LONDON (Alliance News) - Charles Stanley Group PLC on Friday reported a decrease in pretax profit but saw growth in all of its divisions as the wealth manager's focus on its discretionary service saw a strong rise in the unit's funds under management.
For the 12 months to March 31, the investment manager reported a 3.5% dip in pretax profit to GBP11.0 million from GBP11.4 million.
Charles Stanley attributed the decrease to absence of "a number" of one-off gains recorded in the prior year. On a positive note, the company's execution-only platform, Charles Stanley Direct, saw a significant swing to profit, of GBP1.0 million from a GBP300,000 loss the year before.
The company's revenue, however, grew 2.4% to GBP155.2 million from GBP150.9 million - with Charles Stanley seeing growth in all of its divisions, but particularly noting the strength of Charles Stanley Direct and Financial Planning.
At March 31, Charles Stanley's total funds under management & administration stood at GBP24.1 billion, which represents a rise of 1.3% from the GBP23.8 billion recorded the year earlier.
The company's discretionary funds saw a 6.5% year on year increase, ending the period at GBP13.1 billion compared to GBP12.3 billion the year before. Charles Stanley said the outperformance of discretionary funds compared to total funds represents the company's "continued focus" on growing its "higher margin" discretionary service.
The investment manager upped its total financial 2019 dividend by 9.4% to 8.75 pence from the 8.0p distributed the year prior.
"As demonstrated by our results, the group continues to deliver improvements in performance. I am confident that following the completion of the recently announced operating model restructure, Charles Stanley will be well placed to accelerate the rate of progress and deliver our medium-term target of a 15% profit margin. This will be achieved through top line growth alongside cost control to improve overall productivity," said Chief Executive Paul Abberley.
"We have turned the business around and it is now profitable, but it is taking longer than expected to reach our goal of achieving a 15% core business pre-tax profit margin. Going forward, we have identified a clear strategic approach to drive forward increasing the operational gearing of the business," added Abberley. Charles Stanley's pretax profit margin in financial 2019 was 7.1%.
The company recently announced a shake up - amid a larger restructure - which saw Head of Investment Management & Director Gary Teper will leave. The departure of Teper was part of the company's intention to restructure its business model through a major transformation project, including plans to standardise processes and introduce a new, simplified organisational structure.
As a result of this, Charles Stanley said Friday it expects to incur exceptional costs of about GBP9.5 million over the next two to three years but then see annualised benefits of GBP4.5 million.
Looking ahead, Chair David Howard added: "Given the extent of the equity market rally earlier this year, we anticipate much more modest returns over the remainder of the year. The long-term prospects for equities remain positive, but equities are likely to pause for breath until evidence of better economic growth emerges."
"We see opportunities that provide a favourable backdrop for our transformation programme which is designed to bring growth in revenues, profits and margins, and to provide value for shareholders."
Shares in the company were down 0.9% at 314.00 pence each on Friday morning.