St. James's Place Plc · LSE:STJ
St. James's Place — FY2009 Earnings Presentation
59 slides from St. James's Place's earnings presentation, Feb 24, 2010
Slide 1: Annual Results February 2010
ANNUAL RESULTS February 2010
Slide 2: Mike Wilson, Chairman
ST. JAMES’S PLACE WEALTH MANAGEMENT MIKE WILSON Chairman
Slide 3: Mike Wilson, David Bellamy, Andrew Croft
Mike Wilson CHAIRMAN David Bellamy CHIEF EXECUTIVE Andrew Croft FINANCE DIRECTOR
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: Review of 2009: New Business
Review of 2009 New Business • Total single investments of £3.5bn up 13% • APE of £440.8m up 5% • Manufactured proportion 91%
Slide 7: Investment new business
Investment new business Single premiums 2009 over 2008 -15% -12% +20% +64%
Slide 8: Pensions new business
Pensions new business Single premiums 2009 over 2008 +11% -0% -1% +30%
Slide 9: Total single investments
Total single investments 2009 over 2008 -6% -8% +12% +50%
Slide 10: Total new business (APE)
Total new business (APE) APE (Annual premiums plus 10% of single premiums) 2009 over 2008 -5% -10% +3% +38%
Slide 11: Manufactured new business (APE)
Manufactured new business (APE) APE (Annual premiums plus 10% of single premiums) 2009 over 2008 -1% -3% +12% +43%
Slide 12: Review of 2009: Funds under Management
Review of 2009 Funds under Management • Continued 95% retention • Net inflows of funds of £2.3bn up 35% • Funds under management £21.4bn up 31%
Slide 13: Net inflow of funds under management
Net inflow of funds under management +35% +36% -10% +56% Percentage of opening FUM 9% 11% 12% 9% 14%
Slide 14: Review of 2009: Partnership
Review of 2009 Partnership • Continued strong retention • 20 Academy graduates • Partnership numbers 1464 up 9%
Slide 15: Number of Partners
Number of Partners +9% +7% +8% +2% +5%
Slide 16: Review of 2009
Review of 2009 New Business • Total single investments of £3.5bn up 13% • APE of £440.8m up 5% (H1 -8%; H2 +20%) • Manufactured proportion 91% Funds under Management • Continued 95% retention • Net inflows of funds of £2.3bn up 35% • Funds under management £21.4bn up 31% Partnership • Continued stro
Slide 17: Andrew Croft, Finance Director
ANDREW CROFT Finance Director
Slide 18: Profit measures
Profit measures EEV • Result reflects the net present value of future shareholder cash flows Cash result • Is a measure of the underlying cash generated by the business • Reflects the positive cash flow from in force business less the negative cash flow from acquiring new business IFRS result • Aims
Slide 19: Highlights
Highlights • EEV new business profit of £155.4 million up 26% • EEV operating of £228.9 million up 12% • EEV pretax profits of £363.2 million compared with a loss of £115.9 million in 2008 • EEV net asset value per share of 284.5p up 22% • Final dividend of 2.66p up 4%
Slide 20: Analysis of Operating Profit
Analysis of Operating Profit £’m 2009 2008 New business contribution 155.4 123.5 Profits from existing business –expected 78.3 80.5 –experience variance 11.6 16.9 –operating assumption changes (1.5) (0.9) Investment income 5.6 4.9 Life & unit trust operating profit 249.4 224.9 Other (20.5) (20.6) Op
Slide 21: Margin
Margin • Higher new business • Manufactured business 91% compared with 86% • Total direct expenses and establishment costs down 4% • Margin as percentage of APE increased to 35.3% (2008: 29.5%)
Slide 22: Analysis of Operating Profit
Analysis of Operating Profit £’m 2009 2008 New business contribution 155.4 123.5 Profits from existing business –expected 78.3 80.5 –experience variance 11.6 16.9 –operating assumption changes (1.5) (0.9) Investment income 5.6 4.9 Life & unit trust operating profit 249.4 224.9 Other (20.5) (20.6) Op
