St. James's Place Plc · LSE:STJ
St. James's Place — H1 2011 Earnings Presentation
53 slides from St. James's Place's earnings presentation, July 2011
Slide 1: Interim Results July 2011
ST. JAMES’S PLACE WEALTH MANAGEMENT INTERIM RESULTS July 2011
Slide 2: Mike Wilson, David Bellamy, Andrew Croft
Mike Wilson CHAIRMAN David Bellamy CHIEF EXECUTIVE Andrew Croft FINANCE DIRECTOR
Slide 3: Mike Wilson, Chairman
ST. JAMES’S PLACE WEALTH MANAGEMENT MIKE WILSON Chairman
Slide 4: Agenda
Agenda Introduction MIKE WILSON Business Update DAVID BELLAMY Financials ANDREW CROFT Outlook DAVID BELLAMY Q&A
Slide 5: David Bellamy, Chief Executive
DAVID BELLAMY Chief Executive
Slide 6: Total new business by quarter
Total new business by quarter APE (Annual premiums plus 10% of single premiums) 2008 2009 2010 2011 +12% £180m 178.9 +18% £160m 159.3 156.7 152.7 £140m 133.3 136.5 133.2 £120m 122.0 £100m 109.2 101.9 104.6 98.7 93.8 96.4 £80m £60m Q1 Q2 Q3 Q4 2008 over 2007 +1% +5% +0% -15% 2009 over 2008 -5% -10% +
Slide 7: Record half year single investments
Record half year single investments (£’bn) £3b n +14% +60% 2.7 2.4 £2b n +0% +42% -12% 1.7 1.7 1.5 £1b n £0b n 2007 2008 2009 2010 2011
Slide 8: 17% p.a. compound growth in funds under management over 5 years
17% p.a. compound growth in funds under management over 5 years £30b n +30% 29.1 £25b n +33% £20b n 22.4 +29% -1% -2% £15b n 17.3 17.2 16.9 £10b n £5b n £0b n 2007 2008 2009 2010 2011 30 June
Slide 9: An excellent start to the year
So, an excellent start to the year with; • APE growth of 15% • Total single investments of £2.7bn up 14% on 2010 • Net inflows of £1.7bn • Bringing Funds under Management to £29.1bn
Slide 10: Growing number of partners
Growing number of partners +6% +3% 1,600 +9% 1,552 1,601 1,400 +7% +8% 1,464 1,200 1,340 1,251 1,000 800 600 400 200 0 2007 2008 2009 2010 2011 30 June
Slide 11: An excellent start to the year
So, an excellent start to the year with; • APE growth of 15% • Total single investments of £2.7bn up 14% on 2010 • Net inflows of £1.7bn • Bringing Funds under Management to £29.1bn • Partnership up 3% to 1601
Slide 12: Andrew Croft, Finance Director
ANDREW CROFT Finance Director
Slide 13: Analysis of EEV operating profit
Analysis of EEV operating profit £’m H1 2011 H1 2010 New business contribution 127.7 100.9 +27% Profits from existing business – expected 59.1 46.8 – experience variance 2.8 12.1 – operating assumption changes - - Investment income 2.2 1.9 Life & unit trust operating profit 191.8 161.7 Distribution
Slide 14: New business margin
New business margin • APE up 15% • Manufactured business up 16% and represents 93% of the total (2010: 91%) • Careful management of establishment expenses with growth of only 4.4% • Equalisation of Partner remuneration across bonds and unit trusts as part of RDR implementation • Corporation tax redu
Slide 15: New business margin
New business margin H1 2011 H1 2010 On an APE basis 38.1% 34.5% On a PVNBP basis 4.4% 4.1%
Slide 16: Analysis of EEV operating profit
Analysis of EEV operating profit £’m H1 2011 H1 2010 New business contribution 127.7 100.9 +27% Profits from existing business – expected 59.1 46.8 – experience variance 2.8 12.1 – operating assumption changes - - Investment income 2.2 1.9 Life & unit trust operating profit 191.8 161.7 Distribution
Slide 17: Analysis of EEV pre-tax result
Analysis of EEV pre-tax result £’m H1 2011 H1 2010 Operating profit 183.6 162.1 Investment variance 0.9 (84.5) Economic assumption change (1.9) 9.4 Pre-tax result 182.6 87.0 +110%
Slide 18: EEV net asset value per share
EEV net asset value per share pence H1 2011 H1 2010 Net asset value per share 379.6 294.9 +29%
