Is there anything good in St James’s Place’s results?

Shares in Britain’s biggest wealth manager St James’s Place plunged to the lowest level since December 2012 this morning after the company published its 2023 results.

Following the declines the stock has now fallen 65.4 per cent over the past year, making the FTSE 100 listed firm the 135th biggest listed company on the London Stock Exchange – that puts it on track to be kicked out of the blue-chip index.

When new chief Mark FitzPatrick took the helm in October, the market was hopeful the new captain could steer the business in the right direction.

His first job was to deal with the fallout from the firm’s outdated fee structure to comply with the new consumer duty rules.

In the new CEO’s first results for the firm, Panmure Gordon analysts Rae Maile and Ross Luckman described today’s results as a “kitchen sink” tactic, with FitzPatrick eager to “throw in everything” to address “the various issues which have been raised against the company over many years”.

These included cutting its full-year dividend to 23.8 pence per share from 52.8 pence per share in 2022, and announcing it had set aside £426m to refund customers over complaints.

RBC analyst Ben Bathurst noted that even after the dividend cut after recent delines the stock was still yielding 4.7 per cent.

However, Numis analyst David McCann pushed back against the positive rhetoric, describing the results as a “piecemeal warning” and complaining that the issues had not yet been “dealt with comprehensively.”

Nevertheless, Maile and Luckman argued that underneath these terrible headlines was “a statement that the new CEO believes that the pricing of the product has been dealt with”.

In October, St James’s Place announced it would be pushing through an overhaul for the “vast majority of new investment bonds and pensions”, eliminating early withdrawal charges or a gestation period.

Other titbits of positivity identified by the analysts in the results included a belief that cost controls will be much firmer in the future, and that “the secular growth opportunity is undimmed”, they said.

“Those positives are going to wait for another day unfortunately and the initial emotional response will be brutal,” added Maile and Luckman.

RBC’s Bathurst seemed to agree, stating that “with shares close to 10-year lows we believe St James’s Place offers compelling long-term value”.

“At its core, it continues to be an exceptionally neat and efficient business model, uniquely designed to support high-growth advice businesses across the UK,” he said.

“Changes to the charging structure have addressed a number of tail risks, meaning we see the group as better positioned over the long run to restore and retain a premium valuation to peers.”

However, Peel Hunt analysts Stuart Duncan and Robert Sage moved the firm’s rating from Buy to Under Review, stating: “Today’s news is clearly disappointing, and it will take a little time to digest the longer-term implications.”

Numis’ McCann agreed, stating that today’s news meant that “we once again need to go back to the drawing board in assessing the investment case for St James’s Place” and placing it Under Review.