Investor presentation - Winter 2019 - Quilter
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Quilter Basic rBand Guidelines Our brand a
ssets 1
Investor presentation
Winter 2019Investment overview and Quilter’s journey to date
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 £bn 1.3 2.8 (54%)
AuMA £bn 118.4 116.5 +2%
Advice-led investment solutions for - Of which QLA £bn 12.1 14.5 (17%)
customers in the UK and selected
Adjusted profit before tax £m 115 110 +5%
international markets
- Of which QLA £m 26 27 (4%)
LSE and JSE listed; ~£3bn market cap IFRS (loss)/profit after tax3 £m (17) 342
Operating margin % 29 29 -
Proven track record, with scale in a
growing market, and momentum for - Excl. QLA % 26 25 +1pp
future profit growth
Non-financial:
Restricted Financial Planners (‘RFPs’) # 1,803 1,590 +13%
Optimisation Phase 1 commenced; sale of
QLA announced Investment Managers (‘IMs’) # 163 168 (3%)
1. Inclusive of 0.43 pence per share in respect of QLA’s first half profit contribution. 3
2. Excluding Quilter Life Assurance (QLA).
3. Represents total IFRS (loss)/profit including discontinued operations.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
AuM £24bn
AuM
Restricted
St. James’s
Place
£109bn
3,810 only
platform
Rowan
Dartington
Standard Life
Aberdeen4
£578bn 80
SL Wealth
Hargreaves
Lansdown
£99bn 167
Direct
platform
Rathbones £49bn n.a.
AJ Bell £51bn n.a.
Direct &
Restricted
Brewin
Dolphin
£44bn 430
Integrafin £36bn n.a.
Indicates capability and scale within capability
1. Includes closing AuA and / or closing AuM for competitors as at 30 June 2019.
2. FT Top 100 financial advisers 30 June 2018 includes all CF30’s for businesses, not only financial adviser, such as Quilter Cheviot investment managers. Quilter figure includes Lighthouse CF30s to reflect acquisition in June 2019.
3. Total Quilter closing AuMA excludes Quilter Life Assurance but includes Quilter Financial Planning and intra-group eliminations. 4
4. Platform-only assets total £66.0bn as at 30 June 2019; Adviser figure as quoted in SLA’s 2018 Annual Report and Accounts.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 – Need for financial advice
0.6 Individual Savings - ISA +7%
– Pensions and investment
consolidating onto Platforms
8
2.7
1 Bank deposits 0.0 0.8 Individual Savings - Other +2%
0.2 Growing and changing
3 0.2
market provides opportunity
1 Physical wealth 0.3
0.5 Workplace Pension - DC +10% to support clients through
1 their savings and investment
0.7
life cycle
1
0.2
5 Property (net mortgage)
1.7 Workplace Pension - DB +6%
3
1.0
2009 2018 2009 2018
1. Source: ONS, NMG UK Stock & Flow Model. 2018 figures based on estimates
2. Note: Property Wealth is defined as any property owned, both main residence plus any other land or property owned in the UK or abroad, net of outstanding mortgage value. Physical Wealth is
defined as household contents, possessions and valuables owned, such as antiques, artworks, collections and any vehicles owned by individuals. Pensions excludes retained rights in pension
5
schemes and pensions expected from former spouse/partner. Individual Savings – Other includes Onshore and Offshore bonds, endowments, direct shares and unwrapped funds. ER = Equity
Release; Workplace pension – DB includes Bulk annuitiesRegulatory 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 annuitisation
Auto-enrolment increasing flows into pensions, albeit slowly – future customers for wealth managers
Government
initiatives Increase in ISA allowances and introduction of JISA and NISA and Junior SIPPS
Continually changing tax and allowances on savings, pension and IHT driving need for advice
Asset management market study remedies focussed on driving competitive pressure in asset
management, investor value for money and effectiveness of intermediaries
FCA thematic
Investment Platform study focused on improving competition and better consumer outcomes
reviews
DB pension transfer advice proposals designed to improve quality of advice and help consumers get better
value for their pensions
Further increase in regulatory burden for advisers, particularly low scale players and new entrants
MiFID II, GDPR & MiFID II further increase transparency for customers
SMCR GDPR clarifies existing requirements and increases costs of non-compliance
SMCR strengthens individually accountability within the financial services industry
6Fiscal 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
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
15.0
11.3 11.5
10.7
Pension lifetime allowance 10.2
£m
CAGR
7.2 7.2
-5%
1.75 1.80 1.80
1.65
1.50 1.50
1.25 1.25 4.0 4.1 4.1 4.1 4.3
1.00 1.00 1.03 3.6 3.6 3.7
2008/09
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
Source: HMRC
7Advice: 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 less than once p.a.) 70
