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St James's Place bolstered by record inflows

The wealth manager continued to benefit from pension freedom changes and strong equity markets
February 28, 2017

St James's Place (STJ) invested heavily in growing its discretionary management services, expanding into Asia and upgrading its back-office systems last year. Yet despite an uptick in expenses, the continued shift towards self-directed investment delivered solid pre-tax profit growth during the period. Funds under management increased by more than a quarter to £75bn, pushing up net fee and commission income.

IC TIP: Buy at 1070p

Net inflows came in at £6.8bn, with the pension business contributing around half of new business. Chief executive David Bellamy - soon to step down from his role - attributed this to the declining popularity of annuities following the pension freedom changes. However, new business inflows into the unit trust, Isa and discretionary fund management businesses were also strong at £2.6bn. Around half of this gain came via the acquisition of discretionary wealth management company Rowan Dartington. Management has been increasing the staff size of this increasingly popular area of wealth management.

A surge in equity markets and a strong US dollar also helped increase funds under management. The wealth manager has just under half its funds invested equally in North American and UK equities and a further 11 per cent in European stocks.

Prior to these results analysts at Numis expect embedded value to reach 944p a share at December 2017, up from 901p in the previous year.

ST JAMES'S PLACE (STJ)

ORD PRICE:1,070pMARKET VALUE:£5.64bn
TOUCH:1,069-1,070p12-MONTH HIGH:1,126pLOW: 521p
DIVIDEND YIELD:3.1%PE RATIO:50
NET ASSET VALUE:204pEMBEDDED VALUE:901p

Year to 31 DecGross written premiums (£m)Pre-tax profit (£m)Earning per share (p)Dividend per share (p)
201266.113521.510.64
201361.219137.415.96
201457.429436.623.3
201554.717438.927.96
201652.248621.533
% change-5+179-45+18

Ex-div: 6 Apr

Payment: 12 May