St James's Place hikes divi, but profits miss estimates - UPDATE

29th Jul 2014 08:36

Wealth management and financial services group St James's Place (SJP) hiked its interim dividend by 40% after funds under management (FuM) reached a record in the first half.However, the market gave a cool reaction to the results on Tuesday as profits came up short of analysts' expectations.FuM totalled £47.6bn by June 30th, up 19% year-on-year and 7% ahead of the start of the year, helped by 23% higher net inflows at £2.44bn.The company said its partners introduced 27,000 new clients during the first half who, together with existing clients, led to £3.9bn of new investments during the period, up 21% year-on-year. Results were also bolstered by a strong customer retention level of 95%.However, pre-tax profit on an IFRS basis totalled £82.4m in the first half, down from £90.1m and below the £91m expected by analysts. The prior year had benefitted from a one-off amount of £8.9m from a reinsurance treaty associated with a closed book of protection business. Excluding one-off items, profits improved by 1%.The company said it would pay a dividend for the first half of 8.93p per share, up from 6.38p the year before."The scale, growth and maturity of our funds under management has resulted in a growing underlying post tax result in recent years, which has supported the significant increase in dividends," SJP said. "This growth has continued in 2014 and given this performance and our confidence about the future, the board has agreed an increase in the interim dividend at the top end of the range signalled earlier in the year of 40% and anticipates a similar increase in the full-year dividend." Shares fall, but analysts stay upbeatDespite the strong first half, shares in St James's Place sank sharply after the results and were trading down nearly 3% at 767p by 12:40.Nevertheless, brokers kept their positive recommendations on the stock, with Berenberg and Panmure Gordon continuing to recommend investors to 'buy' SJP shares, while Numis repeated its 'add' call.According to analysts at Panmure, the outlook for wealth management is "very good, particularly for high net worth clients given the recent changes to ISAs and pension arrangements post Budget".Meanwhile, Numis said that SJP's estimated 13% total shareholder return per annum - based on the current share price - "underpins our modestly positive recommendation".BC