1. ANNUAL RESULTS
February 2010

2. MIKE WILSON
Chairman

3. Mike Wilson
CHAIRMAN
David Bellamy
CHIEF EXECUTIVE
Andrew Croft
FINANCE DIRECTOR

4. Agenda
Introduction
MIKE WILSON
Business Update
DAVID BELLAMY
Financials
ANDREW CROFT
Outlook
DAVID BELLAMY
Q&A

5. DAVID BELLAMY
Chief Executive

6. Review of 2009
New Business
• Total single investments of £3.5bn up 13%
• APE of £440.8m up 5%
• Manufactured proportion 91%

7. Investment new business
Single premiums
£738.0m
£557.9m
£554.7m
Q2
Q3
£431.0m
Q1
Q4
2009 over 2008
-15%
-12%
+20%
+64%

8. Pensions new business
Single premiums
£346.7m
£280.1m
£269.7m
£280.1m
Q1
Q2
Q3
Q4
2009 over 2008
+11%
-0%
-1%
+30%

9. Total single investments
Investments
Pensions
£269.7m
£346.7m
£280.1m
£280.1m
£738.0m
£557.9m
£431.0m
Q1
Q2
£554.7m
Q3
Q4
2009 over 2008
-6%
-8%
+12%
+50%

10. Total new business (APE)
APE (Annual premiums plus 10% of single premiums)
£133.2m
£109.2m
£104.6m
Q2
Q3
£93.8m
Q1
Q4
2009 over 2008
-5%
-10%
+3%
+38%

11. Manufactured new business (APE)
APE (Annual premiums plus 10% of single premiums)
£122.7m
£98.4m
£95.7m
Q2
Q3
£83.3m
Q1
Q4
2009 over 2008
-1%
-3%
+12%
+43%

12. Review of 2009
Funds under Management
• Continued 95% retention
• Net inflows of funds of £2.3bn up 35%
• Funds under management £21.4bn up 31%

13. Net inflow of funds under management
+35%
+36%
+56%
£1.9bn
-10%
£2.3bn
£1.7bn
£1.4bn
£0.9bn
2005
2006
2007
2008
2009
Percentage of opening FUM
9%
11%
12%
9%
14%

14. Review of 2009
Partnership
• Continued strong retention
• 20 Academy graduates
• Partnership numbers 1464 up 9%

15. Number of Partners
+9%
1,464
+7%
+8%
+2%
+5%
2005
2006
2007
2008
2009

16. Review of 2009
New Business
• Total single investments of £3.5bn up 13%
• APE of £440.8m up 5% (H1 -8%; H2 +20%)
• Manufactured proportion 91%
Funds under Management
• Continued 95% retention
• Net inflows of funds of £2.3bn up 35%
• Funds under management £21.4bn up 31%
Partnership
• Continued strong retention
• 20 Academy graduates
• Partnership numbers 1464 up 9%

17. ANDREW CROFT
Finance Director

18. Profit measures
EEV
• Result reflects the net present value of future shareholder
cash flows
Cash result
• Is a measure of the underlying cash generated by the
business
• Reflects the positive cash flow from in force business less
the negative cash flow from acquiring new business
IFRS result
• Aims to smooth the emergence of profit over the life of the
contract
We manage shareholder value based on the EEV
and cash result and not the IFRS result

19. Highlights
• EEV new business profit of £155.4 million
up 26%
• EEV operating of £228.9 million up 12%
• EEV pretax profits of £363.2 million compared
with a loss of £115.9 million in 2008
• EEV net asset value per share of 284.5p up 22%
• Final dividend of 2.66p up 4%

20. Analysis of Operating Profit
£’m
New business contribution
Profits from existing business
–expected
–experience variance
–operating assumption changes
Investment income
Life & unit trust operating profit
Other
Operating profit
2009
2008
155.4
123.5
78.3
11.6
(1.5)
5.6
249.4
(20.5)
228.9
80.5
16.9
(0.9)
4.9
224.9
(20.6)
204.3

