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St James's Place the bellwether for pension 'freedoms'

Wealth manager St James's Place has benefited from pension freedom reforms.
February 26, 2016

The introduction of greater pension 'freedom' last year was a gift for St James's Place (STJ). As people have taken greater ownership of managing their retirement income, so the wealth manager's clients have been putting more of their money into its pension, individual savings account (Isa) and fund options. In all, the group secured net inflows of £5.78bn last year, taking its funds under management to £58.6bn. However, in choppier markets net investment return fell to £0.8bn from £2.6bn in 2014.

IC TIP: Buy at 882p

On a European embedded value basis, which management uses to take into account the long-term release of profit from its products, operating profit rose by 11 per cent to £660m. Net inflows into the group's investment management arm were £1.19bn, but this was down on £1.53bn during 2014, a trend seen across the wealth management industry. The group's Financial Services Compensation Scheme levy also more than tripled to £20.1m.

One of the main ways the group grows is via its partnership model, through which it links with wealth advice firms to increase its distribution network. Last year it grew partner numbers to 2,264, while its total qualified adviser network grew by 10 per cent to 3,113 members.

Analysts at Numis expect embedded value to reach 778p at the end of 2016.

 

ST JAMES'S PLACE (STJ)

ORD PRICE:881.5pMARKET VALUE:£4.63bn
TOUCH:880.5-881.5p12-MONTH HIGH:1,031pLOW: 801p
DIVIDEND YIELD:3.2%PE RATIO:23
NET ASSET VALUE:209p*EMBEDDED VALUE:737p

Year to 31 DecGross written premiums (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201173.411021.98
201266.113521.510.64
201361.219137.415.96
201457.429436.623.3
201554.717438.927.96
% change-5-41+6+20

Ex-div: 7 Apr

Payment: 13 May

*Includes intangible assets of £793m, or 151p a share