INTERIM RESULTS

July 2013

DAVID BELLAMY

Chief Executive

Agenda

Business UpdateDAVID BELLAMY

FinancialsANDREW CROFT

Outlook DAVID BELLAMY

Q&A

Q1 Q2 Q3 Q4£60m

£100m

£140m

£180m

£220m

133.3

159.3

136.5152.7156.7

178.9

153.9 152.8152.6

201.3

165.6

223.8

199.2

2010 2011 2012 2013

Total new business by quarter

APE (Annual premiums plus 10% of single premiums)

2010 over 2009

+42% +46% +30% +15%

2011 over 2010

+18% +12% +13% +0%

2012 over 2011

-3% +13% +8% +46%

2013 over 2012

+31%

Q1 Q2 Q3 Q4£60m

£100m

£140m

£180m

£220m

133.3

159.3

136.5152.7156.7

178.9

153.9 152.8152.6

201.3

165.6

223.8

199.2

227.3

2010 2011 2012 2013

Total new business by quarter

APE (Annual premiums plus 10% of single premiums)

2010 over 2009

+42% +46% +30% +15%

2011 over 2010

+18% +12% +13% +0%

2012 over 2011

-3% +13% +8% +46%

2013 over 2012

+31% +13%

Q1 Q2 Q3 Q4£0m

£400m

£800m

£1200m

£1600m

£2000m

11151276.2

1104.51253.11,288

1,4451,263 1,2061,256

1,5011,331

1,7871,601

1,927

2010 2011 2012 2013

Single investment by quarter

2010 over 2009

+57% +54% +32% +16%

2011 over 2010

+16% +13% +14% -4%

2012 over 2011

-3% +4% +5% +48%

2013 over 2012

+28% +28%

H1 2008

H1 2009

H1 2010

H1 2011

H1 2012

H1 2013

£0.8bn

£1.1bn

£1.5bn£1.7bn

£1.5bn

£2.0bn

Net inflows (£bn)

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

£0bn

£5bn

£10bn

£15bn

£20bn

£25bn

£30bn

£35bn

£40bn

Funds under management

+34%+20%

+29%+25%

+18%-10%

+31%

+26% +6%

+15%

+22% £39.9

June

18% p.a compound growth over the last5 years and 20% p.a over 10 years (at June 2013)

Five strong years of Partner recruitment

2008 2009 2010 2011 2012 H1 2013

0200400600800

1,0001,2001,4001,6001,8002,000

13461467

15551649

17881,905

+7%+9% +6%

+6%+8.4%

+6.5%

New business results

• New business up 21%

• New single investments of £3.5 billion (up 28%)

• Net inflows £2.0 billion (up 32%)

• FUM £39.9 billion (up 15% ytd)

• Partnership 1,905 (up 6.5% ytd)

• Interim dividend up 50%

ANDREW CROFT

Chief Financial Officer

First half profit drivers

• New business growth of 21% (28% excluding last year large group pension scheme)

• Favourable business mix – manufactured up 24%

• Careful management of expenses

• Continued strong retention

• Very strong investment returns

Reinsurance treaty

• New treaty entered into by UK life company

• Removes remaining insurance and persistency risk of closed Protection book

• Positive post-tax benefit of £18.3 million in the cash result

• Release of prudent solvency reserves and realisation of the capitalised value of expected future margins

• Neutral in EEV

• Small IFRS pre-tax benefit of £8.9 million

Capital losses

• Value placed on capital losses within group now capable of being utilised

• £38.4 million deferred tax asset in IFRS result

• £32.0 million positive experience variance in EEV result

• Benefit to be realised in cash result over medium term

Changes in respect of adviser charging

• New rules have changed nature of certain cash flows

• Loss of tax relief on the adviser charge which reduces the new business margin

• Acceleration of cash earnings on certain pension business reducing new business strain