21. Margin
• Higher new business
• Manufactured business 91% compared
with 86%
• Total direct expenses and establishment
costs down 4%
• Margin as percentage of APE increased to
35.3% (2008: 29.5%)

22. Analysis of Operating Profit
£’m
New business contribution
Profits from existing business
–expected
–experience variance
–operating assumption changes
Investment income
Life & unit trust operating profit
Other
Operating profit
2009
2008
155.4
123.5
78.3
11.6
(1.5)
5.6
249.4
(20.5)
228.9
80.5
16.9
(0.9)
4.9
224.9
(20.6)
204.3

23. Analysis of Operating Profit
£’m
New business contribution
Profits from existing business
–expected
–experience variance
–operating assumption changes
Investment income
Life & unit trust operating profit
Other
Operating profit
2009
2008
155.4
123.5
78.3
11.6
(1.5)
5.6
249.4
(20.5)
228.9
80.5
16.9
(0.9)
4.9
224.9
(20.6)
204.3

24. Analysis of Operating Profit
£’m
New business contribution
Profits from existing business
–expected
–experience variance
–operating assumption change
Investment income
Life & unit trust operating profit
Other
Operating profit
2009
2008
155.4
123.5
78.3
11.6
(1.5)
5.6
249.4
(20.5)
228.9
80.5
16.9
(0.9)
4.9
224.9
(20.6)
204.3

25. Analysis of Operating Profit
£’m
New business contribution
Profits from existing business
–expected
–experience variance
–operating assumption change
Investment income
Life & unit trust operating profit
Other
Operating profit
2009
2008
155.4
123.5
78.3
11.6
(1.5)
5.6
249.4
(20.5)
228.9
80.5
16.9
(0.9)
4.9
224.9
(20.6)
204.3

26. Analysis of Operating Profit
£’m
New business contribution
Profits from existing business
–expected
–experience variance
–operating assumption change
Investment income
Life & unit trust operating profit
Other
Operating profit
2009
2008
155.4
123.5
78.3
11.6
(1.5)
5.6
249.4
(20.5)
228.9
80.5
16.9
(0.9)
4.9
224.9
(20.6)
204.3

27. Analysis of Pre-Tax Result
£’m
2009
2008
Operating profit
228.9
204.3
Investment variance
Economic assumption change
Pre-tax result
148.2
(13.9)
363.2
(320.6)
0.4
(115.9)

28. Investment Variance
• Sensitivity provided is for a 10% change in
the value of equities
• Some 70/80% of our funds under
management are invested in equities
• Our funds are global and the £ MSCI is the
best index to use in your modelling

29. Analysis of Pre-Tax Result
£’m
2009
2008
Operating profit
228.9
204.3
Investment variance
148.2
(320.6)
Economic assumption change
(13.9)
Pre-tax result
363.2
0.4
(115.9)

30. Analysis of Pre-Tax Result
£’m
2009
2008
Operating profit
228.9
204.3
Investment variance
148.2
(320.6)
Economic assumption change
Pre-tax result
(13.9)
363.2
0.4
(115.9)

31. EEV Net Asset Value per Share
Net asset value
284.5p

32. Analysis of Post Tax Cash Result
£’m
2009
2008
Arising on in force business
88.8
91.4
Arising from new business
Cash Result
(65.3)
23.5
(67.3)
24.1

33. Dividend
Final dividend
Increased by 4% to 2.66 pence
Full year dividend
Up 2.5% to 4.5 pence

34. Capital Position
• Total group solvency assets of £263.3
• Solvency remains strong
• Investment policy for solvency assets
continues to be prudent
• Solvency II

35. IFRS Result
£’m
2009
2008
One–off items
Share options
Interest income
Other
Profit before policyholder tax
(8.6)
6.1
52.4
49.9
16.2
(14.9)
22.6
56.8
80.7

