Payout cut

St James’s Place shares tumble on provisions

St James’s Place shareholders have taken a hit

Wealth manager St James’s Place saw its shares tumble after it announced a huge provision for client redress and slashed its dividend.

Shares were down by a third in early trade before closing 115.2p (18.55%) lower at 505.8p.

The company factored in a £426m provision in potential client refunds following a significant increase in complaints, particularly in the latter part of 2023, mostly linked to the delivery of ongoing servicing.

Shareholders will get a lower final dividend of 8p (2022: 37.19p), resulting in full year dividend of 23.83p, sharply down on the 52.78p paid out in 2022.

The board announced that future annual distributions will be 50% of the full year underlying cash result, set at 18p per share for the next three years.

It said its pre-tax underlying cash result came in 4% lower at £483m (2022: £485m)  due to the higher corporation tax rate in effect for 2023. There was an IFRS loss after tax of £9.9m (2022: £407.2m profit).

The cash result for the year fell sharply to £68.7m (2022: £410.1m), significantly impacted by an assessment into the evidencing and delivery of historic ongoing servicing and the provision it has established for potential client refunds.

The assessment revealed that its evidence of ongoing client servicing was less complete in the years preceding investment into its Salesforce CRM system in 2021, and it has made a provision for potential client refunds to address this matter.

“Looking forward, the investment we’ve made into Salesforce means we are confident this is a historic issue,” it said in a statement.

“While our financial results have been significantly impacted by this legacy matter, the board recognises the importance of returns to shareholders and is confident that sufficient capital and liquidity is available to deal with the financial impact of the provision.”

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