OCTOBER 2014 - St. James's Place plc/media/... · OCTOBER 2014. 1 Strategy 2 PART ONE – BUSINESS...

OCTOBER 2014

1

Strategy 2

PART ONE – BUSINESS MODEL

PART TWO – FINANCIAL RESULTS

The Partnership 16

Investment Management 25

Our Clients 37

Our Market 43

Cash & Dividend Profile 64

Our Shareholders 74

Analyst following 76

Business Model

PART ONE

2

Strategy

3

St. James’s Place: Overview

• Leading UK Wealth Management Company - Established 1991

- UK listed with market cap of c.£3.5 billion - £49.1 billion in funds under management - Target market £50k to £5 million free investable assets

• Differentiated business model - ‘‘Vertically integrated’’

- Own dedicated distribution – the Partnership - Distinct investment management approach

• Well positioned to benefit from long-term market growth - Favourable demographic trends

- Increasing tax burden

4

Global Investment Management Expertise

S. W. M i tc h e l l C a p i ta l l l p

33 funds

59 lead fund managers

30 fund houses

8 asset classes/

strategies

14 exclusive to UK retail investors

14 cities

Whole of Market approachWe take responsibility for the due diligence on all the products and companies we make available to our clients.

5

SIP SERVICES

6

Our products and services

• Comprehensive range - of pension, investment and savings ‘‘wrappers’’

- of investment funds managed by global Investment Managers - access to ‘‘whole of market’’ for third party products and services e.g. Protection and Annuities

• Whilst avoiding - capital intensive products

- guarantees and options - overly complex, fashionable or high risk structures

7

The Growth Model

NEW BUSINESS

PRODUCTIVITYCAPACITYNumber of Partners New Business per Partner

8

Growing number of Partners

Num

ber

500

1,000

1,500

2,000

02004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

30 June

1% 2% 1%8%

7%9%

6%6%

8%9.5%

2,007

2.5%

7% p.a. compound growth over the last 5 years and 6% p.a. over the last 10 years

9

Productivity (single investment per Partner)£

mil

lio

n

0.5

1.00

1.50

2.00

2.50

3.00

4.00

4.50

3.50

0.02009

+2%

2010

+26%

2011 2012 2013 2014 30 June*

2.00

+3% +2%+11%

+13%

*Year on year

10

Partnership, including Advisers

500

1,000

1,500

2,000

2,500

02004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

30 June

10% -4%10%

9%8%

6%7%

10%

13%2,688

5%

9% p.a. compound growth over the last 5 years and 7% p.a. over the last 10 years

Num

ber

11

Productivity (single investment per Adviser)£

mil

lio

n

0.5

1.00

1.50

2.00

2.50

3.00

3.50

0.02009 2010

+27%

2011 2012 2013 2014 30 June*

1.5

+3% +1%+9%

+9%

*Year on year

12

New single investments

£ bi

llio

n

1

2

3

4

5

6

7

02004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

30 Sept

£1.2 bn£1.6 bn

£2.5 bn

£3.1 bn£2.9 bn

£3.3 bn

£4.6 bn£4.9 bn

£5.4 bn

£6.6 bn

£5.8 bn

Consistent net inflow of funds under management

£ bi

llio

n

4.0

5.0

3.0

2.0

1.0

020102009200720062005 2008 2011 2012 2013 2014

30 Sept*

+30%

+31%+34%

+60%-8%

+10% +4%

+28%

+23%

3.7bn

*Year on year 13

14

Fund flow information

£ billion 30 Sept 2014 30 Sept 2013

Funds under management at start 44.3 34.8New money invested 5.8 4.9Investment return 1.1 4.0

51.2 43.7

Regular income withdrawals/maturities (0.7) (0.5)Surrenders/part surrenders (1.4) (1.4)

