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INTERIM RESULTS July 2012. Agenda Business Update DAVID BELLAMY Financials ANDREW CROFT Outlook...
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Transcript of INTERIM RESULTS July 2012. Agenda Business Update DAVID BELLAMY Financials ANDREW CROFT Outlook...
INTERIM RESULTSJuly 2012
Agenda
Business UpdateDAVID BELLAMY
FinancialsANDREW CROFT
Outlook DAVID BELLAMY
Q&A
Total new business by quarterAPE (Annual premiums plus 10% of single premiums)
2009 over 2008
-5% -10% +3% +38%
2010 over 2009
+42% +46% +30% +15%
2011 over 2010
+18% +12% +13% +0%
2012 over 2011
-3% +13%
Single investment by quarter
2009 over 2008
-6% -8% +12% +51%
2010 over 2009
+57% +54% +32% +16%
2011 over 2010
+16% +13% +14% -4%
2012 over 2011
-2% +4%
Pensions new business by quarterAPE (Annual premiums plus 10% of single premiums)
2009 over 2008 +7% -9% -14% +16%
2010 over 2009 +19% +31% +32% +18%
2011 over 2010
+16% +22% +21% +19%
2012 over 2011
+15% +28%
Strong retention of funds
• Retention 95%• Net inflows + £1.51 bn
Funds under management
-6%+34%
+20%+29%
+25%+18%
-10%
+31%
+26%
+8%+6%
£30.9bn
June
Growth in number of Partner numbers
+8%+7%
+9%+6%
+3.2%+6%
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 CROFTChief 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 H1 2012 H1 2011New business contribution 120.6 127.7Profits from existing business– expected 48.9 59.1– experience variance 3.7 2.8– operating assumption
changes - -Investment income 1.4 2.2Life & unit trust operating profit 174.6 191.8Distribution 2.0 -Other (8.8) (8.2)Operating profit 167.8 183.6
New business margin
H1 2012 H1 2011
PVNBP 4.3% 4.4%
Manufactured APE 40.1% 41.1%
Total APE 34.1% 38.1%
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 H1 2012 H1 2011New business contribution 120.6 127.7Profits from existing business– expected 48.9 59.1– experience variance 3.7 2.8– operating assumption
changes - -Investment income 1.4 2.2Life & unit trust operating profit 174.6 191.8Distribution 2.0 -Other (8.8) (8.2)Operating profit 167.8 183.6
Analysis of EEV pre-tax result
£’m H1 2012 H1 2011Operating profit 167.8 183.6Investment variance 54.9 0.9Economic assumption change (2.2) (1.9)Pre-tax result 220.5 182.6
Analysis of funds under management
£’bn 30 June 2012
UK equities 9.4European equities
3.5North American equities
4.3Asia & Pacific equities
3.6Property 0.8Fixed Interest 4.4Alternative Investments 1.1Cash
2.5Other
1.3Total 30.9
Analysis of EEV pre-tax result
£’m H1 2012 H1 2011Operating profit 167.8 183.6Investment variance 54.9 0.9Economic assumption change (2.2) (1.9)Pre-tax result 220.5 182.6
EEV net asset value per share
pence H1 2012 H1 2011
Net asset value per share 414.6 379.6
IFRS profit before shareholder tax
£’m H1 2012 H1 2011
Life 52.6 49.1Unit trust 13.1 14.4
65.7 63.5Distribution 2.0 -
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%
£’m H1 2012 H1 2011
Expected 13.7 15.0
Market related impacts 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%
Analysis of shareholder tax charge
IFRS net asset value per share
pence H1 2012 H1 2011
Net asset value per share 141.7 127.4
Analysis of post tax cash result
£’m H1 2012 H1 2011Arising on in force business 75.7 62.0 +22%
Arising from new business (33.8)
(34.0) +0%
Underlying cash result 41.9
28.0 +50%
Variances 3.0 2.8Post tax cash result 44.9 30.8 +46%
£’m H1 2012 H1 2011Estimated business not yet generating positive cash (£’bn)*
10.6 9.5
Associated annual post tax cash (£’m)* c80.0 66.3
* Ignores stock market movements and outflows since the date of the original client investment
Analysis of EEV pre-tax result
Analysis of post tax cash result
£’m H1 2012 H1 2011Arising on in force business 75.7 62.0 +22%
Arising from new business (33.8)
(34.0) +0%
Underlying cash result 41.9
28.0 +50%
Variances 3.0 2.8Post tax cash result 44.9 30.8 +46%
Return on the investment in new business
£’m H1 2012 H1 2011
Cost of investment (£’m) 33.8 34.0Post tax EEV profit (£’m) 94.8 96.9Cash payback period (yrs) 5 4
IRR (net of tax) 21.0% 23.6%As a % of gross inflows 1.3% 1.3%
Analysis of post tax cash result
£’m H1 2012 H1 2011Arising on in force business 75.7 62.0 +22%
Arising from new business (33.8)
(34.0) +0%
Underlying cash result 41.9
28.0 +50%
Variances 3.0 2.8Post tax cash result 44.9 30.8 +46%
Post-tax cash result
34%
Double Half Year*Investment in new business
* For illustration purposes
£’m 2012 2008
Average closing daily FTSE 100
5,691 5,933 (4%)
Cash result for first six months (£’m) 44.9
12.2 x3.68
Growth in cash result
Unbroken dividend growth
+16%
+18%
+2%
+33%
+2.5%
+33%
+33%
* Plus special dividend of 6.35 pence
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 BELLAMYChief 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
38
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)
USP’s
• The Partnership• Our Investment approach• Our Culture
‘Relationship based business’
39
2012 Awards
40
Annual Company meeting
41
Foundation Fund Raising
Target
Growth in Partner numbers
+8%+7%
+9%+6%
+3.2%+6%
Advice marketplace
Adviser Community
• Over 400 Advisers
45
New Advisers
Adviser Community
• Over 400 Advisers• Average experience 10yrs• Average age 44• 156 Partners formerly advisers• 30 ‘second generation’
47
Academy
• Two intakes• Average earnings c£100,000• Average age 39• Second generation later this year
48
Professional Qualifications
• 91% qualified• 6% - 2 exams or less• Over 2,000 qualified individuals• 100 Chartered Planners – many more to
come
49
SRA
50
51
Dr Mohamed El-Elrian
Dr Vineer Bhansali
Curtis Mewbourne
52
Kenneth Buntrock
Global Equity Income Fund
53
Paul Boyne Doug McGraw
Diversified Portfolios
Diversified Portfolios
58
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%
60