Charles Stanley makes solid strategic progress in first half
By Josh White
Date: Thursday 21 Nov 2019
(Sharecast News) - Charles Stanley Group announced its interim results for the six months ended 30 September on Thursday, reporting a 2.1% improvement in funds under management and administration to £24.6bn, with discretionary funds up 6.1% to £13.9bn.
The London-listed wealth management firm said revenue growth across its three divisions contributed to a 9.9% increase in revenue, to £85.4m.
Its revenue margin was up to 69.9 basis points from 62.7 basis points year-on-year, which the board said benefitted from a "comprehensive" repricing project completed in March, and a shift towards higher margin services.
Expenditure remained well controlled, the board claimed, at £75.4m - a 4.1% rise, which was put down to variable staff remuneration.
Restructuring costs totalled £1.2m for the period, with those expected to yield £0.8m in annualised savings.
The costs were a part of the company's three-year transformation programme, which was expected to cost around £9.5m in total and yield annualised benefits of £4.5m.
Underlying profit before tax increased 71.9% to £9.8m, and the company's underlying profit margin improved to 11.2% from 9.3%.
Its reported profit before tax totalled £8.1m, rising from £5.1m.
Regulatory capital resources were described as "strong" at £81.1m, up from £75.5m in the first half of last year.
On the operational front, the board said the transformation initiatives focussed on improving sales and operational efficiencies remained on track, with the company's overall sales strategy and targets said to have been refocussed.
Its operating model was in the process of restructuring to drive efficiencies, with the firm establishing a single middle office function in investment management services early in the second quarter, which it said would provide more efficient and effective support to business units.
The company's IT infrastructure was being reorganised, while front office productivity was being improved across the group's investment management teams
The acquisition of Myddleton Croft in August also enhanced the group's presence in Yorkshire and the North East.
Looking ahead, Charles Stanley's management said it expected further progress with its initiatives in the second half, adding it was confident that its strategy would support a sustainable improvement in underlying profitability.
"This is an encouraging set of results," said chief executive officer Paul Abberley.
"The increase in profits demonstrates that the hard work of recent years is now bearing fruit.
"The comprehensive repricing project, completed last March, and our continued shift towards higher margin services have been the key drivers of profit growth."
Abberley said the business transformation programme that was underway was focused on improving the group's distribution capability, and streamlining its operational processes.
"In the short term, it will temper profitability given the costs, but will establish a stronger platform for long-term, sustainable growth.
"We are confident of further progress in the second half."
At 1045 GMT, shares in Charles Stanely were up 18.43% at 302p.
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