320 Active clients (seen at least annually)
– Change in compensation model from commission to fees
316
61% – Smaller number of those with higher investable assets
300 60
– Opportunity to serve customers’ wealth needs for longer
256 257 50%
248 225
250 227 47% 50
44% 47%
42% 215 218
41% 40%
39% 39%
200
180
40 Potentially more customers left without access to
196 187 155 149
148 advice… at a time when the need for advice is
127 119 109
150
114
30 increasing
71
100 20
124 129
50 101 108 100 100 106 101 109 109 10
0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
1. Source: Investment Trends. March 2019 UK Adviser Technology & Business Report, based on a survey of 1,216 advisers.
Passive clients considered to be those the adviser sees less than once a year; Active clients considered to be those the adviser sees as least annually. Based on annual survey of c.600-800
advisers
8Platform: 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 AUA £bn2
675 675 For Advisers
13 Bonds
114 Corporate Tools and technical support
167 Unwrapped Customer relationships in one place
Deliver back office functionality
147 D2C
+20% Custody, settlement and reporting
166 ISA
For Customers
Holdings in one place
414 Retail Advised
Tax-efficient wrappers
329 SIPP & Other Pension
Est. £110 Customer service including reporting and transactions
2009 H2 2019 H2 2019
1. Source: Platforum 2009 Total Platform AuM £92bn excluding D2C; Fundscape 2019 Q2
2. Source: Fundscape 2019 Q2
9Investment 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 design bespoke portfolios 5%
9% Global EM & APAC Equity
14% Solutions
Tailored approach considering client personal investment objectives,
attitude and risk tolerance 22% International Equity
15%
16% Alternatives Service for clients with more than £200k to invest
11% Managed portfolio service (“MPS”) 6% European Equity
19% Passive Outsourcing portfolio construction and management to Quilter’s multi-
asset investment specialists 21% UK Equity
18%
Active and Passive Blend portfolios that risk-matched portfolios from
Global Partner fund ranges
18% Active specialities 11% North American Equity
Multi Asset funds
16% Global Fixed Income
Range of multi-asset funds including Cirilium Active, Passive and Blend
46%
Active Core Fund range differs in terms of breadth of investment proposition 5% Money Market
33%
Customer needs include accumulation, decumulation, income &
international 16% Other (Alt. & Property)
FY08 FY18 IA 40-85%
1. Source: BCG Global Asset Management Benchmarking 2019; Solutions Includes target-dated, global asset allocation, flexible, income, liability-driven, and traditional balanced investments. Alternatives includes hedge funds,
private equity, real estate, infrastructure, commodities, private debt, and liquid alternative mutual funds (such as absolute return, long and short, market-neutral, and trading-oriented); private equity and hedge fund
revenues do not include performance fees. Active specialties includes equity specialties (foreign, global, emerging markets, small and mid caps, and sectors) and fixed-income specialties (emerging markets, global, high
yield, and convertibles). Active core Includes actively managed domestic large-cap equity, domestic government and corporate debt, money market, and structured products. 10
2. Financial Express Analytics, Sept. 2019Business 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 ongoing
Financial Advice sales based culture relationships
• Open architecture wrap-platform
• Closed or ‘off’-platform
