St. James's Place Plc · LSE:STJ
St. James's Place — FY2013 Earnings Presentation
88 slides from St. James's Place's earnings presentation, Feb 25, 2014
Slide 1: St. James's Place Wealth Management February 2014
ST. JAMES’S PLACE WEALTH MANAGEMENT —— FEBRUARY 2014 —-
Slide 2: Part One Business Model / Part Two Financial Results
PART ONE – BUSINESS MODEL Strategy 2 The Partnership 12 The Academy 17 Investment Management 19 Our Clients 31 Our Market 37 PART TWO – FINANCIAL RESULTS Cash & Dividend Profile 67 Our Shareholders 76 Analyst following 78 1
Slide 3: Part One: Business Model
ST. JAMES’S PLACE WEALTH MANAGEMENT PART ONE Business Model
Slide 4: Strategy
WEALTH MANAGEMENT Strate gy
Slide 5: St. James's Place: Overview
St. James’s Place: Overview • Leading UK Wealth Management Company - Established 1991 - UK listed with market cap of c.£4 billion - £44.3 billion in FUM - Target market £50k to £5 million free investable assets • Differentiated business model - Provider and distributor - Own dedicated distribution –
Slide 6: Global Investment Management Expertise
Global Investment Management Expertise Global Range of Investment Houses S.W. Mitchell Capital llp 4
Slide 7: Whole of Market approach
Whole of Market approach We take responsibility for the due diligence on all the products and companies we make available to our clients. SIP SERVICES 5
Slide 8: Our products and services
Our products and services • Comprehensive range - of pension, investment and savings ‘‘wrappers’’ - of investment funds managed by Global Invesment Managers - access to ‘‘whole of market’’ for third party products and services e.g. Protection and Annuities • Whilst avoiding - capital intensive produ
Slide 9: The Growth Model
The Growth Model Target: 15-20% pa NEW BUSINESS CAPACITY PRODUCTIVITY Number of Partners New Business per Partner 7
Slide 10: Growing number of Partners
Growing number of Partners 2000 +9.5% +8% 1800 +6% 1,958 1600 +6% Number of Partners +9% 1400 1200 1000 800 600 400 200 0 2009 2010 2011 2012 2013 8
Slide 11: Productivity (single investment per Partner)
Productivity (single investment per Partner) 4.00 +12% 3.50 +3% +5% 3.83 +28% 3.00 +2% £ million 2.50 2.00 1.50 1.00 0.5 0.0 2009 2010 2011 2012 2013 9
Slide 12: Single premium gross investments
Single premium gross investments £7.2 bn 7 £5.9 bn 6 £5.2 bn 5 £4.7 bn £ billion 4 £3.5 bn £3.4 bn £3.1 bn 3 £2.6 bn 2 £1.6 bn £1.2 bn 1 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 10
Slide 13: Funds under management
Funds under management 22% p.a. compound growth over the last 5 years and 19% p.a. over last 10 years +27% 45 44.3 40 +22% 35 Funds £ billion 30 +6% +26% 25 +31% 20 +18% +25% -10% 15 +29% +20% 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 11
Slide 14: WEALTH MANAGEMENT
WEALTH MANAGEMENT
Slide 15: The Partnership
WEALTH MANAGEMENT The Partnership
Slide 16: Dedicated distribution – the Partnership
Dedicated distribution – the Partnership • High quality self-employed team of c.2,000 advisers - Average age is 48 - Above average productivity - 90%+ per annum retention rate • Aim to grow Partner number by 5% to 7% per annum • Aim to increase productivity each year 13
Slide 17: Geographic Distribution
Geographic Distribution 31 December 2013 Partners Clients 5% 6% 2% 1% 23% 23% 24% 13% 14% 14% 4% 4% 3% 4% 3% 4% 4% 4% 23% 22% 22% 10% 10% Overseas Clients: 2% 16% 14% 14
Slide 18: Partners by age band