Analysis of EEV operating profit

£’m 2013

2012

New business contribution 152.4 120.6 +26%

Profits from existing business

– expected56.5

48.9

– experience variance 39.3 3.7

– operating assumption changes - -

Investment income 1.7 1.4

Life & unit trust operating profit 249.9 174.6

Distribution (2.1) 2.0

Other (14.2) (8.8)

Operating profit 233.6 167.8

Analysis of EEV operating profit

£’m 2013

2012

New business contribution 152.4 120.6Profits from existing business

– expected56.5

48.9

– experience variance 39.3 3.7

– operating assumption changes - -

Investment income 1.7 1.4

Life & unit trust operating profit 249.9 174.6

Distribution (2.1) 2.0

Other (14.2) (8.8)

Operating profit 233.6 167.8

Analysis of EEV operating profit

£’m 2013

2012

New business contribution 152.4 120.6Profits from existing business

–expected 56.5 48.9

– experience variance 39.3 3.7

– operating assumption changes - -

Investment income 1.7 1.4

Life & unit trust operating profit 249.9 174.6

Distribution (2.1) 2.0

Other (14.2) (8.8)

Operating profit 233.6 167.8

Analysis of EEV operating profit

£’m 2013

2012

New business contribution 152.4 120.6Profits from existing business

–expected 56.5 48.9

–experience variance 39.3 3.7

– operating assumption changes - -

Investment income 1.7 1.4

Life & unit trust operating profit 249.9 174.6

Distribution (2.1) 2.0

Other (14.2) (8.8)

Operating profit 233.6 167.8

Analysis of EEV operating profit

£’m 2013

2012

New business contribution 152.4 120.6Profits from existing business

–expected 56.5 48.9

–experience variance 39.3 3.7

– operating assumption changes - -

Investment income 1.7 1.4

Life & unit trust operating profit 249.9 174.6

Distribution (2.1) 2.0

Other (14.2) (8.8)

Operating profit 233.6 167.8

Analysis of EEV operating profit

£’m 2013

2012

New business contribution 152.4 120.6Profits from existing business

–expected 56.5 48.9

–experience variance 39.3 3.7

– operating assumption changes - -

Investment income 1.7 1.4

Life & unit trust operating profit 249.9 174.6

Distribution (2.1) 2.0

Other (14.2) (8.8)

Operating profit 233.6 167.8

Analysis of EEV operating profit

£’m 2013

2012

New business contribution 152.4 120.6Profits from existing business

–expected 56.5 48.9

–experience variance 39.3 3.7

– operating assumption changes - -

Investment income 1.7 1.4

Life & unit trust operating profit 249.9 174.6

Distribution (2.1) 2.0

Other (14.2) (8.8)

Operating profit 233.6 167.8

Analysis of EEV operating profit

£’m 2013

2012

New business contribution 152.4 120.6Profits from existing business

–expected 56.5 48.9

–experience variance 39.3 3.7

– operating assumption changes - -

Investment income 1.7 1.4

Life & unit trust operating profit 249.9 174.6

Distribution (2.1) 2.0

Other (14.2) (8.8)

Operating profit 233.6 167.8 +39%

Analysis of EEV pre-tax result

£’m 2013

2012

Operating profit 233.6 167.8

Investment variance 209.5 54.9Economic assumption change 1.5 (2.2)

Pre-tax result 444.6 220.5

Analysis of EEV pre-tax result

£’m 2013

2012

Operating profit 233.6 167.8

Investment variance 209.5 54.9Economic assumption change 1.5 (2.2)

Pre-tax result 444.6 220.5 +102%

EEV post-tax result

£’m 2013

2012

Pre- tax result 444.6 220.5

Tax on ordinary activities(88.0) (46.8)

Corporation tax change 18.9 18.7

Post-tax result 375.5 192.4

Tax rate on ordinary activities 20%

21%

£’m 2013

2012

Pre- tax result 444.6 220.5

Tax on ordinary activities (88.0) (46.8)

Corporation tax change 18.9 18.7

Post-tax result 375.5 192.4

Tax rate on ordinary activities

20%

21%

EEV post-tax result

£’m 2013

2012

Pre- tax result 444.6 220.5

Tax on ordinary activities (88.0) (46.8)

Corporation tax change 18.9 18.7

Post-tax result 375.5 192.4

Tax rate on ordinary activities

20%

21%

EEV post-tax result

£’m 2013

2012

Pre- tax result 444.6 220.5

Tax on ordinary activities (88.0) (46.8)

Corporation tax change 18.9 18.7

Post-tax result 375.5 192.4

Tax rate on ordinary activities

20%

21%

EEV post-tax result

EEV net asset value per share

Pence 2013

2012

Net asset value per share 524.1 414.6 +26%

Pre-tax IFRS

£’m 2013

2012

Life 81.1

52.6 +54%

Unit trust 25.3 13.1

Distribution (2.1) 2.0

Other (14.2) (8.8)

Profit before shareholder tax90.1 58.9

Pre-tax IFRS

£’m 2013

2012

Life 81.1

52.6

Unit trust 25.3 13.1 +93%

Distribution (2.1) 2.0

Other (14.2) (8.8)

Profit before shareholder tax90.1 58.9

Pre-tax IFRS

£’m 2013

2012

Life 81.1

52.6

Unit trust 25.3 13.1

Distribution (2.1) 2.0

Other (14.2) (8.8)

Profit before shareholder tax90.1 58.9

Pre-tax IFRS

£’m 2013

2012

Life 81.1

52.6

Unit trust 25.3 13.1

Distribution (2.1) 2.0

Other (14.2) (8.8)Profit before shareholder tax 90.1 58.9 +53%

£’m 2013

2012

Pre- tax result 90.1 58.9

Tax on ordinary activities(20.3) (12.8)

Recognition of capital losses38.4 -

Post-tax result 108.2 46.1

Tax on ordinary activities 22.5%

21.7%

IFRS post-tax result

£’m 2013

2012

Pre- tax result 90.1 58.9

Tax on ordinary activities (20.3) (12.8)

Recognition of capital losses38.4 -

Post-tax result 108.2 46.1

Tax on ordinary activities 22.5%

21.7%

IFRS post-tax result

£’m 2013

2012

Pre- tax result 90.1 58.9

Tax on ordinary activities (20.3) (12.8)Recognition of capital losses 38.4 -

Post-tax result 108.2 46.1

Tax on ordinary activities 22.5%

21.7%

IFRS post-tax result

£’m 2013

2012

Pre- tax result 90.1 58.9

Tax on ordinary activities (20.3) (12.8)

Recognition of capital losses38.4 -

Post-tax result 108.2 46.1

Tax on ordinary activities 22.5%

21.7%

IFRS post-tax result

£’m 2013

2012

Underlying cash result 66.9 41.9 +60%

Reinsurance transaction 18.3

-

Variance (2.6) 3.0 82.6 44.9

Analysis of post-tax cash result

£’m 2013

2012

Underlying cash result 66.9 41.9

Reinsurance transaction 18.3

-

Variance (2.6) 3.0 82.6 44.9

Analysis of post-tax cash result

£’m 2013

2012

Underlying cash result 66.9 41.9

Reinsurance transaction 18.3

-

Variance (2.6) 3.0 82.6 44.9

Analysis of post-tax cash result

£’m 2013

2012

Underlying cash result 66.9 41.9

Reinsurance transaction 18.3

-

Variance (2.6) 3.0 82.6 44.9 +84%

Analysis of post-tax cash result

£’m 2013

2012

Arising on opening in force 91.9 75.7 +21%

Margin arising on new business

18.5 3.1

Expenses (46.4) (40.5)

Other 2.9

3.6

66.9 41.9

Underlying cash

Return on in force

• c£12.2 billion of new business added in last six years, which is not yet generating positive cash earnings*

• Over £91.0 million of post tax cash earnings per annum in future*

* Ignores stock net movements and out flows

£’m 2013

2012

Arising on opening in force 91.9 75.7

Margin arising on new business

18.5 3.1

Expenses (46.4) (40.5)

Other 2.9

3.6

66.9 41.9

Underlying cash

£’m 2013

2012

Arising on opening in force 91.9 75.7

Margin arising on new business 18.5 3.1

Expenses (46.4) (40.5)

Other 2.9

3.6

66.9 41.9

Underlying cash

£’m 2013

2012

Arising on opening in force 91.9 75.7

Margin arising on new business 18.5 3.1

Expenses (46.4) (40.5)

Other 2.9

3.6

66.9 41.9

Underlying cash

Dividend

Maturing FUM = Increasing emergence of cash

Increasing emergence of cash = Increasing dividend

Dividend

• Interim dividend to increase by 50%

• Expect a similar increase in the full year dividend

• Thereafter dividend to progressively grow in line with the underlying performance of the business

Investment programme

• Need to invest to accommodate future growth and achieve efficiency savings

• Major systems development costs will be borne by outsourced provider

• We will have internal project costs over the next couple of years

• Estimate of £5.0 million cost in 2013

• Internal expenditure covered by cash released from reinsurance treaty

Summary

• 2013 has got off to a great start

• Strong financial performance on all measures

• Highlight is the post tax cash result

• 50% increase in the interim dividend

DAVID BELLAMY

Chief Executive

The Growth Model

53

NEW BUSINESS

CAPACITYNumber of Partners

PRODUCTIVITYNew business per Partner

NEW BUSINESS

“Simple but not easy”

Partnership growth

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Adviser numbers down 20%

Academy

• 100 ‘students’– Average age 38– Age range 23 to 50+– 20% are female– 50% from broader financial services – 50% military, law, sport, retail, accountancy

etc.– Majority referred by Partners

• 100% Diploma qualified within 12 months

• Graduation to Partnership beginning in 2014

Other initiatives

• Regional Academies

• Third party relationships – military, sports bodies, City out-placement agencies and universities

• Overseas adviser opportunities

Client engagement

• Wealth account survey – over 45,000 responses

• Over 300 centrally supported client forums – circa 40,000 clients

• Other Partner led client events

• CEO lunches

“Simple but not easy”

Bespoke iPad applications

E-Briefing service

E-Briefing service – tailored to client needs

New Intranet

69

NEW BUSINESSST JAMES’S PLACE

CRAIGFORTHLife & Pensions

BASILDONUnit Trust / ISA

70

NEW BUSINESS

Unified Administration

CRAIGFORTHLife & Pensions

BASILDONUnit Trust / ISA

ST JAMES’S PLACE

Launch of the journey to the FCA

“The FCA has been set up to work with firms to ensure they put consumers at the heart of their business”

Underlying this are three outcomes:

• Consumers get financial services and products that meet their needs from firms they can trust

• Firms compete effectively with the interests of their customers and the integrity of the market at the heart of how they run their business

• Markets and financial systems are sound, stable and resilient with transparent pricing information

Speech by Martin Wheetley - 16 October 2012

• “The best firms, the most successful firms, the most trusted, are the ones that take customers seriously in this environment of expectation. The ones that understand the currency of trust in generating business.”

• “Customer focus has to become a bread and butter staple of financial services”

Speech by Martin Wheatley at Chartered Institute for Securities & Investment 12.3.13

Summary

• New business £426.5m - up 21%

• Single investments £3.5 billion – up 28%

• Net inflow of funds £2 billion – up 32%

• Funds under management £39.9 billion – up 29%

• EEV operating profit £233.6m – up 39%

• IFRS profit before shareholder tax of £90.1m – up 53%

• Underlying post tax cash result of £66.9m up 60%

• Interim dividend of 6.38 pence per share – up 50%