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Notes to the EEV Basis ResultscontinuedIII. COMPONENTS OF LIFE AND UNIT TRUST EEV PROFIT continuedCombined Life and Unit Trust businessSixMonthsEnded30 June2011SixMonthsEnded30 June2010TwelveMonthsEnded31 December2010£ million £ million £ millionNew business contribution 127.7 100.9 217.8Profit from existing business– Unwind of discount rate 59.1 46.8 93.5– Experience variances 2.8 12.1 26.4– Operating assumption changes – – (3.4)Investment income 2.2 1.9 4.2Operating profit before tax 191.8 161.7 338.5Investment return variances 0.9 (84.5) 117.6Economic assumption changes (1.9) 9.4 4.8Profit before tax 190.8 86.6 460.9Attributed tax (45.9) (23.1) (119.7)Corporation tax rate charge 17.8 – 17.7Profit after tax 162.7 63.5 358.9New business contribution after tax is £96.9 million (30 June 2010: £74.7 million).38St. James’s Place plc Registered No. 3183415
IV. SENSITIVITIESThe table below shows the estimated impact on the combined life and unit trust reported value of new businessand EEV to changes in various EEV calculated assumptions. In each case, only the indicated item is variedrelative to the restated values.Change in newbusinesscontributionNote Pre-tax Post-taxChange inEuropeanEmbeddedValuePost-tax£ million £ million £ millionValue at 30 June 2011 127.7 96.9 1,864.5100bp reduction in risk free rates, with corresponding changein fixed interest asset values 1 (0.4) (0.3) 8.410% reduction in withdrawal rates 12.2 9.3 91.810% reduction in expenses 2.8 2.2 23.910% reduction in market value of equity assets 2 – – (174.0)5% reduction in mortality and morbidity 3 – – 0.6100bp increase in equity expected returns 4 – – –100bp increase in assumed inflation 5 (2.4) (1.8) (13.1)Note 1: This is the key economic basis change sensitivity. The business model is relatively insensitive to change in economic basis. Notethat the sensitivity assumes a corresponding change in all investment returns but no change in inflation.Note 2: For the purposes of this required sensitivity all unit linked funds are assumed to be invested in equities. The actual mix of assetsvaries and in recent years the proportion invested directly in UK and overseas equities has exceeded 70%.Note 3: Assumes the benefit of lower experience is passed on to clients and reassurers at the earliest opportunity.Note 4: As a market consistent approach is used, equity expected returns only affect the derived discount rates and not the embeddedvalue or contribution to profit from new business.Note 5: Assumed inflation is set by reference to ten year index linked gilt yields.Change in newbusinesscontributionPre-taxPost-taxChange inEuropeanEmbeddedValuePost-tax£ million £ million £ million100bp reduction in risk discount rate 17.7 13.5 129.7Although not directly relevant under a market-consistent valuation where the risk discount rate is a deriveddisclosure only, this sensitivity shows the level of adjustment which would be required to reflect differinginvestor views of risk.Half Year Report 201139
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