INTERIM RESULTS - St. James's Place Wealth Management/media/Files/S/sjp-group/reports-and... ·...

INTERIM RESULTS July 2017

DAVID BELLAMY Chief Executive

Agenda

New Business Update

Financial Performance

The Future

Q&A

Half-year results

‘It’s an understatement to say that it’s been a

very unusual and unprecedented six months with much

volatility, increasing uncertainty, political hostility

and a somewhat divided population’

‘Nevertheless, we are a resilient bunch… and a month

post Brexit, we are beginning to see some

order being restored.’

Half-year results

‘It’s an understatement to say that it’s been a

very unusual and unprecedented six months with much

volatility, increasing uncertainty, political hostility

and a somewhat divided population’

‘Nevertheless, we are a resilient bunch… and a month post

General Election, we are beginning to see some

order being restored.’

+35% +9% +9%

+21% +16%

+17%

+23%

+30%

£0bn

£2bn

£4bn

£6bn

£8bn

£10bn

£12bn

2010 2011 2012 2013 2014 2015 2016 2017 June

Gross Inflows

Up 30% at £6.9bn

+34% -11% +31%

+30% +10% +4%

+28%

+20% +14%

+17%

+40%

£0bn

£2bn

£4bn

£6bn

£8bn

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017June

Up 40% at £4.3bn

Net Inflows

Funds under management

+34% +20% +29% +25% +18% -10%

+31% +26% +6%

+22%

+27%

+17% +13%

+28%

+10%

£0bn

£10bn

£20bn

£30bn

£40bn

£50bn

£60bn

£70bn

£80bn

£90bn

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017June

83.0

Up £7.7bn at £83.0bn

1.6 1.7 1.6 1.9 1.9 1.9 2.0 2.1 2.1

2.3 2.3 2.5 2.5

2.8 2.8

3.3 3.2

3.7

Q1 Q2 Q3 Q4

2013 2014 2015 2016 2017

Gross Inflows by quarter (£bn)

2013 over 2012 +28% +22% +27% +11% 2014 over 2013 +15% +17% +19% +12% 2015 over 2014 +12% +17% +20% +20% 2016 over 2015 +16% +23% +21% +30% 2016 over 2017 +32% +29%

0.6 0.7

1.5 1.8

1.2

1.2

13 14 15 16 17 13 14 15 16 17 13 14 15 16 13 14 15 16

Life Pension UT/ISA

Gross Inflows by quarter & wrapper (£bn)

Q1 Q2 Q3 Q4

UTs & ISAs up 32%, Pensions up 33% and Bonds up 20% YTD

0.9 1.0 1.1

1.2 1.2 1.3 1.3 1.4 1.3 1.4

1.5 1.6

1.4

1.7 1.7

2.1 2.0

2.3

Q1 Q2 Q3 Q4

2013 2014 2015 2016 2017

Net Inflows by quarter (£bn)

2013 over 2012 +29% +26% +41% +9% 2014 over 2013 +26% +20% +23% +14% 2015 over 2014 +9% +14% +17% +17% 2016 over 2015 +3% +25% +12% +26% 2016 over 2017 +46% +35%

Funds under management

+34% +20% +29% +25% +18% -10%

+31% +26% +6%

+22%

+27%

+17% +13%

+28%

+10%

£0bn

£10bn

£20bn

£30bn

£40bn

£50bn

£60bn

£70bn

£80bn

£90bn

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017June

83.0

Up £7.7bn at £83.0bn

Drivers of growth

CAPACITY NUMBER OF ADVISERS

PRODUCTIVITY NEW BUSINESS PER ADVISER

NEW BUSINESS

Experienced recruitment

Asia

Academy

Next Generation

Discretionary Fund Management

Personal development

Broadening investment portfolio

SJP Money Management


Technical Connection

Intergenerational Mortgage range

Number of Advisers

+10% +9%

+8% +6% +7%

+10% +13%

+10%

+10% +10% +3.7%

0

1000

2000

3000

4000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017June

Up 3.7% at 3,540 advisers

Drivers of growth

CAPACITY NUMBER OF ADVISERS

PRODUCTIVITY NEW BUSINESS PER ADVISER

NEW BUSINESS

Experienced recruitment

Asia

Academy

Next Generation


Personal development

Broadening investment portfolio

SJP Money Management


Technical Connection

Intergenerational Mortgage range

Adviser Productivity

+3% +0% +9%

+4% +6%

+7%

+19%

£1m

£2m

£3m

£4m

2010 2011 2012 2013 2014 2015 2016 2017 June

Gross inflows per adviser up 19%

Summary

• Gross inflows up 30%

• Net inflows up 40%

• Funds under management at £83 billion

ANDREW CROFT Chief Financial Officer

Agenda

• Cash

• EEV

• Dividend

• Solvency

Post-tax cash result

£’m H1 2017

H1 2016

Net annual management fee 297.8 235.7 +26%

Reduction in fees in gestation period (130.0) (86.9)

