Charles Stanley — FY2020 Earnings Presentation
29 slides from Charles Stanley's earnings presentation, May 28, 2020
Slide 1: Final Results Presentation
Charles Stanley Final Results Presentation For the year ended 31 March 2020 28 May 2020
Slide 2: Agenda
Agenda 1. Overview 2. FY 2020 Financial results 3. Business transformation 4. Outlook Appendices Paul Abberley Ben Money-Coutts Chief Executive Officer Chief Financial Officer
Slide 3: Overview
Overview Strong results underpin another year of delivering upon our strategic aims with impressive revenue growth across all divisions Transformation programme launched last year is on track to deliver expected savings of £2.6m in FY2021 and £4.5m per annum from FY2022 Exemplary response to C
Slide 4: 2. FY 2020 Financial results
1. Overview 2. FY 2020 Financial results 3. Business transformation 4. Outlook Reported profit up 57.3% to £17.3 m (FY 2019: £11.0m) Ben Money-Coutts Chief Financial Officer
Slide 5: FY 2020 Progress of key financial metrics
FY 2020 Progress of key financial metrics FuMA (£bn) 23.8 24.1 1.4 1.3 1.8 1.5 20.2 1.0 1.2 Stable average Average FuMA was stable at £24.2bn (FY 2019: £24.3bn) 8.3 8.2 Total 6.0 FuMA Higher-value managed funds at 65.3% of FuMA at year end (FY Advisory Dealing Advisory Managed 2019: 60.6%) Impro
Slide 6: Underlying profit before tax growth record
Underlying profit before tax growth record £20.0m £19.3m £15.0m £13.3m £10.2m £10.9m £10.0m £9.5m £6.7m £5.6m H2 £5.6m £3.3m H1 £5.0m £9.1m £6.6m £4.8m £5.3m £3.9m - (£1.5m) (£5.0m) FY 16 FY 17 FY 18 FY 19 FY 20 Page 5
Slide 7: FuMA stable average FuMA and improved business mix
FuMA stable average FuMA and improved business mix Advisory Advisory Execution Discretionary Managed Dealing only Total £bn £bn £bn £bn £bn Managed funds now Funds at 1 April 2019 13.1 1.5 1.3 8.2 24.1 account for 65.3% of FuMA Inflows from new clients of £1.0bn were offset by New clients1 0.7 -
Slide 8: Financial summary
Financial summary FY 2020 FY 2019 Change Strong growth in revenues, attributable to the benefits of the £m £m repricing exercise completed a year Revenue 173.0 155.2 11.5% ago, higher fee income from Expenses (153.2) (142.7) (7.4%) Financial Planning and higher Net finance income and other non-op
Slide 9: Revenue up 11.5%
Revenue up 11.5% 2020 2019 Change £m £m Revenue growth in all Investment Management Services 154.8 140.2 10.4% divisions Charles Stanley Direct 9.5 7.7 23.4% Financial Planning 8.7 7.3 19.2% 173.0 155.2 11.5% 2020 2019 Change £m £m Fees 123.1 110.2 11.7% Commission 39.8 36.7 8.4% Interest income 10.
