St. James's Place Plc · LSE:STJ
St. James's Place — H1 2022 Earnings Presentation
46 slides from St. James's Place's earnings presentation, Jul 28, 2022
Slide 1: 2022 Half-year results
Embrace your 2022 Half-year results
Slide 2: Introduction
Introduction Andrew Croft ci sJP
Slide 3: Agenda
Agenda 1. Andrew Croft Introduction 2. Craig Gentle Financial results 3. Andrew Croft Business update and outlook 4. Q&A 3
Slide 4: New business highlights
New business highlights ♦ Robust new business performance despite difficult trading conditions in H1 2022 − £9.1 billion gross inflows − Strong retention resulting in net inflows of £5.5 billion ♦ Demand for advice remains high, with clients seeking advice to help them stay on track for their future
Slide 5: Gross inflows by quarter
Gross inflows by quarter £bn Gross inflows: 2019 to 2020 ♦ Lockdowns impacted 2020 flows, 5.0 particularly in Q2 and Q3 ♦ However business remained resilient 4.0 ♦ Over £3 billion of gross flows each quarter, despite unprecedented circumstances 3.0 2.0 1.0 0.0 Q1 Q2 Q3 Q4 2019 2020 5
Slide 6: Gross inflows by quarter
Gross inflows by quarter £bn Gross inflows: 2019 to 2021 ♦ Strong recovery in 2021 5.0 − Double digit growth every quarter − Particularly strong growth in Q2 and Q3 4.0 3.0 2.0 1.0 0.0 Q1 Q2 Q3 Q4 2019 2020 2021 6
Slide 7: Gross inflows by quarter
Gross inflows by quarter £bn Gross inflows: 2019 to 2022 ♦ £9.1 billion gross inflows in H1 2022 5.0 − in line with strong 2021 comparatives 4.0 3.0 2.0 1.0 0.0 Q1 Q2 Q3 Q4 2019 2020 2021 2022 7
Slide 8: Gross and net inflows: actual vs plan
Gross and net inflows: actual vs plan £bn Gross inflows Net inflows ♦ Actuals remain ahead of 2025 plan, 30 despite the challenging external £27.3bn £24.5bn environment in H1 2022 25 ♦ In 18 months to 30 June 2022: 20 − Actual performance on gross inflows has £16.5bn exceeded plan by c.£2.8 billion
Slide 9: Gross and net inflows: actual vs plan
Gross and net inflows: actual vs plan £bn Gross inflows Net inflows ♦ Actuals remain ahead of 2025 plan, 30 £27.3bn despite the challenging external 9.1 environment in H1 2022 £24.5bn 25 8.7 ♦ In 18 months to 30 June 2022: 20 − Actual performance on gross inflows has £16.5bn exceeded plan by c.£2.8
Slide 10: Funds under management
Funds under management £bn ♦ FUM closed the period at £142.3 billion 160 ♦ Despite market falls in H1 2022, over 140 longer-term: 120 − 11% compound annual growth over 5 years − 16% compound annual growth over 10 years 100 80 60 40 20 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 HY '22 10
Slide 11: Financial results
Financi raig Gentle lL sJP
Slide 12: Robust operating and financial results
Robust operating and financial results Underlying cash result £198.8 million, up 5% EEV operating profit £914.2 million, up 8% EEV NAV per share £15.74, down 5% YTD Robust Solvency II position Interim dividend 15.59 pence per share 12
Slide 13: Net income from FUM
Net income from FUM ♦ Net income from funds under £m management up 8% to £300.2 million: +8% 300 − Consistent strong net inflows − Half-year benefitted by some £20 million 250 from maturing FUM in gestation − Impacted by significant global market falls 200 ♦ Post-tax margin on mature FUM remains wit
Slide 14: FUM in gestation
FUM in gestation ♦ Gestation balance now stands at Gestation FUM £44.5 billion – retention remains strong £’million future contribution to the Cash result ♦ Lower than at 31 December 2021 due 2022 22.1 to market falls 2023 80.1 ♦ If the gestation balance was mature now, 2024 146.8 it would contribut
Slide 15: Margin arising on new business
Margin arising on new business £m ♦ Movement in margin arising on new 80 business broadly reflects the level 70 -8% of gross inflows ♦ Impacted by certain expenses which 60 are set with reference to prior year 50 gross inflows 40 73.8 67.4 30 20 10 0 H1 2021 H1 2022 15
Slide 16: Controllable expenses (post-tax)
Controllable expenses (post-tax) Impacted by COVID-19 ♦ Return to normal phasing for controllable 100% expenses in 2022 90% − Consistent with pre-COVID experience of 80% 47-48% of FY expense incurred in the first 52% 53% 52% 51% 55% 53% half of the year 70% 60% ♦ Atypical phasing in 2021, with 45% o