Funds under management at close 49.1 41.8

Net inflow of funds under management 3.7 3.0

Implied surrender rate as % of average funds 4.1% 4.7%under management

9 months ended 9 months ended

Funds under management19% p.a. compound growth over the last 5 years and 19% p.a. over last 10 years (at Sept 2014)

£ b

illi

on

10

20

30

40

50

020052004 2006 2007 2008 2009 2010 2011 2012 2013 2014

30 Sept

+29%

+20%

+25%+18%

-10%

+31%

+26%+6%

+22%

+27%

+11%

49.1

15

16

The Partnership

Dedicated distribution – the Partnership

• High quality self-employed team of c.2,000 Partners - Average age is 48 - Above average productivity - 90%+ per annum retention rate

• Aim to grow Partner number by 5% to 7% per annum

• Aim to increase productivity each year

17

18

Geographic Distribution30 June 2014

Partners

4%

5%

2%

17%

23%

13%4% 4%

23%9%

Clients

23%

14%4%3%

22%Overseas Clients: 2%

4%

6%

2%

13%

24%

14%3% 4%

22%10%

19

Partners by age band30 June 2014

Existing Partners New Partners

65+ 3%

<35 8%

35-45 32%

45-55 39%

55-65 18%

65+ 1%

<35 27%

35-45 38%

45-55 26%

55-65 8%

Total Adviser numbers down 18%

ADVISER NUMBERS

TYPE OF ADVISER

Financial advisers

Bank advisers

Discretionary fund managers/stockbrokers

Total number of Advisers

FSA FIGURES 31 DEC 2012

20,453

4,809

3,718

28,980

FCA FIGURES 31 DEC 2013

21,881

3,556

5,783

31,220

FSA ESTIMATES 31 DEC 2011

25,616

8,658

4,043

38,317

20

22

The Academy

• Over 80 new students in 2014

• Will achieve over 50 graduates in 2014

• First Manchester intake commenced in September

• Planning for first Midlands based intake in 2015

• 5th Next Generation Academy intake to commence in October – will have enrolled over 70 individuals through this programme to date

• Should exceed 100 new students in 2015

23

Asia

The Opportunity

• Offices in Singapore, Hong Kong and Shanghai

• The Henley Group has 50 advisers with 4,000 clients and £430 million assets under advice

• Estimated 120,000 UK ex-pats with £12 billion of investible wealth (£100k each) – projected to grow to over £20 billion by 2020

• Our global investment proposition and relationship based approach is well suited to this market

24

Partner Survey 2013 - Source of new business/markets

• 81% existing clients and referrals

• 7% Introducers

• 12% new clients from other sources

• 27% of Partners experienced less competition in 2013

• 39% acquired new clients due to decline of high street advice (banks)

25

Investment Management

26

Our approach to investment management

Appoints the Fund Managers

Sets performance objectives

Risk management and strategy

Decisions: Change firm?

Change manager?No change?

‘MANAGES THE MANAGERS’

Peter Dunscombe

Davina Curling

Win Robbins

Steven Daniels

‘INDEPENDENT EXPERTISE’ THE INVESTMENT COMMITTEE STAMFORD

ASSOCIATES

27

Stamford AssociatesIndependent Investment Consultancy

Research FundManager Market

Access toWhole Market

Monitor Managersand Portfolios

Qualitative andQuantitative

Advise InvestmentCommittee

Focus on FutureOutperformance

• Analyse & identify talented managers

• Gather intelligence

• Number crunching

• Behavioural psychology• Monitor activity

• Workplace analysis

Recommend:

• New managers• Potential changes

28

Global Investment Management Expertise

S. W. M i tc h e l l C a p i ta l l l p

33 funds

59 lead fund managers

30 fund houses

8 asset classes/

strategies

14 exclusive to UK retail investors

14 cities

29

Growth PortfoliosBALANCED PORTFOLIO

Medium risk

• Aims to provide growth for investments of at least five years

• Diversified across asset classes to reduce risk, but fluctuations in value may be significant

