In Andrew Croft’s estimation, 2019 was a challenging time for the UK wealth management sector. In his summary of St James’s Place’s (STJ) preliminary results, the chief executive cited domestic politics, uncertain macroeconomic indicators and the US-China trade war as just three reasons why investors sat on their hands during the year.
That helped to explain the 13 per cent contraction in net inflows to a still-respectable £9bn in the period. However, the fact that this was beaten by total funds’ net investment return in the first half of 2019 alone means investors might have expected a larger rise in net income from funds under management (FUM).
This rose 9.5 per cent to £425m, which translated to a margin of 0.63 per cent on so-called ‘mature’ FUM, two basis points down on 2018. Nonetheless it was costs, rather than thinner fee income profitability, that explains the 12.5 per cent decline in underlying cash earnings per share (EPS). The latter metric – rather than statutory EPS – is the better reference point for the dividend, in case the table below looks puzzling.
Aside from the Financial Services Compensation Scheme levy – which jumped from £12.8m to £22.3m last year – those higher costs at least point the way future growth, as the wealth manager expands its partnership and invests in client acquisition efforts.
Analysts at Numis expect earnings of 62.9p per share in 2020, rising to 74.3p in FY2021.
| St. James's Place (STJ) | |||||
| ORD PRICE: | 1,046p | MARKET VALUE: | £5.6bn | ||
| TOUCH: | 1,046-1047p | 12-MONTH HIGH: | 1,206p | LOW: | 898p |
| DIVIDEND YIELD: | 4.8% | PE RATIO: | 39 | ||
| NET ASSET VALUE: | 177p | ||||
| Year to 31 Dec | Fee Income (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) | |
| 2015 | 1.33 | 174 | 39.0 | 27.96 | |
| 2016 | 1.70 | 486 | 21.5 | 33.00 | |
| 2017 | 1.78 | 342 | 27.8 | 42.86 | |
| 2018 | 1.52 | -85 | 33.0 | 48.22 | |
| 2019 | 2.37 | 709 | 27.6 | 49.71 | |
| % change | +56 | - | -16 | +3 | |
| Ex Div: | 16 Apr | ||||
| Payment: | 22 May |