Net income from FUM 167.8 148.8

Margin arising from new business 59.4 20.5

Establishment expenses (73.6) (60.1)

Operational development expenses (6.2) (5.6)

Regulatory fees (3.2) (3.0)

FSCS levy (16.0) (13.6)

Shareholder interest 5.7 4.7

Utilisation of capital losses 9.3 7.0

Miscellaneous (4.2) 4.4

Operating cash result 139.0 103.1

Net annual management fee drivers

• Average annual management fee

• New funds under management

• Investment returns on FUM


£’m H1 2017

H1 2016








FSCS levy (16.0) (13.6)





FUM in gestation period

• c£26.8 billion of new business

added in last six years, which is

not yet generating positive cash

earnings

• c.£206 million of post tax cash

earnings per annum in future

• c.£1.1bn of FUM emerging

from gestation in H2

Year

2011 £1.1bn

2012 £2.9bn

2013 £4.0bn

2014 £4.3bn

2015 £5.2bn

2016 £6.1bn

2017 HY £3.2bn

Total £26.8bn


£’m H1 2017

H1 2016








FSCS levy (16.0) (13.6)





Establishment Expenses

• Additional office space

• Impact of the higher level of gross and net inflow


£’m H1 2017

H1 2016








FSCS levy (16.0) (13.6)




Operating cash result 139.0 103.1 +35%

£’m H1 2017

H1 2016

Academy (3.3) (2.8)

Asia (7.5) (3.2)

DFM (2.8) (1.2)

Strategic development costs (2.3) (1.5)

(15.9) (8.7)

Investments

£’m H1 2017

H1 2016

Operating cash result 139.0 103.1 +35%

Investments (15.9) (8.7)

Underlying cash result 123.1 94.4 +30%

Back office infrastructure development (8.2) (8.4)

Variance (3.6) (3.5)

Cash result 111.3 82.5 +35%


£’m H1 2017

H1 2016

New business contribution 343.0 228.9 +50%

Unwind of the discount rate 102.8 98.8

Experience variance 17.8 1.7

Operating assumption changes - -

Investment income 3.3 2.9

Fund management business EEV operating profit 466.9 332.3

Investments & back-office infrastructure (23.5) (17.6)

Distribution (20.7) (17.5)

Share options & NI (15.9) (7.5)

Other (9.5) (5.7)

Operating profit 397.3 284.0

EEV operating profit

New business contribution

• Initial margin less initial costs

• Future annual management fees less maintenance costs

• Lower maintenance costs x duration

• Bluedoor financial benefits emerging via EEV but cash still

to follow in future years

£’m H1 2017

H1 2016

New business contribution 343.0 228.9 +50%

Unwind of the discount rate 102.8 98.8

Experience variance 17.8 1.7

Operating assumption changes - -

Investment income 3.3 2.9

Fund management business EEV operating profit 466.9 332.3

Investments & back-office infrastructure (23.5) (17.6)



Other (9.5) (5.7)

Operating profit 397.3 284.0 +40%


£’m H1 2017

H1 2016

Operating profit 397.3 284.0 +40%

Investment variance 214.1 168.8

Economic assumption change 11.5 (10.1)

Pre-tax profit 622.9 442.7 +41%


pence H1 2017

H1 2016

NAV per share 976.7 791.9 +23%

NAV per share

Dividends

• Interim dividend up 25% to 15.41p

• Anticipate increasing the full year dividend by a similar amount

• H1 dividend represents c. 70% of underlying H1 cash result

• Dividend policy unchanged

Solvency

• Solvency managed to ensure assets held are in excess of:

Client liabilities

+

Management Solvency Buffer

• Our approach more cautious than SII position since no credit for VIF

• Standard formula used to calculate SII SCR – no transitionals,

matching or volatility adjustments

£’m 30 June 2017

31 Dec 2016

Net assets in excess of client liabilities (A) 622.6 530.0

Management solvency buffer (B) (437.0) (437.0)

Net assets in excess of MSB 185.6 93.0

Combined Life Company Solvency Position

Dividend history

+18% +2% +2.5% +33% +33%

+33%

+50%

+40%

+20%

+18%

+25%

0p

5p

10p

15p

20p

25p

30p

35p

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 H1 2017

Compound growth of c.25% per annum

DAVID BELLAMY Chief Executive

Our approach to Investment Management

Appoints the

fund managers

Decisions:

Change firm?

