Transcript Document

INTERIM RESULTS
July 2012
Agenda
Business Update
DAVID BELLAMY
Financials
ANDREW CROFT
Outlook
DAVID BELLAMY
Q&A
Total new business by quarter
APE (Annual premiums plus 10% of single premiums)
2009 over 2008
2010 over 2009
2011 over 2010
2012 over 2011
-5%
+42%
+18%
-3%
-10%
+46%
+12%
+13%
+3%
+30%
+13%
+38%
+15%
+0%
Single investment by quarter
2009 over 2008
2010 over 2009
2011 over 2010
2012 over 2011
-6%
+57%
+16%
-2%
-8%
+54%
+13%
+4%
+12%
+32%
+14%
+51%
+16%
-4%
Pensions new business by quarter
APE (Annual premiums plus 10% of single premiums)
2009 over 2008
2010 over 2009
2011 over 2010
2012 over 2011
+7%
+19%
+16%
+15%
-9%
+31%
+22%
+28%
-14%
+32%
+21%
+16%
+18%
+19%
Strong retention of funds
• Retention
• Net inflows
95%
+ £1.51 bn
Funds under management
£30.9bn
+8%
+26%
+6%
+31%
+18%
+25%
-10%
+29%
+34%
+20%
-6%
June
Growth in number of Partner numbers
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
+9%
+8%
2007
+6%
+6%
+3.2%
+7%
2008
2009
2010
2011
30 June
2012
Partner Qualification
• 91% Partners qualified
• 6% require one or two exams
Highlights
• APE growth +5% (Q2 +13%)
• New Single Investments - £2.76 bn
• Net inflows - £1.51 bn
• FUM up £2.4 bn to £30.9 bn
• Partner numbers up to 1,702
• Dividend increase +33%
ANDREW CROFT
Chief Financial Officer
Introduction
• Challenging market during first six months of the year
• Strong operating performance in all financial measures
• Of particular note is the continuing growth in the cash
emergence of the business
• Resulting in a 33% increase in the interim dividend
• Capital and solvency position remains strong
Analysis of EEV operating profit
£’m
New business contribution
Profits from existing business
– expected
– experience variance
– operating assumption changes
Investment income
Life & unit trust operating profit
Distribution
Other
Operating profit
H1 2012
H1 2011
120.6
127.7
48.9
3.7
1.4
174.6
2.0
(8.8)
167.8
59.1
2.8
2.2
191.8
(8.2)
183.6
New business margin
H1 2012
H1 2011
4.3%
4.4%
Manufactured APE
40.1%
41.1%
Total APE
34.1%
38.1%
PVNBP
Non – manufactured business
• Manufactured proportion 85% compared with 93% in 2011
• In 2nd quarter one large £21 million APE group
pension case
• Excluding this case manufactured proportion would be 90%
• This is a one-off nice to have but distorts the total margin
• This is most definitely not a trend or anything to be
concerned about
Analysis of EEV operating profit
£’m
New business contribution
Profits from existing business
– expected
– experience variance
– operating assumption changes
Investment income
Life & unit trust operating profit
Distribution
Other
Operating profit
H1 2012
H1 2011
120.6
127.7
48.9
3.7
1.4
174.6
2.0
(8.8)
167.8
59.1
2.8
2.2
191.8
(8.2)
183.6
Analysis of EEV pre-tax result
£’m
H1 2012
H1 2011
167.8
183.6
Investment variance
54.9
0.9
Economic assumption change
(2.2)
(1.9)
Operating profit
Pre-tax result
220.5
182.6
Analysis of funds under management
£’bn
UK equities
European equities
North American equities
Asia & Pacific equities
Property
Fixed Interest
Alternative Investments
Cash
Other
Total
30 June 2012
9.4
3.5
4.3
3.6
0.8
4.4
1.1
2.5
1.3
30.9
Analysis of EEV pre-tax result
£’m
H1 2012
H1 2011
167.8
183.6
Investment variance
54.9
0.9
Economic assumption change
(2.2)
(1.9)
Operating profit
Pre-tax result
220.5
182.6
EEV net asset value per share
pence
Net asset value per share
H1 2012
H1 2011
414.6
379.6
IFRS profit before shareholder tax
£’m
H1 2012
H1 2011
Life
52.6
49.1
Unit trust
13.1
14.4
65.7
63.5
2.0
-
Distribution
Other
(8.8)
(8.2)
Profit before shareholder tax
58.9
55.3
Pre- tax IFRS profit
£’m
H1 2012
H1 2011
Pre-tax profit
58.9
55.3
Shareholder tax
(12.8)
(7.7)
Post- tax profit
46.1
47.6
Effective tax rate
21.7%
13.9%
Analysis of shareholder tax charge
£’m
H1 2012
H1 2011
13.7
15.0
3.1
(2.5)
Other
(0.3)
(1.0)
Change in corporation tax rate
(3.7)
(3.8)
Total tax charge
12.8
7.7
Expected effective tax rate
23.3%
27.0%
Expected
Market related impacts
IFRS net asset value per share
pence
Net asset value per share
H1 2012
H1 2011
141.7
127.4
Analysis of post tax cash result