Platform / Wrappers with transparent pricing and
investment choice
• Insurance based pensions & • Risk based investment solutions
Solutions
savings products that embedded with focus on customer
investment management outcomes
• Typically insurers’ in-house asset • Provide building blocks for
Asset management
management solutions
11Quilter 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 & National asset management business
Austria
Acquired Intrinsic, Sesame, Caerus, Charles
Poland
Derby and Lighthouse
Germany
Built
multi-asset solutions business Acquired Quilter Cheviot and built Quilter
France Investors
Liechtenstein
Initiated new UK Platform Transformation
Acquired
Luxembourg Programme and entered migration
Quilter Cheviot
Finland testing/delivery phases
OMGI Announced and completed ‘managed
Heritage separation’ from Old Mutual
Listed as Quilter plc on LSE and JSE
Investing
in Platform transformation Largely re-branded businesses to ‘Quilter’
Wealth Platforms
Growing FCA investigation into Quilter Life
UK & International platforms Assurance closed and sale announced
2012 Today
12Our 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 sale of Old Mutual Optimisation phase 1 execution
books Global Investors to Global Investors Announce Targeting 4pp improvement in operating
Acquisition of Intrinsic TA Associates Optimisation phase 1 margin by 2021
and Quilter Cheviot
2017 2018 2019 2020
Managed separation Acquisition of UK Platform Transformation
completed Charles Derby Group Programme:
Old Mutual plc
managed separation Closure of FCA Migration testing and delivery
announced investigation into phase
Life Assurance book
New UK Platform Quilter Investors
Transformation buildout and product
Programme initiated refresh
13Quilter’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
Wealth
Platforms
solutions
Investment Discretionary Fund
Managed Portfolios Multi-Asset Funds
management Management
14Performance
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 consolidate our position as the
advanced – confident in delivery
environment second largest advisory business
in the UK
Focussing business
Strong capital Good optimisation progress
perimeter
Solvency II ratio 181% Agreed sale of
Programme delivery driving
Recommended interim dividend Quilter Life Assurance to
operating margin improvement
of 1.7 pence per share1 ReAssure for £425m
16
1. Including 0.43 pence per share in respect of QLA’s first half profit contribution.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 £20.1bn £12.1bn
NCCF £0.4bn) £0.4bn £0.5bn £0.1bn (£1.2bn)
Revenue £46m £89m £60m £86m £65m £47m
Revenue margin 73bps 61bps 31bps 59bps 63bps
Expense £145m £116m £19m²
Total expense base drivers:
58% : Front office & operations; 22% : IT & development; 15% : Support services; 5% : Other
Adjusted Profit £50m £82m
(£17m)
Y-o-Y growth: 6% Y-o-Y growth: (2%)
£115m
Y-o-Y growth: 5%
1. Group AUMA totals £118.4bn after (£14.2bn) elimination of intra-Group items and includes Quilter Life Assurance AUA.
2. Includes head office and recurring standalone expenses but excludes debt interest costs. 17Operational 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 before tax2 Adjusted diluted EPS2
£m £m Pence
29% 29% Operating
margin
2%
5%
-
275 280
110 115 5.5 5.5
H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019
18
1. Excluding Quilter Life Assurance (QLA).
2. Including Quilter Life Assurance (QLA).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
2.0 Quasi- institutional
1.9 1.9 0.2 account
1.5
1.3
1.2
1.1
1.0 1.0
0.7
0.6
0.5
(0.2)
