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Strong progress at St James's

By any yardstick, this was a solid first-half performance from wealth management group St James's Place. Total new business rose 44 per cent from a year earlier to £292m on an annual premium equivalent basis, while 91 per cent of all new business came from the group's own manufactured products sold through its partnership chain. Funds under management increased from £21.4bn at the end of 2009 to £22.4bn.

Operating profit on a European Embedded Value basis - which includes a measure of future premium income - jumped 60 per cent to £162m. On an IFRS basis, operating profits before shareholder tax rose from £20m to £36.3m, but pre-tax profits were distorted by a tax credit in the previous year. Strong sales were recorded in all sectors of the business, with new regular premiums on pensions and protection up 20 per cent at £31.7m, while new single premiums jumped 52 per cent to £879m. Unit trust sales, which includes personal equity plans (Peps) and individual savings accounts (Isas), were up 60 per cent at £397m.

However, a strong improvement in the life business was partly offset by a weak performance on the investment side, which resulted in a negative investment return of £84.5m, although equity values have shown a marked improvement since the half-year end.

Broker estimates are currently under revision.

ST JAMES'S PLACE (STJ)
ORD PRICE:267pMARKET VALUE:£1.3bn
TOUCH:266-267p12-MONTH HIGH:297pLOW: 172p
DIVIDEND YIELD:1.8%PE RATIO:25
NET ASSET VALUE:116p*EMBEDDED VALUE:295p

Half-year to 30 JunNet premiums (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200925.733.03.41.84
201023.228.25.92.03
% change-10-15+74+10

Ex-div: 4 Aug

Payment: 15 Sep

*Includes intangible assets of £749m, or 154p a share

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More analysis of company results

IC View

St James's Place is extremely adept at attracting new business, although its investment performance is less impressive. Still, trading at a 10 per cent discount to embedded value, the shares retain their attraction. Good value.

Last IC view: Good value, 255p, 25 Feb 2010

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