• Wide variety of assets, including some holdings in emerging economies

• Medium risk

Alternatives 12.0%

Cash7.4%

Property8.4%

UKEquities 12.7%

Bonds 24.5%

International Equities 35.0%

Onshore Portfolio asset mix:

Fund mix: Onshore Offshore

Alternative Assets

Global Equity

Global Managed (Global)

International Corporate Bond

Investment Grade Corporate Bond

Multi Asset

Property

UK & General Progressive

Worldwide Managed (Worldwide Opportunities)

Emerging Markets Equity

Far East

11%10%

11%10%

11%10%

11%10%

11%10%

11%10%

0%10%

11%

11%

6%

6%

10%

10%

5%

5%

DEFENSIVE PORTFOLIOLow risk

• Aims to provide a positive return after charges over a rolling five-year period

• Invests primarily in bonds, alternative assets and equities

• Offers resilience to significant macroeconomic and market events

• Lower-medium risk

Alternatives 33.0%

Cash1.8%

Property0.8%

UK Equities

0.7%Bonds 48.8%

InternationalEquities 15.3%

Portfolio asset mix:

Fund mix:Multi Asset

UK Absolute Return

Alternative Assets

Gilts (UK Gilts)

Index Linked Gilts



40%

15%

10%

10%

10%

10%

5%

CONSERVATIVE PORTFOLIOLow to medium risk

• Aims to provide steady growth for investments of at least five years

• Aims to avoid large fluctuations in value, although fluctuations in value will occur

• Predominantly invests in bonds, equities and alternative assets

• Lower-medium risk

Alternatives 27.0%

Cash4.0%

Property0.8%

UK Equities 2.7%Bonds

38.9%



Fund mix:Global Equity

Multi Asset

Alternative Assets

Index Linked Gilts


International Equity


UK Absolute Return


Corporate Bond

15%

15%

10%

10%

10%

10%

10%

10%5%

5%

30

Growth Portfolios (cont.)

MANAGED FUNDS PORTFOLIOMedium risk

• Aims to provide capital growth for investments of at least five years

• Diversified across managers with different investment styles

• Fluctuations in value may be significant; the value of this Portfolio will typically fluctuate more than that of the Balanced Portfolio

• Invests in global equities, inluding emerging economies, and bonds

• Medium risk

Fund mix:AXA Framlington Managed (Balanced Managed)

Global Equity

Multi Asset

Schroder Managed (Managed Growth)

Strategic Managed


Global Managed (Global)

15%

15%

15%

15%

15%

15%

10%

Cash10.0%

UK Equities 21.9%

Bonds 11.7% Alternatives 6.0%



ADVENTUROUS PORTFOLIOMedium to high risk

• Aims to provide higher levels of capital growth for investments of at least ten years

• The value of the Portfolio may go up and down sharply

• Predominantly invests in global equities, including emerging economies

• Some holdings in bonds• Upper-medium risk

Fund mix:Emerging Markets Equity

Far East

Greater European (Greater European Progressive)

High Octane

North American

UK & General Progressive

Corporate Bond

15%

15%

15%

15%

15%

15%

10%

Cash4.4%

UK Equities 20.3% Bonds 9.0%



31

Income PortfoliosIMMEDIATE INCOME PORTFOLIO

Low to medium risk• Aims to generate a consistent level of income with

some potential for capital growth• Aims to avoid large fluctuations in value, although

fluctuations will occur• Predominantly invests in bonds, mostly in the UK,

and commercial property• Some holdings in equities• Lower-medium risk

Cash7.9%Property

15.2% UK Equities 13.5%

Bonds 48.3%




Property

Global Equity Income

UK & International Income

Corporate Bond

Gilts (UK Gilts)

Index Linked Gilts


Equity IncomeInvestment Grade Corporate Bond

UK Growth

0%20%

15%15%

15%15%

10%10%

10%10%

10%10%

10%10%

10%0%10%10%

10%0%

BALANCED INCOME PORTFOLIOMedium risk

• Aims to generate an attractive level of income with the potential to rise over time

