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Results for the year ended 31 March 2020

Charles Stanley Group PLC today announces its preliminary results for the year ended 31 March 2020

by
Charles Stanley

28.05.2020

Strong results: Group well-placed to navigate COVID-19 challenges

Watch the video, read the full announcement or view the presentation.

 

Charles Stanley Group PLC (‘the Group’) or (‘Charles Stanley’) today announces its preliminary results for the year ended 31 March 2020:

Summary

  • Profits significantly improved.
  • Global COVID-19 pandemic brings challenges however the Group is operationally and financially well-positioned to navigate securely through the crisis and emerge strongly.

Financial highlights 

  • Revenue up 11.5% to £173.0 million (2019: £155.2 million), with growth in all three divisions, Investment Management Services, Charles Stanley Direct and Financial Planning.
  • Underlying1 profit before tax up 45.1% to £19.3 million (2019: £13.3 million), driven by repricing exercise completed a year ago.
  • Underlying1 profit margin2 increased to 11.7% (2019: 9.3%).
  • Underlying1 EPS up 47.1% to 31.41 pence per share (2019: 21.36 pence per share).
  • Restructuring costs of £3.5 million (2019: £nil).
  • Reported PBT up 57.3% to £17.3 million (2019: £11.0 million).
  • Reported EPS up 58.0% to 28.03 pence per share (2019: 17.74 pence per share).
  • Funds under Management and Administration (“FuMA”) at year end were £20.2 billion (2019: £24.1 billion), reflecting impact of COVID-19 virus on global market:
    - average FuMA was stable at £24.2 billion (2019: £24.3 billion).
    - higher-value managed funds now comprise 65.3% of FuMA (2019: 60.6%).
    - FuMA up 6.4% since FY end to £21.5 billion at 30 April 2020, in line with market improvement.
  • Balance sheet strengthened; at 31 March 2020:
    - cash balances up 15.1% to £93.5 million (2019: £81.2 million) with net assets at £116.5 million (2019: £106.4 million).
    - regulatory capital solvency ratio of 189%.
  • Final dividend of 6.0 pence per share proposed, taking the total dividend to 9.0 pence per share (2019: 8.75 pence per share)

Operational

  • Multi-year transformation programme launched a year ago is on track to deliver expected savings of £2.6 million in FY2021 and £4.5 million p.a. from FY2022:
    - single middle and back-office created; will drive efficiencies and enhance customer service.
    - programme to upgrade and reorganise IT infrastructure commenced.
    - sales, distribution and marketing reorganised.
  • Investment Management Services increased average discretionary funds per certification staff despite the decline in stockmarket values.
  • Online execution-only service, Charles Stanley Direct, contributed second year of profits.
  • Financial Planning division expanded with recruitment of additional planners.

Outlook

  • Decline in stockmarket values and interest rates will significantly reduce Group’s revenue, although commission income currently proving resilient due to increased trading activity.
  • Beyond the immediate challenges created by COVID-19 crisis, the Board remains positive about prospects, which are supported by the Group’s strong balance sheet and transformation programme.
Paul Abberley, Chief Executive Officer, commented:

“These strong results reflect the benefits of our ongoing transformation programme. In particular, the substantial rise in profits was achieved by the repricing exercise completed last year to bring our rates into line with market.
COVID-19 is now the major challenge for everyone globally. I am pleased to report that the Group responded swiftly to safeguard the well-being of all our staff through remote-working while also maintaining a very high level of service to clients.
Trading results for the new financial year are expected to be significantly impacted by the crisis, with lower stockmarket valuations and reduced interest rates. However, Charles Stanley is well-positioned to navigate through the challenges and to emerge strongly. We have a very robust balance sheet with significant cash balances, and we will continue to focus on transformation and growth initiatives.”

 

 

1. Underlying profit before tax and earnings per share excludes exceptional restructuring costs, non-cash share options and the amortisation of client lists.
2. This underlying pre-tax margin is based on the underlying profit before tax excluding the charge in respect of non-cash share options awarded to certain investment management teams under revised remuneration arrangements settled in 2017, expressed as a percentage of revenues.

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