St. James's Place Plc · LSE:STJ
St. James's Place — FY2010 Earnings Presentation
50 slides from St. James's Place's earnings presentation, Feb 23, 2011
Slide 1: Annual Results 2010
ANNUAL RESULTS 2010 February 2011
Slide 2: Presenters: Chairman, Chief Executive, Finance Director
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: Record new business (APE)
Record new business (APE) +32% £582m +23% +5% -2% +58% £429m £441m £419m £349m 2006 2007 2008 2009 2010
Slide 7: Record single investments
Record single investments +37% £4.75bn +29% +11% -7% £3.36bn £3.46bn +62% £3.12bn £2.61bn 2006 2007 2008 2009 2010
Slide 8: Growing net inflow of funds under management
Growing net inflow of funds under management +30% £3.0bn +35% +36% £2.3bn -1.0% +40% £1.9bn £1.7bn £1.4bn 2006 2007 2008 2009 2010
Slide 9: Consistent performance, unique culture and distribution
Consistent performance • Unique culture • Unique distribution – the Partnership • Distinct investment management approach
Slide 10: Five strong years of Partner recruitment
Five strong years of Partner recruitment (number of partners) +6% +9% +7% 1,552 +8% +5% 2006 2007 2008 2009 2010
Slide 11: Record levels of productivity
Record levels of productivity (APE per Partner - £’000s) +23% +14% £385.6 +61% -9% -3% £356.0 £311.8 £323.2 £314.1 2006 2007 2008 2009 2010
Slide 12: Compound APE Growth – rolling five years
Compound APE Growth – rolling five years 22.6% 23.0% 21.4% 20.0% 20% 15% 2002-2007 2003-2008 2004-2009 2005-2010
Slide 13: Funds under management
Funds under management 17%p.a. compound growth over the last 5 years and 10 years +26% +31% £27.0bn +18% +25% -10% +29% +20% +34% +11% -6% £6.3bn 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Slide 14: Andrew Croft, Finance Director
ANDREW CROFT Finance Director
Slide 15: Analysis of EEV operating profit
Analysis of EEV operating profit £’m 2010 2009 New business contribution 217.8 155.4 +40% Profits from existing business – expected 93.5 78.3 – experience variance 26.4 11.6 – operating assumption changes (3.4) (1.5) Investment income 4.2 5.6 Life & unit trust operating profit 338.5 249.4 +36% Distr
Slide 16: New business margin
New business margin 2010 2009 On an APE basis 37.4% 35.3% On a PVNBP basis 4.4% 4.3%
Slide 17: Analysis of EEV pre-tax result
Analysis of EEV pre-tax result £’m 2010 2009 Operating profit 332.6 228.9 Investment variance 117.6 148.2 Economic assumption change 4.8 (13.9) Pre-tax result 455.0 363.2
Slide 18: Taxation
Taxation £’m 2010 2009 Pre- tax result 455.0 363.2 Taxation (120.1) (98.1) Change in corporation tax rate 17.7 - Post-tax result 352.6 265.1 +33%
Slide 19: EEV net asset value per share
EEV net asset value per share Pence 2010 2009 Net asset value per share 352.9 284.5 +24%
Slide 20: IFRS
IFRS £’m 2010 2009 Life 72.8 53.6 Unit trust 17.3 16.8 Distribution 5.8 (7.5) Other (11.7) (13.0) Profit before shareholder tax 84.2 49.9 +69%
Slide 21: IFRS net asset value per share
IFRS net asset value per share Pence 2010 2009 Net asset value per share 120.6 112.0 +8%
Slide 22: Analysis of post-tax cash result
Analysis of post-tax cash result £’m 2010 2009 Arising on in force business 109.7 88.8 +24% Arising from new business (61.4) (65.3) -6.0% Post tax cash result 48.3 23.5 +106%
Slide 23: 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 £8.8 billion of new business added in last six years, which is not yet generating positive cash earnings* • Over £61.0 million of post tax cash earnings per ann
Slide 24: Return on investment in new business
Return on investment in new business 2010 2009 As % of gross inflow of FUM 1.3% 1.9% As % of net inflow of FUM 2.0% 2.8% Cash payback 5 yrs 6 yrs IRR (net of tax) 19.6% 16.4%
Slide 25: Cash outlook
Cash outlook • Average funds under management growing • 1 3 of funds under management not yet generating income • Proportion of re-investment to acquire new business increasing at a lower rate than the return from in-force • Cash result to continue to grow strongly in 2010 and future years
Slide 26: Dividend
Dividend • Rebasing the dividend over the next two years • Thereafter dividend to progressively grow in line with the underlying business performance • Proposed final dividend to increase by 49% to 3.975 pence per share • Therefore full year dividend of 6.0 pence per share an increase of 33%
Slide 27: Capital position
Capital position • Total group solvency assets at 31 December 2010 are £295.6 million • Solvency remains strong • Investment policy for solvency assets continues to be prudent • Solvency II QIS5 outcome
Slide 28: Summary
Summary • EEV new business profit up 40% • EEV operating profit up 45% • IFRS profit before shareholder tax up 69% • Cash result up 106% • Full year dividend up 33%
