St. James's Place Plc · LSE:STJ
St. James's Place — H1 2021 Earnings Presentation
33 slides from St. James's Place's earnings presentation, Jul 28, 2021
Slide 1: 2021 Half-Year Results
2021 HALF-YEAR RESULTS ST. JAMES’S PLACE – 28 JULY 2021
Slide 2: Agenda
AGENDA Andrew Croft 01 New Business Update Craig Gentle 02 Financial Results Andrew Croft 03 Summary and outlook Q&A 04
Slide 3: New Business Update
01 NEW BUSINESS UPDATE Andrew Croft 2021 HALF-YEAR RESULTS
Slide 4: Our 2025 Planning Assumptions
OUR 2025 PLANNING ASSUMPTIONS • New business growth of c.10% per annum - Driven by combination of growth in the Partnership and productivity gains • Continued strong retention of client FUM • Core target of £200 billion of FUM by 2025 • Containing expense growth to 5% per annum - Enables targeted in
Slide 5: The Partnership
THE PARTNERSHIP • Net addition of 139 advisers, up 3.2% • Partnership now comprises 4,477 advisers • Strong pipeline for future recruitment and Academy enrolment • 277 individuals now in Academy programmes
Slide 6: H1 Productivity
H1 PRODUCTIVITY Gross inflows per adviser – strong growth £m 2.5 2.0 1.5 1.0 0.5 0.0 H1 15 H1 16 H1 17 H1 18 H1 19 H1 20 H1 21
Slide 7: H1 New Business Flows
H1 NEW BUSINESS FLOWS • Gross inflows £9.2 billion – up 27% • Retention – 96% • Net inflows £5.5 billion – up 23% - Equivalent to 8.6% of opening FUM (annualised)
Slide 8: Client FUM Retention
CLIENT FUM RETENTION • Consistently strong FUM retention over time attributable to: - Trusted and long-term adviser/client relationships - Reliability of quality advice and services - Advised business; providing a steady hand in challenging environments - Long-term investment wrappers and time horiz
Slide 9: Net Inflows by Quarter
NET INFLOWS BY QUARTER £bn 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Slide 10: Flows vs 2019
FLOWS VS 2019 Gross inflows Net inflows £bn £bn 10.0 AGR 6.0 GR % C 12 % CA 12 9.0 9.19 5.54 5.0 8.0 7.0 7.38 4.44 4.52 7.26 4.0 6.0 5.0 3.0 4.0 2.0 3.0 2.0 1.0 1.0 0.0 0.0 H1 19 H1 20 H1 21 H1 19 H1 20 H1 21
Slide 11: Funds Under Management
FUNDS UNDER MANAGEMENT >15% p.a. compound growth over the last 5, 10 and 15 years £bn 160 140 120 100 80 60 40 20 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Jun-21
Slide 12: Summary
SUMMARY • Gross inflows £9.2 billion - up 27% • Retention – 96% • Net inflows £5.5 billion – up 23% • FUM £143.8 billion – up 11% • Strong growth in income • Disciplined expense management • Strong financial results
Slide 13: Financial Results
02 FINANCIAL RESULTS Craig Gentle 2021 HALF-YEAR RESULTS
Slide 14: Strong H1 Financials
STRONG H1 FINANCIALS Underlying cash result £189.3 million (H1 2020: £114.4 million) EEV operating profit £844.8 million (H1 2020: £418.7 million) EEV NAV per share £15.31 (H1 2020: £12.78) Robust Solvency II position Interim dividend 11.55 pence per share
Slide 15: Net Income from FUM
NET INCOME FROM FUM • Net Income from Funds Under Management £m 300 up 27% to £278.2 million: +27% - Strength of new UT/ISA business 278.2 250 - Maturing of FUM in gestation - Sustained global market recovery in H1 200 218.9 • Post-tax margin on mature FUM remains within our 63bps to 65bps guidance
Slide 16: FUM in Gestation
FUM IN GESTATION • C.£20m benefit to H1 net income from FUM due to maturing FUM • Gestation balance now stands at £47.3 billion • Disclosures re shape of future post-tax contribution to cash result now reflect change in corporation tax from 2023
Slide 17: Margin Arising on New Business
MARGIN ARISING ON NEW BUSINESS • Margin arising on new business represents £m 80 the net of initial charges and new business- +27% related expenses 70 73.8 • Increase in H1 margin to £73.8 million, in line 60 with new business volumes 58.2 • Second half margin expected to move broadly 50 in line wit
Slide 18: Controllable Expenses (Post-Tax)
