67 slides from St. James's Place's earnings presentation, February 2017
Slide 1: Full-Year Results
FULL-YEAR RESULTS February 2017
Slide 2: Agenda
Agenda New Business Update and Financial Performance The Future Q&A
Slide 3: Andrew Croft, Chief Financial Officer
ANDREW CROFT Chief Financial Officer
Slide 4: Gross inflows up 23%
Gross inflows Up 23% £11.4bn £9.2bn £7.9bn £6.8bn £5.6bn 2012 2013 2014 2015 2016
Slide 5: Gross inflow growth
Gross inflow growth +26% +20% £6.1bn £5.3bn £4.8bn £4.4bn H1 15 H1 16 H2 15 H2 16
Slide 6: Gross inflow mix
Gross inflow mix Pensions 40% 45% Unit Trust/ISA, Investments 60% 55% 2015 2016
Slide 7: Net inflows up 17%
Net inflows Up 17% £6.8bn £5.8bn £5.1bn £4.2bn £3.4bn 2012 2013 2014 2015 2016
Slide 8: Funds under management up 28%
Funds under management Up 28% £75.3bn £58.6bn £52.0bn £44.3bn £34.8bn 2012 2013 2014 2015 2016
Slide 9: Partnership and Adviser growth up 10%
Partnership and Adviser growth Up 10% Partners Advisers 3,415 2012 2013 2014 2015 2016
Slide 10: Partnership and Adviser growth
Partnership and Adviser growth Partners Advisers +10% +10% +10% +13% +10% 2012 2013 2014 2015 2016
Slide 11: EEV operating profit
EEV operating profit £’m 2016 2015 New business contribution 520.2 440.7 +18% Unwind of the discount rate 199.6 172.4 Experience variance 1.4 78.1 Operating assumption changes 18.6 44.1 Investment income 7.4 6.1 Rowan Dartington 21.0 - Distribution (25.9) (21.2) Back office infrastructure (20.9) (18
Slide 12: Distribution result
Distribution result £’m 2016 2015 FSCS levy (16.5) (19.8) Asia (13.2) (7.0) Other 3.8 5.6 (25.9) (21.2)
Slide 13: EEV operating profit
EEV operating profit £’m 2016 2015 New business contribution 520.2 440.7 +18% Unwind of the discount rate 199.6 172.4 Experience variance 1.4 78.1 Operating assumption changes 18.6 44.1 Investment income 7.4 6.1 Rowan Dartington 21.0 - Distribution (25.9) (21.2) Back office infrastructure (20.9) (18
Slide 14: EEV pre-tax result
EEV pre-tax result £’m 2016 2015 Operating profit 673.6 660.2 Investment variance 537.2 (24.4) Economic assumption change (12.4) 0.9 Pre-tax result 1,198.4 636.7
Slide 15: NAV per share
NAV per share pence 2016 2015 NAV per share 900.7 737.3 +22%
Slide 16: NAV per share compound growth of 19% per annum
NAV per share Compound growth of 19% per annum 900.7p 657.9p 737.3p 575.3p 461.0p 2012 2013 2014 2015 2016
Slide 17: Value creation
Value creation Growth in FUM = Growth in NAV = Growth in shareholder value
Slide 18: Post-tax cash result
Post-tax cash result £’m 2016 2015 Net annual management fee 508.9 440.2 +16% Reduction in fees in gestation period (189.9) (161.6) Net income from FUM 319.0 278.6 +15% Margin arising from new business 49.0 47.8 Operating expenses (146.3) (130.9) FSCS levy (13.7) (15.9) Shareholder interest 9.8 8.6
Slide 19: Investing for growth
Investing for growth £’m 2016 2015 Academy (5.8) (4.4) Asia (12.2) (6.3) DFM (3.2) (1.3) Strategic development costs (5.3) (1.5) Investments (26.5) (13.5)
Slide 20: Post-tax cash result
Post-tax cash result £’m 2016 2015 Net annual management fee 508.9 440.2 +16% Reduction in fees in gestation period (189.9) (161.6) Net income from FUM 319.0 278.6 +15% Margin arising from new business 49.0 47.8 Operating expenses (146.3) (130.9) FSCS levy (13.7) (15.9) Shareholder interest 9.8 8.6
Slide 21: Post-tax cash result
Post-tax cash result £’m 2016 2015 Underlying cash result 199.5 182.1 Back-office infrastructure development (16.7) (14.4) Variance (7.4) 3.8 Cash result 175.4 171.5
