A steady shift in the business mix away from commission income into investment management fees paid off nicely for Charles Stanley (CAY) in the year to the end of March. In fact, after taking into account one-off costs, amortisation, and a further payment into the Financial Services Compensation Scheme (FSCS), adjusted pre-tax profit rose 8 per cent to £13.5m.
Transaction volumes continued to decline - albeit at a slower pace - but that trimmed commission revenue by 3 per cent to £50.7m which, for the first time ever, accounted for less than 40 per cent of group revenue. However, investment management fees jumped 17 per cent to £36m, while combined income from the administration and corporate services operations rose 11 per cent to £40.9m.
Fee income was boosted by a 14.9 per cent rise in funds under management to £17.7bn, thanks to a solid market performance and a net inflow of funds. Crucially, funds under discretionary management - where fees are higher - rose 28 per cent to £6.4bn. In January, the group also launched a direct-to-client internet-based share trading service - Charles Stanley Direct - which already has £500m on its trading platform and over 1,000 accounts.
Broker Canaccord Genuity expects 2014 adjusted pre-tax profit of £16m, giving EPS of 26.6p (from £13.5m and 22.4p in 2013).
| CHARLES STANLEY (CAY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 400p | MARKET VALUE: | £181m | |
| TOUCH: | 395-400p | 12-MONTH HIGH: | 410p | LOW: 245p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 182p* | NET CASH: | £40.2m | |
| Year to 31 Mar | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2009 | 9.21 | 14.7 | 8.75 |
| 2010 | 10.3 | 15.4 | 9.45 |
| 2011 | 13.4 | 21.4 | 10.8 |
| 2012 | 8.48 | 13.1 | 11.3 |
| 2013 | 9.06 | 14.9 | 11.8 |
| % change | +7 | +14 | +4 |
Ex-div: 26 Jun Payment: 2 Aug *Includes intangible assets of £32.8m, or 73p a share | |||