Slide 23: Analysis of Operating Profit
Analysis of Operating Profit £’m 2009 2008 New business contribution 155.4 123.5 Profits from existing business –expected 78.3 80.5 –experience variance 11.6 16.9 –operating assumption changes (1.5) (0.9) Investment income 5.6 4.9 Life & unit trust operating profit 249.4 224.9 Other (20.5) (20.6) Op
Slide 24: Analysis of Operating Profit
Analysis of Operating Profit £’m 2009 2008 New business contribution 155.4 123.5 Profits from existing business –expected 78.3 80.5 –experience variance 11.6 16.9 –operating assumption change (1.5) (0.9) Investment income 5.6 4.9 Life & unit trust operating profit 249.4 224.9 Other (20.5) (20.6) Ope
Slide 25: Analysis of Operating Profit
Analysis of Operating Profit £’m 2009 2008 New business contribution 155.4 123.5 Profits from existing business –expected 78.3 80.5 –experience variance 11.6 16.9 –operating assumption change (1.5) (0.9) Investment income 5.6 4.9 Life & unit trust operating profit 249.4 224.9 Other (20.5) (20.6) Ope
Slide 26: Analysis of Operating Profit
Analysis of Operating Profit £’m 2009 2008 New business contribution 155.4 123.5 Profits from existing business –expected 78.3 80.5 –experience variance 11.6 16.9 –operating assumption change (1.5) (0.9) Investment income 5.6 4.9 Life & unit trust operating profit 249.4 224.9 Other (20.5) (20.6) Ope
Slide 27: Analysis of Pre-Tax Result
Analysis of Pre-Tax Result £’m 2009 2008 Operating profit 228.9 204.3 Investment variance 148.2 (320.6) Economic assumption change (13.9) 0.4 Pre-tax result 363.2 (115.9)
Slide 28: Investment Variance
Investment Variance • Sensitivity provided is for a 10% change in the value of equities • Some 70/80% of our funds under management are invested in equities • Our funds are global and the £ MSCI is the best index to use in your modelling
Slide 29: Analysis of Pre-Tax Result
Analysis of Pre-Tax Result £’m 2009 2008 Operating profit 228.9 204.3 Investment variance 148.2 (320.6) Economic assumption change (13.9) 0.4 Pre-tax result 363.2 (115.9)
Slide 30: Analysis of Pre-Tax Result
Analysis of Pre-Tax Result £’m 2009 2008 Operating profit 228.9 204.3 Investment variance 148.2 (320.6) Economic assumption change (13.9) 0.4 Pre-tax result 363.2 (115.9)
Slide 31: EEV Net Asset Value per Share
EEV Net Asset Value per Share Net asset value 284.5p
Slide 32: Analysis of Post Tax Cash Result
Analysis of Post Tax Cash Result £’m 2009 2008 Arising on in force business 88.8 91.4 Arising from new business (65.3) (67.3) Cash Result 23.5 24.1
Slide 33: Dividend
Dividend Final dividend Increased by 4% to 2.66 pence Full year dividend Up 2.5% to 4.5 pence
Slide 34: Capital Position
Capital Position • Total group solvency assets of £263.3 • Solvency remains strong • Investment policy for solvency assets continues to be prudent • Solvency II
Slide 35: IFRS Result
IFRS Result £’m 2009 2008 One–off items - 16.2 Share options (8.6) (14.9) Interest income 6.1 22.6 Other 52.4 56.8 Profit before policyholder tax 49.9 80.7
Slide 36: St. James's Place Wealth Management
ST. JAMES’S PLACE WEALTH MANAGEMENT
Slide 37: IFRS example
IFRS example • £100,000 unit trust investment • 5% bid offer spread and 3% directly attributable expenses • Cash profit of £2,000 (£5,000-3,000) • IFRS result spreads profit over the expected life of contract • If expected life of the contract is 5 years then year 1 profit is £400 • However if expec
Slide 38: Summary
