Transcript Document

PRELIMINARY RESULTS
February 2009
MIKE WILSON
Chairman
Mike Wilson
CHAIRMAN
David Bellamy
CHIEF EXECUTIVE
Andrew Croft
FINANCE DIRECTOR
Ian Gascoigne
SALES DIRECTOR
David Lamb
BUSINESS DEVELOPMENT DIRECTOR
Agenda
Introduction
MIKE WILSON
Business Update
DAVID BELLAMY
Financials
ANDREW CROFT
Outlook
DAVID BELLAMY
Q&A
DAVID BELLAMY
Chief Executive
• FTSE 100

31%
• Banking Sector

60%
• World Stock Markets

20% - 75%
• Interest Rates

60%
New Business by Quarter
APE (Annual premiums plus 10% of single premiums) - £m
2006 +58%
2007 +23%
115.7
97.8
98.7
2008 -2%
122.0
113.2
101.9 101.9
91.5
103.1
96.4
85.1
69.4
Q1
2006 over 2005 +57%
2007 over 2006 +41%
2008 over 2007 +1%
Q2
Q3
Q4
+54%
+26%
+5%
+63%
+20%
+0%
+59%
+10%
-15%
Investment new business by quarter
Single premiums
2006
2007
2008
£665m
£634m
£594m
£578m
£529m
£508m
£512m
£476m
Q1
2006 over 2005 +71%
2007 over 2006 +22%
2008 over 2007
-4%
£461m
£445m
£432m
£449m
Q2
Q3
Q4
+47%
+39%
-4%
+49%
+30%
-20%
+36%
+16%
-24%
Pensions new business by quarter
Single premiums
2006
2007
£252m
£232m
2008
£268m
£245m
£282m
£286m £276m
£238m
£188m
£161m
£113m
Q1
2006 over 2005 +83%
2007 over 2006 +105%
2008 over 2007 +9%
Q2
+78%
+52%
+10%
Q3
+106%
+27%
+19%
Q4
+147%
-4%
-3%
£267m
Funds Under Management (£bn)
16% p.a. compound growth over the last 5 years
and 18% p.a. over 10 years
+18%
-10%
+25%
+29%
+20%
+34%
+47%
+24% +10% -6%
+31%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Number of Partners
1,340
1,251
1,157
2006
2007
2008
ANDREW CROFT
Finance Director
Analysis of Operating Profit
£’m
New business contribution
Profits from existing business
–expected
–experience variance
–operating assumption changes
Investment income
Total Life/Pension & unit trust
Other
Operating profit
2008
2007
123.5
150.9
80.5
16.9
(0.9)
4.9
224.9
(20.6)
204.3
77.7
16.2
(2.8)
6.9
248.9
(4.2)
244.7
New Business Contributions
£’m
Gross margin
Direct expenses
2008
2007
250.2
272.8
(8%)
(126.7)
(121.9)
4%
123.5
150.9
(18%)
New Business Contributions
£’m
Gross margin
Direct expenses
2008
2003
250.2
100.7
+148%
(126.7)
(75.7)
+67%
123.5
25.0
+394%
Analysis of Operating Profit
£’m
New business contribution
Profits from existing business
–expected
–experience variance
–operating assumption changes
Investment income
Total Life/Pension & unit trust
Other
Operating profit
2008
2007
123.5
150.9
80.5
16.9
(0.9)
4.9
224.9
(20.6)
204.3
77.7
16.2
(2.8)
6.9
248.9
(4.2)
244.7
Pre-Tax EEV Profit
£’m
2008
2007
Total operating profit
204.3
244.7
Investment variance
(320.6)
(14.5)
Economic changes
Pre-tax results
0.4
(115.9)
0.2
230.4
Investment Variance
• Reflects the capitalised impact of the revised
future profit expectation
• But not all funds invested in equities
• Benefit from fall in strength of sterling
• Our funds outperformed
Pre-Tax EEV Profit
£’m
2008
2007
Total operating profit
204.3
244.7
Investment variance
(320.6)
(14.5)
Economic changes
Pre-tax results
0.4
(115.9)
0.2
230.4
Net Asset Value per Share
Net asset value
232.4p (2007 : 252.5p)
MCEV
IFRS Result
2008
2007
Profit before shareholder tax
80.7m
96.1m
Profit after shareholder tax
67.1m
78.1m
Net asset value per share
105.9p
92.9p
Analysis of Post Tax Cashflow
£’m
2008
2007
Arising on in force business
91.4
84.7
Arising from new business
(67.3)
(58.8)
24.1
25.9
-
7.2
24.1
33.1
Underlying cash result
One offs
Dividend
• Interim dividend 1.84 pence up 5%
• Maintained final dividend at 2.55 pence
• Full year dividend 4.39 pence up 2.1%
Capital Position as at 31 December 2008
£’m
Life
Other
Regulated
Other
Total
Solvency position
Solvency net assets
Solvency requirement
Solvency ratio
151.9
19.3
41.1
14.6
370%
132%
88.8
260.0
DAVID BELLAMY
Chief Executive
St. James’s Place
• Leading UK Wealth Management company
• Differentiated business model
• Own dedicated distribution – the Partnership
• Distinct investment management approach
• Manufacturer and distributor
• High brand recognition for trusted advice
• 286,000 clients
• Funds under management £16.3 billion at 31 December 2008
• Our market (mass affluent/high net worth) £2,000 billion at
31 December 2008
External Endorsement
Sector winner - 2008
Delivering Growth