Partners by age band 31 December 2013 Existing Partners New Partners 65+ <35 <35 55-65 2% 6% 65+ 20% 19% 55-65 0% 8% 35-45 35-45 31% 46% 45-55 45-55 42% 26% 15
Slide 19: Total Adviser numbers down 18%
Total Adviser numbers down 18% ADVISER NUMBERS FSA FSA FCA ESTIMATES FIGURES FIGURES TYPE OF ADVISER 31 DEC 2011 31 DEC 2012 31 DEC 2013 Financial advisers 25,616 20,453 21,881 Bank advisers 8,658 4,809 3,556 Discretionary fund managers/ 4,043 3,718 5,783 stockbrokers Total number of Advisers 38,317
Slide 20: The Academy
WEALTH MANAGEMENT QYcO ST. JAMES’S PLACE ACADEMY
Slide 21: The Academy
The Academy • 60 new students in 2013 • 40 next generation • Targeting another 50-60 this year • Anticipate c.50 to ‘graduate’ this year • Plus a new regional initiative in Manchester 18
Slide 22: Investment Management
WEALTH MANAGEMENT Investment Management
Slide 23: Our approach to investment management
Our approach to investment management ‘INDEPENDENT EXPERTISE’ THE INVESTMENT S TAMFORD Vivian Bazalgette Sarah Bates Peter Win Dunscombe Robbins COMMITTEE A SSOCIATES ‘MANAGES THE MANAGERS’ Decisions: Appoint the Sets performance Risk management Change firm? Fund Managers objectives and strategy Cha
Slide 24: Stamford Associates Independent Investment Consultancy
Stamford Associates Independent Investment Consultancy Research Fund Monitor Managers Advise Investment Manager Market and Portfolios Committee Access to Qualitative and Focus on Future Whole Market Quantitative Outperformance • Analyse & identify talented • Number crunching Recommend: managers • Mo
Slide 25: Global Investment Management Expertise
Global Investment Management Expertise Global Range of Investment Houses S.W. Mitchell Capital llp 22
Slide 26: Growth Portfolios
Growth Portfolios DEFENSive Portfolio Conservative Portfolio BALANCED Portfolio Low risk Low to medium risk Medium risk • Aims to provide a positive return after charges over • Aims to provide steady growth for investments of at • Aims to provide growth for investments of at least a rolling five-yea
Slide 27: Growth Portfolios (cont.)
Growth Portfolios (cont.) MANAGED FUNDS Portfolio ADVENTUROUS Portfolio Medium risk Medium to high risk • Aims to provide capital growth for investments of • Aims to provide higher levels of capital growth for at least five years investments of at least ten years • Diversified across managers with d
Slide 28: Income Portfolios
Income Portfolios IMMEDIATE INCOME Portfolio BALANCED INCOME Portfolio DEFERRED INCOME Portfolio Low to medium risk Medium risk Medium risk • Aims to generate a consistent level of income with • Aims to generate an attractive level of income with • Aims to generate a rising level of income some pote
Slide 29: Funds under management
Funds under management 22% p.a. compound growth over the last 5 years and 19% p.a. over last 10 years +27% 45 44.3 40 +22% 35 Funds £ billion 30 +6% +26% 25 +31% 20 +18% +25% -10% 15 +29% +20% 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 26
Slide 30: Weighted 5 year Rolling Performance
Weighted 5 year Rolling Performance to 31 December 2013 (excluding Money Market & Alternative Assets) 100% 90% 80% 58% 54% 70% 62% 74% 77% 75% 77% 60% 83% 89% 89% 50% 40% 30% 46% 42% 20% 38% 23% 26% 25% 23% 10% 17% 11% 11% 0% 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Below Peer Group Average
Slide 31: Weighted 10 year Rolling Performance