Slide 22: Solvency II position
Solvency II position • Reassessment of unit liability – now matches encashment value • Increases SII net assets by £267m • But reduces VIF by £267m • So no change to SII free assets • Hence increase to Management Solvency Buffer of £267m
Slide 23: Solvency II position
Solvency II position £’m 2016 pre-change 2016 post-change Adjustment Solvency II net assets 803.0 1,070.0 267.0 Value of in-force 2,974.9 2,707.9 (267.0) Risk margin (779.2) (779.2) Own funds (A) 2,998.7 2,998.7 Solvency capital requirement (B) (2,046.5) (2,046.5) Solvency II free assets 952.2 952.2
Slide 24: Modelling implications
Modelling implications • Change to timing of cash emergence • For future new business, cash will emerge earlier • If implemented at 1 Jan 16, the operating, underlying and total cash results would have been c. £25m higher • Some changes to IFRS albeit overall impact is neutral
Slide 25: Modelling guidance
Modelling guidance https://www1.sjp.co.uk/investor-relations
Slide 26: Divesting matching assets
Divesting matching assets • Lower unit liability means we have redundant matching assets • In process of divesting excess assets from our funds • Holdings in cash will lower Group risk profile • Solvency Capital and Risk Margin requirements will reduce • Level of Management Solvency Buffer will be r
Slide 27: Solvency II position
Solvency II position £’m 2016 post-change Solvency II net assets 1,070.0 Value of in-force 2,707.9 Risk margin (779.2) Own funds (A) 2,998.7 Solvency capital requirement (B) (2,046.5) Solvency II free assets 952.2 Solvency II net assets 1,070.0 Management solvency buffer (527.0) Management free asse
Slide 28: Dividend outlook
Dividend outlook • Final dividend up 20% to 20.67p • Full year dividend up 18% to 33.0p • Full year pay-out of 77% of operating cash • Full year pay-out of 87% of underlying cash
Slide 29: Dividend history
Dividend history Compound growth of 25% per annum 35p +18% 30p +20% 33.0 25p +40% 20p +50% 15p +33% 10p +33% +18% +2% +2.5% +33% 5p 0p 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 30: Dividend outlook
Dividend outlook • We fully intend to continue our policy of increasing the dividend in line with the underlying performance of the business • Comfort from the £25.1 billion of funds in the gestation period
Slide 31: Financial Summary
Financial Summary • Continued strong net inflows, up 17% • Funds under management up 28% • Strong EEV result: – New business contribution up 18% – NAV per share up 22% • Underlying cash result up 10% reflecting: – Strong operating cash result, up 16% – Investment in long-term growth opportunities •
Slide 32: David Bellamy, Chief Executive
DAVID BELLAMY Chief Executive
Slide 33: Gross Inflows
Gross Inflows £12bn £11.4 +23% £10bn £9.2 £7.9 £8bn £6.8 £6bn £5.2 £5.6 £4.7 £4bn £3.1 £2.9 £3.3 £2bn 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 34: Consistent Net Inflow of Funds Under Management
Consistent Net Inflow of Funds Under Management £7bn £6.8 £6bn £5.8 +17% £5.1 £5bn £4.2 £4bn £3.3 £3.4 £2.9 £3bn £2.2 £1.9 £1.7 £2bn £1bn 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 35: Funds under Management
Funds under Management 21%p.a. compound growth over the last 5 years and 18%p.a. over 10 years £80bn £75.3 £70bn +28% £58.6 £60bn £52.0 £50bn £44.3 £40bn £34.8 £27.0 £28.5 £30bn £21.4 £20bn £18.2 £16.3 £10bn 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 36: Net Inflows 2007-2016