Slide 17: Controllable expenses (post-tax)
Controllable expenses (post-tax) £m ♦ Controllable expenses of £131.4 million 140 +10% for H1 2022 are in line with plan 120 ♦ Expect to contain full-year growth in controllable expenses to no more than 100 5% for 2022 despite inflation 80 ♦ 10% higher than H1 2021 as a result of the atypical phasin
Slide 18: Asia and DFM
Asia and DFM £m Net investment (post-tax) ♦ Remain on track for break-even in: 6 +15% − 2025 for Asia − 2024 for DFM -19% ♦ Road to break even is not linear for 4 DFM due to spend on back-office replatforming project ♦ DFM will therefore see a significant 5.2 5.4 improvement from late 2023 onwards 4
Slide 19: FSCS levy and regulatory fees
FSCS levy and regulatory fees ♦ FSCS levy of £27.1 million, down 6% £’million H1 2022 H1 2021 − Industry levy costs have reduced more FSCS levy 27.1 28.7 significantly Regulatory fees 5.8 4.5 − Offset by increased market share following strong performance in 2021 FSCS levy and regulatory fees 32.9 3
Slide 20: Tax relief from capital losses
Tax relief from capital losses ♦ £13.9 million utilised in H1 2022 ♦ Level of utilisation largely due to significant market falls ♦ Volatile markets make this difficult to forecast with precision ♦ For modelling purposes, for the time being include the £13.9 million for the total utilisation for FY
Slide 21: Miscellaneous
Miscellaneous ♦ £12.9 million for the period, up £5.2 million compared to H1 2021 ♦ Increase due to: − the market impact on a number of assets held on the balance sheet − increased funding for the St. James’s Place Charitable Foundation 21
Slide 22: Underlying cash result
Underlying cash result ♦ Underlying cash result up 5% to £m £198.8 million 200 +5% ♦ Total Cash result up 10% to £194.1 million ♦ Strong result in an extraordinary operating environment 150 100 198.8 189.3 50 0 H1 2021 H1 2022 22
Slide 23: Embedded value
Embedded value £’million H1 2022 H1 2021 ♦ Operating assumption change booked New business contribution 525.6 525.6 in H1 2022 for unit trust and ISA persistency Unwind of the discount rate 216.2 138.5 − Reflects improvements in long-term retention experience Experience variance 9.9 1.1 − No further
Slide 24: Embedded value
Embedded value £’million H1 2022 H1 2021 ♦ 8% growth in EEV operating profit Funds management business 985.9 915.6 ♦ Significant market falls led to a £1.3 billion Distribution business (33.5) (34.2) investment return variance Other (38.2) (36.6) ♦ This drove an EEV loss after tax of £208.2 million
Slide 25: EEV NAV per share
EEV NAV per share ♦ EEV NAV per share of £15.74, down 5% £ in the period 18 16 -5% 14 12 10 8 6 4 2 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 H1 2022 25
Slide 26: IFRS
IFRS £’million H1 2022 H1 2021 ♦ IFRS profit after tax up 70% period-on- period IFRS (loss)/profit before tax (298.4) 482.6 ♦ IFRS analysis is dominated by equal and Policyholder tax credit/(charge) 555.0 (336.1) opposite policyholder tax movements of IFRS profit before shareholder tax 256.6 146.5 £
Slide 27: Combined life company solvency position
Combined life company solvency position 30 June 31 December ♦ No underlying change to our solvency 2022 2021 approach Net assets in excess of client liabilities 567.3 392.5 ♦ Ratio at 30 June 2022 has benefited from Management solvency buffer 355.0 355.0 two temporary effects which arose due to Mana
Slide 28: Dividends
Dividends ♦ Interim dividend set in line with guidance at 30% of the prior full-year dividend ♦ The Board has therefore declared an interim dividend of 15.59 pence per share 28
Slide 29: Business update
Business update Andrew Croft
Slide 30: Business priorities
Business priorities Building Delivering value to Our culture and community clients through being a leading our IMA responsible business Building and Being easier Continued protecting to do business with financial strength our brand and reputation 30
Slide 31: Building community