Slide 10: Underlying expenditure well-controlled
Underlying expenditure well-controlled Front office Support Fixed staff cost increased by £2.2m divisions Functions 2020 Total 2019 Total to £53.4m mainly reflecting the recruitment of additional financial £m £m £m £m planning resource Fixed staff costs (28.5) (24.9) (53.4) (51.2) Other direct cos
Slide 11: Divisional analysis
Divisional analysis Investment Management Charles Stanley Financial IMS profitability improved 46.2% Services Direct Planning Underlying mainly reflecting the benefits of the Year ended 31 March 2020 £m £m £m £m repricing exercise Revenue 154.8 9.5 8.7 173.0 Direct costs: Financial Planning reve
Slide 12: Adjusting items
Adjusting items Restructuring costs of £3.5m mainly FY 2020 FY 2019 relate to the outsourcing of IT £m £m infrastructure maintenance, creation of the centralised middle Restructuring costs (3.5) - office team and reorganisation of Investment Management Services non-cash share options 3.0 (1.7) par
Slide 13: Strong Balance sheet net assets £116.5m
Strong Balance sheet net assets £116.5m FY 2020 FY 2019 Change £m £m Total intangible assets 20.0 18.3 9.3% Strong trading has led to a 15.1% increase in cash Total tangible non-current assets 24.3 14.5 68.3% Non-current assets 44.3 32.8 35.4% The other principal balance sheet movement was accou
Slide 14: Strategic measures: what we are working towards
Strategic measures what we are working towards Operating Lever Our target FY 2020 progress Closing FuMA was down 16.2% to £20.2bn reflecting the a significant driver of top-line revenues impact of COVID-19 on stock markets, while average FuMA for 2020 was static at £24.2bn A key driver to achieve th
Slide 15: Cash flow
Cash flow Overall increase in cash of £12.4m Strong cash generation from operating activities Relatively modest spend on working capital and Capex since the business 39.9 is not capital intensive and most software development spend is expensed Expenditure on intangibles accounted for by acqu
Slide 16: 3. Business transformation
1. Overview 2. FY 2020 Financial results 3. Business transformation Restructuring programme on course 4. Outlook Paul Abberley Chief Executive Officer
Slide 17: Where are we going
Where are we going Achievements in FY 2020: Group sales, distribution and marketing reorganised under new Head of Distribution (appointed March 2019) Strengthened our intermediary sales network and profile Created a single middle and back office to streamline processes Restructured and upgra
Slide 18: 4. Outlook
1. Overview 2. FY 2020 financial results 3. Business transformation programme COVID-19 brings challenges but the Group is well-placed to navigate through these 4. Outlook and remains focused on delivering transformation and growth initiatives Paul Abberley Chief Executive Officer
Slide 19: Outlook
Outlook FY2021 profitability is expected to be impacted by the COVID-19 crisis weaker stock markets and lower interest rates will reduce revenues The Group has a strong balance sheet and substantial cash balances leaving it well-positioned to navigate the crisis and take advantage of opportuniti
Slide 20: Summary
Summary Good trading performance in FY 2020 reflects progress with transformation and growth initiatives Operational resilience evidenced during current COVID-19 crisis high customer service levels maintained while staff transitioned to remote working Challenging current trading conditions b
Slide 21: Appendices
1. Overview 2. FY2020 Financial results 3. Business transformation 4. Outlook Appendices
Slide 22: Our business
Our business Charles Stanley offers a genuinely personal service across the full range of wealth management services, which has led to high levels of trust and overall client satisfaction scores of 88% Page 21
Slide 23: We define leading in terms of quality rather than quantity
We define leading in terms of quality rather than quantity. Focusing on client satisfaction as well as staff engagement and equity market rating, we measure our progress against these targets year-on-year Page 22
Slide 24: Change in FuMA by service type in FY 2020
Change in FuMA by service type in FY 2020 Discretionary Advisory Managed New clients 0.7 (0.9) (0.1) (0.1) Transfers Transfers (1.1bn) (0.3bn) Lost clients Net outflow from existing Market movement clients (0.2) Lost clients (0.7) (0.1) Market movement Advisory Dealing Execution-only 0.3 0.2 New cli
Slide 25: IMS Divisional performance
IMS Divisional performance 2020 2019 Change £m £m Average FuMA fell marginally by 1.4% to £20.7bn (FY Fee 109.6 98.8 10.9% 2019: £21.0bn) Commission 38.1 35.3 7.9% Interest 7.1 6.1 16.4% Revenue 154.8 140.2 10.4% Improved asset mix, with Discretionary funds now representing 69.8% (FY 2019: 63.3%
Slide 26: Charles Stanley Direct Divisional performance
Charles Stanley Direct Divisional performance 2020 2019 Change Average FuMA increased 6.9% to £3.1bn (FY 2019: £2.9bn) £m £m Revenue 9.5 7.7 23.4% At the end of December 2019, the Contribution 5.5 4.4 25.0% then fell 18.0% in the last quarter to Profit before tax 1.6 1.0 60.0% £2.7bn at 31 March
Slide 27: Financial Planning Divisional performance
Financial Planning Divisional performance The Group continues to invest in the Financial Planning division as a 2020 2019 Change core component of its wealth £m £m management offering to clients Revenue 8.7 7.3 19.2% Revenues up 19.2% to £8.7m Contribution (1.9) (0.9) (111.1%) Loss before tax (5
Slide 28: Disclaimer
Disclaimer The information contained in this document has been prepared by Charles Stanley Group PLC (the or and is valid at 28 May 2020. This document does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any shares in the Company nor shall it f
Slide 29: Charles Stanley
CHARLES STANLEYs