Weighted 10 year Rolling Performance to 31 December 2013 (excluding Money Market & Alternative Assets) 100% 90% 80% 70% 70% 60% 84% 83% 86% 86% 90% 90% 90% 90% 50% 98% 40% 30% 20% 30% 10% 14% 14% 16% 17% 10% 10% 10% 10% 2% 0% 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Below Peer Group Average
Slide 32: Funds Under Management: Shown by Asset Class and Region
Funds Under Management: Shown by Asset Class and Region 31 December 2013 Property Alternatives 2% PABs/FABs 3% 2% Cash & Other Assets 10% UK 30% European 11% US 19% Fixed Interest Far East 14% 9% 29
Slide 33: Benefits of investment management approach
Benefits of investment management approach • No in-house managers, so no conflict of interest • Benefit from Investment Committee experience & expertise • Ability to appoint the best fund managers with wholesale purchasing power • Continuous monitoring plus quarterly reviews • Easy to change manager
Slide 34: Our Clients
WEALTH MANAGEMENT Our Clients
Slide 35: Geographic Distribution of Our Clients
Geographic Distribution of Our Clients 31 December 2013 Clients 6% 420,000 clients Male 53% 1% 24% Female 47% Average age 53 14% 4% 3% 4% 22% Overseas Clients: 2% 10% 14% 32
Slide 36: Clients and FUM by Value Band
Clients and FUM Clients by Value Band 31 December 2013 All Clients All Clients - FUM £250k- £500k- £500k £1m £1m+ £1m+ 2% 1% £500k- 16% <£50k 7% £1m 9% 16% £50k- £250k- £50k- £250k <£50k 54% £500k £250k 36% 21% 38% 33
Slide 37: New and Retained Clients by Age Band
New and Retained Clients by Age Band 31 December 2013 Existing Clients by Age Band New Clients by Age Band 70 + <30 30-40 70 + <30 3% 8% 30-40 18% 9% 14% 10% 65-70 65-70 12% 10% 40-50 40-50 26% 19% 60-65 60-65 10% 12% 55-60 50-55 55-60 50-55 11% 13% 12% 13% 34
Slide 38: What our clients think
What our clients think The key findings were: • 84%* of clients highly satisfied with their relationship with St. James’s Place – nearly a third scoring us 10 out of 10 • 88%** of clients ‘value’ a face-to-face relationship with their Partner • 86%* of clients agreed that we provide excellent servic
Slide 39: Award winning into 2014
Award winning into 2014 Best Private Client Asset Manager UK 36
Slide 40: Our Market
WEALTH MANAGEMENT Our Market
Slide 41: Our Market
Our Market • The market is big • Favourable demographics • The tax burden is increasing • UK high net worth individuals want face-to-face advice • Limited access to advice as adviser numbers have reduced 38
Slide 42: WEALTH MANAGEMENT
WEALTH MANAGEMENT
Slide 43: Total Adviser numbers down 18%
Total Adviser numbers down 18% ADVISER NUMBERS FSA FSA FCA ESTIMATES FIGURES FIGURES TYPE OF ADVISER 31 DEC 2011 31 DEC 2012 31 DEC 2013 Financial advisers 25,616 20,453 21,881 Bank advisers 8,658 4,809 3,556 Discretionary fund managers/ 4,043 3,718 5,783 stockbrokers Total number of Advisers 38,317
Slide 44: The SJP Marketplace: Number of Individuals
The SJP Marketplace UK individuals with between £50k and £5m of liquid assets 12 10,743,472 10,345,700 9,927,000 Number of Individuals 10 9,108,800 9,482,400 8 (million) 6 4 2 0 2014 2015 2016 2017 2018 Year Source: Datamonitor, 23 January 2014 40
Slide 45: The SJP Marketplace: Liquid Assets
The SJP Marketplace Amount of liquid assets held by UK individuals with between £50k and £5m 2,500 £2,082bn £1,885bn £1,982bn 2,000 £1,717bn £1,797bn £ billion 1,500 1,000 500 0 2014 2015 2016 2017 2018 Year Source: Datamonitor, 23 January 2014 41
Slide 46: UK Funds under management