Target
15 – 20% pa
New Business
Capacity
No of Partners
Productivity
New Business
Per Partner
But also resilient in more difficult times
Dedicated distribution
• High quality wealth management team
• Average experience 17 years
• 97% per annum retention rate
• No partner accounts for more than 1% APE
• Initiatives to grow partner numbers
• Dedicated acquisition team
• Academy
• Take advantage of current economic circumstances
Growing Number of Partners
+7%
+10%
+9%
+8%
+7%
-2%
+2% +1%
+2% +5%
+8%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Average APE per Partner (£k)
356
323
312
193
133
2003
157
2004
2005
2006
2007
2008
Broad Geographical Distribution
Partners
Client FuM
6%
5%
2%
1%
15%
3%
12%
4%
3%
4%
4%
11%
12%
25%
25%
11%
18%
25%
Overseas Clients 4%
Distinct Investment Management Approach
• No in-house investment managers which
means no conflicts of interest
• Investment Committee with Stamford
Associates advice
• Ability to appoint the best fund managers with
wholesale purchasing power
• Continuous monitoring plus quarterly reviews
• Facility to change managers efficiently
without churn
Relative investment performance
Funds under Management - Rolling 5 years
1st
2nd
3rd
4th
67%
67%
68%
80%
13%
79%
65%
61%
63%
10%
5%
76%
13%
15%
19%
15%
16%
9%
11%
2008
12%
8%
14%
20%
8%
4%
2%
4%
3%
2%
10%
8%
2006
2005
2004
2003
2002
8%
8%
2007
8%
13%
2001
17%
2000
External Investment Managers - 2003
Core Managers – Managed Funds
Specialist Managers
• THSP
• Invesco Perpetual – Neil Woodford
• Invesco Perpetual - Neil Woodford
• Aberdeen – Andrew Preston, Hugh Young
• GAM – Andrew Green
• Wellington – Louis Chabier, Haluk Soykan
• Schroder – Ted Williams
• Bank of Ireland – Des Sullivan
• Selected Managed – Various
• BGI – Graham Hepher, Christopher Sutton
• GAM – Andrew Green
• Schroder – Nick Purves
• THSP
External Investment Managers - 2009
Core Managers – Managed Funds
Specialist Managers
•
•
•
•
•
•
•
•
• Invesco Perpetual – Neil Woodford Paul Read,
Paul Causer
• Aberdeen – Andrew Preston, Hugh Young
• Wellington – Louis Chabier, Haluk Soykan
• BGI – Graham Hepher, Christopher Sutton
• GAM – Andrew Green
• Schroder – Nick Purves
• THSP
• AXA Framlingon – George Luckcraft
• Insight – Takis Anastassopoulos
• Invista – Duncan Owen
• Oldfield – Richard Oldfield
• Thornburg – Vinson Walden
• Polaris – Bernard R Horn Jnr
• Reed Connor Birdwell – Jeffrey Bronchick
• RWC - John Innes
• State Street – Michael Karpik
• SW Mitchell – Stuart Mitchell
THSP
Invesco Perpetual - Neil Woodford
GAM – Andrew Green
Schroder – Nick Purves
Jupiter – Ian McVeigh
AXA Framlington – Richard Pierson
Newton - Alex Stanic
Polaris – Bernard R. Horn Jnr
Simple and Safe
• No with profits
• No guaranteed annuity options
• No longevity risk
• No split level trusts
• No derivative-based “precipice” funds
• No mortgages / sub prime
Responsive Fund Range
• 2008
• Alternative Asset Fund
• High Octane Fund
• Cash Unit Trust
- BGI
- Oldfield/Thornburg
- State Street
• 2009
• Corporate Bond Fund
- Invesco Perpetual
• (Investment Grade)
• Gilt Unit Trust
• Income Unit Trust
- Wellington
- Axa Framlington
New business
Target 15 to 20% pa (18% compound growth since inception
and 23% over the last 5 years)
+23% -2%
+58%
+42%
+15%
+17%
+25%
+11%
-24% -4%
+19%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
APE (Annual premiums plus 10% of single premiums)
Funds Under Management (£bn)
28% compound growth since inception and 16% over the
last 5 years
+18%
-10%
+25%
+29%
+20%
+34%
+47%
+24% +10% -6%
+31%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Current Environment
• Investment markets under real pressure
BUT
• Growing need for advice
• Wealth preservation
• Planning for retirement still a priority
• Average pension fund for 50-65 year olds
= £150,000 (£8K pa)
• 50% of Final Salary Schemes will close
• 25% of Final Salary Schemes will change
• Public sector pension schemes also
unsustainable
Outlook
• Dedicated advisor-led approach
• Partnership growing whilst competition shrinking
• Strong record on retention
• Growing maturity of in-force book
• Strong solvency position
• Focused business model
St. James’s Place uniquely positioned