• Some potential for capital growth• Fluctuations in value may be significant• Predominantly invests in equities, mainly in the UK• Some holdings in commercial property, bonds and

alternative assets• Medium risk

Alternatives 10.0%

Cash 7.5%

Property11.4%

UK Equities 36.3%Bonds

24.1%




Property

Diversified Income (Allshare Income)

Equity Income





UK Equity (Income Distribution/UK High Income)

Multi Asset

Corporate Bond

0%15%

12%10%

12%10%

12%10%

12%10%

12%10%

12%10%

12%

10%

6%

10%

10%

5%

DEFERRED INCOME PORTFOLIOMedium risk

• Aims to generate a rising level of income• Potential for capital growth over the medium to

long term• Fluctuations in value may be significant; the vlue of

this Portfolio will typically fluctuate more than that of the Balanced Income Portfolio

• Predominantly invests in UK and International equities

• Some holdings in bonds• Medium risk

Fund mix:Equity Income



UK Equity (Income Distribution/UK High Income)

UK Income

International Corporate BondCorporate Bond

Alternative Assets

15%

15%

15%

15%

15%

10%10%

5%


Cash6.2%

Property0.4% Alternatives

1.0%

UK Equities 54.4%

Bonds 21.3% International

Equities 16.7%

32

Funds under management19% p.a. compound growth over the last 5 years and 19% p.a. over last 10 years (at Sept 2014)

£ b

illi

on

10

20

30

40

50

020052004 2006 2007 2008 2009 2010 2011 2012 2013 2014

30 Sept

+29%

+20%

+25%+18%

-10%

+31%

+26%+6%

+22%

+27%

+11%

49.1

33

Client Experience Over 3 and 5 years the client outcomes profiles align with our medium risk portfolio results.

Growth and Income portfolio returns include some backtested data prior to January 2011.

3 YEARS (per annum)

5 YEARS (per annum)

Source: FE and SJP. Total Return. Data to 30 September 2014

Defensive –

Balanced Balanced Income Median8.9% 10.1% 10.5%

Adventurous 11.6%

Conservative Immediate Income Lower quartile6.3% 8.6% 8.9%

Managed Deferred Income Upper quartile12.8% 13.6% 12.2%

GROWTH PORTFOLIOS INCOME PORTFOLIOS ACTUAL CLIENT OUTCOME

Defensive 4.9%

Balanced Balanced Income Median7.6% 8.2% 6.8%

Adventurous 8.8%

Conservative Immediate Income Lower quartile6.2% 6.9% 5.8%

Managed Deferred Income Upper quartile9.4% 9.3% 7.8%

GROWTH PORTFOLIOS INCOME PORTFOLIOS ACTUAL CLIENT OUTCOME

Net of charges.

34

Portfolio Relative Performance & Consistency Ratio

Fund average, not weighted by fund size

Relative to ARC Private Client Indices Equity Funds

Deferred Inc.

Balanced Inc.

Immediate Inc.

Adventurous

Managed

Balanced

Conservative

Defensive

-2%

1 month 1 year Since launch

-0.9%

0.0%

0.5%

0.8%

2.3%

2.3%

3.2%3 years 61.9% 60.1% 61.5%

Sept 14 chg chgSept 13 Sept 12

5 years 63.3% 63.0% 68.9%

10 years 78.6% 80.7% 81.5%3.6%

1% 2% 3% 4%-1% 0%

3 years, 62%5 years, 64%

10 years, 79%

Net of charges.

