St. James's Place PLC (LON:STJ) did not pay a half-year dividend and said it will continue to hold back part of its final dividend until the financial and economic impacts of the coronavirus pandemic become clearer.
The wealth management group said its profits have been hit by “a more challenging new business environment” together with a planned increase in investment expenditure and the rising costs associated with the Financial Services Compensation Scheme.
The underlying cash result for the six months to June 30 of £114.4mln was down 9% on the same period last year.
While gross sales of £7.3bn were down 1.6% in the first half of the year, net inflows increased year on year to £4.5bn, meaning funds under management ended June at £115.7bn, down from £117.0bn at the end of December
On the dividend, the board said it “remains satisfied with the decision that it reached in April” so will continue to retain roughly a third of the previously proposed 2019 final dividend and will make a decision on the 2020 dividend next February, “when we believe we will be in a stronger position to assess the impact that COVID-19 has had on our business”.
The company believes third quarter flows will be similar to the second and that momentum will build from September, accelerating in the fourth quarter.
Analysts at Shore Capital said AUM was ahead of consensus forecast and the net flow increase came as client retention increased to 96%, “showing the strength and defensive of the franchise in challenging markets”.
The performance “was a story of two halves (or two quarters)”, the analysts added, with the first quarter having strong sales post the UK election in 2019 before COVID hit at the end.
“However Q2 sales were resilient, and net flows actually increased, allowing SJP to report resilient flows and AUM and earnings in a tough environment.”