Change manager?

No change?

‘MANAGES THE MANAGERS’

Peter Dunscombe

‘INDEPENDENT EXPERTISE’

THE INVESTMENT COMMITTEE

Win Robbins

Davina Curling

Steven Daniels

Sets

performance

objectives

Risk

management

and strategy

28 8 36 69 36 funds Asset

classes

exclusive

strategies

lead fund

managers

fund

houses

Our approach to Investment Management

2.6

3.9

5.3 4.9

7.5

3.5

4.6

5.8

1.9 1.9

3.2

4.5

5.5

1.9

3.2

4.5

0%

1%

2%

3%

4%

5%

6%

7%

8%

Defensive Conservative Balanced Managed Adventurous ImmediateIncome

BalancedIncome

DeferredIncome

SJP Portfolio ARC Sectors

SJP vs ARC Peer Group

Source: FE Analytics, Asset Risk Consultants (ARC) Private Client Indices and SJP internal data. Data to 30 June 2017

Year to 30 June 2017

3.9

6.6

8.2

11.4 11.8

7.3 8.5

10.1

4.3 4.3

6.5

8.3 9.6

4.3

6.5

8.3

0%

2%

4%

6%

8%

10%

12%

14%

Defensive Conservative Balanced Managed Adventurous ImmediateIncome

BalancedIncome

DeferredIncome

SJP Portfolio ARC Sectors

SJP vs ARC Peer Group

Source: FE Analytics, Asset Risk Consultants (ARC) Private Client Indices and SJP internal data. Data to 30 June 2017

Five years to 30 June 2017

ARC Private Client Indices – Contributors

5%

2%

15%

22%

13% 4% 4%

22% 9% Overseas Partners:

4%

The St. James’s Place Partnership

• 2,394 Partner businesses

• Circa 20 years average industry experience

• 1,700 employees

• 5,000 Partner support staff

(3,540 qualified advisers)

The St. James’s Place Academy

100 expected to graduate this year

88 new entrants so far in 2017 (vs. 75 in 2016)

Average age under 40

87% hold degrees

23% are women

Partnership development

Business

Acquisition Transition

Business

Processing Establishment Development Risk

Marketing Private

Clients

Technical

Support

Business sale

& purchase Technology

Training &

Development

Business

Assurance

PARTNER PRACTICE

FCA’s Assessing Suitability Review

FCA’s Assessing Suitability Review – Market Results

Suitable 93.1%

FCA’s Assessing Suitability Review – Market Results

Acceptable 52.9%

Acceptable 39.5%

Technology

• UK tax code is now some 20,000 pages long

• Has trebled since 1997

• FCA Handbook ‘if printed out stands more than 6 feet tall’

Sources: City AM: “Our bulging tax code is holding Britain back: Politicians must fix this” March 2015, Financial Times: “Financial regulator says new rules will have to consider Brexit” November 2016

Increasing Complexity

FSCS Levy


Shifting Sands of Pension Legislation

Lifetime Allowance Annual Allowance

2006 Pension Simplification (A-Day)

Introduction of the Lifetime Allowance (rising to £1.8m by 2010)