35

Funds Under Management: Shown by Asset Class and Region

30 September 2014

UK 30%

Fixed Interest 12%

Cash 9% Other Assets 4%

European 11%

Far East 9%

Property 3%

US 19%

Alternatives 3%

36

Benefits of investment management approach

• No in-house managers, so no conflict of interest

• Benefit from Investment Committee experience & expertise

• Ability to appoint the best fund managers with wholesale purchasing power

• Continuous monitoring plus quarterly reviews

• Easy to change manager – reduced churn

• Free switching for clients

• Significantly improved retention of funds

37

Our Clients

38

Geographic Distribution of Our Clients30 June 2014

Clients

4%

6%

1%

14%

24%

14%3% 4%

22%10%Overseas Clients: 2%

443,000 clients

Male 53%Female 47%Average age 54

39

Clients and FUM Clients by Value Band30 June 2014

All Clients

£1m+ 1%

£500k- £1m 2%

£250k- £500k

7%

£50k- £250k 36%

<£50k 54%

All Clients - FUM

£1m+ 16%£500k-

£1m 16%

£250k- £500k 21%

£50k- £250k 38%

<£50k 9%

40

New and Retained Clients by Age Band30 June 2014

New Clients by Age BandExisting Clients by Age Band

<30 3%

30-40 8%

40-50 25%

50-55 13%

55-60 11%

60-65 10%

65-70 10%

70+ 20%

<30 9% 30-40

10%

40-50 20%

50-55 13%

55-60 13%

60-65 11%

65-70 11%

70+ 13%

41

What our clients think

• 84%* of clients highly satisfied with their relationship with St. James’s Place – nearly a third scoring us 10 out of 10

• 88%** of clients ‘value’ a face-to-face relationship with their Partner

• 86%* of clients agreed that we provide excellent service

• 80%* of clients highly satisfied in the way in which we communicate with them

• 96%** of clients were likely to recommend St. James’s Place to others

• 79%* of clients would definitely invest with St. James’s Place again if making that decision today

*Ledbury Research – November/December 2013.*Scoring 8 or more out of 10.

The key findings were:

**Wealth Account Survey, January 2014.

42

Award winning in 2013/2014

Best Private Client Asset Manager UK

AWARDS 2014

43

Our Market

44

Our Market

• The market is big

• Favourable demographics

• The tax burden is increasing

• UK high net worth individuals want face-to-face advice

• Limited access to advice as adviser numbers have reduced

45

The SJP MarketplaceUK individuals with between £50k and £5m of liquid assets

Source: Datamonitor, 23 January 2014

Year

Num

ber

of I

ndiv

idua

ls

(mil

lion

)

2

4

6

8

10

12

02014

9,108,800

2015

9,482,400

2016 2017 2018

9,927,00010,345,700 10,743,472

46

The SJP MarketplaceAmount of liquid assets held by UK individuals with between £50k and £5m

Source: Datamonitor, 23 January 2014

Year

£ bi

llio

n

500

1,000

1,500

2,000

2,500

02014

£1,717bn

2015

£1,797bn

2016 2017 2018

£1,885bn £1,982bn£2,082bn

47

UK Funds under managementFunds £billion

The City UK Fund management report 2012 – figures relate to 31 December 2011.Insurance & Corporate Pensions relate to institutional clients.

Corporate Pensions £1,597

Insurance Companies £994

Retail Clients £760

Private Clients £483

Private Equity £112

Property £142

Hedge £217

Source: 2014 PAM Directory

Company2013 Rank

2012 Rank

AUM end 2013(£bn)

Change v 2012 (£bn)

Share (of top 40)

49.6

48.1

44.3*

31.9

31.3

28.7

28.2

24.7

24.0

19.5

9.5

4.9

330.3

563.1

-2.1 (-4%)

-2.1 (-4%)

9.5 (27%)*

0.5 (2%)

4.3 (16%)

-1.3 (-4%)

2.2 (8%)

-1.1 (-4%)

11.2 (87%)

2.8 (17%)

8.8 (8%)

0.1 (3%)

23.9 (8%)

49.1 (10%)

