Quilter Plc · LSE:QLT
Quilter — Investor Presentation (2019)
48 slides from Quilter's investor presentation, 2019
Slide 1: Investor presentation Winter 2019
Quilter Basic rBand Guidelines Our brand a ssets 1 Investor presentation Winter 2019
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 Indicators from continuing Business snapshot operations including QLA H1 2019 H1 2018 ∆ Financial: Leading UK and cross-border wealth NCCF/opening AuMA2 % 1 6 (5pp) manager with £100bn+ of customer assets Integrated flows2
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 Platforms Solutions Total AuMA1 (£bn) Restricted Independent Advised International Multi-asset Discretionary (CF30’s)2 advisers Platform £109bn3 2,703 4,000+ firms £55bn AuA £20bn AuA £20bn
Slide 5: Large and growing UK wealth market
Large and growing UK wealth market UK national wealth¹ Long-term savings market² (AUM, £trn) 12 4.5 0.1 Decumulation - Drawdown +11% Growth driven by structural 0.2 Decumulation - Annuity, ER +4% trends, including: +5% 0.5 Individual Pension - SIPP & PP +12% – Demographics +6% 4 Long term savings
Slide 6: 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 7: 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 £150k earners 255 ISA 235 245 -16% 20.0 20.0 50 50 50 40 40 40 40 40 CAGR +11% 15.2 15.2 2008/09 2009/10 2010/11 2011/
Slide 8: 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 9: Platform: Savings and investments consolidating onto Platforms, particularly pensions
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 10: Investment Solutions: continued growth in outcome-based, client-focussed solutions
Investment Solutions: continued growth in outcome-based, client-focussed 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 desi
Slide 11: Business models adapted to changing regulation and evolving value chain
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 • Adviser focus ong
Slide 12: Quilter has adapted its business model
Quilter has adapted its business model Our journey to deliver a modern UK focussed wealth manager UK & European Modern UK-focussed Life Assurer wealth manager Our transition to becoming ‘one Quilter’ Italy Acquired and built Sold European life books, single strategy Switzerland Advice Network & Na
Slide 13: Our journey to deliver a focussed UK wealth management business
Our journey to deliver a focussed UK wealth management business Listed as Quilter plc Acquisition of Announce sale of Old Mutual Wealth on LSE and JSE Lighthouse plc Quilter Life Capital Markets Assurance Special Dividend: Showcase I Return of proceeds Sale of European life Sale of Old Mutual from s
Slide 14: 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 Distribution Quilter Private Client Quilter Financial Planning Quilter Financial Advisers Advisers Weal
Slide 15: Performance
Performance Quilter
Slide 16: H1 2019 highlights: financial, strategic and operational progress
H1 2019 highlights: financial, strategic and operational progress Financial Strategic Operational Solid financial Investing in advice PTP progressing well performance Charles Derby Group & Adjusted profit up 5% to £115m Lighthouse plc acquisitions UK Platform upgrade well in a challenging flow conso
Slide 17: What drives our business: H119 Results
What drives our business: H119 Results Advice and Wealth Management Wealth Platforms Head office AuMA1 £45.1bn £87.5bn Total fee revenue £195m £198m £2m Financial Quilter Quilter Wealth Quilter Life AuMA Planning Cheviot Investors Solutions International Assurance £1.0bn £24.1bn £20.0bn £55.3bn £20.
Slide 18: Operational performance
Operational performance Resilient performance in H1 19 NCCF1 Average AuMA2 Revenue2 £bn £bn £m Integrated Revenue 2.8 1.3 - 57 57 flows (£bn) margin (bps) 9.1 114.5 114.4 -90% 3% 3.0 385 395 0.3 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 Market movement contribution Expenses2 Adjusted profit be
Slide 19: Lower net flows in 2019 partly attributable to expected outflows
Lower net flows in 2019 partly attributable to expected outflows Integrated flows £2.2bn1 Integrated flows £5.2bn1 Integrated flows £4.7bn1 Integrated flows £1.3bn1 Asset retention 90%1 Asset retention 90%1 Asset retention 91%1 Asset retention 89%1 2.3 After expected outflows of: 0.6 IM departures 2
Slide 20: Business initiatives
Business initiatives Quilter
Slide 21: UK Platform Transformation Programme: gearing up for migration
UK Platform Transformation Programme: gearing up for migration Mar – Dec Feb Jul – Nov 2017 Summer 2019 Rest of 2019/20 2018 2019 Functional testing & Phased Build Soft launch migration planning migration Design Testing Final system Migration code delivery rehearsals Final mile of the journey… Migra
Slide 22: 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 23: Optimisation focussed on addressable cost base
Optimisation focussed on addressable cost base FY18 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 Ta
Slide 24: Optimisation: good progress made
Optimisation: good progress made What we have done What we have left to do Initial simplification and unification of the Transform our support functions into shared services support functions Implement group wide cost categories Quick win tactical efficiencies delivered General ledger buil
Slide 25: Quilter Life Assurance: key metrics
Quilter Life Assurance: key metrics Quilter Life Assurance key financial highlights H1 2019 FY 2018 Agreed sale of Quilter Life Assurance to Total revenue £m 47 109 ReAssure for consideration of £425m, Expenses £m (21) (52) subject to regulatory approval Adjusted profit before tax £m 26 57 Operati