£1,500,000 £215,000

2007 £1,600,000 £225,000

2008 Announcement that LTA would freeze at 2010 levels for next 5 years £1,650,000 £235,000

2009 £1,750,000 £245,000

2010 Announcement of a reduction in the LTA for 2012 and introduction of carry forward £1,800,000 £255,000

2011 Requirement to annuitise at 75 abolished

Reduction in annual allowance

£1,800,000 £50,000

2012 Auto-Enrolment Starts

Reduction in lifetime allowance

£1,500,000 £50,000

2013 £1,500,000 £50,000

2014 Pensions Freedoms Announced

Further reduction in annual & lifetime allowances

£1,250,000 £40,000

2015 Freedom & Choice Regime begins

Further consultations on tax relief

Pension Input Period Rules Change

£1,250,000 £40,000

2016 Annual Allowance Tapering for higher earners £1,000,000 £40,000 reducing to

£10,000

2017 Money Purchase Annual Allowance reduced from £10,000 to £4,000 £1,000,000 £40,000 reducing to

£10,000


ISA

Lifetime ISA

Junior ISA

Help to Buy ISA

Innovative ISA

Inheritance ISA

Flexible ISA

Consistent Delivery

• Our investment approach

• The St. James’s Place Partnership

• The support they have behind them

• The environment we work in

The SJP Marketplace

UK individuals with between £50k and £5m

of investable wealth

Amount of investable wealth held by UK

individuals with more than £50k but <£5m

BREXIT

• UK domestic business

• Limited overseas exposure

• Unaffected directly by trade

agreements

AMMS & MIFID II

AMMS & MIFID II

No new authorisations required

Already negotiate largely institutional

fund fees

90bps

43bps

Average cost in the market* Average cost at SJP

* Source: FCA Asset Management Market Study Interim Report

The Value of Advice

Would recommend

96%

Satisfaction with level of

Partner contact

92%

Value for money

98%

Overall satisfaction

94%

The value of Financial Advice

‘This report demonstrates the very real value of financial advice

for the consumer.’

‘…those who take advice are likely to accumulate more

financial and pension wealth, supported by increased saving and

investing in equity assets, while those in retirement are likely to

have more income, particularly at older ages.’

‘…advisers are good value for money – the benefits of advice

outweigh any costs associated with it.’

Need for Advice

Technology

BLUEDOOR

PRIVATE CLIENTS

Other Initiatives

PRIVATE BANK ING PANEL C ASH MANAG EMENT

£0.0bn

£0.2bn

£0.4bn

£0.6bn

£0.8bn

£1.0bn

£1.2bn

£1.4bn

£1.6bn

£1.8bn

£2.0bn

2015 2016 2017 June

Rowan Dartington

Over 12 months - Funds under Management up 35%

- Investment Executives up 21%

£1.57bn

£1.84bn

51

86

102 110

2014 2015 2016 2017 (as at end of June)

Asia – Number of Advisers

£482m

£659m

£814m

2015 2016 2017 (as at end of June)

Asia – Funds Under Management

+37%

+24%

Summary of Results

• Gross inflows up 30%

• Net inflows up 40%

• Adviser numbers up 3.7%

• Funds under Management at £83bn

• Embedded value operating profit up 40%

• IFRS profit before tax up 32%

• Underlying cash result up 30%

• Interim dividend up 25%

Appendices

£’m H1 2017

H1 2016

Underlying cash result 123.1 94.4 +30%

Share option cost (13.0) (7.5)

Deferred tax impacts (14.6) (12.4)

Back office infrastructure (8.2) (8.4)

Other (3.9) (7.0)

Underlying post-tax profit 83.4 59.1 +41%

DAC/DIR/PVIF

- Amortisation 17.4 (2.6)

- Tax rate change - -

- New Business (38.9) (8.1)

IFRS post-tax profit 61.9 48.4 +28%

Cash result to IFRS reconciliation

£’m H1 2017

H1 2016

Funds management business IFRS operating profit 175.9 122.1 +44%

Investments and back-office infrastructure (23.5) (17.6)



Other (9.5) (5.7)

Underlying pre-tax profit 106.3 73.8 +44%

IFRS underlying pre-tax profit

Solvency II position

£’m Life

Other

Group

June 2017

Group

Dec 2016

Solvency II net assets 622.6 424.3 1,046.9 1,070.0

Value of in-force 2,996.6 2,996.6 2,707.9

Risk margin (855.2) (855.2) (779.2)

Own funds (A) 2,764.0 424.3 3,188.3 2,998.7

Solvency capital requirement (B) (2,157.3) (63.1) (2,220.4) (2,046.5)

Solvency II free assets 606.7 361.2 967.9 952.2

Solvency ratio (A/B) 144% 147%

INTERIM RESULTS - St. James's Place Wealth Management/media/Files/S/sjp-group/reports-and... ·...

Documents

Transcript of INTERIM RESULTS - St. James's Place Wealth Management/media/Files/S/sjp-group/reports-and... ·...