Good morning and welcome to our 2025 half-year results. It's been a very successful first half for St. James's Place. We've delivered double-digit earnings growth and record funds under management, all while making substantial progress on our key programs of work. This performance reflects the strength of our business model, the quality and resilience of our Advisors, and the continued demand for trusted financial advice. I'm going to talk through some of the business and financial highlights, then Caroline will cover the financials in more detail. I'll then update you about our priorities as we look to the second half and beyond. Let's begin with the strong first half we've just delivered. It was a period where the backdrop for consumers continued to be complex and evolve. More positively, mortgage rates are coming down rather than going up, and interest rates are expected to trend lower over time.
On the other hand, we've seen sluggish economic growth across major economies. Stock markets have been volatile, consumer confidence is fragile, and geopolitical tension has been on the rise. Putting all this together, it's a tricky environment for a U.K consumer. How can they plan with confidence when there's so much uncertainty? The answer for many is holistic financial advice, delivered by a trusted, highly qualified, professional financial Advisor with whom they have a long relationship. Advisors can help their clients navigate a sea of uncertainty and make sense of markets. They help them block out the noise and encourage the right long-term behaviors to guide them on the way to financial freedom and flexibility. They help their clients to stay in control of their financial affairs and remain well-informed as pensions and saving landscapes shift over time.
I believe it is a great time to be a financial Advisor, one where they can really bring their expertise and experience to bear and add value to clients. It's against this backdrop that we've achieved a strong first half for new business. Our Advisors have been highly engaged with their clients, both in the run-up to tax year end and beyond. Activity levels remain high, ahead of what is seasonally a quieter summer period. During the first half, we attracted GBP 10.5 billion of new client investments as we sustained momentum, which built across 2024. Gross inflows were higher across all wrappers and reflected an increase in both case volumes and case size compared to the first half of 2024.
Now, we should be careful about reading too much into short-term trends, but investment bonds have become a feature in more retirement planning conversations of late, given proposed changes to inheritance tax treatment on defined contribution pensions. This will have contributed to the improved flows we're seeing into this wrapper. Retention remains high at 95.3% and reflects a modest improvement in surrender rates versus the same period last year. This resulted in net inflows of 3.8 billion for the half, double the net inflows we saw in the first half of 2024. Achieving sustained net inflows has long been a hallmark of our business. Very important too is delivering positive long-term investment returns for our clients.
While there was heightened market volatility during the first half of the year, the importance we place on building diversified investment portfolios served clients well and contributed to positive returns that compare favorably against peers. Combining investment returns with another period of net inflows, we now manage a record GBP 198.5 billion of client investments. A strong new business outturn has been mirrored in a strong financial result for the first half. We've delivered an underlying cash result of GBP 240.4 million, which is 17% up on the prior year, notwithstanding incurring additional charging structure implementation costs this half. Caroline will walk through the detail behind the cash results shortly. Another period of flows and financial performance highlights the quality of our business and the fantastic service our professional advisors provide for clients.
This puts us in excellent shape as we continue to deliver change that will set us up for sustained growth and success going forward. I'll turn now to updating you with the progress we're making on each of our major programs of work, beginning with how we're implementing simple and more comparable charges. I'm pleased to say that we are in the final stages of implementing this work. We expect the new structure to be in place within a month from today. The new charging structure will make clearer the value of our proposition, which is led through the value of personal advice that our professional advisors deliver day in and day out for clients. It will also help us to tell a clearer story around our investment performance for clients.
Importantly, our new charging structure will enable us to unlock how we can develop our business and client proposition going forward. In the near term, this means being able to develop a new Polaris Multi-Index fund range that we plan to launch later this year, subject to regulatory approval. I'll talk a little bit more about Polaris Multi-Index in the second part of my presentation. Returning to implementation, we have informed clients of the forthcoming changes to their charges. We are fine-tuning and testing the final aspects of our IT infrastructure build, and the partnership are primed and ready for the change. We remain on track for delivery in line with our plans and look forward to getting the job done. Turning to our second key program of work, namely addressing the historic client service evidencing gaps.
