St James’s Place share price falls over 30% following full-year results

Citi and JP Morgan Cazenove react to dividend cuts and provisions


St James’s Place (SJP) watched its share price tumble over 30% this morning in the wake of full-year results as dividend payments were crunched and the company factored in a £426m provision in potential client refunds.

While 2022 offered a full-year dividend of 52.78 pence per share, this year will result in 23.83 pence per share, a 54.8% decrease. The board also announced that in the future, annual distributions will be 50% of the full year underlying cash result, set at 18 pence per share for the next three years.

The £426m pre-tax provision is in response to a “marked increase” in client complaints regarding their ongoing service. SJP started an assessment into the need for refunds due to this ongoing service, and found the “evidence of ongoing client servicing was less complete in the years preceding investment into [its] Salesforce CRM system in 2021″. The findings resulted in the company upping its provisions for refunds.

In 2023, SJP announced fee restructures that will be put in place in the second half of 2025, which faced criticism within the industry, primarily for the amount of time it would take to put the system in place. The announcement followed the FCA’s consumer duty regulation which came into play on 31 July.

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A report from Citi highlighted the drop in its capital return policy: “H2’23 underlying cash came in 8% below consensus driven by the costs associated with an increase in client complaints. The post-tax result was also materially impacted by a provision for further potential client refunds linked to historic servicing levels.

“Although the dividend cut is not completely unexpected, it has gone further than we had thought and, when combined with the uncertainty surrounding the costs associated with client servicing complaints, we expect the shares to face headwinds today.”

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SJP’s post-tax underlying cash result was £392.4m, down from £410.1m in 2022, which the company noted included a higher corporation tax rate for the year. For the year, SJP had net inflows of £5.1bn compared to 2022’s £9.8bn.

JP Morgan Cazenove wrote in an analysis report: “The size of the provision, paired with the downgrade in the capital return policy, will result in another major negative share price reaction, in our view.

“We expect that management will have to address a number of questions, including the one-off nature of the provision, additional regulatory risks, and the implications for future customer acquisition and relationship with the Partners.”

SJP CEO Mark FitzPatrick added in the results: “Overall, 2023 was a difficult year for SJP but we’ve faced into our challenges. We’ve raised our standards around both the delivery and evidencing of ongoing client servicing and we’ve announced changes across our business, including our charges structure, so that we’re in good shape for the future.”