8.8%

8.5%

7.9%*

5.7%

5.6%

5.1%

5.0%

4.4%

4.3%

3.5%

3.3%

0.9%

59%

-

1st

2nd

3rd

4th

5th

9th

6th

10th

7th

20th

8th

28th

1st

2nd

3rd

4th

6th

13th

5th

9th

7th

20th

8th

31st

Coutts & Co

Barclays Wealth

St. James’s Place Wealth Management

Goldman Sachs International

UBS Wealth Management

Investec Wealth & Investment

HSBC

Rathbones

Brewin Dolphin

Close Brothers

Top 10 Companies

Hargreaves Lansdown

Towry

Top 40 Companies

Private Asset & Wealth ManagersTop 10 and selected others

48*31/12/2013

49

The SJP Opportunity

• ISAs - Cash £228 bn (Aug 2014 - HMRC)

- Stocks & shares £241 bn (Aug 2014 - HMRC)

• Building Society (Mutual Lender) deposits £258 bn (Nov 2013 - Building Societies Association)

• National Savings and Investment £105 bn (Nov 2013 - Building Societies Association)

(NS&I) deposits

• Bank deposits £864 bn (Nov 2013 - Building Societies Association)

• Mutual funds £763 bn (Nov 2013 - IMA)

50

The advice market... transparent?The fees a client may have to consider when trying to compare advice and products based on publicly available information for a variety of firms and providers.

Advice

Initial advice fee% of initial investment

ORHourly rate (£) Rate may depend on seniority of adviser

Rate may depend on seniority of adviser

Amount may depend on activity

Tiered fee based on transaction size

Tiered fee based on amount invested + VAT

Tiered fee based on fund value

Amount based on fund value

Amount per transaction

Amount based on fund value

Amount will depend on insurance company

Amount based on value of funds under management

Amount based on value of funds under management

% of Funds Under ManagementOR

Hourly rate (£)


Prescribed fees (£)


Prescribed fees (£)

Tiered fee based on fund value

Amount will depend on platform providerAccount fee (£)Platform/Admin

Ongoing advice fee

Transaction charges

Insurance Company

Administration fee

Wrapper charges

Administration fee

Fund Management

Annual charge (%)

Annual management charges (£)

Additional miscellaneous costs

Source: Numis

Total Investment £85kUT/ISA £35k Pension £50k

Advisory/Discretionay Managers Total bps

210

219

195

226

231

278

305

312

322

330

349

350

362

Hargreaves PMS

St. James’s Place (6yr holding period)


Raymond James

Brewin Dolphin Discretionary (fee only)

Rathbones Discretionary

Barclays Wealth (3yr holding period)

Towry (6yr holding period)

Towry (3yr holding period)

Coutts (20yr holding period)


Investec PMS


Total Advisory/Discretionary Charge Comparison

51

Source: Numis

Total Investment £212kUT £100k ISA £12k

Pension £100k

Advisory/Discretionay Managers Total bps180

195

203

210

229

231

235

247

263

275

275

282/299

Raymond James


Rathbones Discretionary

Hargreaves PMS




Brewin Dolphin Discretionary (fee only)

Investec PMS

Towry (6 & 20yr holding period)


Barclays Wealth (20yr holding period)

Total Advisory/Discretionary Charge Comparison

52

53

Summary

• Established and respected business

• Experienced and stable management team

• Experienced and stable advisory team – ‘The Partnership’

• Proven track record of growth

• Resilient in tough markets

• Favourable demographics

• Award winning performance

Financial Results

PART TWO

54

SJP new business by quarterAPE (Annual premiums plus 10% of single investments)