Slide 26: Cash and capital
Cash and capital Quilter
Slide 27: Strong solvency position
Strong solvency position Solvency II ratio 190% XX% (4%) Reductions in own funds of £76m due to acquisitions (Charles Derby Group and Lighthouse plc) and £31m for (5%) interim dividend (3%) 6% 181% Provides capacity for strategic (3%) investments including UK Platform Transformation Programme 31
Slide 28: Holding company cash
Holding company cash (128) 175 (61) 2 (31) (25) (5) 416 374 £m 1 January 2019 Full year dividend Head office costs External debt interest Cash remittances Capital contributions Other movements 30 June 2019 Interim dividend including from subsidiaries & investments transformation costs 28
Slide 29: 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 30: Investment case and 2019 outlook
Investment case and 2019 outlook
Slide 31: 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 32: Key tasks for H2 2019 and 2020
Key tasks for H2 2019 and 2020 Deliver platform and migrate existing customers/advisers Integrate acquisitions and deliver national advice business model Execute optimisation plans to drive operating leverage Close sale of QLA and consult on method of capital return Confident in prospects for 2020 a
Slide 33: Appendix
Appendix Quilter
Slide 34: Advice and Wealth Management: building foundations for growth
Advice and Wealth Management: building foundations for growth Revenue Expenses Adjusted profit £m £m £m Operating 26% 26% margin +8% +8% +6% 181 195 134 145 47 50 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 Quilter Investors revenues up 20% KPIs H1 2018 H1 2019 Revenue margin bps 65 67 Impro
Slide 35: 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 36: Wealth Platforms: solid performance, stable profits
Wealth Platforms: solid performance, stable profits Revenue1 Expenses1 Adjusted profit1 £m -2% £m £m Operating 41% 41% margin -3% 203 -1% 198 120 116 83 82 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 Revenue decrease primarily due to run-off of closed life book KPIs H1 2018 H1 2019 Expense r
Slide 37: Wealth Platforms excluding Quilter Life Assurance (unaudited)
Wealth Platforms excluding Quilter Life Assurance (unaudited) Revenue Expenses Adjusted profit £m £m £m - Operating 37% 37% margin - 151 151 - 95 95 56 56 H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019 Revenue, expenses and revenue margin in line with prior year KPIs H1 2018 H1 2019 Revenue margi
Slide 38: Group performance excluding Quilter Life Assurance (unaudited)
Group performance excluding Quilter Life Assurance (unaudited) NCCF Average AuMA Revenue £bn £bn £m Integrated Revenue 2.8 1.9 1.3 56 56 56 flows (£bn) margin (bps) 102.1 346 348 101.4 3.0 99.6 333 1.7 0.3 H1 2018 H2 2018 H1 2019 H1 2018 H2 2018 H1 2019 H1 2018 H2 2018 H1 2019 Expenses1 Adjusted pro
Slide 39: Strong organic growth after impact of acquisitions
Strong organic growth after impact of acquisitions 395 115 13 (1) 90 +10% 280 26 14 335 +3% 245 +1% 110 47 21 £m H1 2019 Revenue H1 2019 Expenses H1 2019 Adjusted profit 39 Quilter Life Assurance Underlying business Acquisitions Total Underlying business year on year growth
Slide 40: Quilter Life Assurance solvency (unaudited)
Quilter Life Assurance solvency (unaudited) Own Quilter Life Assurance MCEV funds At 31 December 2018 £m 536 484 Quilter receives: “Foreseeable” dividend paid March £m (90) (90) 2019 £425m in cash, with up to £30m being settled by After “foreseeable” dividend £m 446 394 way of a pre-completion div
Slide 41: Updated financial guidance
Updated financial guidance Guidance to market at time of Listing Updates to guidance £75m one-off costs to deliver optimisation phase 1 initiatives, Optimisation: n/a with c.50% incurred by end of 2019 Target: 30% operating margin (excl. interest) by 2020 after Targeting c.2 percentage point
Slide 42: Updated financial guidance continued
Updated financial guidance continued Guidance to market at time of Listing Updates to guidance No change to target but cautious on 2019 given expected Target: NCCF of 5% of opening AuMA (excluding QLA) per Net client cash flow Quilter Cheviot outflows, market conditions and economic annum over m
Slide 43: Updated financial guidance continued
Updated financial guidance continued Guidance to market at time of Listing Updates to guidance New Quilter Performance Shareplan will result in additional LTIP staff costs in 2018 and later years LTIP costs No change LTIP costs to increase steadily on a phased basis to approximately £15m per a
Slide 44: Register structure by geography
Register structure by geography Company analysis vs key benchmark data Quilter General Financials FTSE 250 58% 53% 45% 21% 20% 19% 17% 12% 10% 9% 9% 8% 7% 3% 2% UK South Africa North America Rest of Europe Rest of World As at 19 August 2019 44
Slide 45: Register structure over time
Register structure over time Company analysis over time As at 19 August 2019 45
Slide 46: Contacts
Contacts Investor enquiries John-Paul Crutchley UK +44 207 002 7016 john-paul.crutchley@quilter.com Keilah Codd UK +44 207 002 7054 keilah.codd@quilter.com Media enquiries Jane Goodland UK +44 77 9001 2066 jane.goodland@quilter.com Tim Skelton-Smith UK +44 78 2414 5076 tim.skelton-smith@quilter.com
Slide 47: Disclaimer
Disclaimer This presentation should be read in conjunction with the announcement published by Quilter plc on 5 August 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 48: Quil t er Basic r B and Guidelines Our b r and a ss
Quilter Basic rBand Guidelines Our brand a ssets 1