St. James's Place Plc · LSE:STJ
St. James's Place — H1 2010 Earnings Presentation
42 slides from St. James's Place's earnings presentation, July 2010
Slide 1: Interim Results July 2010
ST. JAMES’S PLACE WEALTH MANAGEMENT INTERIM RESULTS July 2010
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) 2007 2008 2009 2010 2007 over 2006 +41% +26% +20% +10% 2008 over 2007 +1% +5% +0% -15% 2009 over 2008 -5% -10% +3% +38% 2009 over 2010 +42% +46%
Slide 7: Strong growth across the board
Strong growth across the board • Manufactured business is up 47% (to 91% of total) • Investment business is up 66% – Unit trusts / ISAs up 70% – Onshore / Offshore Bonds up 62% • Single premium pensions is up 36%
Slide 8: Record half year single investments
Record half year single investments (£’bn) +60% +42% +0% -12% +71%
Slide 9: Strong retention rate of funds under management
Strong retention rate of funds under management *annualised
Slide 10: Growing first half net inflow of funds under management
Growing first half net inflow of funds under management (£’bn) +50% +43% +25% -20% +75%
Slide 11: Half year funds under management
Half year funds under management (£’bn) +33% +28% -1% -2% +29% 16% p.a compound growth
Slide 12: Growing number of partners
Growing number of partners +9% +3% +7% +8% +5%
Slide 13: Exceptional performance
Exceptional performance • APE of £292.6 million up 44% • Total single investments of £2.4 billion up 60% • Continued strong retention of client funds • Net inflows of £1.5 billion up 50% • Funds under Management of £22.4 billion
Slide 14: Andrew Croft, Finance Director
ANDREW CROFT Finance Director
Slide 15: Highlights
Highlights • New business on an APE basis £292.6 million up 44% • EEV new business profit of £100.9 million up 65% • EEV operating profit at £162.1 million up 60% • IFRS profit before shareholder tax of £36.3 million up 82% • Cash result of £18.7 million up from £0.6 million • EEV net asset value pe
Slide 16: Analysis of EEV operating profit
Analysis of EEV operating profit £’m H1 2010 H1 2009 New business contribution 100.9 61.3 +65% Profits from existing business – expected 46.8 37.6 – experience variance 12.1 9.0 – operating assumption changes - 1.6 Investment income 1.9 2.4 Life & unit trust operating profit 161.7 111.9 Distribution
Slide 17: Analysis of EEV pre-tax result
Analysis of EEV pre-tax result £’m H1 2010 H1 2009 Operating profit 162.1 101.0 Investment variance (84.5) (63.2) Economic assumption change 9.4 (10.4) Pre-tax result 87.0 27.4
Slide 18: Analysis of adjusted post tax cash result
Analysis of adjusted post tax cash result £’m H1 2010 H1 2009 Net annual management fee 83.7 56.4 Unwind of surrender penalties (27.5) (20.4) 56.2 36.0 +56% New business strain (5.1) (5.5) Establishment expenses (35.7) (35.3) Shareholder interest 1.5 2.0 Development costs (2.0) - Miscellaneous 3.8 3
Slide 19: Analysis of IFRS profit
Analysis of IFRS profit £’m H1 2010 H1 2009 Cash result 18.7 0.6 DAC / DIR amortisation 7.8 7.7 DAC / DIR new business 9.2 9.7 PVIF (1.4) (1.3) Share options (4.9) (5.2) Other (1.0) 4.5 28.4 16.0 Taxation 7.9 4.0 Pre-tax profit 36.3 20.0
Slide 20: Analysis of cash result + IFRS result
Analysis of cash result + IFRS result £’m H1 2010 H1 2009 Cash (post tax) Arising on in force business 52.6 35.9 +47% Arising from new business (33.9) (35.3) Post tax Cash result 18.7 0.6 IFRS (pre-tax) Arising on in force business 67.9 52.0 +31% Arising from new business (31.6) (32.0) Pre tax IFRS
Slide 21: Return on in force business
Return on in force business • Majority of return comes from fees from funds under management less the unwind & surrender penalties • Unwind & surrender penalty occurs in first six years • Consequently the return on new funds added in the last six years is not yet fully contributing to the cash resul
