Getting its house in order has been a long process for Charles Stanley (CAY), but its work restructuring and streamlining its businesses is beginning to pay off. Five offices have been reduced to one, housing its core investment management business plus a reorganised financial planning division, fund management and online broking. Overall expenditure reduced to just under £70m during the six months to September, from £73m the previous year. What's more, the wealth manager booked a net gain of £3.2m after surrendering a long-term lease, which boosted earnings.
The all-important discretionary funds under management grew a fifth to £10.6bn, while advisory managed and execution-only services also received a boost in funds. However, revenue for the investment management division fell slightly as past dealing and trail commissions ran off, offsetting an increase in management fees.
The asset management division tipped into the black after cost reductions. But the transfer of investment managers to the core business meant the financial planning business suffered a 7 per cent decline in revenue. Increased restructuring costs also resulted in a greater operating loss for the division. While Charles Stanley Direct gained £300m in funds, the termination of its contract to provide dealing services to Fidelity resulted in an operating loss.
Analysts at Peel Hunt expect adjusted pre-tax profit of £7.8m and EPS of 11.9p for the 12 months ending March 2017, up from £4m and 6.2p in FY2016.
CHARLES STANLEY (CAY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 305p | MARKET VALUE: | £155m | |
| TOUCH: | 300-305p | 12-MONTH HIGH: | 345p | LOW: 235p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | na | |
| NET ASSET VALUE: | 162p* | NET CASH: | £55m | |
| Half-year to 30 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 72.1 | 1.6 | 3.0 | 1.5 |
| 2016 | 68.8 | 3.6 | 4.4 | 1.5 |
| % change | -5 | +131 | +46 | - |
Ex-div: 15 Dec Payment: 20 Jan *Includes intangible assets of £24m, or 47p a share | ||||
