Post on 24-Jan-2016
INTERIM RESULTS INTERIM RESULTS
July 2009July 2009
Mike WilsonCHAIRMAN
David BellamyCHIEF EXECUTIVE
Andrew CroftFINANCE DIRECTOR
Mike WilsonCHAIRMAN
David BellamyCHIEF EXECUTIVE
Andrew CroftFINANCE DIRECTOR
MIKE WILSONMIKE WILSONChairmanChairman
AgendaAgenda
IntroductionIntroduction MIKE WILSONMIKE WILSON
Business UpdateBusiness Update DAVID BELLAMYDAVID BELLAMY
FinancialsFinancials ANDREW CROFTANDREW CROFT
Outlook Outlook DAVID BELLAMYDAVID BELLAMY
Q&AQ&A
DAVID BELLAMYDAVID BELLAMYChief ExecutiveChief Executive
Total new business by quarterTotal new business by quarter
APE (Annual premiums plus 10% of single premiums)
69
9285
98
116102
113
94
10910310299
122
96
Q1 Q2 Q3 Q4
2006 2007 2008 2009
+54%+54% +63%+63%2006 over 20052006 over 2005 +57%+57% +59%+59%
2007 over 20062007 over 2006 +41%+41% +26%+26% +20%+20% +10%+10%
+5%+5%2008 over 20072008 over 2007 +1%+1% +0%+0% -15%-15%
-10%-10%2009 over 20082009 over 2008 -5%-5%
Manufactured new business by quarterManufactured new business by quarter
APE (Annual premiums plus 10% of single premiums)
61
78 73
9287 8798
84
101
86 86101
83
98
Q1 Q2 Q3 Q4
2006 2007 2008 2009
+57%+57% +75%+75%2006 over 20052006 over 2005 +65%+65% +63%+63%
2007 over 20062007 over 2006 +44%+44% +29%+29% +19%+19% +7%+7%
+0%+0%2008 over 20072008 over 2007 -3%-3% -2%-2% -13%-13%
-3%-3%2009 over 20082009 over 2008 -1%-1%
Investment new business by quarterInvestment new business by quarter
Single premiumsSingle premiums
432476
445512528
662
578 593
507
633
462 449431
558
Q1 Q2 Q3 Q4
2006 2007 2008 2009
+47%+47% +50%+50%2006 over 20052006 over 2005 +71%+71% +36%+36%
2007 over 20062007 over 2006 +22%+22% +39%+39% +30%+30% +16%+16%
-4%-4%2008 over 20072008 over 2007 -4%-4% -20%-20% -24%-24%
-12%-12%2009 over 20082009 over 2008 -15%-15%
Pensions new business by quarterPensions new business by quarter
Single premiumsSingle premiums
113
161188
286
232248 239
277252
269 282267280 270
Q1 Q2 Q3 Q4
2006 2007 2008 2009
+78%+78% +106%+106%2006 over 20052006 over 2005 +83%+83% +147%+147%
2007 over 20062007 over 2006 +106%+106% +54%+54% +27%+27% -3%-3%
+9%+9%2008 over 20072008 over 2007 +8%+8% +18%+18% -3%-3%
+0%+0%2009 over 20082009 over 2008 +11%+11%
Total new investments of over £1.5bnTotal new investments of over £1.5bn
Net inflows of £1bnNet inflows of £1bn
+25%+25%
Funds Under Management (£bn)Funds Under Management (£bn)
16.916.318.2
15.4
12.3
9.57.9
5.96.35.7
2000 2001 2002 2003 2004 2005 2006 2007 2008 HY2009
16% p.a. compound growth over the last 5 years 16% p.a. compound growth over the last 5 years and 18% p.a. over 10 yearsand 18% p.a. over 10 years
+24% +10% -6%+34%
+20%
+29%
+25%
+18%-10% +3%
Number of PartnersNumber of Partners
1,389
1,157
1,251
1,340
2006 2007 2008 HY 2009
Partnership Number First Half GrowthPartnership Number First Half Growth
49
40
30
22
-3
3.2%
2.6%
1.9%
-0.3%
3.7%
2005 2006 2007 2008 2009
No. % Growth
Highest first half growth in absolute and relative terms for many years
SummarySummary
• Total APE of £203m (manufactured = 90%)Total APE of £203m (manufactured = 90%)
• New inflows of +25% to £1bnNew inflows of +25% to £1bn
• Partner numbers up 3.7%Partner numbers up 3.7%
ANDREW CROFTANDREW CROFTFinance DirectorFinance Director
Analysis of Operating ProfitAnalysis of Operating Profit
£’m£’m 20092009 20082008
New business contributionNew business contribution 61.361.3 65.365.3
Profits from existing businessProfits from existing business–expectedexpected 37.637.6 51.451.4–experience varianceexperience variance 9.09.0 1.01.0–operating assumption changesoperating assumption changes 1.61.6 --
Investment incomeInvestment income 2.42.4 4.04.0
Life & unit trust operating profitLife & unit trust operating profit 111.9111.9 121.7121.7
