68 slides from St. James's Place's earnings presentation, Feb 22, 2012
Slide 1: Annual Results 2011
ANNUAL RESULTS 2011 February 2012
Slide 2: Presenters: Charles Gregson, David Bellamy, Andrew Croft
Charles Gregson CHAIRMAN David Bellamy CHIEF EXECUTIVE Andrew Croft CFO
Slide 3: Charles Gregson, Chairman
ST. JAMES’S PLACE WEALTH MANAGEMENT CHARLES GREGSON Chairman
Slide 4: Andrew Croft, Chief Financial Officer
ANDREW CROFT Chief Financial Officer
Slide 5: Total new business by quarter
Total new business by quarter APE (Annual premiums plus 10% of single premiums) 2008 2009 2010 2011 2008 over 2007 +1% +5% +0% -15% 2009 over 2008 -5% -10% +3% +38% 2010 over 2009 +42% +46% +30% +15% 2011 over 2010 +18% +12% +13% +0%
Slide 6: Record single investments
Record single investments (£’bn) +10% +37% +29% -11% -7%
Slide 7: Funds under management
Funds under management 16% p.a compound growth over the last 10 years +6% +26% +31% +18% -10%
Slide 8: Analysis of EEV operating profit
Analysis of EEV operating profit £’m 2011 2010 New business contribution 246.0 217.8 +13% Profits from existing business – expected 91.2 93.5 – experience variance 38.1 26.4 – operating assumption changes 0.6 (3.4) Investment income 2.8 4.2 Life & unit trust operating profit 378.7 338.5 Distribution
Slide 9: New business margin
New business margin 2011 2010 On an APE basis 38.3% 37.4% On a PVNBP basis 4.6% 4.4%
Slide 10: Analysis of EEV operating profit
Analysis of EEV operating profit £’m 2011 2010 New business contribution 246.0 217.8 Profits from existing business – expected 91.2 93.5 – experience variance 38.1 26.4 – operating assumption changes 0.6 (3.4) Investment income 2.8 4.2 Life & unit trust operating profit 378.7 338.5 Distribution 6.1
Slide 11: Analysis of EEV operating profit
Analysis of EEV operating profit £’m 2011 2010 New business contribution 246.0 217.8 Profits from existing business – expected 91.2 93.5 – experience variance 38.1 26.4 – operating assumption changes 0.6 (3.4) Investment income 2.8 4.2 Life & unit trust operating profit 378.7 338.5 Distribution 6.1
Slide 12: Analysis of EEV operating profit
Analysis of EEV operating profit £’m 2011 2010 New business contribution 246.0 217.8 Profits from existing business – expected 91.2 93.5 – experience variance 38.1 26.4 – operating assumption changes 0.6 (3.4) Investment income 2.8 4.2 Life & unit trust operating profit 378.7 338.5 Distribution 6.1
Slide 13: Analysis of EEV operating profit
Analysis of EEV operating profit £’m 2011 2010 New business contribution 246.0 217.8 Profits from existing business – expected 91.2 93.5 – experience variance 38.1 26.4 – operating assumption changes 0.6 (3.4) Investment income 2.8 4.2 Life & unit trust operating profit 378.7 338.5 Distribution 6.1
Slide 14: Analysis of EEV operating profit
Analysis of EEV operating profit £’m 2011 2010 New business contribution 246.0 217.8 Profits from existing business – expected 91.2 93.5 – experience variance 38.1 26.4 – operating assumption changes 0.6 (3.4) Investment income 2.8 4.2 Life & unit trust operating profit 378.7 338.5 Distribution 6.1
Slide 15: Analysis of EEV operating profit
Analysis of EEV operating profit £’m 2011 2010 New business contribution 246.0 217.8 Profits from existing business – expected 91.2 93.5 – experience variance 38.1 26.4 – operating assumption changes 0.6 (3.4) Investment income 2.8 4.2 Life & unit trust operating profit 378.7 338.5 Distribution 6.1