Summary • Record new business • Establishment expenses 4% below last year • Record new business contribution • Highest ever margin • Positive experience variance • Increased operating profit • Strong solvency position • Increased dividend
Slide 39: David Bellamy, Chief Executive
DAVID BELLAMY Chief Executive
Slide 40: Review of 2009
Review of 2009 • A record year • in new business • in funds under management • in new business profit • in recruitment and size of the Partnership • A year of two halves
Slide 41: 2009 Productivity (APE per Partner)
2009 Productivity (APE per Partner)
Slide 42: The Growth Model
The Growth Model Target 15 – 20% pa New Business Capacity Productivity No of Partners New Business Per Partner
Slide 43: 2009 Productivity (APE per Partner)
2009 Productivity (APE per Partner)
Slide 44: 2009 Growth in APE
2009 Growth in APE Total APE Growth -5% -10% +3% +38%
Slide 45: Productivity (APE per Partner)
Productivity (APE per Partner £’000s) +14% -9% -3% +61% +23%
Slide 46: Number of Partners
Number of Partners +9% +7% +8% +2% +5%
Slide 47: St. James's Place Wealth Management
ST. JAMES’S PLACE WEALTH MANAGEMENT
Slide 48: Retail Distribution Review
Retail Distribution Review • Further demonstration of our professionalism • Accredited SJP module • Realigned management structure • We will minimise fall out and disruption
Slide 49: Retail Distribution Review: Provider/Product Bias
Retail Distribution Review Provider/Product Bias • No provider bias • Minor product differences – already addressed Restricted Advice • Variation on a theme • Investment Management Approach is key • Professional and trusted advice is what matters
Slide 50: Retail Distribution Review: Adviser Charging
Retail Distribution Review Adviser Charging • Still not clear • Vertically Integrated Firms are different (to IFA’s) • Our approach is integrated • we are responsible for the advice (we guarantee it!) • we have a distinct investment approach • we build long term relationships • The market will decid
Slide 51: Retail Distribution Review
Retail Distribution Review • Having a positive impact on recruitment • We’re embracing the ‘Diploma’ • We’ve addressed any question of ‘bias’ • We believe we are better placed than most
Slide 52: Evolving Fund Range
Evolving Fund Range 2008 • Alternative Asset Fund - Blackrock • High Octane Fund - Oldfield • Cash Unit Trust - State Street 2009 • Corporate Bond Fund - Invesco Perpetual • Gilt Unit Trust - Wellington • Income Unit Trust - Axa Framlington • New managers - Burgundy/Liberty Square/JO Hambro
Slide 53: Investment Management Approach
Investment Management Approach • Emerging Market Fund • Global Bond Fund • Absolute Return Fund
Slide 54: Strengthen the Team
Strengthen the Team • Senior team together for 18 years • Development from within • Charles Gregson – new Non-Executive • Chris Ralph, Vivian Bazalgette & Peter Dunscombe
Slide 55: The SJP Opportunity
The SJP Opportunity • In excess of 8m people in the UK with liquid assets over £50k • In excess of 500,000 people in the UK with liquid assets over £500k • Total liquid assets estimated to be over of £1.5 trillion over 50% of which is held in cash
Slide 56: The SJP Opportunity
The SJP Opportunity • ISA’s • £170bn - Cash (BSA) • £116bn - Stocks & shares (HMRC) • £220bn Building Society deposits (BSA) • £750bn Bank deposits (LBG) • £480bn Mutual Funds (IMA)
Slide 57: 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 58: Summary
Summary • Proven track record of growth • Resilient in tough markets • Well positioned for future growth
Slide 59: St. James's Place Wealth Management
ST. JAMES’S PLACE WEALTH MANAGEMENT