160

200

220

240

180

2011 over 2010

2011

+16% +17% +13% -5%2012 over 20112013 over 20122014 over 2013

2012

2013

2014

-5%+25%+20%

-2%+24%+19%

+4%+24%+18%

+43%+9%

£m

140

120

100

80

134.4143.9

136.7

170.6

203.3205.4

242.5

212.6

179.9

209.1

163.7

144.6

192.2

167.1

138.5

Q1 Q2 Q3 Q4

55

Q3 New business

Funds under management

• Total single investments of £5.75 billion – up 21% YTD• SJP new business on an APE basis of £660.5 million – up 19% YTD• Our own business represents 89% of the total

• Net inflow of funds under management of £3.7 billion – up 23% YTD• Continue to retain 95% year on year• Funds under management of £49.1 billion – up 11% since

beginning of year; up 17% over last 12 months

Other financials• EEV net asset value of 620.0 pence per share – up 15%

As at 30 September 2014.

56

Partnership*

• Partnership numbers 2,007 – up 2.5%• Total Advisers 2,688 – up 4.6%

Profits*

Other financials*

• EEV new business profit £181.3 million – up 19%• EEV operating profit £260.7 million – up 12%• IFRS operating profit before shareholder tax (excluding one-off items)

£82.4 million – up 1%

• Underlying cash result of £78.5 million – up 17%• Interim dividend of 8.93 pence – up 40%

*As at 30 June 2014.

57

Record EEV new business profit£

mil

lion

150

200

250

300

350

100

50

02009

+26%

2010 2011 2012 2013 2014 30 June*

+40%+13%

+13%

+16%

+19%

327.2

181.3

*Year on year

58

Analysis of EEV life, pension & unit trust pre-tax operating profit

30 Jun 2014 30 Jun 2013

New business contribution 181.3 152.4Profits from existing business- expected 91.6 56.5- experience variance 9.0 39.3- operating assumption changes – –

Investment income 3.4 1.7

Operating profit 285.3 249.9

£ million

59

Pre-tax EEV profit

£ million 30 Jun 2014 30 Jun 2013

Life, pension & unit trust 285.3 249.9Distribution (8.8) (2.1)

Other operations (15.8) (14.2)

Total operating profit 260.7 233.6

Investment variance 13.0 209.5Economic changes (3.1) 1.5

Pre-tax result 270.6 444.6

60

2013 EEV operating profit£

mil

lion 300

400

500

200

100

02009

+12%

2010 2011 2012 2013 2014 30 June*

+45%+12% -2%

+26%

+12%

260.7

*Year on year

61

Pre-tax IFRS profit before shareholder tax

£ million 30 Jun 2014 30 Jun 2013

Underlying 82.4 81.2

One-off reinsurance treaty – 8.9

Profit before shareholder tax 82.4 90.1

62

Capital position as at 30 June 2014

£ million Life Regulated Other Total Other

Solvency position

Solvency net assets 233.6 48.1 233.7 515.4

Solvency requirement 48.8 16.5

Solvency ratio 479% 292%

63

Group expenses£ million 30 Jun 2014 30 Jun 2013

Paid from policy marginsPartner remuneration 215.9 177.7Investment expenses 58.7 49.5Third party administration 18.0 17.7 292.6 244.9Direct expensesOther new business related costs 40.9 32.4Establishment expenses 63.5 54.7Academy costs 1.8 1.3Other development costs 6.5 3.9Back office infrastructure costs 4.7 –Regulatory fees 3.1 3.0 FSCS Levy 6.9 2.4Regulatory change costs – 1.4Contribution from third party product sales (11.0) (8.8) 116.4 90.3 409.0 335.2

Cash & Dividend Profile

64

65

Underlying post-tax cash arising from inforce business£

mil

lion

20

40

60

80

100

120

140

160

180

200

02009 2010

-3%

2011 2012 2013 2014 30 June*

188.2

114.9

144.5125.4

102.3

+15%+23%

+15%

+30%

+25%

88.8

*Year on year

66

Return on inforce

• Where product structures use early withdrawal the business is cash neutral in first six years

• This relates to £14.2 billion of new business added in last six years which is not yet generating positive cash earnings*