Back in February, we highlighted that we would take into consideration new industry guidance issued by the Financial Conduct Authority (FCA) around ongoing financial advice services as we progressed our work. Having engaged extensively with the FCA since then, we have now revised our approach to ongoing servicing and therefore revised our redress methodology, bringing us into better alignment with the new industry guidance and, of course, our experience from the project to date. This revised redress methodology has led to a GBP 84.5 million release from the ongoing service evidence provision. After tax, this release equates to GBP 63.4 million, which we will be returning to shareholders in full through an additional share buyback. Caroline Waddington will provide more information on this later. We said from the outset that this is a very significant exercise that would take the best part of two to three years to complete.
We look forward to accelerating progress in the second half of this year as we embed our revised approach at scale. Our third key program of work relates to delivering our cost and efficiency program. This will create additional capacity to invest in our strategic initiatives and enhance operating leverage as we grow in scale. We've made good progress in this work, including completing the implementation of most of our organizational redesign. Caroline will expand on this program and the other activities we are focusing on to achieve our planned cost savings going forward. To summarize, it's been a strong first half for SJP , one where we've delivered excellent new business and financial results and made further progress to position the business for sustained growth and success. I'll now hand over to Caroline to talk through our financial results in more detail before I return to talk about the future.
Thanks, Mark, and good morning, everyone. I'm delighted to present a strong set of financials for the first half of 2025, which you can see on the slide. I'm going to start off today by providing detail on our financial performance for the period, taking you through our cash result and the strength of our balance sheet. I'll then set out the financial impacts of our key programs that Mark spoke about earlier, and finally, I'll cover shareholder returns for the period. As usual, I'm not going to cover IFRS or EEV, but information about these metrics can be found in the appendix to the slide deck. Let's start by taking you through our cash result. This is a post-tax metric, so the numbers I will quote as I take you through it are also post-tax.
We are pleased to have delivered an underlying cash result of GBP 240.4 million for the period, which is an increase of 17% on the first half of 2024. This is despite incurring additional charging structure implementation costs compared to the same period last year. There are three key drivers of this strong result. First, an increase in average mature fund. Second, an increase in margin arising from new business. Third, our continued focus on cost management. First, funds under management, which I'll refer to as fund, has increased to a record GBP 198.5 billion as of 30th of June. Despite market volatility, this increase drove average mature fund up 13% on the same period last year and resulted in net income from fund also being up 13% at GBP 366.1 million. This result is within our guidance range of 54- 56 basis points on mature fund, excluding age and DFM.
For those of you who are less familiar with our financial business model, when I refer to mature fund, what I mean is the portion of our total fund which is subject to annual product management charges. These charges are our key profit driver, but under our current charging structure, they are not taken for the first six years after investment for most investment bond and pensions business. Whilst this fund is in its first six years with us, we refer to it as gestation fund. Gestation fund does not yet contribute to the net income from fund line in the cash result. However, as we have high levels of retention, we know that the vast majority of it will stay with us for the long term, which provides a high degree of visibility over future growth in income.
To bring this to life, once a GBP 51.1 billion gestation fund at June 30 is fully mature by 2031, it could contribute in the region of GBP 300 million of additional income to the cash result every year, and this is without incurring any additional costs. From the point our new charging structure is in place, we will benefit from all charges applying from the day that a new investment is made. We will not have to wait six years for new investment bond and pension business to contribute recurring income to the cash result. This means there will be no new inflows to the gestation fund balance post-implementation. As previously guided, we expect the margin we earn on mature fund to reduce to 43- 45 basis points under our new charging structure.
As usual, you can find a summary of all our guidance in the appendix to the slide deck, which also contains a reminder of what our new charging structure will look like. Whilst the margin range will reduce upon implementation, it will apply to an increasing proportion of fund over time. This is because all new business under the new structure will immediately flow into mature fund, and the remaining gestation fund will mature over the next six years. Together, these dynamics build a powerful picture of how our income can develop and compound in the medium term. As already guided, following the expected dip in profitability post-implementation in 2025 and 2026, we anticipate that the cash result will accelerate from 2027 onwards. This supports our ambition to double the underlying cash result from 2023- 2030.
The second key driver behind our strong underlying cash result is the margin arising from new business. This has increased by 40% to GBP 75.4 million, and it represents the initial charges on new business, less the payment of directly associated costs, such as initial advice fees paid to partners and third-party administration costs. The margin increase is predominantly driven by higher new business period on period. As a reminder, this line in our cash result will be negligible following the implementation of our new charging structure, as initial product charges are removed. Again, this is in line with the previous guidance. Third and finally, we've continued our focus on cost management.