Q4 2016 Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 Net Inflows 2007-2016 Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Q2 200
Slide 37: 2016 Investment Association platform net flows
2016 Investment Association platform net flows
Slide 38: 2016 Investment Association platform net flows
2016 Investment Association platform net flows £1,250m £1,000m £750m £500m £250m £0m -£250m Jan Feb Mar April May June July Aug Sept Oct Nov Dec -£500m -£750m -£1,000m Investment Association Source: The Investment Association – Five Platforms that provide data include Cofunds, Fidelity Funds Network
Slide 39: 2016 Investment Association platform net flows vs SJP
2016 Investment Association platform net flows vs SJP £1,250m £1,000m £750m £500m £250m £0m -£250m Jan Feb Mar April May June July Aug Sept Oct Nov Dec -£500m -£750m -£1,000m Investment Association SJP Source: The Investment Association – Five Platforms that provide data include Cofunds, Fidelity Fu
Slide 40: St. James's Place – Unique selling points
St. James’s Place – Unique selling points • The St. James’s Place Partnership • Our distinct approach to Investment Management
Slide 41: Global Investment Management Expertise
Global Investment Management Expertise
Slide 42: SJP Portfolios vs ARC Private Client indices over 1 Year
SJP Portfolios vs ARC Private Client indices over 1 Year 25% 20.7 20% 16.2 15% 12.9 13.7 11.6 11.6 10.6 11.6 10.3 9.3 8.6 10% 8.6 5.2 5.5 5.5 5.5 5% 0% Defensive Conservative Balanced Managed Adventurous Immediate Balanced Deferred Income Income Income SJP Portfolio ARC PCI Peer Group Source: FE Ana
Slide 43: ARC Private Client Indices universe
ARC Private Client Indices universe
Slide 44: SJP Portfolios vs ARC Private Client indices over 5 Years
SJP Portfolios vs ARC Private Client indices over 5 Years 15% 11.2 11.1 10.1 10% 9.1 7.8 7.9 8.3 7.9 7.2 6.2 6.4 6.4 5% 4.3 4.3 0% Conservative Balanced Managed Adventurous Immediate Balanced Deferred Income Income Income SJP Portfolio ARC PCI Peer Group Source: FE Analytics, Asset Risk Consultants
Slide 45: Full Advice Service
Full Advice Service 10 year reduction in yield comparison St James’s Place 1.5% Source: Grant Thornton Adviser Charges Report, December 2016 Grant Thornton has collated and computed data in the attached table from publicly available information, and some mystery shopping face-to-face meetings, at th
Slide 46: FCA Asset Management Market Study
FCA Asset Management Market Study
Slide 47: Fund Management Costs
Fund Management Costs 90bps 43bps Average cost in the market Average cost at SJP
Slide 48: Fund charges comparison
Fund charges comparison SJP External Manager Fee Normal level of charge for In-House Retail Class 2.0% 1.5% 1.0% 0.5% 0.0% UK Global Overseas Mixed Fixed Alternatives Weighted Equities Equities Equities Asset Income Average
Slide 49: 2016 Investment Association platform net flows vs SJP
2016 Investment Association platform net flows vs SJP £1,250m £1,000m £750m £500m £250m £0m -£250m Jan Feb Mar April May June July Aug Sept Oct Nov Dec -£500m -£750m -£1,000m Investment Association SJP Source: The Investment Association – Five Platforms that provide data include Cofunds, Fidelity Fu
Slide 50: Value of advice – 'time-in' not 'timing'
Value of advice – ‘time-in’ not ‘timing’ A recent FT article ‘‘If you had been out of the FTSE All-Share index for 10 of the best-performing days over the past 20 years, you would have lost 170 per cent of your returns.”
