Your IndustryAug 6 2015

St James’s Place profits hit by trebled FSCS levy as it buys DFM firm

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St James’s Place profits hit by trebled FSCS levy as it buys DFM firm

St James’s Place revealed reduced profits of £67m in its half-year report as it buys DFM firm Rowan Dartington for £34m.

The Cheltenham-based FTSE 100 company has taken on an extra £1bn in assets under management and 100 staff through the acquisition.

David Bellamy, chief executive of St James’s Place, said the company had been looking at providing a DFM service for some time and the acquisition provides an “excellent platform” from which to build this additional service.

Graham Coxell, executive chairman at Rowan Dartington, said; “This opportunity will provide a strong platform for St. James’s Place to provide discretionary fund management services to high net worth clients.

“It will also enable Rowan Dartington to develop and support the propositions and services to our existing and new private clients, as well as the broader UK financial adviser market.”

Meanwhile SJP’s profits before shareholder tax were down from £82m to £67m in the first half of 2015.

Mr Bellamy said this was because of the company’s FSCS levy, which trebled from £6.9m to £20m.

He said: “We are concerned about the scale of this year’s levy and the burden on shareholders and will be actively engaging in the FCA’s review of the allocation and application of the future levy.

“Despite this significant cost, the sustained growth and maturity of our funds under management continues to provide growth in the underlying post-tax cash result and the board has declared a 20 per cent increase in the interim dividend to 10.72 pence per share.”

The company saw increased gross inflows of funds under management of £4.4bn and increased funds under management of £55.5bn.

Analyst views

Alan Devlin, an analyst with Barclays Capital, said: “We thought the results were good. There is continued strong underlying growth in assets under management and inflows which are among the most important things to look at.

“The one hiccup was the FSCS levy. We knew it was going up and we thought it would be double, but it actually tripled and it does seem a bit unfair.”

In a note from Berenberg, the analysts said they had downgraded St James’s Place to ‘hold’ from ‘buy’ with an unchanged price target of 950p, saying that following a strong rally year-to-date the share price is now largely up with events.

The note said: “With the FTSE 100 and FTSE All Share struggling to stay in the green so far this year, the performance of St James’s Place at +16 per cent seems somewhat difficult to justify.”