 2.5 121.1 357 335 1.1 105.1 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 Expenses Adjusted profit before tax Adjusted diluted EPS £m £m P
Slide 44: H1 21: Revenue margin progression in line with long-standing guidance
H1 21: Revenue margin progression in line with long-standing guidance Revenue margin bps Quilter Cheviot Quilter Investment Platform Quilter Investors Quilter plc (Continuing) Quilter International Quilter plc (Total) 80 70 60 50 40 30 20 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-2
Slide 45: H1 21: Advice and Wealth Management
H1 21: Advice and Wealth Management Revenue Expenses Adjusted profit £m £m £m Operating 21% 21% margin +8% +8% 197 213 168 156 +10% 41 45 H1 2020 1 H1 2021 2 H1 2020 H1 2021 H1 2020 1 H1 2021 2 ➢ Segment achieved 15% increase in average AuMA over the period, supporting growth KPIs H1 2021 H1 2020 in
Slide 46: Quilter Investors: Strong growth in core Cirilium and Wealth Select propositions
Quilter Investors: Strong growth in core Cirilium and Wealth Select propositions CAGR +10% £24.8bn £23.2bn £21.6bn £18.5bn £17.8bn Wealth CAGR Select +17% £8.0bn¹ Wealth Select £4.6bn¹ Cirilium range CAGR £13.1bn +17% Cirilium range £7.5bn 2017 2018 2019 2020 H1 2021 Cirilium Active Cirilium Passive
Slide 47: H1 21: Wealth Platforms
H1 21: Wealth Platforms Revenue Expenses Adjusted profit £m £m £m Operating +6% 35% 38% margin +1% 144 +15% 136 89 90 47 54 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 ➢ Significant improvement in gross and net flows across the segment KPIs H1 2021 H1 2020 Revenue margin bps 31 36 ➢ Quilter Inte
Slide 48: Platform business efficiency a key focus post-PTP
Platform business efficiency a key focus post-PTP NCCF / Opening AuA¹ Average AuA² Revenue Expenses Adjusted profit £bn £m £m £m Operating +18% +16% 29% 27% margin +14% +3pp +9% 64.7 91 66 6% 54.7 57 3% 80 23 25 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 ➢ Deligh
Slide 49: Quilter International historic financial profile
Quilter International historic financial profile Recent key financials Recent profitability driven by strong cost control £m unless stated 2018 2019 2020 Revenue Expenses Profit Alternative performance measures AuMA (£bn) 18.3 20.5 21.8 Gross sales (£bn) 1.8 2.0 1.6 Net Client Cash Flow (£bn) 0.3 0.
Slide 50: 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 51: Optimisation phase 1 focused on addressable cost base
Optimisation phase 1 focused on addressable cost base 2018 Addressable costs Contribution to Optimisation: A phased, multi-year approach Total costs optimisation 555 18 Phase: 1. Operational efficiencies 105 • Efficiency initiatives to deliver Programme improvements in operational of activity: perfo
Slide 52: Continued disciplined expense management
Continued disciplined expense management 12 11 32 10 5 264 248 232 External environment Management action £m H1 2020 o/w Quilter International H1 2020 Inflation FSCS levies Tactical 2020 Optimisation H1 2021 - Total business - Continuing business & regulatory fees savings unwind 52
Slide 53: Updated financial guidance continued
Updated financial guidance continued Previous guidance Updates to guidance ➢ Target NCCF growth of at least 6% of opening AuMA per annum over medium-term from 2022 onwards, with a Net client cash flow ➢ No change higher percentage growth rate from the Quilter Investment Platform ➢ Expect the Group’s
Slide 54: Updated financial guidance
Updated financial guidance Previous guidance Updates to guidance ➢ Optimisation initiatives to support two percentage point operating margin improvement in 2021 versus 2020 outturn, adjusted for Tactical Savings Optimisation & ➢ Expect to achieve additional c.£15m savings with costs to operating mar
Slide 55: Updated financial guidance continued
Updated financial guidance continued Previous guidance Updates to guidance Debt costs ➢ £200m subordinated debt at 4.478% ➢ No change ➢ Approximately 80% of post-tax operating profit from continuing operations into free cash, partially used to ➢ No change Cash conversion fund debt servicing costs an
Slide 56: Environmental, Social & Governance credentials
Environmental, Social & Governance credentials Quilter’s ESG strategy is set out in our Shared Prosperity Plan Theme 2025 commitments Lead KPIs UN SDGs ➢ Create secure financial futures for customers by delivering quality ➢ Customer asset retention products and service ➢ % colleagues feeling confide
Slide 57: Register structure by geography
Register structure by geography Company analysis vs key benchmark data Quilter General Financials FTSE 250 52% 50% 39% 23% 22% 22% 18% 11% 12% 10% 8% 5% 4% 2% 1% UK South Africa North America Rest of Europe Rest of World As at 17 August 2021 57
Slide 58: Register structure over time
Register structure over time Company analysis over time As at 17 August 2021 58
Slide 59: Contacts
Contacts Investor enquiries John-Paul Crutchley UK john-paul.crutchley@quilter.com Keilah Codd UK keilah.codd@quilter.com Media enquiries Tim Skelton-Smith UK tim.skelton-smith@quilter.com Camarco Geoffrey Pelham-Lane UK +44 203 757 4985 quilter@camarco.co.uk 59
Slide 60: Disclaimer
Disclaimer This presentation should be read in conjunction with announcements published by Quilter plc on 1 April and 11 August 2021. 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 fu
Slide 61: Quilter Basic r B and Guidelines Our b rand a
Quilter Basic rBand Guidelines Our b rand a ssets 1