LONDON (Alliance News) - Charles Stanley Group PLC Wednesday revealed plans to raise GBP15.8 million in a share placing designed to strengthen its capital reserves.
Charles Stanley said it will issue up to 4.6 million new shares with existing investors in a placing priced at 355 pence per share, with the aim of strengthening its balance sheet and solvency levels so that they are equivalent to more than 125% of its regulatory requirements.
Charles Stanley shares were down 0.9% at 367.00 pence on Wednesday morning. The stock is up about 12% so far in 2015.
The group said the fundraising will help it to go about implementing its strategic plans. Although Charles Stanley said it remains above the minimum requirements, it said that its 25% cushion has been eroded by tougher regulatory capital expectations, poor trading and uncovered dividend payments.
The company is looking to focus entirely on wealth management, meaning that the main parts of its securities and employee benefits businesses are up for sale. Negotiations on the sale of those assets are currently underway.
The group also said it will target an operating margin, before taking into account the Financial Services Compensation Scheme levy and amortisation of intangibles, of at least 15% in 2018.
Charles Stanley said that it expects to report underlying profit, which again exclude the FSCS levy, restructuring costs deemed to be one-off in nature, and non-cash impairment charges, in line with market expectations. It intends to cut its dividend for the year ended March 31, 2015, to 5.0 pence per share from 12.25p for the prior year.
"Over the medium term the intention is to move towards a target dividend cover of two times earnings per ordinary share, as adjusted for the amortisation of intangible assets, and thereafter the intention is to grow the dividend progressively," Charles Stanley said.
In addition, the group said that it is yet to complete its review of the carrying value of intangible assets and goodwill, which amounted to GBP34.4 million at the end of September 2014. Nevertheless, Charles Stanley said that a GBP6.2 million impairment charge "may" be made. That charge would be in addition to an amortisation charge of about GBP1.8 million. Such charges would come on top of the GBP1.8 million impairment of intangible assets and unlisted available-for-sale financial assets made in the first half.
Charles Stanley said that growth in its funds under management has been "encouraging", increasing to GBP21.3 billion at the end of March from GBP20.1 billion at the same stage of the prior year.
"Whilst trading in the last quarter picked up and global equity markets have shown resilience, the near term impact that the [UK] General Election may have is uncertain. Nevertheless, the board believes that as the suitability review programme nears its end this should enable Charles Stanley's investment managers to devote more time to growing their client base and revenues," Charles Stanley said.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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