St. James's Place Plc · LSE:STJ
St. James's Place — H1 2024 Earnings Presentation
50 slides from St. James's Place's earnings presentation, Jul 30, 2024
Slide 1: Half Year Results 2024
St Half Year Jamess | Results Place | 2024
Slide 2: Coming up...
Coming up... 1Introduction 2 Financial results 3 Business review 2
Slide 3: Introduction
1 Introduction 2 Financial results 3 Business review 3
Slide 4: SJP – positioning for further success
SJP – positioning for further success Established Positioned to Sustainable Well-placed for Highly cash market leader benefit from and effective earnings growth generative, operating with structural market asset gathering as we deliver supporting growth scale advantage growth model scale operating a
Slide 5: Market backdrop
Market backdrop Mixed environment for UK consumers: + Headline inflation easing + Interest rates stable, outlook improving + Consumer confidence starting to improve - Sluggish UK economic growth - High mortgage costs impacting more people 5
Slide 6: H1 2024 summary
H1 2024 summary Financial highlights Operational highlights: £181.9bn Funds under management (FUM) 31 December 2023: £168.2bn ◆ Completion of H1 business review ◆ Progressed implementation of our new charging structure and 94.6% FUM retention rate ongoing service evidence review H1 2023: 95.6% ◆ Imp
Slide 7: Financial results
1 Introduction 2 Financial results 3 Business review 7
Slide 8: New business highlights
New business highlights Gross inflows of £8.5 billion, up 6% H1 2024 vs H1 2023 Gross inflows Net inflows ◆ Improving trend with Q2 2024 up 18% compared to Q2 2023 £bn +6% £bn -44% 9 4 8.5 Q1 2023 8.0 8 3.4 Q2 2023 Outflows remain elevated, 7 3 Q1 2024 but stable in Q2 vs Q1 2024 3.8 4.5 1.4 6 Q2 20
Slide 9: Strong compound growth in funds under management
◆ IMA continues to deliver Strong compound growth in for clients, average funds under management investment return of 7% YTD £bn ◆ FUM closed the period 200 at £181.9 billion, 180 up 8% YTD 160 ◆ Average FUM up 14% on H1 2023 140 120 100 80 60 40 20 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 202
Slide 10: Implementing our future charging structure
Implementing our future Implementation charging structure progress ◆ Completed planning and mobilisation ◆ Multi-disciplinary team now focused on execution and delivery On track with previous guidance ◆ New structure expected to be implemented in H2 2025 ◆ Total implementation costs of £140m-£160m (
Slide 11: Ongoing Service Evidence review
Ongoing Service Evidence review ◆ Dedicated project and associated workstreams mobilised, supported by third-party expertise ◆ Operational and tech capabilities being developed to complement Salesforce, supporting assessment of historic client servicing data ◆ No changes to the Ongoing Service Evide
Slide 12: Summary financial results
Summary Underlying post-tax cash result Life company solvency ratio financial results £205.2m (down 1%) 164% Interim shareholder returns 6.00 pence per share dividend £32.9m share buyback IFRS profit after tax EEV NAV per share £165.1m (up 2%) £15.71 (up 11%) 12
Slide 13: Underlying post-tax cash result
13 Underlying post-tax cash result ◆ Underlying post-tax cash £m 500 result of £205.2m ◆ Excluding short-term 400 36.3 charge structure 53.7 144.9 implementation costs, it 300 Up 11% increased by 11% on H1 2023 39.7 Down 1% ◆ Including these costs, it 200 25.0 decreased by 1% 324.8 230.2 100 205.2 2
Slide 14: Financial strengths
14 Financial strengths Solvency Credit rating Partner lending Life company solvency Maintained investment High quality loan book ratio remains strong grade credit rating Life company Fitch credit rating: ◆ Loans secured against A solvency ratio Partner income 200% ◆ Low average loan to 150% values S
Slide 15: Shareholder returns
Shareholder returns Interim shareholder Expect total returns comprising: full year shareholder ◆ 6.00 pence per share dividend, returns to equal consistent with guidance 50% of the full ◆ £32.9m share buyback year Underlying (equivalent to 6.00 pence cash result per share) 15
Slide 16: Business review
1 Introduction 2 Financial results 3 Business review 16
Slide 17: SJP – positioning for further success
SJP – positioning for further success Established Positioned to Sustainable Well-placed for Highly cash market leader benefit from and effective earnings growth generative, operating with structural market asset gathering as we deliver supporting growth scale advantage growth model scale operating a
Slide 18: Business review
18 01 02 03 3 Our Our Our future market strengths priorities and focus Business review
Slide 19: The £3.3 trillion UK wealth management market
