St. James's Place Plc · LSE:STJ
St. James's Place — Corporate Update (October 2023)
28 slides from St. James's Place's corporate update, Oct 17, 2023
Slide 1: The future of simple, comparable charging
The future of simple, comparable charging
Slide 2: Agenda
Agenda 1. Andrew Croft The future of SJP charging 2. Craig Gentle Financial impact 3. Andrew Croft Q3 trading update & outlook 4. Q&A
Slide 3: The future of SJP charging
The future of SJP charging Andrew Croft
Slide 4: Summary
Summary What changes are Why did we make What impact will these we making? these changes? changes have? We have completed an internal To address evolution over time of Client charges will continue to evaluation of our charging structure external environment, increasingly compare favourably wit
Slide 5: Market positioning
Market positioning £bn Funds Under Management 180 SJP has delivered strong client outcomes for 33 years 160 140 We have grown to become the UK’s leading provider of financial advice with 120 over £158bn of FUM 100 80 Market opportunity1 driven by increasing demand for advice 60 40 − Large UK s
Slide 6: Evaluating our charging models
Evaluating our charging models Client expectations and the external landscape are continually evolving Increasing focus on: − Simplicity − Comparability We have evaluated our long-term approach to charges
Slide 7: Our objectives in evolving our charging models
Our objectives in evolving our charging models Clear articulation Simplicity of value Renewed charging structure that sets the business up for future success Comparability
Slide 8: Key changes to charging structure
Key changes to charging structure Simplifying bonds Separating Rebalancing and pensions our charges our advice and product charges New investment bond and pension Charges will now be outlined in Charges will be rebalanced business will no longer be subject to component parts (advice, towards t
Slide 9: Outcome of changes
Outcome of changes Reduced complexity Improved Well placed to capture Renewed charging Competitive significant market structure charges comparability opportunity Sustainable charging model
Slide 10: Outcome of changes: Unit Trusts & ISAs
Outcome of changes: Unit Trusts & ISAs Improved value offering by reducing both Clearly separated into the three components of initial and overall ongoing charges our ongoing service Initial Charges Ongoing Charges Up to 5% 1.64% Up to 1.59%2 Advice 1 Up to 4.5%1 2 Fund 0.80%1 3 Product 1Varies
Slide 11: Outcome of changes: Investment Bonds and Pensions
Outcome of changes: Investment Bonds and Pensions Initial Charges Bond and pensions charging Up to 6% structure more closely aligned Up to 4.5%1 with the structure for unit trusts and ISAs, and new business will have no gestation period Initial charges will be lower, while ongoing charges will b
Slide 12: Implementation
Implementation Changes to be completed by H2 2025 Charging structure will be in place from H2 2025 for all new business and mature in-force Implementation costs of £140m-£160m business (before tax) over 2023-2025, funded from outside of our controllable expense target Gestation business will
Slide 13: Summary
Summary What changes are Why did we make What impact will these we making? these changes? changes have? We have completed an internal To address evolution over time of Client charges will continue to evaluation of our charging structure external environment, increasingly compare favourably wit
Slide 14: Financial impact
Financial impact Craig Gentle
Slide 15: Key differences and effect on financials
Key differences and effect on financials 1 2 3 4 Removing initial Simplifying Reducing Implementation product charges bonds and ongoing charges costs pensions charge structure Lower initial income as Removal of gestation Reduced ongoing One-off pre-tax costs of initial product charges effect for new
Slide 16: Key differences: Bonds and pensions
Key differences: Bonds and pensions 1 2 3 Removing initial product Simplifying bonds and Reducing ongoing charges charges pensions charge structure Reduced initial margin as initial Higher ongoing income in Y1-6 as Lower ongoing income in Y7+ as product margin is eliminated gestation effect is remov
Slide 17: Key differences: Unit trusts and ISAs
Key differences: Unit trusts and ISAs 1 3 Removing initial product Reducing ongoing charges charges Reduced initial margin as initial Lower ongoing income throughout as product margin is eliminated ongoing charges are reduced 200 1 3 Current Future Retained bps 150 100 50 0 0 1 2 3 4 5 6 7 8 9 10 11
Slide 18: Key differences and effect on financials
Key differences and effect on financials 1 2 3 4 Removing initial Simplifying Reducing Implementation product charges bonds and ongoing charges costs pensions charge structure Lower initial income as Removal of gestation Reduced ongoing One-off pre-tax costs of initial product charges effect for new
Slide 19: Financial impact – cash modelling guidance
Financial impact – cash modelling guidance Margin arising from new business1 (Guidance applies from the second half of 2025) There will be no positive margin in the future because of the removal of initial product fees − Compared to a positive margin of 66 bps achieved in the first half of 2023 1R
Slide 20: Financial impact – Cash result income pro-forma
Financial impact – Cash result income pro-forma Pro-forma shows the impact on Cash result income if these changes had been implemented from 1st January 2016, with everything else as actually achieved Future evolution of the Cash result will naturally reflect various assumptions, but impact patte
Slide 21: EEV NAV per share
EEV NAV per share £ 18 EEV NAV per share of approximately £13.60, down 16 17% since 30 June 2023, 14 -17% reflecting: EEV profit in the period 12 Payment of interim 10 dividend Impact of simplifying 8 charge structure 6 4 Full reassessment to be completed for the financial 2 year end 0 2018 20
Slide 22: IFRS
IFRS Impacts described for Cash will similarly impact the IFRS result, but on a gross of tax basis Impact mitigated through no further deferral of initial product charges through the DIR IFRS DIR £’million 2022 Future Gradually reduce Amortisation of DIR 166.2 over 6 years No longer a feature DI
Slide 23: Solvency & Dividends
Solvency & Dividends Solvency Charge simplification will reduce SII own funds, offset by a reduction in SII capital requirements Small positive impact to solvency ratio Solvency position remains strong with a robust solvency ration Dividends Dividend guidance remains at 70% of Underlying cas
Slide 24: Q3 trading update and outlook
Q3 trading update and outlook Andrew Croft
Slide 25: Q3 trading update
Q3 trading update £’Billion Q3 2023 Q3 2022 Robust performance in Gross inflows 3.68 4.05 Q3 despite ongoing challenging conditions Net inflows 0.91 2.19 Market conditions impacting Closing funds under near-term client confidence 158.57 143.14 management and capacity to commit to long-term inves
Slide 26: Focus remains on business priorities
Focus remains on business priorities Delivering value Our culture and Building to advisers and clients community being a leading through our investment responsible proposition business Building and Being easier protecting Continued to do business our brand and financial strength with reputation
Slide 27: Outlook
Outlook Business continues to demonstrate resilience and robust performance through the business cycle Attractive long-term market opportunity Revised charging structure leaves us well placed to capitalise on this Focus is on delivering long-term growth for clients, Partners and shareholders
Slide 28: Any questions?
Any questions? (A sJP