£m Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2016 2017 2018 2019
FTSE-1002
FTSE All-Share2
NCCF excl. Quilter Life Assurance
19
1. Excludes Quilter Life Assurance.
2. Source: Factset.Business initiatives
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…
Migration data validation nearly complete
Rigorous functional testing to ensure the system meets our demanding quality standards is progressing well
c.£25 million additional costs for programme completion in 2020 reflecting additional migration resourcing and longer dual running
Scheduling full dress rehearsals ahead of first migration phase planned by early 2020
21
Complete In progress Not startedOptimisation: 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 operational
performance Transition to a simpler,
high growth business
Targeting c.2 percentage point
operating margin improvement Further detail to be provided in
by 2020 and a further due course
2 percentage points by 2021
2019-2021 Post-completion of UK Platform
Transformation Programme
22Optimisation 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 Targeting ~15%
reduction of • Support services focussed
~300 addressable cost base
• Targeting c.2 percentage point
[45%] improvement in operating
Impact/ margin by 2020 and a further
c.35% outcome:
312 2 percentage points by 2021
c.50%
[18%]
• c.£75m¹ one-off costs to deliver
[37%] c.15%
Timeline: 2019-2021
£m
2018 expenses Addressable cost base
Front office IT & Support services Other
& operations Development
23
1. Includes £7m incurred in 2018.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 build
Staff restructuring
Standardise processes and automate as appropriate
Third party contract renegotiation
Property and facilities savings
Commenced system changes to support further
rationalisation
2019 2020 2021
Operating
margin Programme initiated +2pp +2pp
impact
24Quilter 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
Operating margin % 55 54
Completion expected by end 2019
NCCF £bn (1.2) (2.3)
Perimeter change drives c.5pp rebasing of Closing AuA £bn 12.1 12.4
the group operating margin - Of which pension £bn 5.5 5.5
- Of which savings and bonds £bn 3.4 3.2
Pro-forma MCEV of £406m at 31 December
- Of which institutional £bn 2.9 3.4
20181
- Of which protection £bn 0.3 0.3
Pro-forma own funds of £354m at 31 Average AuA £bn 12.2 14.3
December 20181 Revenue margin bps 63 69
Asset retention % 77 81
Of which pension asset retention % 80 81
25
1. After £130m dividend in 2019.Cash and capital
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 Dec Charles Lighthouse PTP costs Profit and Recommended 30 Jun
2018 Derby acquisition incurred other net interim 2019
acquisition movements dividend 27Holding 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
28Capital 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
allocation
To accelerate growth through bolt-on acquisitions
Investing
inorganically Private Client Adviser acquisitions
Development of distribution capabilities and investment in National advice strategy
On-going future regular dividend distributions
Returning
capital to Potential Odd Lot Offer (if shares cancelled)
shareholders
Consideration of special dividends and/or share buy-back programme
29Investment case and 2019 outlook
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 proposition and investment performance driving integrated flows and long term customer
3 and adviser relationships
4 Attractive top-line growth and the opportunity for operating leverage
5 Strong balance sheet with low gearing and improving cash generation to drive shareholder returnsKey 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 and beyond
32Appendix
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
Improving revenue bps in Quilter Investors and stable in Quilter
Cheviot NCCF £bn 2.3 -
NCCF / Opening AuM % 11 -
£0.8bn of exceptional outflows in Quilter Cheviot as guided
Closing AuM £bn 43.7 45.1
Lower productivity in Quilter Financial Planning resulting from lower
DB to DC transfers and general market sentiment Average AuM £bn 42.0 43.5
34Our 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%
2017: 42%
Quilter Investors Third party funds
1. Excludes intra-group elimination.
2. Excludes International AuA on Quilter Wealth Solutions. 35Wealth 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 reductions achieved
Revenue margin1 bps 44 42
Asset retention in the continuing business remained strong at 90% NCCF2 £bn 2.2 0.6
for Wealth Solutions and 92% for the International business
NCCF2 / Opening AuA1 % 6 1
Revenue margin decrease aligned with expectations Closing AuA1 £bn 86.0 87.5
Average AuA1 £bn 83.2 84.3
Platform gross new business sales down as DB to DC transfers
reduce
36
1. Including Quilter Life Assurance (QLA).
2. Excluding Quilter Life Assurance (QLA).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 margin bps 39 39
Asset retention in the continuing business remained strong at
NCCF £bn 2.2 0.6
90% for Wealth Solutions and 92% for the International business
NCCF / Opening AuA % 6 1
Closing AuA1 £bn 71.5 75.4
Average AuA1 £bn 69.9 72.1
37
1. Based on gross AuA excluding eliminations.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 profit1
£m £m
27% 26% Operating
25%
259 margin1
253 93
250
89
83
H1 2018 H2 2018 H1 2019 H1 2018 H2 2018 H1 2019
38
1. This analysis is excluding any impact from stranded costs and therefore estimated and subject to change.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 growthQuilter 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 dividend. Represents
1.2x pro-forma adjusted own funds at 31 Further “foreseeable” dividend to
£m (40) (40)
be paid Q3 2019
December 2018
Pro-forma adjusted 31 December
£m 406 354
2018
Interest on £425m from 1 January 2019 up to
completion date (or dividend payment date in the
case of the pre-completion dividend)
Solvency
Solvency capital requirement at 31
£m 272
December 2018
Solvency II pro-forma coverage
% 130
ratio
40Updated 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 improvement in operating
Optimisation & impact of additional expenses expected in 2018, before margin by 2020 and a further 2 percentage points by 2021,
operating margin benefits from any optimisation initiatives assuming broadly normal market performance from around
target (pre-tax) 2018 & 2019 will bear full impact of standalone costs, likely current levels, together with steady net flows
leading to to a small decrease in our current operating margin Sale of Quilter Life Assurance will rebase the Group operating
prior to 2020 margin by c.5pp. We still target a 2pp improvement in 2020
and 2021 off the revised base
ETR expected to be 12-14% within a few years, reflecting
Corporate tax rate to remain below UK marginal rate, due to
Tax rate International’s profits, use of capital losses and UK corporation
profit mix and lower tax rate in International
tax rate declining to 17% in 2020
Shares in respect of staff share schemes expected to vest over
Share count the next two years. Future share awards will then be satisfied No change
through on-market purchases
Relocation anticipated to increase property costs by £3m in H2
London relocation n/a 2019, £10m in 2020 while we incur some dual-running costs,
and circa £5m of ongoing additional costs thereafter
The Group’s underlying cost base is expected to remain
broadly consistent with 2018 before the impact of acquisitions.