The £3.3 trillion UK wealth management market: growing across all segments UK wealth market: by AUM segment UK wealth market: forecast development of AUM 2018-2030 2018-2030 Forecast Forecast £’tn £’tn 6 5 4 3 2 1 0 2018 2023 2030 2018 Outflows 2023 Outflows 2030 AUM AUM AUM Gross Asset Gross Asset
Slide 20: The UK financial advice landscape
Source: Company Published Reports, Platforum, Lit Search 20 The UK financial advice landscape There is a large market £3.3tn opportunity for financial advice UK investable wealth £2.1tn Ongoing drivers of demand: ◆ Large range of investment products Fully advised AUM available ◆ Plethora of informat
Slide 21: Business review: our strengths
21 01 02 03 3 Our Our Our future market strengths priorities and focus Business review
Slide 22: Integrated client proposition
We have a distinct and successful business model Advice Holistic financial planning and wealth management Platform & ◆ Built on strong, long-term Integrated client administration adviser client relationships proposition ◆ Connected proposition focused on great long-term outcomes Investments 22
Slide 23: We have the UK's leading advice network: the Partnership
We have the UK’s leading advice network: the Partnership 4,852 highly qualified advisers Penetration throughout the UK, the largest professional financial adviser community 2,666 independently run Partner practices Entrepreneurial, motivated, nimble Superior technical support and adviser qualificati
Slide 24: We have the UK's leading financial adviser training scheme: the Academy
319 New advisers in We have the UK’s training at end-H1 leading financial Pipeline of quality advisers adviser training scheme: 36 Average age the Academy Enables long-term client relationships; increases attractiveness to younger clients 28% Female advisers Contributes to Partnership diversity, sup
Slide 25: We have a distinct investment approach
We have a distinct investment approach 32 Funds 3 Portfolio Ranges Diversified and complementary To meet different client needs building blocks TOP DOWN Growth Portfolios Equities Bonds Asset Allocation Active, systematic Sovereign Model portfolios that can be tailored Portfolio and regional and cre
Slide 26: We have a robust technology infrastructure platform
We have a robust technology infrastructure platform Bluedoor Salesforce Data & AI Modern back-office Central customer Rich data universe £’bn administration system relationship management Data and AI integrated Enabling scalability and (CRM) system ecosystem efficiency within SJP Hyper-p
Slide 27: Our track record of success
Our track record of success Number of clients Gross inflows £bn H2 1,200,000 20 H1 1,000,000 15 800,000 600,000 10 400,000 5 200,000 0 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 H1 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2024 Funds under management Underlying cash result £bn £m H2 200
Slide 28: Business review: our priorities
28 01 02 03 3 Our Our Our future market strengths priorities and focus Business review
Slide 29: Our strategy
29 Our strategy WHY WE ARE HERE To empower clients with invaluable advice to realise bolder ambitions WHAT WE WILL DO Differentiated Leading Performance Brilliant Client Adviser Focused Basics Proposition Offering Organisation Simplify and standardise Drive empowerment, Enhance our client Continue t
Slide 30: Brilliant Basics
30 Brilliant Basics What this means: We will simplify and standardise our operations, sharpening focus on delivering excellent client outcomes Initial priority areas 1 2 3 Leverage data to Drive awareness Drive standardisation provide enhanced of financial advice and simplification analytics, suppor
Slide 31: Brilliant Basics: leading the conversation in UK wealth management
Brilliant Basics: leading the conversation in UK wealth management ◆ Utilise our brand to promote the value of financial advice ◆ Continue to work closely with Government and the FCA on: – Closing the advice and savings gaps more broadly – The Advice Guidance Boundary Review 38% £47,000 91% Of peopl
Slide 32: Differentiated Client Proposition
32 Differentiated Client Proposition What this means: We will enhance our client proposition, providing a quality offering across differing client segments Initial priority areas 1 2 3 Continue to broaden Develop our digital Enhance the our investment shelf channels, improving experience we provide
Slide 33: Differentiated Client Proposition: tailoring our proposition
33 Differentiated Client ◆ Our FUM is now diversified across the spectrum of client segments and needs Proposition: tailoring our proposition ◆ Most valued traits in our proposition are the quality of advice and clients’ Client funds under management relationship with their adviser segmentation 9% 1
Slide 34: Leading Adviser Offering