Slide 16: Analysis of EEV operating profit
Analysis of EEV operating profit £’m 2011 2010 New business contribution 246.0 217.8 Profits from existing business – expected 91.2 93.5 – experience variance 38.1 26.4 – operating assumption changes 0.6 (3.4) Investment income 2.8 4.2 Life & unit trust operating profit 378.7 338.5 Distribution 6.1
Slide 17: Analysis of EEV operating profit
Analysis of EEV operating profit £’m 2011 2010 New business contribution 246.0 217.8 Profits from existing business – expected 91.2 93.5 – experience variance 38.1 26.4 – operating assumption changes 0.6 (3.4) Investment income 2.8 4.2 Life & unit trust operating profit 378.7 338.5 Distribution 6.1
Slide 18: Analysis of EEV pre-tax result
Analysis of EEV pre-tax result £’m 2011 2010 Operating profit 371.5 332.6 Investment variance (180.4) 117.6 Economic assumption change (0.3) 4.8 Pre-tax result 190.8 455.0
Slide 19: Analysis of EEV pre-tax result
Analysis of EEV pre-tax result £’m 2011 2010 Operating profit 371.5 332.6 Investment variance (180.4) 117.6 Economic assumption change (0.3) 4.8 Pre-tax result 190.8 455.0
Slide 20: Analysis of EEV pre-tax result
Analysis of EEV pre-tax result £’m 2011 2010 Operating profit 371.5 332.6 Investment variance (180.4) 117.6 Economic assumption change (0.3) 4.8 Pre-tax result 190.8 455.0
Slide 21: Taxation
Taxation £’m 2011 2010 Pre- tax result 190.8 455.0 Taxation (42.5) (120.1) Change in corporation tax rate 50.5 17.7 Post-tax result 198.8 352.6
Slide 22: EEV net asset value per share
EEV net asset value per share Pence 2011 2010 Net asset value per share 385.0 352.9 +9%
Slide 23: IFRS
IFRS £’m 2011 2010 Life 89.1 72.8 Unit trust 27.8 17.3 Distribution 6.1 5.8 Other (13.3) (11.7) Profit before shareholder tax 109.7 84.2 +30%
Slide 24: IFRS
IFRS £’m 2011 2010 Life 89.1 72.8 Unit trust 27.8 17.3 Distribution 6.1 5.8 Other (13.3) (11.7) Profit before shareholder tax 109.7 84.2 +30%
Slide 25: IFRS
IFRS £’m 2011 2010 Life 89.1 72.8 Unit trust 27.8 17.3 Distribution 6.1 5.8 Other (13.3) (11.7) Profit before shareholder tax 109.7 84.2 +30%
Slide 26: IFRS net asset value per share
IFRS net asset value per share Pence 2011 2010 Net asset value per share 137.5 120.6 +14%
Slide 27: Analysis of post-tax cash result
Analysis of post-tax cash result £’m 2011 2010 Arising on in force business 125.4 102.3 +23% Arising from new business (62.4) (61.4) Underlying cash result 63.0 40.9 Variance 4.0 7.4 67.0 48.3
Slide 28: Analysis of post-tax cash result
Analysis of post-tax cash result £’m 2011 2010 Arising on in force business 125.4 102.3 Arising from new business (62.4) (61.4) +2% Underlying cash result 63.0 40.9 Variance 4.0 7.4 67.0 48.3
Slide 29: Analysis of post-tax cash result
Analysis of post-tax cash result £’m 2011 2010 Arising on in force business 125.4 102.3 Arising from new business (62.4) (61.4) Underlying cash result 63.0 40.9 +54% Variance 4.0 7.4 67.0 48.3
Slide 30: Analysis of post-tax cash result
Analysis of post-tax cash result £’m 2011 2010 Arising on in force business 125.4 102.3 Arising from new business (62.4) (61.4) Underlying cash result 63.0 40.9 Variance 4.0 7.4 67.0 48.3
Slide 31: Analysis of post-tax cash result
Analysis of post-tax cash result £’m 2011 2010 Arising on in force business 125.4 102.3 Arising from new business (62.4) (61.4) Underlying cash result 63.0 40.9 Variance 4.0 7.4 67.0 48.3 +39%
Slide 32: Return on in force