2019 costs n/a
Acquisitions are expected to add around £22m of additional
expenses to the cost base for FY 2019
UK Platform Expect additional costs to complete the programme of
Transformation Costs incurred to be between £120m to £160m approximately £25m above previously targeting top end of the
Programme range of £160m
41Updated 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 medium-term
and political uncertainty
Subject to delivering expected AuMA volumes and mix,
overall Quilter annual rate of revenue margin decline to
slow in near-term and become increasingly stable
Business units managed with intention of delivering
revenue and profit growth, may lead to mix driven
changes in segment revenue margins over time Sale of Quilter Life Assurance will reduce the Group
Revenue margin Greater proportion of flows into higher revenue margin revenue margin by c.1bp and the Wealth Platforms
Advice and Wealth Management segment segment revenue margin by c.3bp
Run-off of QLA Institutional book over next one to two
years, expected to support to overall revenue margin in
near term
Growth of Integrated NCCF to support revenue margin
going forward
Old Mutual plc guidance: c.£25-30m p/a additional
operating expenses above 2016 level due to Managed Standalone listed group operating costs now reflected in
Managed
Separation and need to operate on standalone basis cost base at full run-rate
separation &
c.£16m on annual basis reflected in 2017 year-end Further c.£12m below-the-line costs in 2019, principally in
standalone costs
reported results, up to £14m of additional annual re-branding
separation costs to be incurred during 2018
For the period 2018-2020 total investment estimated to
Investment No change
impact expense base by £20-30m, in aggregate
42Updated 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 annum by 2020
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 and targeted distribution
acquisitions No change
Distribution acquisitions expected to be up to £20m p.a.
Target 40-60% pay-out ratio of post-tax adjusted profits,
Dividend policy with the split of interim and final dividends No change
approximately one-third and two-thirds, respectively
Subordinated debt security issued to ensure sufficient
capital and liquidity to maintain strong capital ratios and
Capital No change
free cash balances to withstand severe but plausible
stress scenarios
Other items
Shares in respect of staff share schemes expected to vest
Share count over the next two years. Future share awards will then be No change
satisfied through on-market purchases
Seasonal dynamics FSCS levies paid in first half of year No change
43Register 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
44Register structure over time
Company analysis over time
As at 19 August 2019
45Contacts
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
Camarco
Geoffrey Pelham-Lane UK +44 203 757 4985
Aprio
Julian Gwillim SA +27 11 880 0037
46Disclaimer
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 financial condition, performance and results.
By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances
which are beyond Quilter plc’s control including amongst other things, international and global economic and business conditions,
the implications and economic impact of several scenarios of the UK leaving the EU in relation to financial services, market related
risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of
competition, inflation, deflation, the timing and impact of other uncertainties of future acquisitions or combinations within relevant
industries, as well as the impact of tax and other legislation and other regulations in the jurisdictions in which Quilter plc and its
affiliates operate. As a result, Quilter plc’s actual future financial condition, performance and results may differ materially from the
plans, goals and expectations set forth in Quilter plc’s forward looking statements.
Quilter plc undertakes no obligation to update the forward-looking statements contained in this presentation or any other forward-
looking statements it may make.
Nothing in this presentation should be construed as a profit forecast.
Nothing in this presentation shall constitute an offer to sell or the solicitation of an offer to buy any securities.
47Quilter Basic rBand Guidelines Our brand a
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