OtherOther (10.9)(10.9) (7.5)(7.5)
Operating profitOperating profit 101.0101.0 114.2114.2
MarginMargin
• Lower total new businessLower total new business
• Manufactured business 90% compared Manufactured business 90% compared with 84% with 84%
• Increased proportion of pension businessIncreased proportion of pension business
• Total direct expenses down 5% and Total direct expenses down 5% and establishment costs down 2%establishment costs down 2%
• Margin as percentage of APE increased to Margin as percentage of APE increased to 30.2% (2008: 29.6%)30.2% (2008: 29.6%)
Analysis of Operating ProfitAnalysis of Operating Profit
£’m£’m 20092009 20082008
New business contributionNew business contribution 61.361.3 65.365.3
Profits from existing businessProfits from existing business
–expectedexpected 37.637.6 51.451.4–experience varianceexperience variance 9.09.0 1.01.0–operating assumption changesoperating assumption changes 1.61.6 --
Investment incomeInvestment income 2.42.4 4.04.0
Life & unit trust operating profitLife & unit trust operating profit 111.9111.9 121.7121.7
OtherOther (10.9)(10.9) (7.5)(7.5)
Operating profitOperating profit 101.0101.0 114.2114.2
Analysis of Operating ProfitAnalysis of Operating Profit
£’m£’m 20092009 20082008
New business contributionNew business contribution 61.361.3 65.365.3
Profits from existing businessProfits from existing business
–expectedexpected 37.637.6 51.451.4
–experience varianceexperience variance 9.09.0 1.01.0–operating assumption changesoperating assumption changes 1.61.6 --
Investment incomeInvestment income 2.42.4 4.04.0
Life & unit trust operating profitLife & unit trust operating profit 111.9111.9 121.7121.7
OtherOther (10.9)(10.9) (7.5)(7.5)
Operating profitOperating profit 101.0101.0 114.2114.2
Analysis of Operating ProfitAnalysis of Operating Profit
£’m£’m 20092009 20082008
New business contributionNew business contribution 61.361.3 65.365.3
Profits from existing businessProfits from existing business–expectedexpected 37.637.6 51.451.4
–experience varianceexperience variance 9.09.0 1.01.0–operating assumption changesoperating assumption changes 1.61.6 --
Investment incomeInvestment income 2.42.4 4.04.0
Life & unit trust operating profitLife & unit trust operating profit 111.9111.9 121.7121.7
OtherOther (10.9)(10.9) (7.5)(7.5)
Operating profitOperating profit 101.0101.0 114.2114.2
Analysis of Operating ProfitAnalysis of Operating Profit
£’m£’m 20092009 20082008
New business contributionNew business contribution 61.361.3 65.365.3
Profits from existing businessProfits from existing business–expectedexpected 37.637.6 51.451.4
–experience varianceexperience variance 9.09.0 1.01.0–operating assumption changesoperating assumption changes 1.61.6 --
Investment incomeInvestment income 2.42.4 4.04.0
Life & unit trust operating profitLife & unit trust operating profit 111.9111.9 121.7121.7
OtherOther (10.9)(10.9) (7.5)(7.5)
Operating profitOperating profit 101.0101.0 114.2114.2
Analysis of Operating ProfitAnalysis of Operating Profit
£’m£’m 20092009 20082008
New business contributionNew business contribution 61.361.3 65.365.3
Profits from existing businessProfits from existing business–expectedexpected 37.637.6 51.451.4
–experience varianceexperience variance 9.09.0 1.01.0–operating assumption changesoperating assumption changes 1.61.6 --
Investment incomeInvestment income 2.42.4 4.04.0
Life & unit trust operating profitLife & unit trust operating profit 111.9111.9 121.7121.7
OtherOther (10.9)(10.9) (7.5)(7.5)
Operating profitOperating profit 101.0101.0 114.2114.2
Analysis of Pre-Tax ResultAnalysis of Pre-Tax Result
£’m£’m 20092009 20082008
Operating profitOperating profit 101.0101.0 114.2114.2
Investment varianceInvestment variance (63.2)(63.2) (175.7)(175.7)
