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Inside SJP: 10 key charts from its annual results

10 key charts from the company's annual results this week

No firm gets people talking quite like St James's Place

Yesterday the wealth manager, headed by Andrew Croft, published its full-year numbers, offering the industry an insight into its health. 

While the business continues to show its might, there were signs that things were not as seamless as in previous years. 

So where did it feel the pressure in 2018? We highlight 10 charts from it results presentation that provide some clues, while others underline its strength.   

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No firm gets people talking quite like St James's Place

Yesterday the wealth manager, headed by Andrew Croft, published its full-year numbers, offering the industry an insight into its health. 

While the business continues to show its might, there were signs that things were not as seamless as in previous years. 

So where did it feel the pressure in 2018? We highlight 10 charts from it results presentation that provide some clues, while others underline its strength.   

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Pause for breath 

In the context of the breakneck velocity of recent growth, 2018 marked a definite pause for SJP’s expansion.

Slower asset gathering and the sharp breakdown of risk at year end sent growth in AUM to the lowest since the credit crunch. However, unlike many peers it didn’t see an outright fall, and noted that post period assets had climbed back above £100 billion.

Investors are clearly recalibrating their expectations as the stock continued its recent softness following yesterday’s results. JP Morgan, for instance, cut its guidance from £12.06 to £11.87.

So will this be the pause that refreshes, or the first step onto a plateau?

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Fourth quarter slowdown 

Breaking down the annualised figures show that the sea change in client inflows was very much a fourth quarter phenomenon, although the remainder of the year shows the upward trend has slowed.

Management also noted that inflows were again positive so far in 2019, but that they continued to ‘moderate’. 

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Bulging academy 

Presidential trade war tweets and fears of a global recession may be outside the scope of the board’s ability to control. 

However, management was keen to tout the pipeline of client facing, income earning advisers it has put in place to ensure it has the capacity for continued growth, as large numbers of graduates prepare to complete its academy training programme. 

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Increased spending 

Adding to current capacity does mean assuming the potential risk of upfront capital spending to meet an uncertain level of future demand, however.

In addition to the 27% increase in training costs this includes the floorspace to house them with new office space being taken on this year, as well as the ongoing saga of adopting the company’s Bluebox backoffice system, which it hopes to have completed by 2020

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Partner growth 

Putting the current numbers in context, the company appears to be essentially continuing the rate of partner growth that has served it so well over the last decade.

The numbers expected to graduate this year would be only marginally lower than the number it added in 2018

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Stalling inflows 

Gross inflows are a very rough tool, and the number has to be contextualised in the broader slowdown in asset growth.

But the crude multiplier of more advisers equalling more money in SJP’s coffers stalled last year for the first time since 2012, following 2017’s bumper period

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Regional aspirations 

In terms of its regional ambitions the company has not experienced any step change in the year although it has clearly begun to tilt to future growth. 

The share of company advisers in the Midlands ticking up from 12% to 13%, with the difference made up by a fall in the south east. The share of clients based in the south east fell by the same amount, with a 1% increase in the North of England

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Generation shift 

Much more significant was the generational shift in SJP advisers with the number of qualified advisers aged 34-45 rising from 29% to 30% and the number aged 45-55 rocketing from 33% to 37%.

While not exactly a youthquake, in an industry with demographic challenges as acute as those faced by financial advice, that is a significant shift  

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Wealth newbies 

The company also notes that rather than cannibalising existing talent, almost two thirds of its recruits are coming to the industry for the first time

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Just a bull story?  

The business does have some justification in emphasising that the model doesn’t appear to be broken, having delivered a remarkable 19% annualised rate of growth over the last decade.

The question remains whether this was a bull market phenomena however, as the entire asset management sector has rerated sharply lower in the past year.

The business still commands a chunky PE premium, on a multiple of 19x forecast, versus a peer average of 11.65x.  

But the gloss has come off SJP at a much faster rate, having fallen from a peak 2017 spread of 26.7x versus 13.5x    

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