CONTROLLABLE EXPENSES (POST-TAX) • H1 total controllable costs 3% lower than H1 £m 140 20, reflecting: - Continued focus on cost discipline 120 - Constrained operating environment 100 • Continue to expect full-year growth in controllable costs of 5% for 2021 80 • H1 developments focused around Sales
Slide 19: Asia
ASIA Net investment (post-tax) £m 10 8 6 9.5 4 5.2 2 0 H1 20 H1 21 • Strong improvement in Asia net investment: - Continued cost control - Growth in new business - Positive investment market returns • Anticipate FY21 net investment of c.£14 million • Good progress on plan to cash break-even by 2025
Slide 20: DFM
DFM Net investment (post-tax) £m 10 8 6 4 5.2 4.7 2 0 H1 20 H1 21 • Improved flows and investment markets driving income growth • SS&C appointed as back-office outsourcing partner • Anticipate FY21 net investment of c. £10m • Remain on track to cash break-even by 2024
Slide 21: Underlying Cash Result
UNDERLYING CASH RESULT • Underlying cash result up 65% to £189.3 million £m 200 • Total cash result up 41% to £175.8 million 189.3 180 - H1 21 Variance reflects timing differences 160 that will unwind in H2 140 - £9.0 million restructuring charge relates to costs associated with H1 redundancies 120
Slide 22: Embedded Value
EMBEDDED VALUE £’million H1 2021 H1 2020 • Strong growth in EEV operating profit: EEV operating profit 844.8 418.7 - Positive operating assumption change Investment return variance 593.6 (329.7) of £249.4 million recognised within operating profit. Reflects increased Economic assumption changes 22.8
Slide 23: EEV NAV per Share
EEV NAV PER SHARE £ 16 • EEV NAV per share of £15.31, up 20% 14 over past 12 months 12 • Excludes additional c.£400m (or c. 74 pence per share) value of pensions 10 business falling outside of current 8 contract boundaries 6 4 2 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 HY 2021
Slide 24: Combined Life Company Solvency Position
COMBINED LIFE COMPANY SOLVENCY POSITION H1 2021 H1 2020 FY 2020 • Solvency managed on the basis of Net assets in excess of client liabilities 552.2 554.4 424.6 holding assets to match client unit-linked liabilities plus the MSB Management solvency buffer 345.0 320.0 345.0 • Solvency position remains
Slide 25: Dividends
DIVIDENDS • New dividend guidance set out in February 2021 - Interim dividends to be set at 30% of the prior full year dividend - Full year dividends to be set at 70% of the underlying cash result • Interim dividend of 11.55 pence per share, in line with guidance
Slide 26: Summary and Outlook
03 SUMMARY AND OUTLOOK Andrew Croft 2021 HALF-YEAR RESULTS
Slide 27: Strong Performance
STRONG PERFORMANCE + + = Strong gross Strong Strong expense Strong financial flows retention discipline performance
Slide 28: 2021 Outlook
2021 OUTLOOK • Strong start to July • Strengthening comparatives in latter part of 2021 • Anticipate c.20% growth in gross flows for second half • Business remains in great shape
Slide 29: Longer-Term Outlook
LONGER-TERM OUTLOOK • Market for trusted advice continues to grow • UK advice gap remains large • Growing Partnership • Strong pipeline of quality experienced recruits • Increasing scale of Academy programmes
Slide 30: Building Flows to 2025
BUILDING FLOWS TO 2025 Gross inflows based on 10% CAGR (illustrative) £bn 100 • Growth in new business will not be linear • There will naturally be variations in growth 80 rates from year to year • Development of cumulative gross flows will 60 be key driver of FUM reaching £200 billion c. £96 billio
Slide 31: A Business in Great Shape Delivering Strong Results
A BUSINESS IN GREAT SHAPE 4,477 advisers in the Partnership, growth of 3.2% DELIVERING STRONG RESULTS Gross inflows £9.2 billion, up 27% Net inflows £5.5 billion; 8.6% of opening FUM (annualised) Funds under management £143.8 billion, up 11% YTD Strong financial performance: underlying cash result u
Slide 32: The live Q&A session will commence at 9.30 am
The live Q&A session will commence at 9.30 am 2021 HALF-YEAR RESULTS
Slide 33: Q&A
Q&A &%, | 2021 HALF-YEAR RESULTS ut