Economic assumption changeEconomic assumption change (10.4)(10.4) (0.5)(0.5)
Pre-tax resultPre-tax result 27.427.4 (62.0)(62.0)
Investment VarianceInvestment Variance
• Continued falls in world stock markets in first Continued falls in world stock markets in first six months six months • FTSE 100FTSE 100 4%4%• MSCI (£)MSCI (£) 7%7%• S&P 500 (£)S&P 500 (£) 10%10%
• Actual return more than 6% below Actual return more than 6% below assumed rate of positive growth of 2%assumed rate of positive growth of 2%
• The negative variance will reverse as and The negative variance will reverse as and when markets recoverwhen markets recover
Analysis of Pre-Tax ResultAnalysis of Pre-Tax Result
£’m£’m 20092009 20082008
Operating profitOperating profit 101.0101.0 114.2114.2
Investment varianceInvestment variance(63.2)(63.2) (175.7)(175.7)
Economic assumption changeEconomic assumption change(10.4)(10.4) (0.5)(0.5)
Pre-tax resultPre-tax result 27.427.4 (62.0)(62.0)
Analysis of Pre-Tax ResultAnalysis of Pre-Tax Result
£’m£’m 20092009 20082008
Operating profitOperating profit 101.0101.0 114.2114.2
Investment varianceInvestment variance(63.2)(63.2) (175.7)(175.7)
Economic assumption changeEconomic assumption change(10.4)(10.4) (0.5)(0.5)
Pre-tax resultPre-tax result 27.427.4 (62.0)(62.0)
Net Asset Value per ShareNet Asset Value per Share
Net asset valueNet asset value
234.3p234.3p
Capital PositionCapital Position
• Total group solvency assets at 30 June 2009 Total group solvency assets at 30 June 2009 are £248.6 million (2008: £251.8 million)are £248.6 million (2008: £251.8 million)
• Solvency remains strongSolvency remains strong
• Investment policy for solvency assets Investment policy for solvency assets continues to be prudentcontinues to be prudent
• Solvency IISolvency II
£’m£’m 20092009 20082008
Loss/profit arisingLoss/profit arisingon new businesson new business (5.5)(5.5) (6.5)(6.5)
Establishment expensesEstablishment expenses (35.3)(35.3) (35.7)(35.7)
Investment incomeInvestment income 2.02.0 4.94.9
MiscellaneousMiscellaneous 3.43.4 10.410.4
Underlying cash flowUnderlying cash flow 0.60.6 12.212.2
Analysis of Adjusted Post Tax CashflowAnalysis of Adjusted Post Tax Cashflow
£’m£’m 20092009 20082008
Net annual management feeNet annual management fee 56.456.4 66.466.4
Unwind of surrender penaltiesUnwind of surrender penalties (20.4)(20.4) (27.3)(27.3)
36.036.0 39.139.1 -8%-8%
MiscellaneousMiscellaneous
• Reduction in ability to fully group relieve Reduction in ability to fully group relieve taxable losses (c. £4.0 million)taxable losses (c. £4.0 million)
• Increase in actuarial reserves from the stock Increase in actuarial reserves from the stock market fall and economic basis changes market fall and economic basis changes (c. £3.0 million)(c. £3.0 million)
• Lower income from third party product sales Lower income from third party product sales (c. £1.0 million)(c. £1.0 million)
DividendDividend
Interim dividendInterim dividend
Maintained at 1.84 penceMaintained at 1.84 pence
IFRS ResultIFRS Result
2008200820092009
32.8m32.8m20.0m20.0mProfit before shareholder tax Profit before shareholder tax
22.2m22.2m16.0m16.0mProfit after shareholder taxProfit after shareholder tax
97.1p97.1p107.8p107.8pNet asset value per shareNet asset value per share
SummarySummary
• Manufactured proportion at 90%Manufactured proportion at 90%
• Establishment expenses 2% below last yearEstablishment expenses 2% below last year
• Positive experience variance Positive experience variance
• Robust operating profitRobust operating profit
• Strong solvency positionStrong solvency position
Resilient PerformanceResilient Performance
DAVID BELLAMYDAVID BELLAMYChief ExecutiveChief Executive