34 Leading Adviser Offering What this means: We will continue to be the best place to be a financial adviser in the UK, setting the standard for the future of financial advice Initial priority areas 1 2 3 Continue to refine our Continue to provide Evolve our Partnership Academy programme, a market l
Slide 35: Leading Adviser Offering: evolving our support model
Leading Adviser Offering: evolving our support model Funds under management by size of The Partnership is comprised of a business broad range of business types with diverse needs Opportunity to optimise the Partnership, supporting strong client relationships and sustained success for Single Part
Slide 36: Performance Focused Organisation
36 Performance Focused Organisation What this means: We will foster empowerment and accountability, evolving our culture and driving performance across our community Initial priority areas 1 2 3 Embed high performance Maintain a disciplined Optimise our cost base into our culture by driving approach
Slide 37: Cost and efficiency programme
Cost and efficiency programme areas of focus: Saving to invest ◆ Cost and efficiency programme to Demand management optimise our c.£670m existing £ addressable cost base ◆ Broad range of operating efficiencies Operating model redesign identified as we align to redefined purpose and refreshed strateg
Slide 38: Investing for growth
Investing for growth ◆ Savings create capacity to invest c.£250m over 2025 – 2030, c.50% of the capacity we will create ◆ Investment will focus on enhancing our technology and data capabilities, client proposition and broadening our investment shelf ◆ Further underpins our ambition to double the Und
Slide 39: Capital allocation framework
How we will prioritise our resources Maintain We will ensure the safety of our client investments by: Capital 1 a strong Meeting all regulatory solvency, working capital and liquidity balance sheet requirements as the business grows allocation Maintaining an investment grade credit rating framew
Slide 40: Summary
SSS Half Year = Results S! Jamess Place
Slide 41: Our strategy
41 Our strategy WHY WE ARE HERE To empower clients with invaluable advice to realise bolder ambitions WHAT WE WILL DO Differentiated Leading Performance Brilliant Client Adviser Focused Basics Proposition Offering Organisation Simplify and standardise Drive empowerment, Enhance our client Continue t
Slide 42: Our strategic ambitions
Adviser advocacy Our strategic ambitions Leading adviser advocacy What success looks like Colleague advocacy High-performing, empowered and engaged colleagues Great client outcomes c.95% annual client retention FUM growth Mid-to-high single digit annual FUM growth Cash result growth Doubling the Und
Slide 43: The home of advice
The home of advice Trust Excellence High performance Constant improvement 43
Slide 44: Q&A
SJP – positioning for further success Established Positioned to Sustainable Well-placed for Highly cash market leader benefit from and effective earnings growth generative, operating with structural market asset gathering as we deliver supporting growth scale advantage growth model scale operating a
Slide 45: Appendices
SSS Half Year == Results Appendices S! Jamess Place
Slide 46: Cash result: Other costs
Reduced investment in Asia Cash result: Other costs following prior year restructuring £’million H1 2024 H1 2023 Reduced investment in DFM which enters final stages of Net investment in Asia 4.5 10.8 back-office restructuring Net investment in DFM 2.3 2.6 Reduced FSCS levy due to scheme recoveries F
Slide 47: IFRS and EEV
47 IFRS and EEV IFRS profit after tax up 2%, reflecting EEV NAV per share up 11%, reflecting: similar dynamics to Cash result ◆ EEV operating profit in the period ◆ Continues to be distorted by policyholder ◆ Strong investment performance, increasing tax future net income ◆ Payment of 2023 final div
Slide 48: Addressable cost base
48 Addressable cost base Addressable cost base for cost and efficiency £’m programme is c.£670m Starting point to determine this was the 2023 IFRS expense base of £2.4bn Out of scope items removed e.g. all aspects of Partner remuneration One-off and non-controllable 67 672 items removed e.g. cost of
Slide 49: Modelling guidance for cost and efficiency and investment programmes
Modelling guidance for cost and efficiency and investment programmes £’million 2024 2025 2026 2027 2028 2029 2030 Total Cost savings net of 01 30 55 95 100 100 100 480 costs to achieve Investment for Nil (30) (55) (65) (50) (30) (30) (260) growth Net impact on cost 0 0 0 30 50 70 70 220 base (before
Slide 50: 2024 guidance summary
2024 Net income from FUM margin range of 54 to 56 bps No additional FSCS levy expense expected in H2, and guidance other regulatory costs in line with 2023 summary Growth in controllable expenses budgeted at 5% pre-tax / 3% post-tax Shareholder interest of c.£60- £70m if the BoE base rate remains at