St. James's Place Plc · LSE:STJ
St. James's Place — H1 2009 Earnings Presentation
46 slides from St. James's Place's earnings presentation, July 2009
Slide 1: Interim Results
ST. JAMES’S PLACE WEALTH MANAGEMENT INTERIM RESULTS July 2009
Slide 2: Presenters: 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) 2006 2007 2008 2009 122 116 113 109 99 102 102 103 98 94 96 92 85 69 Q1 Q2 Q3 Q4 2006 over 2005 +57% +54% +63% +59% 2007 over 2006 +41% +26% +20% +10% 2008 over 2007 +1% +5% +0% -15% 2009 over 2008 -5% -10%
Slide 7: Manufactured new business by quarter
Manufactured new business by quarter APE (Annual premiums plus 10% of single premiums) 2006 2007 2008 2009 101 101 98 98 87 87 92 84 86 86 83 78 73 61 Q1 Q2 Q3 Q4 2006 over 2005 +65% +57% +75% +63% 2007 over 2006 +44% +29% +19% +7% 2008 over 2007 -3% +0% -2% -13% 2009 over 2008 -1% -3%
Slide 8: Investment new business by quarter
Investment new business by quarter Single premiums 2006 2007 2008 2009 662 633 578 593 558 528 507 512 476 462 449 432 431 445 Q1 Q2 Q3 Q4 2006 over 2005 +71% +47% +50% +36% 2007 over 2006 +22% +39% +30% +16% 2008 over 2007 -4% -4% -20% -24% 2009 over 2008 -15% -12%
Slide 9: Pensions new business by quarter
Pensions new business by quarter Single premiums 2006 2007 2008 2009 280 282 286 277 269 270 267 252 248 232 239 188 161 113 Q1 Q2 Q3 Q4 2006 over 2005 +83% +78% +106% +147% 2007 over 2006 +106% +54% +27% -3% 2008 over 2007 +8% +9% +18% -3% 2009 over 2008 +11% +0%
Slide 10: Total new investments of over £1.5bn, net inflows of £1bn
Total new investments of over £1.5bn Net inflows of £1bn +25%
Slide 11: Funds Under Management (£bn)
Funds Under Management (£bn) 16% p.a. compound growth over the last 5 years and 18% p.a. over 10 years +18% -10% +3% +25% 18.2 16.3 16.9 +29% 15.4 +20% 12.3 +34% 9.5 +10% -6% +24% 7.9 6.3 5.9 5.7 2000 2001 2002 2003 2004 2005 2006 2007 2008 HY 2009
Slide 12: Number of Partners
Number of Partners 1,389 1,340 1,251 1,157 2006 2007 2008 HY 2009
Slide 13: Wealth Manager of the Year 2008 & 2009
ST. JAMES’S PLACE WEALTH MANAGEMENT WINNER WEALTH MANAGER sie ieee = She Daily Telegraph — Wealth Manager Wealth "” of the Year 2008 & 2009 Management 2009
Slide 14: Partnership Number First Half Growth
Partnership Number First Half Growth 3.7% No. % Growth 3.2% 49 2.6% 40 1.9% 30 22 -0.3% -3 2005 2006 2007 2008 2009 Highest first half growth in absolute and relative terms for many years
Slide 15: Summary
Summary • Total APE of £203m (manufactured = 90%) • New inflows of +25% to £1bn • Partner numbers up 3.7%
Slide 16: Andrew Croft, Finance Director
ANDREW CROFT Finance Director
Slide 17: Analysis of Operating Profit
Analysis of Operating Profit £‟m 2009 2008 New business contribution 61.3 65.3 Profits from existing business –expected 37.6 51.4 –experience variance 9.0 1.0 –operating assumption changes 1.6 - Investment income 2.4 4.0 Life & unit trust operating profit 111.9 121.7 Other (10.9) (7.5) Operating pro
Slide 18: Margin
Margin • Lower total new business • Manufactured business 90% compared with 84% • Increased proportion of pension business • Total direct expenses down 5% and establishment costs down 2% • Margin as percentage of APE increased to 30.2% (2008: 29.6%)
Slide 19: Analysis of Operating Profit
Analysis of Operating Profit £‟m 2009 2008 New business contribution 61.3 65.3 Profits from existing business –expected 37.6 51.4 –experience variance 9.0 1.0 –operating assumption changes 1.6 - Investment income 2.4 4.0 Life & unit trust operating profit 111.9 121.7 Other (10.9) (7.5) Operating pro
Slide 20: Analysis of Operating Profit
Analysis of Operating Profit £‟m 2009 2008 New business contribution 61.3 65.3 Profits from existing business –expected 37.6 51.4 –experience variance 9.0 1.0 –operating assumption changes 1.6 - Investment income 2.4 4.0 Life & unit trust operating profit 111.9 121.7 Other (10.9) (7.5) Operating pro
Slide 21: Analysis of Operating Profit
Analysis of Operating Profit £‟m 2009 2008 New business contribution 61.3 65.3 Profits from existing business –expected 37.6 51.4 –experience variance 9.0 1.0 –operating assumption changes 1.6 - Investment income 2.4 4.0 Life & unit trust operating profit 111.9 121.7 Other (10.9) (7.5) Operating pro
Slide 22: Analysis of Operating Profit
Analysis of Operating Profit £‟m 2009 2008 New business contribution 61.3 65.3 Profits from existing business –expected 37.6 51.4 –experience variance 9.0 1.0 –operating assumption changes 1.6 - Investment income 2.4 4.0 Life & unit trust operating profit 111.9 121.7 Other (10.9) (7.5) Operating pro
Slide 23: Analysis of Operating Profit
Analysis of Operating Profit £‟m 2009 2008 New business contribution 61.3 65.3 Profits from existing business –expected 37.6 51.4 –experience variance 9.0 1.0 –operating assumption changes 1.6 - Investment income 2.4 4.0 Life & unit trust operating profit 111.9 121.7 Other (10.9) (7.5) Operating pro
