27th Feb 2020 09:29
(Alliance News) - St James's Place PLC on Thursday reported a sharp rise in assets under management over the course of 2019, despite a "challenging" year for UK wealth managers.
All three of the company's fund classes saw growth in 2019. SJP's assets under management ended 2019 at GBP116.99 billion, up 22% from GBP95.55 billion a year ago, which represents a record for the company.
Investment funds grew 13% to GBP31.22 billion whilst Unit Trust/ISA & Discretionary Fund Management added 21% to GBP32.93 billion. Pension funds increased 30% to GBP52.84 billion.
By asset class, St James's Place North American Equities fund - which makes up 21% of total funds - increased 26% to GBP25.1 billion from GBP19.9 billion at the end of 2018.
The wealth manager's UK Equities fund - which makes up just under 18% of total funds - increased by 15% over the course of 2019 to GBP20.2 billion from GBP17.6 billion. Fixed Income Securities - just under 17% of total funds - gained 24% during 2019 to GBP20.9 billion from GBP16.9 billion.
Group net inflows totalled GBP8.99 billion, down from GBP10.28 billion in 2018, with gross inflows of GBP15.10 billion, down from GBP15.70 billion.
The Cirencester, England-based company saw a net investment return of GBP12.45 billion in 2019 versus a GBP5.48 billion investment loss in 2018.
"Last year was challenging for the UK wealth management sector with investor sentiment being impacted by uncertain macro-economic indicators, the US-China trade dispute, and the domestic political environment. Therefore, I am pleased to report a solid set of results. Positive net flows, together with the impact of positive investment returns, increased client funds under management to a record, once again demonstrating the resilience of St James's Place," Chief Executive Officer Andrew Croft said.
The wealth manager recorded a European embedded value operating profit - the company's preferred metric - of GBP952.0 million, down from 4.8% year-on-year from GBP1.00 billion and slightly behind market consensus of GBP955.9 million.
EEV new business contribution totalled GBP793.0 million in 2019 versus GBP852.7 million in 2018, a 7.0% drop. Market consensus was predicting GBP788.60 million new business contributions.
The wealth manager's pretax profit slipped 16% year on year to GBP146.6 million from GBP173.5 million.
St James's Place declared a 31.22 pence final dividend, up 5.0% on the year before, giving a total dividend of 49.71p - up 3.1% on the year before and ahead of the 48.3p market consensus.
Croft continued: "The fundamentals underlying the business remain strong and over time, increasing funds under management will generate increased returns. However, in the short term, our profit has been impacted by the more modest gross flows relative to the planned investment in the business for future growth."
St James's Place ended 2019 with 4,271 advisers, an 8% rise over 2019.
"The Parliamentary majority following the December 2019 general election provides for longer-term political stability, which has translated into improved investor sentiment. This has consequently resulted in an increase in activity across the business with new investments seeing a return to good growth in the early part of 2020," Croft said.
He added: "Uncertainties remain for the UK and there are market concerns as a result of coronavirus, but we are encouraged by this start to the year which, together with the strength and scale of our business today, gives us confidence that we are well placed to continue to grow."
Shares in St. James's Place were down 2.8% in London on Thursday morning at 1,053.50 pence each.
By Paul McGowan; [email protected]
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