UK Funds under management Funds £billion Private Private Clients Equity Property Hedge £112 £142 £217 £483 Corporate Pensions £1,597 Retail Clients £760 Insurance Companies £994 The City UK Fund management report 2012 – figures relate to 31 December 2011. Insurance & Corporate Pensions relate to ins
Slide 47: Private Asset & Wealth Managers
Private Asset & Wealth Managers Top 10 and selected others 2013 2012 Company AUM end 2012 Change v 2012 Share Rank Rank (£bn) (£bn) (of top 40) 1st 2nd Coutts 51.7 1.9 (4%) 10.9% 2nd 1st Barclays 50.2 0.4 (1%) 10.6% 3rd 6th St. James’s Place Wealth Management 44.3* 9.5 (27%)* 7.3%* 4th 3rd UBS Wealt
Slide 48: Asia: The Opportunity
Asia The Opportunity • Singapore, Hong Kong and Shanghai • Henley Group has 50 advisers with 4,000 clients and £430 million FUM • Estimated 120,000 UK ex-pats with 12 billion of investible wealth (£100k each) • Project to grow to over £20 billion by 2020 • Our investment proposition and relationship
Slide 49: Partner Survey 2013 - Source of new business/markets
Partner Survey 2013 - Source of new business/markets • 81% existing clients and referrals • 7% Introducers • 12% new clients from other sources • 27% of Partners experienced less competition in 2013 • 39% acquired new clients due to decline of high street advice (banks) 45
Slide 50: The SJP Opportunity
The SJP Opportunity • ISAs - Cash £220 bn (Sept 2013 - HMRC) - Stocks & shares £223 bn (Sept 2013 - HMRC) • Building Society (Mutual Lender) deposits £258 bn (Nov 2013 - Building Societies Association) • National Savings and Investment £105 bn (Nov 2013 - Building Societies Association) (NS&I) depos
Slide 51: The advice market... transparent?
The advice market... transparent? The fees a client may have to consider when trying to compare advice and products based on publicly available information for a variety of firms and providers. % of initial investment Tiered fee based on amount invested + VAT Initial advice fee OR Hourly rate (£) Ra
Slide 52: Advisory/Discretionary Charge Comparison
Advisory/Discretionary Charge Comparison Advisory/Discretionay Managers Total bps St. James’s Place (20yr holding period) 195 Hargreaves PMS 210 St. James’s Place (6yr holding period) 219 Raymond James 226 Brewin Dolphin Discretionary (fee only) 231 Total Investment £85k Rathbones Discretionary 278
Slide 53: Advisory/Discretionary Charge Comparison
Advisory/Discretionary Charge Comparison Advisory/Discretionay Managers Total bps Raymond James 180 St. James’s Place (20yr holding period) 195 Rathbones Discretionary 203 Hargreaves PMS 210 Total Investment £212k St. James’s Place (6yr holding period) 229 Brewin Dolphin Discretionary (fee only) 231
Slide 54: Summary
Summary • Established and respected business • Experienced and stable management team • Experienced and stable advisory team – ‘The Partnership’ • Proven track record of growth • Resilient in tough markets • Favourable demographics • Award winning performance 50
Slide 55: Part Two: Financial Results
ST. JAMES’S PLACE WEALTH MANAGEMENT PART TWO Financial Results
Slide 56: WEALTH MANAGEMENT
WEALTH MANAGEMENT
Slide 57: SJP new business by quarter
SJP new business by quarter APE (Annual premiums plus 10% of single premiums) £m 220 209.1 203.3 200 192.2 179.9 2010 180 170.6 167.1 163.7 2011 160 144.6 143.9 143.4 141.3 136.7 138.5 2012 140 134.4 123.7 122.1 2013 120 100 80 60 Q1 Q2 Q3 Q4 2010 over 2009 +48% +46% +28% +15% 2011 over 2010 +16% +1
Slide 58: New business and Funds under management