Slide 19: IFRS profit before shareholder tax
IFRS profit before shareholder tax £’m H1 2011 H2 2010 Life 49.1 27.5 Unit trust 14.4 8.4 Distribution - 5.9 Other (8.2) (5.5) Profit before shareholder tax 55.3 36.3 +52%
Slide 20: Analysis of post tax IFRS profit
Analysis of post tax IFRS profit £’m H1 2011 H1 2010 Cash result 30.8 18.7 DAC / DIR amortisation 9.2 7.8 DAC / DIR new business 6.4 9.2 PVIF (1.4) (1.4) Share options (5.9) (4.9) Impact of Corporation tax reduction 3.8 - Other 4.7 (1.0) Post-tax profit 47.6 28.4
Slide 21: Pre-tax IFRS profit
Pre- tax IFRS profit £’m H1 2011 H1 2010 Post-tax profit 47.6 28.4 Shareholder tax 7.7 7.9 Pre-tax profit 55.3 36.3 Effective tax rate 13.9% 21.8%
Slide 22: Analysis of shareholder tax charge
Analysis of shareholder tax charge £’m H1 2011 H1 2010 Expected 15.0 10.2 Market related impacts (2.5) (2.8) Other (1.0) 0.5 Change in corporation tax rate (3.8) - Total tax charge 7.7 7.9 Effective tax rate 13.9% 21.8% Expected effective tax rate 27.0% 28.0%
Slide 23: IFRS net asset value per share
IFRS net asset value per share pence H1 2011 H1 2010 Net asset value per share 127.4 116.3
Slide 24: Analysis of post tax cash result
Analysis of post tax cash result £’m H1 2011 H1 2010 Arising on in force business 64.8 52.6 +23% Arising from new business (34.0) (33.9) +0% Post tax cash result 30.8 18.7 +65%
Slide 25: Arising from in force business
Arising from in force business H1 2011 Estimated business not yet 9.5 generating positive cash (£’bn)* Associated annual post tax cash (£’m)* 66.3 * Ignores stock market movements and outflows
Slide 26: Return on the investment in new business
Return on the investment in new business H1 2011 H1 2010 Cost of investment (£’m) 34.0 33.9 Post tax EEV profit (£’m) 96.9 74.7 As a % of gross inflows 1.3% 1.5% Cash payback period (yrs) 4 5 IRR (net of tax) 23.6% 20.5%
Slide 27: Underlying post-tax cash result
Underlying post-tax cash result £61.6m £48.3m £24.1m £23.5m £25.9m 2007 2008 2009 2010 2011 Double half year Investment in new business
Slide 28: Interim dividend
Interim dividend • Two year period of rebasing the dividend and indicated a further significant increase in the 2011 dividend • Rebalancing the interim dividend to historic trend of 40% of full year dividend • Therefore we are increasing the interim dividend by 58% to 3.2p per share • Given notice t
Slide 29: Capital position
Capital position • Total group solvency assets at 30 June 2011 are £314.5 million • Solvency remains strong • Solvency II • Investment policy for solvency assets continues to be prudent
Slide 30: Sovereign debt holdings
Sovereign debt holdings £’m H1 2011 2.5% UK Treasury Index Linked 26/7/16 11.7 2.5% UK Treasury Index Linked 17/7/24 15.7 2.0% UK Treasury Index Linked 26/1/35 18.8 4.25% UK Treasury 7/12/2055 3.7 3.5% UK Treasury War Loan 12.6 Total 62.5
Slide 31: AAA Rated Money Market Funds
AAA Rated Money Market Funds £’m H1 2011 BlackRock 43.0 HSBC 45.0 Insight 57.7 Invesco AIM 31.0 RBS 49.9 Total 226.6
Slide 32: Bank balances
Bank balances £’m H1 2011 Barclays 28.1 BNP Paribas 7.0 HSBC 29.3 LBG/Bank of Scotland 39.6 RBS/ NatWest 21.4 Other 0.8 Total 126.2
Slide 33: Summary
Summary • New business on an APE basis £335.6 million up 15% • Establishment expenses of £47.6 million up 4.4% • EEV new business profit of £127.7 million up 27% with a strong increase in margin • EEV operating profit at £183.6 million up 13% and total profit of £182.6 million up 110% • IFRS profit
Slide 34: David Bellamy, Chief Executive
DAVID BELLAMY Chief Executive
Slide 35: The Journey Today
