The full-year results of Charles Stanley (CAY) provide a case study for the changes that are currently reshaping the wealth management sector. Like other managers, it is sharpening its focus on well-performing investment management, while trying to shake off both loss-making operations and arduous regulation in the form of a 'suitability' review of its investment strategies.
The group has announced the sale of its capital markets business to Panmure Gordon for a maximum £6.5m in cash, and has agreed in principle a sale of its employee benefits (EB) business. Leave these aside, and Charles Stanley made a pre-tax profit of £6m from continuing operations, but that was also before some heavy adjustments. Those included a £2m impairment charge on that EB business, and a £3m charge on its online execution-only platform, following a review of its goodwill assets, which further dragged down reported figures.
Total funds under management and administration were up 6 per cent at £21.3bn. This result was flattered by market performance, with management admitting the group was distracted from business development by the systems review. Rising assets pushed up fees, but within that trading commission dropped as activity slowed and clients were encouraged towards fee-only discretionary services.
Analysts at Canaccord Genuity expect adjusted pre-tax profit of £7.6m in the year to March 2016, compared with £6m for the reported period.
| CHARLES STANLEY (CAY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 386p | MARKET VALUE: | £195m | |
| TOUCH: | 384-389p | 12-MONTH HIGH: | 425p | LOW: 290p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | na | |
| NET ASSET VALUE: | 136p* | NET CASH: | £26.5m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 126 | 13.4 | 21.4 | 10.75 |
| 2012 | 120 | 8.5 | 13.1 | 11.25 |
| 2013 | 128 | 9.1 | 14.9 | 11.75 |
| 2014 | 138 | 3.6 | 10.5 | 12.25 |
| 2015 | 144 | -4.4 | -13.5 | 5.00 |
| % change | +4 | - | - | -59 |
Ex-div: tba Payment: tba *Includes intangible assets of £26m, or 52p a share | ||||