For the first half, controllable expenses have increased by 7% on the same period last year to GBP 155 million, but it's important to note that this is due to phasing of expenses between the first and second half of the year only. Our guidance to contain growth in controllable expenses to 5% for the full year remains. Our underlying cash result excludes items which are one-off in nature, and so it excludes the GBP 63.4 million post-tax release from the ongoing service evidence provision following the implementation of our revised redress methodology. This is included in our cash result, which was GBP 299.2 million for the period. As the creation of the provision was a key driver in reducing returns to shareholders, the board has decided that the GBP 63.4 million release will be returned to shareholders in full via a share buyback program.
Our remaining ongoing service evidence provision stands at 320 million at the end of June. More information on the other lines within our cash result can be found in the appendix. I'll now take you through the strength of our balance sheet. As we've said before, we hold assets to fully match our liabilities to clients, and we take a prudent approach to investing shareholder funds. This results in a resilient capital position capable of meeting liabilities even during adverse market conditions. The key risk for our business is operational. To keep things simple, we choose to manage capital by holding a management solvency buffer, or MSB, on top of the assets we hold to match client liabilities. Of course, we also ensure the capital we hold under this method meets the requirements of the Solvency II regime.
At 30th of June, our MSB was GBP 575.9 million, and we held shareholder net assets over and above the value of our MSB of GBP 966.3 million. Most of this reflects investment to support the business and is relatively illiquid in nature, such as business loans to partners and the operational readiness prepayment asset. We run the group in a capital-efficient manner and return excess capital to shareholders subject to having liquidity and IFRS retained earnings capacity. The group operates with substantial liquid balances, but it's worth noting that much of this is already set aside for working capital requirements, including policyholder tax, funding for the ongoing service evidence provision, and to cover our MSB. Moving on to our key programs of work, I've already covered the financial aspects of our historic ongoing service evidence review, so now I'll cover the other two, starting with our new charging structure.
Implementation costs for this significant project were GBP 38.1 million post-tax in the first half, bringing the total spend recognized across the project to date to GBP 104.8 million. As we near implementation towards the end of August, we are confident that the overall cost of the program will be in line with the guidance we gave in February this year, which is towards the upper end of our original guidance range of GBP 105 million-GBP 120 million post-tax. The remaining implementation costs will be recognized in the second half of the year with no further costs to come in 2026. Our cost and efficiency program is progressing well, and we're on track to deliver it by 2027 as planned.
The organizational redesign, which Mark spoke about earlier, is a significant project in itself, involving mapping out how we should be organized across the business to align to our strategic priorities and drive future growth. We've completed most of the work to implement the new design and made headway in a number of other areas. These include optimizing our commercial relationships with suppliers and rationalizing our property footprint. We expect to deliver the program in line with the guidance we provided this time last year. As expected, the program has had no material impact on our half-year 2025 results, as cost to achieve and reinvestment spend have broadly offset the savings we've made during the period. We anticipate this will remain the case for the full year 2025 and 2026, again in line with previous guidance.
Finally, I'm going to cover shareholder returns, which are a key component in our capital allocation framework, which is included in the appendix. Under our current guidance, which covers the financial years 2025 and 2026, we expect to return 50% of the full year underlying cash result to shareholders. This is structured as 18 pence per share in annual dividends, with the balance distributed through share buybacks. For 2025, the board has declared an interim dividend of 6 pence per share, which equates to GBP 32.1 million, and an interim share buyback of the same amount. In addition to this interim share buyback, as I set out earlier, we'll also be buying back GBP 63.4 million of shares as we return the post-tax amount released from our ongoing service evidence provision to shareholders. Together, this means the total buyback, which will commence in August, will be GBP 95.5 million.
To conclude, as I said at the outset, we've delivered strong financial results for the first half of 2025, with our underlying cash result growing by 17% on the same period last year. Whilst our new charging structure will drive the expected dip in profitability for the remainder of 2025 and 2026 after it's implemented, we have a high degree of visibility in compounding earnings going forward. This gives us confidence in our ambition to double the underlying cash result from 2023- 2030. With that, I'll hand back to Mark.