Slide 22: Single premium investment (£'bn)
Single premium investment (£’bn)
Slide 23: Single premium investment (£'bn)
Single premium investment (£’bn)
Slide 24: Return on in force
Return on in force • Some £7.3 billion of new business added in last six years not yet generating positive cash earnings* • Over £50 million of post tax cash earnings per annum in future* * Ignores stock net movements and out flows
Slide 25: Analysis of cash result + IFRS result
Analysis of cash result + IFRS result £’m H1 2010 H1 2009 Cash (post tax) Arising on in force business 52.6 35.9 +47% Arising from new business (33.9) (35.3) Post tax Cash result 18.7 0.6 IFRS (pre-tax) Arising on in force business 67.9 52.0 +31% Arising from new business (31.6) (32.0) Pre tax IFRS
Slide 26: Return on the investment in new business
Return on the investment in new business Post tax value of expected profit £74.7m Investment as a % of gross new FUM 1.5% Investment as a % of net inflow of FUM 2.3% Cash payback period 5-6 years IRR (net of tax) 20.5%
Slide 27: Interim dividend
Interim dividend Increased by 10% to 2.025 pence
Slide 28: Capital position
Capital position • Total group solvency assets at 30 June 2010 are £281.2 million • Solvency remains strong • Investment policy for solvency assets continues to be prudent • Solvency II
Slide 29: David Bellamy, Chief Executive
DAVID BELLAMY Chief Executive
Slide 30: The Opportunities
The Opportunities • Increasing tax burden • Sustained low interest rates • People not confident they have enough for retirement • Migration from DB pensions to DC continues • Fewer advisers (200,000 – 1990; 50,000 – 2010)
Slide 31: Our strategy
Our strategy • Broadening the investment proposition • Focusing on the drivers for growth – Partner productivity – Partner numbers • Preparing for the future
Slide 32: UK Absolute Return Fund
UK Absolute Return Fund Mark Lyttleton Nick Osborne
Slide 33: Global Emerging Markets Fund
Global Emerging Markets Fund Jonathan Asante
Slide 34: International Corporate Bond Fund
International Corporate Bond Fund Jill Fields Zak Summerscale
Slide 35: New Fund Managers – April 2010
New Fund Managers – April 2010 Mark Lyttleton Nick Osborne Jonathan Asante Jill Fields Zak Summerscale Over £200 million
Slide 36: Retail distribution review
Retail distribution review • Well placed • Positive impact on recruitment • Positive impact on retention • Positive momentum towards Diploma +
Slide 37: Partner testimonials on SJP support
ST. JAMES'S PLACE WEALTH MANAGEMENT 6¢Can | just say that the support from the Company has been first class. | know from speaking to ex colleagues working with other institutions that we’re ‘streets ahead’ of anyone else in the sector? “Support from across the board at SJP has been superb... I pity
Slide 38: Half year productivity (APE per Partner)
Half year productivity (APE per Partner) £,000s +33%
Slide 39: Compound APE Growth – rolling five years
Compound APE Growth – rolling five years Growth 25.5% 20% 22.7% 17.4% 18.8% 15% 17.4 Jul 02 - Jun 07 Jul 03 - Jun 08 Jul 04 - Jun 09 Jul 05 - Jun 10
Slide 40: Quality of earnings
Quality of earnings • No one Partner represents more than 1% of our earnings • No one client or corporate investor represents more than 1% of our earnings • The business growth is pretty much across all our wrappers • Over 75% of the business is repeat business or referral • Around 95% of the client
Slide 41: Summary
Summary • APE up 44% • Single investments up 60% • Manufactured business at 91% • Net inflows up 50% • Funds under management of £22.4 billion • EEV Operating Profit up 60% • IFRS Profit before tax up 82% • Interim dividend up 10%
Slide 42: St. James's Place Wealth Management
ST. JAMES’S PLACE WEALTH MANAGEMENT