St James's Place Shares Plunge 30% on Annual Loss

Under pressure wealth manager swung to an annual pretax loss of £4.5 million, compared to a £503.9 million profit in 2022, and slashed its dividend

Alliance News 28 February, 2024 | 11:32AM
Facebook Twitter LinkedIn

pound signs

St James's Place (STJ) shares plummeted on Wednesday, after the release of its results confirmed its difficult year, prompting the wealth manager to more than halve its annual dividend.

Shares in the wealth management company were down 30% to 433.20p in London on Wednesday morning, by far the worst FTSE 100 performing stock. The wider index was down just 0.3%.

Over the last 12-months, St James's Place stock is down 66%, while the FTSE 100 index is down just 2.8%.

The company swung to an annual attributable pretax loss of £4.5 million, compared to a £503.9 million profit in 2022.

Total funds under management jumped 13% to £168.2 billion at the end of 2023 from £148.4 billion a year earlier.

St James's Place reported gross inflows of £15.4 billion in 2023, down 9.4% from £17.0 billion a year earlier. New inflows dropped by 48% to £5.1 billion from £9.8 million.

Cash at the year-end was £68.7 million, down from £410.1 million.

St James's Place Fee Structure Scrutinised

St James's Place recently has been under pressure from UK regulators over its fee structure, promising in October to remove penalties for early withdrawals by customers starting from the second half of 2025.

In January, it assured the market it is reviewing all elements of the business.

It said that results for 2023 have "been significantly impacted by an assessment into the evidencing and delivery of historic ongoing servicing and the provision we have established for potential client refunds".

However, chief executive officer Mark FitzPatrick assured shareholders on Wednesday that it is now "confident this is a historic issue".

"In the near-term, we expect the industry outlook to remain challenging given the pressures that clients continue to face. The near-term environment notwithstanding, the longer-term structural opportunity for the financial advice industry is hugely attractive. With scale advantage, a strong partnership of advisers, and an investment approach that delivers for clients, we are very well placed to capture this opportunity and deliver value for all our stakeholders."

Dividend Cut Dramatically

On the back of the results, St James's Place declared a final dividend of 8p, cut from 37.19p. This lowered its full-year dividend to 23.83p from 52.78p.

Looking at its dividend going forward, St James's Place said the annual dividend will be 50% of underlying cash result. It plans to pay a fixed annual dividend of 18.0p in the years 2024 to 2026, with share buybacks making up the remainder returns.

Looking further ahead, St James's Place expects to be able to grow the cash dividend as proportion of total distributions.

News from October 2023

SJP to Remove Exit Fees in 2025

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
St James's Place PLC419.00 GBX0.34

About Author

Alliance News  provides Morningstar with continuously updating coverage of news affecting listed companies.

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures