Interim Results- Part 1

St. James's Place Capital PLC 26 July 2000 Part 1 INTERIM RESULTS FOR THE PERIOD TO 30 JUNE 2000 NEW BUSINESS UP 43% St. James's Place Capital plc ('SJPC') today announces its new business and financial results for the half year ended 30 June 2000. SJPC's pre-tax earnings, including exceptional and one-off costs, were £35.9 million. Highlights include: J. Rothschild Assurance Group *New business from The J. Rothschild Partnership up 43% to £88.0 million for the six months ended 30 June 2000. *Single premium business from The J. Rothschild Partnership up 74% to £597.6 million, including unit trust business up 134% to £198.8 million. *Pre-tax life operating profits (before one-off items) up 20% to £34.8 million. *Pre-tax unit trust operating profits up 22% to £2.8 million. *Funds under management up 15% to £5.3 billion from the start of the year. *Size of the partnership up 4% to 1,009 since the start of the year. *Strategy for new banking products in place for launch in the new year. J. Rothschild International Assurance *Joint venture announced with Securitas Capital to develop Italian operations. Life Assurance Holding Corporation *Pre-tax profits increase from £4.7 million to £11.9 million (including one-off contribution of £5.1 million). Interim dividend increased to 1.0p per share (1999: 0.75p). Sir Mark Weinberg, Chairman, commented: 'The first half of 2000 was a period of outstanding progress for St. James's Place Capital, in terms of both new business and establishing a platform for future growth.' Enquiries: Mike Wilson, Chief Executive Tel: 0207 514 1907 Martin Moule, Finance Director J. Rothschild Assurance Group Nitya Bolam / Cordelia Himes Tel: 0207 404 5959 Brunswick J. ROTHSCHILD ASSURANCE GROUP NEW BUSINESS FIGURES FOR PERIOD TO 30 JUNE 2000 ANALYSIS OF BUSINESS BY DISTRIBUTION CHANNEL Unaudited Unaudited 3 Months to 6 months to 30 June 2000 30 June 2000 The J. Rothschild 2000 1999 Growth 2000 1999 Growth ================= Partnership =========== £'m £'m % £'m £'m % Life and Pension Business New Regular Premiums Life 6.0 6.4 (6%) 10.9 11.3 (4%) Pension 9.2 9.2 0% 17.3 16.1 7% 15.2 15.6 (3%) 28.2 27.4 3% New Single Premiums Life 178.3 104.7 70% 353.3 213.1 66% Pension 18.6 25.5 (27%) 45.5 45.3 0% 196.9 130.2 51% 398.8 258.4 54% Unit Trust Business (including PEPs and ISAs) New Single Premiums 108.1 36.3 198% 198.8 85.0 134% Total New Business 45.7 32.2 42% 88.0 61.7 43% from The J. Rothschild Partnership International 0.1 0.6 (83%) 0.1 1.1 (91%) ============= Distribution ============ Miscellaneous 0.2 - 100% 0.4 0.2 100% ============= Distribution ============ J. ROTHSCHILD ASSURANCE GROUP NEW BUSINESS FIGURES FOR PERIOD TO 30 JUNE 2000 Unaudited Unaudited 3 Months to 6 months to 30 June 2000 30 June 2000 Total Group 2000 1999 Growth 2000 1999 Growth =========== Business ======== £'m £'m % £'m £'m % Life and Pension Business New Regular Premiums Life 6.1 6.9 (12%) 11.1 12.4 (10%) Pension 9.2 9.2 0% 17.3 16.1 7% 15.3 16.1 (5%) 28.4 28.5 0% New Single Premiums Life 179.2 105.2 70% 354.6 214.2 66% Pension 18.6 25.5 (27%) 45.5 45.3 0% 197.8 130.7 51% 400.1 259.5 54% Unit Trust Business (including PEPs and ISAs) New Single Premiums 109.0 36.3 200% 200.8 85.7 134% Total New Business Life 24.0 17.4 38% 46.6 33.8 38% Pension 11.1 11.8 (6%) 21.8 20.6 6% Unit Trust 10.9 3.6 203% 20.1 8.6 134% 46.0 32.8 40% 88.5 63.0 40% J. ROTHSCHILD ASSURANCE GROUP NEW BUSINESS FIGURES FOR PERIOD TO 30 JUNE 2000 Notes to Editors ================ 1. St. James's Place Capital plc, which is listed on the London Stock Exchange, is the holding company of the companies comprising the J. Rothschild Assurance Group. 2. 'Total New Business' is calculated following the convention in the life assurance industry, by adding together new regular premiums and one-tenth of single premiums. 3. 'International distribution' last year represented only 2% of total Group new business. During 1999 J. Rothschild International withdrew from certain territories ahead of a relaunch in Italy. 4. 'Miscellaneous distribution' represents business which comes to the group from sources other than The J. Rothschild Partnership or its International business. Chairman's Statement The first half of 2000 was a period of outstanding progress for St. James's Place Capital, in terms of both new business and establishing a platform for future growth. Halifax Shareholders will be aware that the Halifax partial offer for 60% of SJPC's share capital was completed on 2 June 2000. We are delighted to welcome Halifax as a shareholder and in particular to welcome James Crosby, the Chief Executive of Halifax, and Jim Spowart, the Chief Executive of Intelligent Finance, to our Board. With Lord Stevenson, the Chairman of Halifax, who has been on our Board for some years, they represent the three appointees of the Halifax provided for in the agreement which regulates the relationship between the two companies. We will in the new year, through our exclusive UK sales arm The Partnership, market an extensive range of banking services under the name St. James's Place Bank, utilising the Halifax Intelligent Finance product suite and technology platform. In addition to producing additional sources of income for both the Partners and SJPC, we believe that putting the Partners in a position to provide a full range of private banking services to their clients will lead to improved growth prospects for our core business, both by increasing the productivity of our existing Partners and by attracting more high quality advisers to The Partnership. We will also be taking the opportunity to adopt a unified brand for this new business model, built around the identity of the highly respected St. James's Place Unit Trust Group which has an outstanding long term investment record. In October, The Partnership is to become the St. James's Place Partnership and over the next three years the life assurance companies will change their names to incorporate the