St James's Place beats profit forecasts and hikes final divi by 50%

25th Feb 2015 07:53

Wealth management group St James's Place (SJP) impressed City analysts on Wednesday with a strong set of annual results, as strong cash generation led it to hike its final dividend by 50%."I am pleased to once again be reporting strong performance in all aspects of our business in 2014," said chief executive David Bellamy.Operating profits on a European Embedded Value (EEV) basis were 29% higher at £596.4m, well ahead of the consensus forecast of £533m.Despite some uncertainty across world stock markets, SJP was able to grow funds under management (FUM) by 17% to a record £52bn, driven by new business flows, improved retention and positive investment returns.Underlying cash, a key determinant in SJP setting its dividends, improved by 24% to £173.8m helped by the increasing maturity of FUM.Around 30% of SJP's FUM are currently not yet generating any positive cash flow, as much of its business typically doesn't generate net cash in the first six years. However, they are expected to become cash generative once they reach the end of their sixth year, "at which time they will support future strong organic growth in the cash arising from the in-force", the company explained.The company declared a final dividend of 14.37p per share, up 50% on the previous year, leading to a 46% increase in the full-year dividend to 23.3p per share.This represented a full-year payout ratio of 70% of underlying cash, up from 60% in 2013, and the company said it expected to increase this to 75% "in future years".Looking ahead, Bellamy said: "We begin 2015 with confidence that we are well positioned for future growth, in line with our medium to long-term objectives."The stock was up 4.7% at 933.5p by 08:29.