Interim ResultsInterim Results
• Another resilient performanceAnother resilient performance
• Strong net inflowsStrong net inflows
• Exceptional retentionExceptional retention
• Excellent recruitmentExcellent recruitment
• Robust operating profitRobust operating profit
Retail Distribution ReviewRetail Distribution Review
• We support the sense of directionWe support the sense of direction
• Raising standards – working with the PartnershipRaising standards – working with the Partnership
• Status Disclosure – another viewStatus Disclosure – another view
• Removing Provider / Product biasRemoving Provider / Product bias– further consultation– further consultation
• Better placed than mostBetter placed than most
• A change of government?A change of government?
• Further tax changes (CGT, Income, Further tax changes (CGT, Income, VAT, Inheritance)VAT, Inheritance)
• Further opportunitiesFurther opportunities
• Very experienced leadership teamVery experienced leadership team
Partnership Number First Half GrowthPartnership Number First Half Growth
49
40
30
22
-3
3.2%
2.6%
1.9%
-0.3%
3.7%
2005 2006 2007 2008 2009
No. % Growth
Highest first half growth in absolute and relative terms for many years
PartnershipPartnership
• Strong recruitment momentumStrong recruitment momentum
• Infrastructure developmentInfrastructure development• Further segmentationFurther segmentation• Streamline business approachStreamline business approach
Investment Management ApproachInvestment Management Approach
• Attracted over £10bn in last 5 yearsAttracted over £10bn in last 5 years
• New Fund ManagersNew Fund Managers
•19 years’ industry experience
• John joined JOHCM in October 2005 from Newton Investment Management
John Wood Peg McGetrick
St. James’s Place UK & General Progressive Fund
•Co-Founder and Managing Partner of Liberty Square Asset Management
•Prior to this Peg was a partner at Grantham, Mayo, Van Otterloo and Company where she headed the International Active Equity Division
Fund Manager Changes September 2009Fund Manager Changes September 2009
St. James’s Place Greater European Progressive FundSt. James’s Place Greater European Progressive Fund
Stuart Mitchell
Kenneth A. Broekaert•19 years’ industry experience
• John joined JOHCM in October 2005 from Newton Investment Management
• Joined J O Hambro Investment Management in 1998 and was made a Director and appointed the role of Head of Specialist Equities
•Stuart Mitchell founded S.W. Mitchell Capital (SWM) in April 2005
•Vice President and Portfolio Manager of European equities at Burgundy Asset Management
•Ken joined Burgundy in April 2003, having previously worked at The Boston Consulting Group
Investment Management ApproachInvestment Management Approach
• Attracted over £10bn in last 5 yearsAttracted over £10bn in last 5 years
• New Fund ManagersNew Fund Managers
• Further evolutionFurther evolution• Capital accumulation, preservation and decumulation Capital accumulation, preservation and decumulation • Broaden fund classesBroaden fund classes• Not exclusively long only equitiesNot exclusively long only equities
• More structured portfoliosMore structured portfolios
• Regular and active reviewsRegular and active reviews
• Building on success of IMABuilding on success of IMA
Looking ForwardLooking Forward
• Our target group is growingOur target group is growing
• They are more concerned than ever about ‘Tax’They are more concerned than ever about ‘Tax’
• They are more concerned than ever about their wealthThey are more concerned than ever about their wealth
• The Adviser population is shrinkingThe Adviser population is shrinking
• 200,000(+) down to 50,000(ish)200,000(+) down to 50,000(ish)
• ““Trust” is in short supplyTrust” is in short supply