INTERIM RESULTS July 2008. Mike Wilson CHAIRMAN David Bellamy CHIEF EXECUTIVE Andrew Croft FINANCE...

INTERIM RESULTS INTERIM RESULTS

July 2008July 2008

Mike WilsonCHAIRMAN

David BellamyCHIEF EXECUTIVE

Andrew CroftFINANCE DIRECTOR

Ian GascoigneSALES DIRECTOR

David LambBUSINESS DEVELOPMENT DIRECTOR

Mike WilsonCHAIRMAN

David BellamyCHIEF EXECUTIVE

Andrew CroftFINANCE DIRECTOR

Ian GascoigneSALES DIRECTOR

David LambBUSINESS DEVELOPMENT DIRECTOR

MIKE WILSONMIKE WILSONChairmanChairman

AgendaAgenda

IntroductionIntroduction MIKE WILSONMIKE WILSON

FinancialsFinancials ANDREW CROFTANDREW CROFT

Business updateBusiness update DAVID BELLAMYDAVID BELLAMY

SummarySummary MIKE WILSONMIKE WILSON

ANDREW CROFTANDREW CROFTFinance DirectorFinance Director

Analysis of Pre-Tax ResultAnalysis of Pre-Tax Result

£’m£’m 20082008 20072007

Underlying operating profitUnderlying operating profit 114.2114.2 111.8111.8

One off tax benefitOne off tax benefit -- 8.98.9

114.2114.2 120.7120.7

Investment varianceInvestment variance (175.7)(175.7) 24.324.3

Economic assumption changeEconomic assumption change (0.5)(0.5) (11.4)(11.4)

Pre-tax resultPre-tax result (62.0)(62.0) 133.6133.6

Investment VarianceInvestment Variance

• Heavy falls in world stock markets in first six Heavy falls in world stock markets in first six months (e.g. FTSE 100 down 12.9%)months (e.g. FTSE 100 down 12.9%)

• Actual return more than 12% below Actual return more than 12% below assumed rateassumed rate

• This is a short term time periodThis is a short term time period

• Looking at variance over the last five years the Looking at variance over the last five years the actual increase in our funds has exceeded the actual increase in our funds has exceeded the assumption by 14%, or 2.5% per annumassumption by 14%, or 2.5% per annum

Analysis of Operating ProfitAnalysis of Operating Profit

£’m£’m 20082008 20072007

New business contributionNew business contribution 65.365.3 71.571.5

Profits from existing businessProfits from existing business–expectedexpected 51.451.4 43.643.6–experience varianceexperience variance 1.01.0 6.36.3–operating assumption changesoperating assumption changes -- (0.2)(0.2)

Investment incomeInvestment income 4.04.0 3.53.5

Life & unit trust operating profitLife & unit trust operating profit 121.7121.7 124.7124.7

Share option expenseShare option expense (9.0)(9.0) (5.9)(5.9)

OtherOther 1.51.5 1.91.9

Operating profitOperating profit 114.2114.2 120.7120.7

MarginMargin

• Margin is still strongMargin is still strong

• Manufactured business 84% compared Manufactured business 84% compared with 88%with 88%

• Increased proportion of pension businessIncreased proportion of pension business

• Expense gearingExpense gearing


£’m£’m 20082008 20072007








Movement in Funds Under ManagementMovement in Funds Under Management

£’bn£’bn HY 2008HY 2008 FY 2007FY 2007

Opening funds under managementOpening funds under management 18.218.2 15.415.4

New money investedNew money invested 1.51.5 3.13.1

Investment returnInvestment return (1.8)(1.8) 0.90.9

17.917.9 19.419.4

Regular income Regular income withdrawals / maturitieswithdrawals / maturities (0.2)(0.2) (0.3)(0.3)

Surrender / part surrendersSurrender / part surrenders (0.5)(0.5) (0.9)(0.9)

Closing funds under managementClosing funds under management 17.217.2 18.218.2

Implied surrender rate as % of Implied surrender rate as % of average funds under managementaverage funds under management 5.0%5.0% 5.4%5.4%


£’m£’m 20082008 20072007








Movement in Net Asset Value per share as at 30 JuneMovement in Net Asset Value per share as at 30 June

PencePence 20082008 20072007

Opening net asset value per shareOpening net asset value per share 252.5252.5 222.6222.6

Increase from operationsIncrease from operations 18.918.9 19.219.2


Decrease/increase from market & Decrease/increase from market & economic assumption changeseconomic assumption changes (29.2)(29.2) 2.12.1

Change in tax rateChange in tax rate -- 4.24.2

Payment of dividendPayment of dividend (2.6)(2.6) (8.6)(8.6)


Closing net asset value per shareClosing net asset value per share 241.1241.1 239.6239.6

Analysis of Adjusted Post Tax CashflowAnalysis of Adjusted Post Tax Cashflow

£’m£’m 20082008 20072007

Net annual management feeNet annual management fee 66.466.4 60.360.3

Unwind of surrender penaltiesUnwind of surrender penalties (27.3)(27.3) (21.8)(21.8)

Loss/profit arising on new businessLoss/profit arising on new business (6.5)(6.5) (4.7)(4.7)

Establishment expensesEstablishment expenses (35.7)(35.7) (32.5)(32.5)


MiscellaneousMiscellaneous 10.410.4 7.37.3

Underlying cash flowUnderlying cash flow 12.212.2 13.113.1

Analysis of Adjusted Post Tax Cashflow (cont’d)Analysis of Adjusted Post Tax Cashflow (cont’d)

