SHARES of St James’s Place Capital rose 2p to 244p yesterday after the the fund manager, unveiled pre-tax profits ahead of expectations.

St James’s Place, which specialises in wealthy investors, increased its pre-tax operating profit to £82 million last year, up from £57 million the year before.

Last year’s figure, however, included £28 million from the sale of Life Assurance Holding Corporation (LAHC). Swiss Re bought LAHC for £333 million in cash in July 2004. It was one of the first sales of closed life funds in what has since become a highly competitive market.

St James’s Place, which is one of the last companies to offer home visits by its financial advisers, reported a 52 per cent increase in new business profits to £38 million. This came despite an increase of just 1 per cent in its sales force of 1,131 self-employed advisers.

Mark Lund, chief executive, attributed the profit rise to an 18 per cent rise in the sales by individual advisers.

Operating profits from the life business jumped from £44 million in 2003 to just under £63 million in 2004, while operating profits from unit trusts business rose from £18 million to £29 million.

However, St James’s Place was forced to put aside £1 million to cover the possibility of having to pay compensation on some of its 11,250 in-force endowment policies. A further £3.6 million was used to cover compliance costs, leading to a £4.6 million loss on its other business operations.

The company put aside a pre-tax reserve of £4 million to cover itself against an adverse outcome in a European Court of Justice VAT case in which it is currently awaiting judgement. The case relates to whether ther is VAT exemption on certain insurance-related services.