New business • Total single investments of £7.2 billion – up 22% • SJP new business on an APE basis of £762.9 million – up 20% • Our own business represents 88% of the total Funds under management • Net inflow of funds under management of £4.3 billion – up 28% • Continue to retain 95% year on year •
Slide 59: Partnership, Profits and Other financials
Partnership • Partnership numbers 1,958 – up 9.5% Profits • EEV new business profit £327.2 million – up 18% • EEV operating profit £462.7 million – up 26% • IFRS operating profit before shareholder tax £190.7 million – up 42% Other financials • EEV net asset value of 575.3 pence per share – up 25% •
Slide 60: Record single investments
Record single investments 8 +22% 7 +13% £7.2bn 6 +11% 5 +26% £5.9bn £ billion £5.2bn 4 £4.7bn 3 £3.5bn 2 1 0 2009 2010 2011 2012 2013 54
Slide 61: Consistent net inflow of funds under management
Consistent net inflow of funds under management +28% 4.2 4.3bn 3.5 +10% +4% +26% 2.8 +31% £ billion 2.1 1.4 0.7 0 2009 2010 2011 2012 2013 55
Slide 62: Funds under management
Funds under management 22% p.a. compound growth over the last 5 years +27% 45 40 44.3bn +22% 35 +10% 30 +26% £ billion 25 +31% 20 15 10 5 0 2009 2010 2011 2012 2013 56
Slide 63: Fund flow information
Fund flow information £ billion 31 Dec 2013 31 Dec 2012 FUM at start 34.8 28.5 New money invested 6.8 5.6 Investment return (Stock market fall) 5.2 3.0 46.8 37.1 Regular income withdrawals/maturities (0.7) (0.7) Surrenders/part surrenders (1.8) (1.6) FUM at close 44.3 34.8 Net inflow of FUM 4.30bn 3
Slide 64: Five strong years of Partner recruitment
Five strong years of Partner recruitment 2000 +9.5% +8% 1800 +6% 1,958 +6% Number of Partners 1600 +9% 1400 1200 1000 800 600 400 200 0 2009 2010 2011 2012 2013 58
Slide 65: Productivity (single investment per Partner)
Productivity (single investment per Partner) 4.25 +12% 3.75 +5% 3.83 +28% +3% 3.25 2.75 +2% £ million 2.25 1.75 1.25 0.75 0.25 2009 2010 2011 2012 2013 59 18
Slide 66: Record EEV new business profit
Record EEV new business profit 350 +16% 300 +13% 327.2 250 +13% +40% £ million 200 +26% 150 100 50 0 2009 2010 2011 2012 2013 60
Slide 67: Analysis of EEV life, pension & unit trust pre-tax operating profit
Analysis of EEV life, pension & unit trust pre-tax operating profit £ 31 million Dec 2013 31 Dec 2012 New business contribution 327.2 276.8 Profits from existing business - expected 112.1 96.0 - experience variance 47.4 4.6 - operating assumption changes 4.6 (4.3) Investment income 5.2 3.4 Operating
Slide 68: Pre-tax EEV profit
Pre-tax EEV profit £ million 31 Dec 2013 31 Dec 2012 Life, pension & unit trust 496.5 376.5 Distribution (6.1) 5.3 Other operations (27.7) (15.9) Total operating profit 462.7 365.9 Investment variance 344.2 190.4 Economic changes 10.6 (3.7) Pre-tax result 817.5 552.6 62
Slide 69: 2013 EEV operating profit
2013 EEV operating profit 500 +26% 400 +12% -2% 462.7 +45% £ million 300 +12% 200 100 0 2009 2010 2011 2012 2013 63
Slide 70: Pre-tax IFRS profit before shareholder tax
Pre-tax IFRS profit before shareholder tax £ million 31 Dec 2013 31 Dec 2012 Life 170.6 111.7 Unit trust 53.9 33.5 Distribution (6.1) 5.3 Other operations (27.7) (15.9) Profit before shareholder tax 190.7 134.6 64
Slide 71: Capital position as at December 2013
Capital position as at 31 December 2013 Other £ million Life Regulated Other Total Solvency position Solvency net assets 384.2 38.9 184.5 507.6 Solvency requirement 49.3 17.1 Solvency ratio 576% 227% 65