• This amounts to £109 million of post-tax cash earnings per annum in future*

* Ignores stock net movements and outflows

Year £ Billion2008 0.72009 1.62010 2.12011 2.22012 2.42013 3.5 2014 (Half year) 1.7

Total 14.2*

67

New single investments

£ bi

llio

n

1

2

3

4

5

6

7

02004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

30 Sept

£1.2 bn£1.6 bn

£2.5 bn

£3.1 bn £2.9 bn

£3.3 bn

£4.6 bn£4.9 bn

£5.4 bn

£6.6 bn

£5.8 bn

New investments with early withdrawal charge

68

Underlying post-tax cash result

Investment in new business

£ m

illi

on

20

40

60

80

100

120

140

160

180

200

220

02009 2010 2011 2012 2013 2014

30 June

65.3 61.4 62.4 60.5 48.3 36.4

69


Post-tax new business cost (£m)

Post-tax EEV new business profit (£m)

Margin (% of APE)

IRR (net of tax)

Cash payback period

As % of gross inflows of FUM

(36.4)

145.3

40.5%

28.3%

4 Years

1.0%

(25.0)

121.7

40.8%

28.3%

4 Years

0.8%

30 Jun 2013 30 Jun 2014

70

Underlying post-tax cash result


£ m

illi

on

20

40

60

80

100

120

140

160

180

200

220

02009 2010 2011 2012 2013 2014

30 June*

40.923.5

63.0

139.9

78.5

84.0

+67%

+17%

*Year on year

71

Underlying cash earnings per sharePe

nce

10

5

15

20

25

30

020072006

5.564.84

2008 2009

5.09

2010

4.92

2011 2012 2013 201430 June

8.49

12.92

16.88

27.46

15.30

72

Continual dividend growth

Pen

ce

2

4

8

6

10

12

14

16

0200779%

200677%

+18%+16%

200887%

200992%

+2%

201071%

+2.5%

201163%

201264%

201359%

2014c65%

30 JunePayout Ratio

15.96

8.93+33%

+33%

+33%

+50%

+40%*

73

Outlook

• Familiar and well respected brand/business

• Loyal client base (Partners and investors)

• Consistent strong recruitment

• Resilient Investment Management Approach

• Strong solvency position

• Strong market for advice

• Favourable market place

• Uniquely placed business

Our Shareholders

74

75

Our Shareholders

1. Baillie Gifford 5.71%2. Threadneedle 5.66%3. Fidelity (FMR) 5.44%4. Legal & General 4.13%5. M&G 4.00%6. Kames Capital 3.39%7. AXA Framlington 3.33%8. Old Mutual 2.98%9. BlackRock (BGI) 2.86%10. Allianz 2.48%

As at 30 September 2014

Analyst following

76

77

Analyst following

• Lance Burbridge - Autonomous• Alan Devlin - Barclays Capital• Matthew Preston - Berenberg• Andrew Sinclair - Boa Merrill Lynch• Haley Tam - Citi• Chris Esson - Credit Suisse• Oliver Steel - Deutsche Bank• Ravi Tanna - Goldman Sachs• Ashik Musaddi - JP Morgan Cazenove• Greig Paterson - KBW

• Neil Welch - Macquarie• Jon Hocking - Morgan Stanley• Ben Bathurst - Nomura• David McCann - Numis• Marcus Barnard - Oriel Securities• Barrie Cornes - Panmure Gordon• Stuart Duncan - Peel Hunt• Paul De’ath - RBC Capital Markets• Edward Houghton - Sanford C Bernstein• Eamonn Flanagan - Shore Capital

30 October 2014

OCTOBER 2014 - St. James's Place plc/media/... · OCTOBER 2014. 1 Strategy 2 PART ONE – BUSINESS...

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Transcript of OCTOBER 2014 - St. James's Place plc/media/... · OCTOBER 2014. 1 Strategy 2 PART ONE – BUSINESS...