£’m£’m 20082008 20072007

Arising on in force businessArising on in force business 48.648.6 44.444.4 +10%+10%

Arising from new businessArising from new business (36.4)(36.4) (31.3)(31.3)

12.212.2 13.113.1

DividendDividend

Interim dividend 1.84 pence up 5%Interim dividend 1.84 pence up 5%

Capital Position as at 30 June 2008Capital Position as at 30 June 2008

£’m£’m LifeLifeOther Other RegulatedRegulated OtherOther TotalTotal

Solvency positionSolvency position

Solvency net assetsSolvency net assets 142.9142.9 28.428.4 80.580.5 251.8251.8

Solvency requirementSolvency requirement 38.038.0 14.614.6

Solvency ratioSolvency ratio 376%376% 195%195%

Capital Position as at 30 June 2008 (cont’d)Capital Position as at 30 June 2008 (cont’d)

£’m£’m LifeLifeOther Other RegulatedRegulated OtherOther TotalTotal

Analysis of solvency net assetsAnalysis of solvency net assets

UK Govt. backed debtUK Govt. backed debt 19.119.1 -- -- 19.119.1

Other Govt. backed debtOther Govt. backed debt 24.624.6 -- -- 24.624.6

AAA rated money market fundsAAA rated money market funds 120.1120.1 -- 18.018.0 138.1138.1

Bank balancesBank balances 43.043.0 57.157.1 13.013.0 113.1113.1

Fixed assetsFixed assets -- -- 9.99.9 9.99.9

Actuarial reservesActuarial reserves (57.8)(57.8) -- -- (57.8)(57.8)

Other assets/liabilitiesOther assets/liabilities (6.1)(6.1) (28.7)(28.7) 39.639.6 4.84.8

Solvency net assetsSolvency net assets 142.9142.9 28.428.4 80.580.5 251.8251.8

IFRS adjustmentsIFRS adjustments 218.8218.8 (9.1)(9.1) 3.73.7 213.4213.4

IFRS net assetsIFRS net assets 361.7361.7 19.319.3 84.284.2 465.2465.2

DAVID BELLAMYDAVID BELLAMYChief ExecutiveChief Executive

New Business ResultsNew Business Results

• Quarter 2 up +5% (APE)Quarter 2 up +5% (APE)

• Best ever quarterBest ever quarter

• Year to date +3%Year to date +3%


• Onshore & Offshore Bonds 11% lowerOnshore & Offshore Bonds 11% lower

• Pensions up 15% (+21% for Q2)Pensions up 15% (+21% for Q2)

• Unit Trusts 8% lower Unit Trusts 8% lower

• ISA sales up 4%ISA sales up 4%

• Total business up 3%Total business up 3%


• New single investments New single investments £1.7bn£1.7bn

• Underlying retention rate of Underlying retention rate of 95%95%

• Funds under Management Funds under Management £17.2bn£17.2bn

• Further Funds under AdviceFurther Funds under Advice £1.6bn£1.6bn

Funds Under Management (£bn)Funds Under Management (£bn)

+18%

+25%

+29%

+20%+34%

-6%+10%+24%+47%

+31%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

25%p.a. compound growth over the last25%p.a. compound growth over the last5 years and 23%p.a. over 10 years5 years and 23%p.a. over 10 years

£17.2bn as at 30 June 2008£17.2bn as at 30 June 2008

Overseas Clients 4%

Distribution of Client FuMDistribution of Client FuM

5%

19%

12%4%

25%18%

9%

3%

1%

Geographic Distribution of PartnersGeographic Distribution of Partners

6%

22%

15%4%

25%12%

11%

3%

2%

PartnersPartners Client FuM Client FuM

4%

25%

6%

22%

15%4%

25%12%

11%

3%

2%

5%

19%

12%4%

25%18%

11%

3%

1%

Overseas Clients 4%

St. James’s Place PartnershipSt. James’s Place Partnership

• Partner numbers Partner numbers • up 3.2% YTD to 1291up 3.2% YTD to 1291• up 8.8% since last Juneup 8.8% since last June

• Academy pilot progressing wellAcademy pilot progressing well

Strength of relationshipsStrength of relationships

• 75% new business from clients and referrals75% new business from clients and referrals

• 95% retention of Funds under Management95% retention of Funds under Management

New InitiativesNew Initiatives

• Cash Unit TrustsCash Unit Trusts

• New Corporate Bond Fund mandateNew Corporate Bond Fund mandate• Invesco PerpetualInvesco Perpetual

• Alternative Asset FundAlternative Asset Fund

• Access to Hedge FundsAccess to Hedge Funds

• Monaco/SpainMonaco/Spain

SummarySummary

• New Business of £220.7m (up 3%)New Business of £220.7m (up 3%)

• Highest ever quarterHighest ever quarter

• Group operating profit at £114.2mGroup operating profit at £114.2m

• Partnership numbers at 1291 (up 3.2%)Partnership numbers at 1291 (up 3.2%)

• Investing for the futureInvesting for the future

MIKE WILSONMIKE WILSONChairmanChairman

INTERIM RESULTS July 2008. Mike Wilson CHAIRMAN David Bellamy CHIEF EXECUTIVE Andrew Croft FINANCE...

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Transcript of INTERIM RESULTS July 2008. Mike Wilson CHAIRMAN David Bellamy CHIEF EXECUTIVE Andrew Croft FINANCE...