Slide 24: Analysis of Pre-Tax Result
Analysis of Pre-Tax Result £‟m 2009 2008 Operating profit 101.0 114.2 Investment variance (63.2) (175.7) Economic assumption change (10.4) (0.5) Pre-tax result 27.4 (62.0)
Slide 25: Investment Variance
Investment Variance • Continued falls in world stock markets in first six months • FTSE 100 4% • MSCI (£) 7% • S&P 500 (£) 10% • Actual return more than 6% below assumed rate of positive growth of 2% • The negative variance will reverse as and when markets recover
Slide 26: Analysis of Pre-Tax Result
Analysis of Pre-Tax Result £‟m 2009 2008 Operating profit 101.0 114.2 Investment variance (63.2) (175.7) Economic assumption change (10.4) (0.5) Pre-tax result 27.4 (62.0)
Slide 27: Analysis of Pre-Tax Result
Analysis of Pre-Tax Result £‟m 2009 2008 Operating profit 101.0 114.2 Investment variance (63.2) (175.7) Economic assumption change (10.4) (0.5) Pre-tax result 27.4 (62.0)
Slide 28: Net Asset Value per Share
Net Asset Value per Share Net asset value 234.3p
Slide 29: Capital Position
Capital Position • Total group solvency assets at 30 June 2009 are £248.6 million (2008: £251.8 million) • Solvency remains strong • Investment policy for solvency assets continues to be prudent • Solvency II
Slide 30: Analysis of Adjusted Post Tax Cashflow
Analysis of Adjusted Post Tax Cashflow £‟m 2009 2008 Net annual management fee 56.4 66.4 Unwind of surrender penalties (20.4) (27.3) 36.0 39.1 -8% Loss/profit arising (5.5) (6.5) on new business Establishment expenses (35.3) (35.7) Investment income 2.0 4.9 Miscellaneous 3.4 10.4 Underlying cash flo
Slide 31: Miscellaneous
Miscellaneous • Reduction in ability to fully group relieve taxable losses (c. £4.0 million) • Increase in actuarial reserves from the stock market fall and economic basis changes (c. £3.0 million) • Lower income from third party product sales (c. £1.0 million)
Slide 32: Dividend
Dividend Interim dividend Maintained at 1.84 pence
Slide 33: IFRS Result
IFRS Result 2009 2008 Profit before shareholder tax 20.0m 32.8m Profit after shareholder tax 16.0m 22.2m Net asset value per share 107.8p 97.1p
Slide 34: Summary
Summary • Manufactured proportion at 90% • Establishment expenses 2% below last year • Positive experience variance • Robust operating profit • Strong solvency position Resilient Performance
Slide 35: David Bellamy, Chief Executive
DAVID BELLAMY Chief Executive
Slide 36: Interim Results
Interim Results • Another resilient performance • Strong net inflows • Exceptional retention • Excellent recruitment • Robust operating profit
Slide 37: Retail Distribution Review
Retail Distribution Review • We support the sense of direction • Raising standards – working with the Partnership • Status Disclosure – another view • Removing Provider / Product bias – further consultation • Better placed than most
Slide 38: Outlook: government and tax changes
• A change of government? • Further tax changes (CGT, Income, VAT, Inheritance) • Further opportunities • Very experienced leadership team
Slide 39: Partnership Number First Half Growth
Partnership Number First Half Growth 3.7% No. % Growth 3.2% 49 2.6% 40 1.9% 30 22 -0.3% -3 2005 2006 2007 2008 2009 Highest first half growth in absolute and relative terms for many years
Slide 40: Partnership
Partnership • Strong recruitment momentum • Infrastructure development • Further segmentation • Streamline business approach
Slide 41: Investment Management Approach
Investment Management Approach • Attracted over £10bn in last 5 years • New Fund Managers
Slide 42: UK & General Progressive Fund Manager Changes
St. James‟s Place UK & General Progressive Fund Fund Manager Changes September 2009 John Wood Peg McGetrick • 19 years’ industry • Co-Founder and Managing experience Partner of Liberty Square Asset Management • John joined JOHCM in October 2005 from Newton • Prior to this Peg was a partner at Invest
Slide 43: Greater European Progressive Fund Manager Changes
St. James‟s Place Greater European Progressive Fund Stuart Mitchell Kenneth A. Broekaert • 19 years’ industry experience • Vice President and Portfolio • John joined JOHCM in October Manager of European equities at 2005 from Newton Investment Burgundy Asset Management Management • Ken joined Burgund
Slide 44: Investment Management Approach
Investment Management Approach • Attracted over £10bn in last 5 years • New Fund Managers • Further evolution • Capital accumulation, preservation and decumulation • Broaden fund classes • Not exclusively long only equities • More structured portfolios • Regular and active reviews • Building on succ
Slide 45: Looking Forward
Looking Forward • Our target group is growing • They are more concerned than ever about „Tax‟ • They are more concerned than ever about their wealth • The Adviser population is shrinking • 200,000(+) down to 50,000(ish) • “Trust” is in short supply
Slide 46: St. James's Place Wealth Management
ST. JAMES’S PLACE WEALTH MANAGEMENT