Thank you, Caroline, for walking us through another strong financial outcome. In a moment, I will talk about our near-term priorities, but before I do that, I want to restate the opportunity for great financial advice-led businesses. You have heard us talk about the GBP 3.3 trillion in liquid investable assets in the U.K., and now the scale of this addressable market is set to grow. There is increasing recognition that much of this collective wealth is not working hard enough for consumers. The FCA recently estimated that over 7 million people hold more than 10,000 in cash. Now, holding cash is no bad thing. A rainy day fund is the cornerstone of any sound financial plan. The real question is, are people saving too much and investing too little? The need to address this is urgent.
According to Scottish Widows, 38% of people aren't on track for even a minimum retirement lifestyle. Our own research shows that nearly 1/5 expect to rely solely on the state pension. Those are stark statistics. This is where trusted financial advice makes a meaningful difference, helping clients build long-term plans, navigate uncertainty, and, crucially, giving them the confidence to invest. It's telling that nearly half those with a financial plan prioritize retirement savings each month, compared to just a quarter of those without. That's the value of advice and why over 1 million clients have chosen SJP . Holistic financial advice is about far more than investment returns. It's about maximizing tax efficiency, instilling positive investment behaviors, and navigating the complexity of intergenerational wealth planning. Just as importantly, it provides peace of mind, confidence, and long-term relationships built on trust.
We recognize that full financial advice won't be right for everyone. Those with simpler financial needs or lower investable wealth may need different support. That's why we back initiatives that help all consumers make better financial decisions, from the FCA's advice guidance boundary review to the Investment Association-led campaign to promote retail investing. As the U.K.'s largest wealth management and financial advice business, we're committed to shaping a marketplace where consumers have greater control and confidence in their financial lives. Beyond delivering good outcomes for our clients, our right to win is dependent on delivering on the strategic ambitions we have already set out. As I highlighted this time last year, this means we must first strengthen our foundations so we have the right basis from which we can then amplify and fully capitalize on the exciting market opportunity ahead.
Making progress against our three key programs therefore remains a key near-term priority. I want these programs completed and in the rearview mirror so we can move forward with pace and purpose. We must continue to deliver on the strategy we set out a year ago. At this stage, this is mainly about strengthening our business, so in the second half of this year, we plan to build on our work around simplification and standardization, particularly around administration linked to advice processes and new business submission. Some of this we'll be exploring tactical improvements. For example, we're considering how we can automate processes to create ongoing advice suitability letters to improve service and free up advisor time. The scope of some of this work to simplify and standardize could be transformational for some of our processes, for example, in reviewing and enhancing our business submission and our approach to payments.
Where we can, we will also press ahead and accelerate some of our work for the Amplify phase. I spoke earlier about the launch of Polaris Multi-Index, which is planned for late 2025, subject to regulatory approval. This is an initiative I'm really excited about, as this will leverage our expertise in active asset allocation while giving clients access to index tracking funds. This will add further choice for our clients and provide us with the opportunity to manage pockets of wealth that might be set outside of SJP today. We'll provide more detail on this once we have regulatory approval. I look forward to talking about the other aspects of our Amplify agenda at the time of our full-year results in February. Arguably, the most important priority is to keep focus on delivering to the level of service that clients and our advisors expect from us.
This means we must keep doing things like ensuring that our academy program remains best in class for those who want to become professional, highly qualified financial advisors. It means working to support the partnership with a market-leading advisor proposition, and it means working hard to deliver great client experiences day in and day out, supporting the realization of clients' financial aspirations, and helping our advisors to grow and develop their businesses further. To summarize, the first half of 2025 has been a very successful period for the business. We've delivered strong new business flows, record funds under management, and double-digit earnings growth, and we're setting SJP up for sustained growth and success. The changes we're making will ensure we are best placed to continue to capitalize on the compelling market opportunity in U.K. wealth management, where the demand and need for financial advice is growing.
We are the scale operator and the home of financial advice in the U.K. We're privileged that over 1 million clients are already securing their long-term financial futures through the power of SJP's professional advisors, and we're driven by a desire to help more people achieve this. We've got a proven track record of delivering growth through all stages of the market cycle, and we expect to see this translate to strong compound earnings growth as we achieve scale operating leverage. As we continue to invest in our capabilities and adapt to an evolving market environment, we remain confident in our ability to deliver sustainable returns and create long-term value for shareholders. Thank you for listening, and do please tune in for our live Q&A, which will kick off at 8:00 A.M.