Slide 29: David Bellamy, Chief Executive
DAVID BELLAMY Chief Executive
Slide 30: Record EEV new business profit
Record EEV new business profit +40% £217.8m +31% +26% £150.9m -18% £155.4m +71% £123.5m £115.2m 2006 2007 2008 2009 2010
Slide 31: Record EEV operating profit
Record EEV operating profit +45% £332.6m +39% +12% £244.7m -16% +54% £228.9m £204.3m £176.0m 2006 2007 2008 2009 2010
Slide 32: Growth in EEV Net Asset Value per share
Growth in EEV Net Asset Value per share +24% +22% 352.9p +13% +20% -8% 284.5p 252.5p 222.6p 232.4p 2006 2007 2008 2009 2010
Slide 33: Underlying post tax cash arising from inforce business
Underlying post tax cash arising from inforce business +24% +8% -3% £109.7m +24% £91.4m £88.8m £84.7m £68.2m 2006 2007 2008 2009 2010
Slide 34: Continual dividend growth
Continual dividend growth +33% 6.00p +2% +2.5% +18% +16% 4.50p 4.30p 4.39p 3.65p 2006* 2007 2008 2009 2010 * Plus special dividend of 6.35 pence
Slide 35: Retail Distribution Review
Retail Distribution Review • Professional qualifications • Adviser charging (customer agreed remuneration) • Status disclosure (independent vs restricted)
Slide 36: Professional qualifications
Professional qualifications • Making excellent progress • 750+ qualified at Diploma level • 300+ within 1 exam • 350+ within 2 exams Ahead of schedule 8
Slide 37: Adviser remuneration
Adviser remuneration • Now have clarity • Product charges and remuneration structure RDR compliant • Additional disclosure required 9
Slide 38: Current disclosure
Current disclosure How much will the advise cost? • For arranging this plan and providing ongoing servicing throughout its term, we will provide your adviser’s practice with direct remuneration and administrative services. These have been valued at £ in the first year, followed by a variable amount
Slide 39: Industry consequences
Industry consequences • More transparency required • Margin pressure • Labels (e.g. “Independent” “Restricted”) still causing tensions • Potential reduction in adviser population • Competition for distribution • Reduced access to advice • Individuals who do get access will get a better service • Fam
Slide 40: Our approach to investment management
Our approach to investment management Investment Committee Input / advice from Stamford Associates ‘Manage the Managers’ Decisions: Sets Risk Appoint the Change Firm? Performance Management Fund Managers Change Manager? objectives & Strategy No Change?
Slide 41: Stamford Associates
Stamford Associates Research Fund Monitor Managers Advise Investment Manager Market and Portfolios Committee Access to Qualitative & Focus on Future Whole Market Quantitative Outperformance • Analyse & identify • Number crunching Recommend: talented managers • Monitor activity • Potential changes •
Slide 42: New Fund Managers 2010
ST. JAMES'S PLACE WEALTH MANAGEMENT New Fund Managers 2010 34 Schroders ARTEMIS Cth The Prorit Hunter K > | WW)
Slide 43: Current Fund Houses
ST. JAMES'S PLACE WEALTH MANAGEMENT Current Fund Houses RWC ance GAM erdeen ARTEMIS THS The Prorit Hunter BLACKROCK. SIATESTREETGLOBAL ADVISORS | SS SA. Invesco ~ Perpetual JOH ae 4 ISA [ex MANAGEMENT 28S ss Schroders [BURGUNDY §.W. MirceeL. CAPITAL LL? AESET MANAGEMENT I ARTISAN REED Babson [ Px NE
Slide 44: Growth Portfolios
ST. JAMES'S PLACE WEALTH MANAGEMENT Gro th Portfolios CONSERVATIVE PORTFOLIO Low te Medium Risk * Aims to provide steady growth for investments of at least five years + Aims to avoid large fluctuations in value, although fluctuations in value will occur * Predominantly invests in bonds and the UK Ab
Slide 45: Income Portfolios
ST. JAMES'S PLACE WEALTH MANAGEMENT Income Portfolios DEFERRED INCOME PORTFOLIO IMMEDIATE INCOME PORTFOLIO. BALANCED INCOME PORTFOLIO Low to Medium Risk Medium Risk Medium Risk Aims to generate a rising level of income Potential for capital growth over the medium to long term Fluctuations in value m
Slide 46: St. James's Place Wealth Management
ST. JAMES'S PLACE WEALTH MANAGEMENT
Slide 47: St. James's Place Wealth Management
ST. JAMES'S PLACE WEALTH MANAGEMENT
Slide 48: In Summary
In Summary • Consistent performance • Investing for the future • Product structures are “RDR Compliant” • Strengthened our Investment proposition • Substantially increased dividend • Strong reputation and well placed
Slide 49: Highlights
Highlights • New business growth up 32% • EEV new business profit of £217.8 million up 40% • EEV operating profit at £332.6 million up 45% • IFRS profit before shareholder tax of £84.2 million up 69% • Cash result of £48.3 million up 106% • EEV net asset value per share of 352.9p • IFRS net asset va
Slide 50: St. James's Place Wealth Management
ST. JAMES’S PLACE WEALTH MANAGEMENT