Half-year figures from life assurer St James's Place (STJ) modestly missed consensus estimates on some measures, yet growth remains robust. Operating profit on an embedded value basis - reflecting the profit stream from in-force policies - rose 12 per cent to £261m, while total new business sales jumped 19 per cent.
With net fund inflows up 23 per cent, St James's increasingly looks like a beneficiary of the pension reforms announced in the Budget. The decision to axe compulsory annuity purchases probably isn't so significant for St James's clients, which typically have between £50,000 and £5m of investible assets. Given its focus on advice, however, chief executive David Bellamy thinks "giving power to clients" - the Budget aimed to increase investment flexibility - is good news for the group. The big hike in the individual savings account (Isa) limit is also a positive, given that St James's is a major player in Isa funds.
St James's ability to offer advice continues to grow as well: headcount in its equivalent of a salesforce - the St James's Place Partnership - grew 5 per cent. The partnership's growth has benefited from the Retail Distribution Review, which outlawed commission on product sales and put plenty of independent financial advisors (IFAs) out of work. But Mr Bellamy thinks partnership growth has now returned to "more normal" levels.
Broker Numis Securities expects adjusted full-year EPS of 29.8p, from 26p in 2013, and embedded value of 629p a share.
ST JAMES'S PLACE (STJ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 767p | MARKET VALUE: | £3.98bn | |
| TOUCH: | 767-768p | 12-MONTH HIGH: | 909p | LOW: 581p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 179p* | EMBEDDED VALUE: | 605p | |
| Half-year to 30 Jun | Gross premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 29.2 | 250 | 21.3 | 6.38 |
| 2014 | 27.4 | 110 | 12.9 | 8.93 |
| % change | -7 | -56 | -39 | +40 |
Ex-div: 27 Aug Payment: 24 Sep *Includes intangible assets of £906m, or 175p a share | ||||