£’m
H1 2012
H1 2011
Arising on in force business
75.7
62.0
Arising from new business
(33.8)
(34.0) +0%
Underlying cash result
41.9
28.0
Variances
3.0
2.8
44.9
30.8
Post tax cash result
+22%
+50%
+46%
Analysis of EEV pre-tax result
£’m
Estimated business not yet
generating positive cash (£’bn)*
Associated annual post tax
cash (£’m)*
H1 2012
H1 2011
10.6
9.5
c80.0
66.3
* Ignores stock market movements and outflows since the date of the original client investment
Analysis of post tax cash result
£’m
H1 2012
H1 2011
Arising on in force business
75.7
62.0
Arising from new business
(33.8)
(34.0) +0%
Underlying cash result
41.9
28.0
Variances
3.0
2.8
44.9
30.8
Post tax cash result
+22%
+50%
+46%
Return on the investment in new business
£’m
H1 2012
H1 2011
Cost of investment (£’m)
33.8
34.0
Post tax EEV profit (£’m)
94.8
96.9
Cash payback period (yrs)
5
4
21.0%
23.6%
1.3%
1.3%
IRR (net of tax)
As a % of gross inflows
Analysis of post tax cash result
£’m
H1 2012
H1 2011
Arising on in force business
75.7
62.0
Arising from new business
(33.8)
(34.0) +0%
Underlying cash result
41.9
28.0
Variances
3.0
2.8
44.9
30.8
Post tax cash result
+22%
+50%
+46%
Post-tax cash result
34%
Investment in new business
* For illustration purposes
Double Half
Year*
Growth in cash result
£’m
Average closing daily FTSE 100
Cash result for first six months (£’m)
2012
2008
5,691
5,933
(4%)
44.9
12.2
x3.68
Unbroken dividend growth
9
+33%
8
7
+33%
6
5
4
+18%
+2%
+2.5%
+33%
+16%
3
4.25
2
1
0
2006*
2007
* Plus special dividend of 6.35 pence
2008
2009
2010
2011
2012
Interim
Expenses
• Establishment expense growth for the half year was 4.2%
• We will maintain pressure on these costs but will continue
to invest in the business where appropriate (eg Partner
recruitment)
• Development costs were £4.0 million in the first six
months and we anticipate a similar spend in the second half
of the year
• Our full year contribution to the FSCS levy to be some
£6-7 million (double last year)
Capital position
• Total group solvency assets at 30 June 2012 were
£368.2 million
• Solvency remains strong
• Holding a £35.0 million dividend reserve
• Investment policy for solvency assets continues
to be prudent
• Solvency II
DAVID BELLAMY
Chief Executive
‘Trust’ in financial services at an all time low
• Scandal surrounding LIBOR fixing
• Product failures
– Key Data; Arch Cru; MF Global etc.
• Regulatory sanctions
• Increasing FSCS levies
• Corporate culture & trust – never more important
Business momentum
Driven by:• Dedicated team
• Focused on delivering good outcomes for clients
• Partner development
• Quality of new recruits
• New funds & fund managers
Predictability
Partner
Numbers
Total new
Investments
2010
+6%
£4.7 bn
2011
+6%
£5.2 bn
2012 –Year to date
+3%
£2.7 bn
(Straight line projection)
(+6%)
(£5.4 bn)
37
USP’s
• The Partnership
• Our Investment approach
• Our Culture
‘Relationship based business’
38
2012 Awards
39
Annual Company meeting
40
Foundation Fund Raising
Target
Growth in Partner numbers
+9%
+8%
+7%
+6%
+6%
+3.2%
Advice marketplace
Adviser Community
• Over 400 Advisers
44
New Advisers
Adviser Community
• Over 400 Advisers
• Average experience 10yrs
• Average age 44
• 156 Partners formerly advisers
• 30 ‘second generation’
46
Academy
• Two intakes
• Average earnings c£100,000
• Average age 39
• Second generation later this year
47
Professional Qualifications
• 91% qualified
• 6% - 2 exams or less
• Over 2,000 qualified individuals
• 100 Chartered Planners – many more to come
48
SRA
49
Dr Mohamed El-Elrian
Dr Vineer Bhansali
Curtis Mewbourne
50
Kenneth Buntrock
51
Global Equity Income Fund
Paul Boyne
Doug McGraw
52
Diversified Portfolios
Diversified Portfolios
57
Resilient & Predictable Results
Growth in Partner numbers
Growth in new business
Growth in FUM
Growth in shareholder value
Summary
• APE growth +5%
• New single investments of £2.76bn
• New inflows of £1.51bn
• FUM £30.9bn
• Partnership growth of 3.2% to 1,702
• EEV operating profit £167.8 million
• IFRS profit £58.9 million
• Interim dividend up 33%
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