SJP turns £7.5m loss into £6m profit in 2010

The distribution unit of wealth manager St James's Place (SJP) turned a huge loss in 2009 into a significant profit last year after new business increased by a third.

The 32% growth in new business during 2010 increases the income the distribution company receives but has no impact on fixed costs, it says.

This resulted in a profit of £5.8m on an IFRS basis (before shareholder tax) compared with a loss for the prior year of £7.5m.

SJP says over the course of an 'economic cycle' it would expect to make a profit on distribution activity, but it adds the result will vary between years.

It says the profit would have been £1.3m higher had it not been for the proportion of the FSCS Keydata levy charged to this company.

Across the vertically-integrated company as a whole, total profit before shareholder tax, again on an IFRS basis, for the year was £84.2m, up 69% on the prior year result of £49.9m.

It says the key driver for this was higher income from funds under management, with the average FUM in 2010 at £24.2bn, some 30% higher than the previous year.

A negative in the result was a £6.2m increase in the fees paid to the FSA and FSCS. This increase was principally due to a £4.8m jump in the FSCS interim levy.

The unit trust profit for the year at £17.3m (2009: £16.8m) was also higher than the same period last year, due to higher funds under management. The profit was impacted by £3.5m, the proportion of the FSCS Keydata levy charged to this business.

Meanwhile, the company says more than 700 partners and members of its management and support teams have achieved the required RDR diploma status, while a further 700 are "within one or two exams of doing likewise".

It adds, following further clarity from the FSA regarding the requirements of vertically-integrated firms in respect of the adviser charging rules, it is confident its current product charges and remuneration structures will be RDR compliant.