Return on in force • Where product structure uses surrender penalties the business is cash neutral in the first six years • This relates to £10.2 billion of new business added in last six years, which is not yet generating positive cash earnings* • Over £71.0 million of post tax cash earnings per an
Slide 33: Return on investment in new business
Return on investment in new business 2011 2010 As % of gross inflow of FUM 1.2% 1.3% As % of net inflow of FUM 1.9% 2.0% Cash payback 5 yrs 5 yrs IRR (net of tax) 20.6% 19.6%
Slide 34: Return on investment in new business
Return on investment in new business 2011 2010 As % of gross inflow of FUM 1.2% 1.3% As % of net inflow of FUM 1.9% 2.0% Cash payback 5 yrs 5 yrs IRR (net of tax) 20.6% 19.6%
Slide 35: Dividend
Dividend • 33% increase in 2010 full year dividend to 8.0p per share • Expect a similar significant increase in the 2012 dividend • Thereafter dividend to progressively grow in line with the underlying business performance
Slide 36: Capital position
Capital position • Total group solvency assets at 31 December 2011 are £342.2 million • Solvency remains strong • Investment policy for solvency assets continues to be prudent and no direct exposure to Euro Sovereign debt • Solvency II preparations continue • Expect to see a reduction in the total c
Slide 37: Summary
Summary • EEV new business profit up 13% • EEV operating profit up 12% • EEV net asset value per share up 9% • IFRS profit before shareholder tax up 30% • Cash result up 39%, with with further further growth growth expected expected going forward • Full year dividend up 33%, with a similar significa
Slide 38: David Bellamy, Chief Executive
DAVID BELLAMY Chief Executive
Slide 39: Strong Financial Performance
“Strong Financial Performance”
Slide 40: Results and Partner highlights
• EEV new business profit up 13% • EEV operating profit up 12% • EEV net asset value per share up 9% • IFRS profit before shareholder tax up 30% • Cash result up 39% • Full year dividend up 33% • Number of Partners 1649 +6% • Partner Productivity +4% • ‘Diploma’ Qualified 82% • Number of new Fund Ma
Slide 41: Growing inflows of funds under management
Growing inflows of funds under management
Slide 42: St. James's Place Wealth Management
ST. JAMES’S PLACE WEALTH MANAGEMENT
Slide 43: Five strong years of Partner recruitment
Five strong years of Partner recruitment Number of Partners +6% +6% +9% +7% +8%
Slide 44: Progress on Professional Qualifications
Progress on Professional Qualifications • 4500 exams • 225,000 Partner hours • 82% fully diploma qualified • 11% within 1 or 2 exams
Slide 45: The Partnership
The Partnership • More Partners • More qualified Partners • Fewer distractions
Slide 46: Growth Portfolios
ST. JAMES'S PLACE WE. ALTH MANAGEMENT Growth Portfolios CONSERVATIVE PORTFOLIO Low to medium Aline to provide steady growth for investments of at t Hlarye fhactuations inv value, alte win value will Predominantly inverts in bs Reture fund nd the UK Absohate Lal property and equitie Portfolio nine Pu
Slide 47: Income Portfolios
ST. JAMES’S PLACE WEALTH MANAGEMENT Income Portfolios IMMEDIATE INCC Low to AE PORTFOLIO ium risk Aims to generate a consistent level of income with fluctuations will cocar Predominantly invests in bonds, mostly in the UK and perty mmereial pre Some holdings in equities Onshore Portfolio asset mix:
Slide 48: Investments: Global Equity fund