The Journey Today • Diversified adviser team • Specialist advisers • Access to a wide range of asset classes and asset managers • Whole of market for protection, annuities, mortgages etc • Access to leading professional advice on trusts, wills etc
Slide 36: The St. James's Place Partnership
The St. James’s Place Partnership • 1601 Partners – Sole Traders – Small Businesses – Large Practices • Strong support team • Specialised areas of advice • Average age 48
Slide 37: Geographic Distribution – Partners – 30 June 2011
Geographic Distribution – Partners – 30 June 2011 5% 2% 22% 13% 3% 5% 16% 24% 11%
Slide 38: The St. James's Place Partnership
The St. James’s Place Partnership • 1601 Partners – Sole Traders – Small Businesses – Large Practices • Strong support team • Specialised areas of advice • Average age 48 • No one partner accounts for more than 1%
Slide 39: Current Fund Houses
ST. JAMES'S PLACE WEALTH MANAGEMENT Current Fund Houses A é GRWC GAM Aberdeen Areva THS > ASEET MAMAGQHMENT ASTA The Pi ARTISAN BLACKROCK = srareSrreerGLosALApvisors | $$ SA. pence erpetua P JOH sso OrchardStreet INVESTMENT MANAGEMENT LLP Insight _— 6 UFirer First State JNWELUINGTON) MANAGEMENT “ASS
Slide 40: External product providers
ST. JAMES'S PLACE WEALTH MANAGEMENT External product providers Friends ife | brightgrey = SpeechlyBircham xd Legal & LINDEReMYERS @ a General Scottish © ZURICS AVIVA — Provident Quilter Chantrey Vellacott DFK * CanadaLife .7@7@Ce€ Clarke WEGON = © International Le willmott er LV = Ttstsavincs 73{PRU
Slide 41: Diversified Client Base
Diversified Client Base • Retail investors • Professional investors • SME’s & PLC’s • Pension Trustees
Slide 42: Funds / New Funds 2011
Funds New Funds 2011 5% 4% 1% 1% 20% 21% 13% 13% 3% 4% 3% 4% 17% 18% 24% 23% 10% 10% Overseas Clients: 3%
Slide 43: Diversified Client Base
Diversified Client Base • Retail investors • Professional investors • SME’s & PLC’s • Pension Trustees • Average age 55 • Average investment £150,000+ • 140,000 wealth management clients • No one client represents more than 1% of FUM
Slide 44: The SJP Market Place
The SJP Market Place UK Individuals with between €50k and €5m of liquid assets 9,403,000 8,562,000 7,601,000 7,008,000 2011 2012 2013 2014 Source: Datamonitor European Wealth Markets Database 2010
Slide 45: The Journey
The Journey • Diversified Wealth Management business • Wide range of funds and fund managers • Whole of market access to protection, annuities and mortgages • Experienced and qualified adviser team • Building long term relationships and trust
Slide 46: 17% p.a. compound growth over the last 5 and 10 years
17%p.a. compound growth over the last 5 and 10 years £30b n +26% £25b n 27.0 +31% £20b n +18% -10% +25% £15b n +29% +20% £10b n +34% +11% -6% £5b n £0b n 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 30 June 2011: £29.1 billion
Slide 47: Growth Portfolios
Growth Portfolios Managed Funds Conservative Adventurous Balanced
Slide 48: Income Portfolios
Income Portfolios Immediate Income Deferred Income Balanced Income
Slide 49: New Fund Managers
New Fund Managers David Levanson William Browne Simon Todd
Slide 50: Clients
Clients • Core market £50,000 - £500,000 • Attractive high net worth market • Exploring private client division • Colin Jelley to lead
Slide 51: Partnership qualifications and Academy
Partnership • Over 80% of the Partnership qualified or close to it • Re-launching the Academy • STP programme
Slide 52: Ambitious development programme
Ambitious development programme • In our people • In our back office • In our investment approach • In the Partnership • And our overall client proposition
Slide 53: St. James's Place
ST. JAMES’S PLACE WEALTH MANAGEMENT