Slide 51: Value of advice
Value of advice A report from Vanguard Asset Management suggested that Professional advice “can add about 3% a year in net returns” to clients with the key benefits seen in behavioural advice at times of market volatility and tax planning particularly in relation to retirement income. Vanguard Asset
Slide 52: Our charges online
ST. JAMESS PLACE WEALTH MANAGEMENT Our charges online Pensions — our charges for the Retirement Account When you invest with St. James’s Place you pay for our advice and the products we recommend, When you invest with St. James's Place you pay for our advice and the products we recommend. These char
Slide 53: Wealth account results
Wealth account results Do you feel the St. James’s Place proposition provides value for money? Good 50% Excellent 32% Reasonable Poor 17% 1% * Interim results as of 24 February 2017
Slide 54: Wealth account results
Wealth account results Knowing everything you know of the St. James’s Place proposition, would you recommend it to others? Yes I would, and have already done so 56% Yes, but I have yet to do so 41% No 3% * Interim results as of 24 February 2017
Slide 55: Wealth account results
Wealth account results Excellent/ Met Partner in Good/ Would Have already Overall Year the last year Reasonable value recommend SJP recommended satisfaction for money 2017 79% (90%) 99% (82%) 97% 56% 94% 2016 77% 98% (79%) 95% 58% N/A 2015 76% 99% (83%) 97% 46% N/A *Interim results as of 24 February
Slide 56: Client survey results
Client survey results Measure SJP Marketplace Overall satisfaction 83% 76% Advocacy 66% 51% Excellent client service 85% 75% Communications 78% 73% Definitely invest again 77% 59% Excellent/Good – value for money 73% 55% Very satisfied with Partner/adviser 73% 45% Percentage denote proportion of sco
Slide 57: The St. James's Place Partnership
The St. James’s Place Partnership • Over 2,378 Partner Practices play the Partners leading role in delivering our wealth management service 5% • Some of the most experienced and able professionals working in wealth 2% management today – average industry 23% experience of c.19 years • 1,037 advisers
Slide 58: Number of qualified Advisers/Partner businesses
Number of qualified Advisers/Partner businesses 3,500 Partner Businesses Qualified Advisers 10% 3,000 10% 3,415 10% 13% 2,500 10% 7% 2,000 8% 6% 9% 10% 1,500 1,000 500 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 59: St. James's Place Academy
St. James’s Place Academy • 73 graduates from the Academy over the last 12 months • Expect 200 to join the Academy in 2017 • 210 students currently enrolled • 80 to 100 of these students are expected to graduate in 2017 • Four Regional Academies (London, Manchester, Solihull & Edinburgh) Typical int
Slide 60: St. James's Place Asia
St. James’s Place Asia Shanghai • Offices in Singapore, Hong Kong & Shanghai • Adviser numbers have doubled in the 2016 now totalling 102 • SJP products now in all three locations and new life company Singapore bond launching in Hong Kong in March • Our global investment proposition and relationship
Slide 61: Rowan Dartington discretionary fund management
• Complementary investment management services specialising in Discretionary Fund Management (DFM) • Growth model – acquiring and retaining investments based on trusted long-term, face-to-face relationships with clients • Assets under management in excess of £1.5 billion a 26% increase on 2015 • Inv
Slide 62: Marketplace opportunities
Marketplace opportunities • 10 million people have over £50,000 of investable wealth • Complex tax arrangements • Move from corporate to individual responsibility • Living longer • Low interest rate environment • Intergeneration challenges • Fewer advisers
Slide 63: Adds Value
Clients The Economy Shareholders Charities via The The Partnership Foundation Adds Value “Responsible Business” Local communities Employees Suppliers
Slide 64: 2016 Results
2016 Results • Gross inflows of £11.4bn – up 23% • Net inflows of £6.8bn – up 17% • Funds Under Management up £15bn to £75.3bn • Total advisers - 3,415 Advisers – up 9.8% • EEV New Business Profits of £520.2m – up 18% • Post tax operating cash result – £226.0m – up 16% • Underlying post tax cash res
Slide 65: St. James's Place Wealth Management
= ST. JAMES’S PLACE WEALTH MANAGEMENT
Slide 66: IFRS underlying post-tax profit
IFRS underlying post-tax profit £’m 2016 2015 Underlying cash result 199.5 182.1 Share option cost (23.9) (15.0) Deferred tax impacts (21.1) 52.1 Back office infrastructure (16.7) (14.4) Other (9.3) 2.0 Underlying post-tax profit 128.5 206.8
Slide 67: IFRS post-tax profit
IFRS post-tax profit £’m 2016 2015 Underlying post-tax profit 128.5 206.8 DAC/DIR/PVIF - Amortisation (3.4) 9.9 - Tax rate change 2.1 5.9 - New Business (15.5) (20.6) IFRS post-tax profit 111.7 202.0