Slide 72: Group expenses
Group expenses £ million 31 Dec 2013 31 Dec 2012 Paid from policy margins Partner remuneration 407.1 307.0 Investment expenses 101.8 89.4 Third party administration 37.7 32.6 546.6 429.6 Direct expenses Other new business related costs 69.0 59.5 Establishment expenses 113.4 100.2 Academy costs 2.7 1
Slide 73: WEALTH MANAGEMENT
WEALTH MANAGEMENT
Slide 74: Cash & Dividend Profile
WEALTH MANAGEMENT Cash & Dividend Profile
Slide 75: Underlying post-tax cash arising from inforce business
Underlying post-tax cash arising from inforce business 200 +30% 180 188.2 160 +15% 140 +23% 144.5 £ million 120 +15% 125.4 100 -3% 80 102.3 88.8 60 40 20 0 2009 2010 2011 2012 2013 68
Slide 76: Return on inforce
Return on inforce • Where product structure uses penalties the business is cash neutral in first six years Year £ Billion • This relates to £13.2 billion of new business added in 2008 1.4 last six years which is not 2009 1.6 yet generating positive 2010 2.1 cash earnings* 2011 2.2 2012 2.4 • This am
Slide 77: Single premium gross investments
Single premium gross investments £7.2 bn 7 £5.9 bn 6 £5.2 bn 5 £4.7 bn £ billion 4 £3.5 bn £3.4 bn £3.1 bn 3 £2.6 bn 2 £1.6 bn £1.2 bn 1 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 New investments with surrender penalties 70
Slide 78: Underlying post-tax cash result
Underlying post-tax cash result 220 200 180 160 140 £ million 120 100 80 60 40 20 65.3 61.4 62.4 60.5 48.3 0 2009 2010 2011 2012 2013 Investment in new business 71
Slide 79: Investment in new business
Investment in new business 31 Dec 2013 31 Dec 2012 Post-tax new business cost (£m)* (52.3) (60.5) Post-tax EEV new business profit (£m) 261.8 218.3 Margin (% of APE) 42.9% 43.4% IRR (net of tax) 28.4% 22.5% Cash payback period 4 Years 4 Years As % of gross inflows of FUM 0.8% 1.1% *2013 - includes n
Slide 80: Underlying post-tax cash result
Underlying post-tax cash result 220 200 +67% 180 139.9 160 140 84.0 £ million 120 63.0 100 40.9 80 23.5 60 40 20 0 2009 2010 2011 2012 2013 Investment in new business 73
Slide 81: Continual dividend growth
Continual dividend growth +50% 16 15.96 14 12 +33% 10 +33% Pence 8 +33% 6 +18% +2% +2.5% +16% 4 2 0 2006 2007 2008 2009 2010 2011 2012 2013 74
Slide 82: Outlook
Outlook • Familiar and well respected brand/business • Loyal client base (Partners and investors) • Consistent strong recruitment • Resilient Investment Management Approach • Strong solvency position • Strong market for advice • Favourable market place • Uniquely placed business 75
Slide 83: WEALTH MANAGEMENT
WEALTH MANAGEMENT
Slide 84: Our Shareholders
WEALTH MANAGEMENT Our Shareholders
Slide 85: Our Shareholders
Our Shareholders 1. Threadneedle 5.28% 2. Baillie Gifford 4.99% 3. M&G 4.07% 4. Kames Capital 3.68% 5. AXA Framlington 3.41% 6. Legal & General 3.09% 7. Schroder 2.74% 8. Old Mutual 2.67% 9. BlackRock (BGI) 2.24% 10. Wellington 1.90% As at 30 December 2013 77
Slide 86: Analyst following
WEALTH MANAGEMENT Analyst following
Slide 87: Analyst following
Analyst following • Alan Devlin - Barclays Capital • Jon Hocking - Morgan Stanley • Matthew Preston - Berenberg • Ben Bathurst - Nomura • Andrew Sinclair - Boa Merrill Lynch • David McCann - Numis • Chris Esson - Credit Suisse • Marcus Barnard - Oriel Securities • Oliver Steel - Deutsche Bank • Barr
Slide 88: 24 February 2014
24 February 2014