37. IFRS example
• £100,000 unit trust investment
• 5% bid offer spread and 3% directly
attributable expenses
• Cash profit of £2,000 (£5,000-3,000)
• IFRS result spreads profit over the expected life
of contract
• If expected life of the contract is 5 years then year 1
profit is £400
• However if expected life of contract is 10 years then
year 1 profit is £200
• A tension between managing the IFRS result and
shareholder value

38. Summary
• Record new business
• Establishment expenses 4% below last year
• Record new business contribution
• Highest ever margin
• Positive experience variance
• Increased operating profit
• Strong solvency position
• Increased dividend

39. DAVID BELLAMY
Chief Executive

40. Review of 2009
• A record year
•
•
•
•
in new business
in funds under management
in new business profit
in recruitment and size of the Partnership
• A year of two halves

41. 2009 Productivity (APE per Partner)
+27%
-4%
-11%
-17%
Q1
Q2
Q3
Q4

42. The Growth Model
Target
15 – 20% pa
New Business
Capacity
No of Partners
Productivity
New Business
Per Partner

43. 2009 Productivity (APE per Partner)
+27%
-4%
-11%
-17%
Q1
Q2
Q3
Q4

44. 2009 Growth in APE
Average APE
New Partners
+11%
+27%
+6%
-11%
+7%
Q1
Q2
+7%
-4%
-17%
Q3
Q4
Total APE Growth
-5%
-10%
+3%
+38%

45. Productivity (APE per Partner £’000s)
+14%
+61%
388.0
-3%
323.2
311.8
-9%
314.1
2008
2009
+23%
193.4
2005
2006
2007

46. Number of Partners
+9%
1,464
+7%
+8%
+2%
+5%
2005
2006
2007
2008
2009

48. Retail Distribution Review
• Further demonstration of our professionalism
• Accredited SJP module
• Realigned management structure
• We will minimise fall out and disruption

49. Retail Distribution Review
Provider/Product Bias
• No provider bias
• Minor product differences – already addressed
Restricted Advice
• Variation on a theme
• Investment Management Approach is key
• Professional and trusted advice is what matters

50. Retail Distribution Review
Adviser Charging
• Still not clear
• Vertically Integrated Firms are different (to IFA’s)
• Our approach is integrated
• we are responsible for the advice (we guarantee it!)
• we have a distinct investment approach
• we build long term relationships
• The market will decide if ‘margins’ are to change
• but supply and demand principles will prevail

51. Retail Distribution Review
• Having a positive impact on recruitment
• We’re embracing the ‘Diploma’
• We’ve addressed any question of ‘bias’
• We believe we are better placed than most

52. Evolving Fund Range
2008
• Alternative Asset Fund - Blackrock
• High Octane Fund
• Cash Unit Trust
- Oldfield
- State Street
2009
• Corporate Bond Fund - Invesco Perpetual
• Gilt Unit Trust
- Wellington
• Income Unit Trust
• New managers
- Axa Framlington
- Burgundy/Liberty Square/JO Hambro

53. Investment Management Approach
• Emerging Market Fund
• Global Bond Fund
• Absolute Return Fund

54. Strengthen the Team
• Senior team together for 18 years
• Development from within
• Charles Gregson – new Non-Executive
• Chris Ralph, Vivian Bazalgette
& Peter Dunscombe

55. The SJP Opportunity
• In excess of 8m people in the UK with liquid
assets over £50k
• In excess of 500,000 people in the UK with
liquid assets over £500k
• Total liquid assets estimated to be over of
£1.5 trillion over 50% of which is held in cash

56. The SJP Opportunity
• ISA’s
• £170bn - Cash (BSA)
• £116bn - Stocks & shares (HMRC)
• £220bn
Building Society deposits (BSA)
• £750bn
Bank deposits (LBG)
• £480bn
Mutual Funds (IMA)

57. The Opportunities
• Increasing tax burden
• Sustained low interest rates
• People not confident they have enough for
retirement
• Migration from DB pensions to DC continues
• Fewer advisers (200,000 – 1990; 50,000 – 2010)

58. Summary
• Proven track record of growth
• Resilient in tough markets
• Well positioned for future growth