St. James's Place brand. The J. Rothschild Partnership New business through The Partnership was 43% higher than in the first half of the previous year, following the 25% growth achieved in the second half of 1999. These rates of growth are clearly well ahead of our long-term growth target of 15% to 20%. Particularly pleasing was the increase in new business of Unit Trusts and ISAs, which grew by 134% over the period. I have commented in previous statements on the particular benefits enjoyed by JRA in having its own distribution, and in particular the ability of The Partnership to adapt to changing market conditions. This was demonstrated by the reaction to the Partners in the face of falling margins and commissions on pension products over the past year. Over that period, Partners have redirected their attention towards other products so that, in the six months under review, pension products represented only 16% of initial commission income for The Partnership, compared with 26% for the same period last year. The company has continued, albeit on a reducing scale, to subsidise the commission paid on pension plans in order to assist the cash flow of The Partnership. This cost £2.6 million pre-tax during the half year, but will be phased out by October. Partnership numbers grew by 4% from 972 at the end of the year to 1,009 at 30 June. International Operations It was announced yesterday that we intend to enter into a joint venture with Securitas Capital, a global private equity fund, with the aim of establishing a European financial services business. This will include a new life assurance company to be registered in Dublin; a SICAV based in Luxembourg and, as the first step in the distribution network, creating a salesforce through a distribution arm (known as a SIM) in Italy. Paul Bradshaw will head the European operation with Patrizia Misciattelli 'administratore delegato' of the Italian operation which will be known as Nascent. Paul Bradshaw will resign from the Board of SJPC on completion of the joint venture. SJPC last year announced a project to establish a European operation as part of its Dublin-based subsidiary J.Rothschild International Assurance (JRIA). This new venture will replace that project and take over the SIM and the SICAV which have been established by JRIA, as well as both the Italian infrastructure that has been created and the personnel of JRIA dedicated to the European operation. The project involves setting up a major sales network throughout Italy. While it offers the prospect of highly attractive returns, it requires substantially more capital than the Board of SJPC felt it prudent to commit in the light of its objective of producing smooth organic growth in Group earnings. In April SJPC stated that it was involved in discussions with potential financial partners. Yesterday's announcement reflects the agreement in principle reached with Securitas Capital to effect this aim. SJPC is to take a one-third and Securitas Capital a two-thirds share in the joint venture, which envisages a total capital commitment of some £50 million, phased over a number of years, for the Italian operation. The parties will look for an Italian partner with knowledge and expertise in the sector to take up a minority interest. SJPC's contribution to the venture will reflect the money so far invested in building up the operation. Life Assurance Holding Corporation (23% owned) Although there were no acquisitions to boost the profits of LAHC the company's contribution to SJPC's pre-tax profits for the half-year was £11.9 million (1999:£4.7 million). This profit reflects an underlying contribution of £6.8 pre-tax, with the balance being the result the release of various provisions. Financial Results The underlying results of the business reflect the substantial growth in new business over the half-year. However the results were affected by a number of one-off items: * Professional fees and other costs relating to the Halifax transaction, together with certain of the costs of rebranding the group St. James's Place. These amounted to £8.9 million pre-tax during the half year. A further £2.2 million is anticipated to be spent during the second half of the year. * The costs of subsidising commission on level load pensions referred to above. As mentioned above, these amounted to £2.6 million pre-tax over the period. * The continued costs of developing the international business, which amounted to £4.5 million pre-tax (1999: £1.6 million). As stated above, SJPC's contribution to the joint venture with Securitas will reflect these costs together with some incurred in previous years. After stripping out these effects, the pre-tax earnings from the life businesses grew by 20% from £29.0 million to £34.8 million. Pre-tax unit trust profits have grown from £2.3 million to £2.8 million. As we have reported previously, accounting convention means that the Unit Trust business reports on a cash flow basis, rather than the embedded value basis used by the life companies. This means that the costs of acquiring new business depress profits in the period in which it is acquired. The Directors believe that a more helpful measure of the economic performance of the business is given by the increase in embedded value over the period. This is given in the supplementary information and shows that on this basis unit trust profits increased from £6.1 million post-tax in 1999 to £16.2 million in 2000 an increase of 166% - showing that the business made excellent progress. Dividend The Board has resolved to pay an interim dividend of 1p a share in respect of the six months to 30 June 2000 (1999: 0.75p per share). The dividend will be paid on 11 September 2000 to those on the register at close of business on 11 August 2000. The Board will consider a further increase in the final dividend when it reviews the trading results at the end of the year. Sir Mark Weinberg MORE TO FOLLOW

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