Building community Growing the Partnership ♦ The Partnership today: − 4,626 advisers, +70 in H1 2022 − Strong pipeline of advisers currently in training via our Academy − Academy capacity increasing following adoption of hybrid learning 31
Slide 32: Building community
Building community The Academy ♦ Supports growth and succession within the Partnership − 25% of new advisers in 2021 under 30 years old ♦ Supports ability to attract younger clients ♦ Supports ability to advise on intergenerational wealth transfer 32
Slide 33: Delivering value to clients through our IMA
Delivering value to clients through our IMA ♦ Fund manager changes ♦ Global growth fund − New managers appointed to sharpen focus on long-term growth − Change to investment policy to allow fund to hold assets directly ♦ Emerging markets equity fund − Additional fund managers appointed to complement
Slide 34: Building and protecting our brand and reputation
Building and protecting our brand and reputation ♦ Launched refreshed brand in early 2022 ♦ Good progress in roll-out of assets ♦ Positive feedback from stakeholders 34
Slide 35: Being easier to do business with
Being easier to do business with The SJP App ♦ Launched for testing during Q1 ♦ Key stage of our programme to deliver our next generation client experience ♦ Will be available in app stores later this year, enabling enhanced client-adviser engagement 35
Slide 36: Our culture and being a leading responsible business
Our culture and being a leading responsible business Transformative community impact ♦ Resumed fuller programme of fundraising activities across the SJP community − £5.6 million raised for SJP Charitable Foundation during H1 − Inclusive of £1.4 million raised to support Ukraine appeal 36
Slide 37: Medium- to long-term outlook
Medium- to long-term outlook ♦ The market for advice is large and growing − Demographic trends − Shift in responsibility for retirement savings from employer and the state to individuals − Growing savings gap − Complexity of tax, savings and investment − Complexity of intergenerational wealth transf
Slide 38: Learning from the past
Learning from the past ♦ Near-term external environment remains uncertain ♦ But we can be informed by past experience: − Our business is resilient − Advice is valued, especially in difficult times − Our experience puts us in good stead − New business accelerates once stability returns to the externa
Slide 39: A resilient model: track record of net inflows
A resilient model: track record of net inflows £bn 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 39
Slide 40: Delivering value through advice
Delivering value through advice ♦ Strength and duration of adviser-client relationships ♦ Consistent delivery of trusted advice − Focused on long-term financial planning, financial coaching − Focused on keeping clients, and their investments, safe ♦ Flexible investment wrappers and distinct IMA − Ab
Slide 41: Delivering value from our experience
Delivering value from our experience ♦ The business has weathered external shocks before ♦ We have experience across SJP leadership and the Partnership − Knowledge and experience is shared to support and benefit both clients and less experienced advisers in difficult times 41
Slide 42: A resilient model: track record of net inflows
A resilient model: track record of net inflows £bn 3.5 COVID-19 lockdowns 3.0 2.5 2.0 Peak of Eurozone debt crisis 1.5 1.0 GFC 0.5 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 42
Slide 43: Short-term outlook
Short-term outlook ♦ Near-term external environment remains uncertain ♦ But we can be informed by past experience: − Our business is resilient − Advice is valued, especially in difficult times − New business accelerates once stability returns to the external environment ♦ Expect FY 2022 gross and ne
Slide 44: Summary of results
Summary of results ♦ New business highlights − Gross inflows of £9.1 billion − Net inflows of £5.5 billion, 7.1% of opening FUM (annualised) − Funds under management £142.3 billion ♦ Financial highlights − On track and committed to deliver +5% controllable expense growth for FY 2022 − Underlying cas
Slide 45: Q&A
Any The live Q&A session will commence at 9.30am 04
Slide 46: Thank you
Thank you