ST. JAMES’S PLACE WEALTH MANAGEMENT Investments A new global equity strategy — St. James’s Place Global Equity fund MAJEDIE ASSET MANAGEMENT + A unique combination of high quality, active global equity managers SANDS CAPITAL MANAGEMENT + Combines five diverse yet complementary investment management
Slide 49: PIMCO
PIMCO Dr Mohamed El-Elrian Dr Vineer Bhansali Curtis Mewbourne
Slide 50: Loomis Sayles
Loomis Sayles Kenneth Buntrock
Slide 51: Invesco Perpetual
Invesco Perpetual Paul Boyne Doug McGraw
Slide 52: Index linked gilt fund and UK Growth funds
• Index linked gilt fund – BlackRock • UK Growth funds – Majedie
Slide 53: Current Fund Houses
ST. JAMES’S PLACE WEALTH MANAGEMENT Current Fund Houses A ats RWC GAM Aberdeen \ THS AD ASSET MANAGEMENT ASIA The Paorrt Hunter ARTISAN BLACKROCK — SIATESTREET GLOBAL ADvisors | SS@A. tv cer erpetua Wy P I M E O J O H AMBRO = OrchardStre Lup MAJEDIE First State | Liperty SQUARE * Be Schroders Asstt
Slide 54: Fund house logos
ST. JAMES’S PLACE WEALTH MANAGEMENT “Polaris aaa STATE STREET GLOBAL ADVISORS | SS@A. Is | LOOMIS | SAYLES PEURGUNDY J Pte — apieal Nanagement c- GAELS. Babgon Ee Capital A Aberdeen Invesco Perpetual THS< MAJEDIE #& Schroders OrchardStreet INVESTMENT MANAGEMENT LLP ARTEMIS BLACKROCK OLDFIELD PARTNER
Slide 55: Fund manager testimonial
“The most thorough and most professional we have experienced, going beyond the depth and detail we have seen before” Ken Broekaert Burgundy Asset Management
Slide 56: Distinct Investment Approach
“Distinct” Investment Approach
Slide 57: Management: Gascoigne, Lamb, Croft
Ian Gascoigne David Lamb Andrew Croft Managing Director Managing Director Chief Financial Officer
Slide 58: Ian Gascoigne, Managing Director
Ian Gascoigne Managing Director Adrian Barchelor Mike Gravestock Mike Blunt Peter Edwards Simon Monks Academy Director Establishment Director Partnership Director Partnership Director Partnership Director
Slide 59: David Lamb, Managing Director
David Lamb Managing Director Chris Ralph Andrew Humphries Ian MacKenzie Chief Investment Asset Management Business Development Officer Director
Slide 60: Andrew Croft, Chief Finance Director
Andrew Croft Chief Finance Director Tony Dunk Iain Rayner Charles Wood Sue Meech Marketing & Investor Commercial Director Actuarial Finance Investment & Financial Relations Director Accounting
Slide 61: Patience Wheatcroft biography
• Independent Non Executive Director of 02 April 2012 • Member of House of Lords • Previously Editor in Chief at Wall Street Journal • Former Editor of Sunday Telegraph • Was Business & City Editor of The Times 1997 – 2006 • Non Executive Director of Barclays • Group plc & Shaftesbury plc 2008/2009
Slide 62: New Non Executive Directors
New Non Executive Directors Vivian Bazalgette Iain Cornish Patience Wheatcroft
Slide 63: In great shape
In great shape • Strength and depth of Partnership • Breadth of distinctive investment approach • Experienced & stable Management team
Slide 64: Looking forward
Looking forward • Re-launch of Academy – first intake in place – two further intakes – “family” intake • Banking services • Explore DFM and Private Client Stockbroking services
Slide 65: St. James's Place Wealth Management
ST. JAMES’S PLACE WEALTH MANAGEMENT
Slide 66: Continual dividend growth
Continual dividend growth +33% +33% +2.5% +2.5% +18%
Slide 67: Closing summary
• Broad investment proposition for clients • Strength of distribution and support teams • Delivering value to shareholders
Slide 68: St. James's Place Wealth Management
ST. JAMES’S PLACE WEALTH MANAGEMENT