Charles Stanley Group PLC

Charles Stanley — H1 2019 Earnings Presentation

26 slides from Charles Stanley's earnings presentation, Nov 22, 2018

  1. Slide 1: H1 2019 Interim results

    CHARLES STANLEY, H1 2019 Interim results 22 November 2018

  2. Slide 2: 1. Financial results

    CHARLES STANLEY, ]. Financial results

  3. Slide 3: Steady improvement of FuMA

    FuMA (£bn) 25.0 24.3 23.8 1.4 1.7 1.4 1.7 Advisory 2.2 1.8 Dealing  FuMA up 5.0% 8.7 Advisory Managed Steady  Discretionary funds up 7.3% 8.3 8.3 Execution- only improvement  Advisory Managed down 5.6% and Dealing flat Discretionary of FuMA  Execution-only up 4.8%; Charles Stanley Direct up 12.1

  4. Slide 4: Total FuMA growth reflects market uplift of 5.5%

    Advisory Advisory Execution- Discretionary Managed Dealing only Total £bn £bn £bn £bn £bn  Total FuMA growth reflects market uplift of 5.5% Funds at 1 April 2018 12.3 1.8 1.4 8.3 23.8  Discretionary funds grew 7.3% New clients 0.4 - - 0.2 0.6 Service level transfers 0.1 (0.2) (0.1) 0.2 -  Total E

  5. Slide 5: Revenue growth in all divisions

    H1 2019 H1 2018 change £m £m Investment Management Services 1 66.9 65.2 2.6% Revenue growth in all divisions Asset Management1 3.8 3.3 15.2% Financial Planning 3.5 2.9 20.7% Charles Stanley Direct 3.5 2.6 34.6% 77.7 74.0 5.0% H1 2019 H1 2018 change Increase in fee income £m £m Fees 54.7 50.4 8.5% co

  6. Slide 6: Core Business expenditure increased by 4.9%

     Core Business expenditure increased by 4.9% Front  The increase in fixed staff costs office Support H1 19 Core H1 18 Core includes the continued investment to divisions Functions Business Business expand the Financial Planning division (£0.7m), additional costs £m £m £m £m Fixed staff costs (14.0

  7. Slide 7: Revenues and expenditure up in line with FuMA

     Revenues and expenditure up in H1 2019 H1 2018 Change line with FuMA £m £m Revenue 77.7 74.0 5.0%  Net finance income increase as a Expenses (72.4) (69.0) (4.9%) result of gains on listed investments Other income - 0.2 (100.0%) Operating profit 5.3 5.2 1.9%  Core Business profit margin Net finan

  8. Slide 8: Core business profit before tax increased by 5.6% to £5.7m

     Core business profit before tax increased by 5.6% to £5.7m Investment Charles Management Asset Financial Stanley Core  Investment Management Services Management Planning Direct Business Services has seen revenue growth, which was offset by Six months ended 30 September 2018 £m £m £m £m £m linked

  9. Slide 9: Pension deficit continues to decrease

    H1 2019 FY 2018 Change £m £m Total intangible assets 19.0 19.3 (1.6%) Total tangible non-current assets 14.1 18.5 (23.8%) Non-current assets 33.1 37.8 (12.4%)  Regulatory capital resources improved Cash 67.0 65.6 2.1% with the capital adequacy ratio Other current assets 147.6 178.2 (17.2%) increasi

  10. Slide 10: 2. Strategic update

    CHARLES STANLEY, 2. Strategic update

  11. Slide 11: To become the UK's leading wealth manager

     To become the UK’s leading wealth manager  The broad strategy and underlying financial projections to achieve our vision remains unchanged  In the medium term, we believe we can deliver a 15% Core Business pre-tax profit margin Page 10

  12. Slide 12: Divisional progress and initiatives

     Improved business mix; upgrading clients to a Discretionary service where appropriate Investment  Continued progress in repricing our asset book Management Services  Released a significantly improved website portal and new mobile app for private clients to increase digital interaction with clien

  13. Slide 13: Key levers and medium-term targets

    Medium-term Key levers Performance and actions Principal risks of delivery target FY15 – FY18 average FuMA grew 18 %  Failure to achieve organic growth Grow average (10% Market, 8% organic)  Higher than expected outflows Grow FuMA FuMA by 13-15% Appointment of a Group Head of Distribution from exi

  14. Slide 14: Markets have corrected in October reducing our FuMA

     Markets have corrected in October reducing our FuMA back to March levels at £23.8 billion  Notwithstanding near term uncertainties, we retain a positive view for world economies and markets over next twelve to eighteen months  We expect to make continued progress in the second half and remain fu

  15. Slide 15: Q&A

    CHARLES STANLEYs Q&A Paul Abberley Chief Executive Officer Ben Money-Coutts Chief Financial Officer

  16. Slide 16: 3. Appendices

    CHARLES STANLEY, 3. Appendices

  17. Slide 17: FuMA movements by service

    Discretionary Advisory Managed New clients New clients 0.4 Transfers Transfers 0.7 +0.9bn 0.1 (0.1bn) (0.2) Net inflow/(outflow) from Net inflow/(outflow) from 0.1 existing clients existing clients Lost clients Lost clients (0.2) (0.1) Market movement Market movement Advisory Dealing Execution-only

  18. Slide 18: Investment Management Services divisional results

    H1 2019 H1 20181 Change £m £m Fee 46.2 43.5 6.2% Commission 18.4 21.2 (13.2%) Interest 2.3 0.5 360.0% Revenue 66.9 65.2 2.6% Contribution2 28.6 29.5 (3.1%) Profit before tax2 7.0 7.3 (4.1%)  Divisional revenue increased by Investment managers share option charge 1.5 0.8 87.5% 2.6%, driven primarily

  19. Slide 19: Asset Management divisional results

    H1 2019 H1 20181 Change £m £m  The division reported a profit for the Revenue 3.8 3.3 15.2% period, as well as increasing revenue Contribution 1.4 1.2 16.7% and contribution Profit before tax 0.2 - 100.0% Revenue margin (bps) 58 56 2  The division’s FUM increased by 7.7%, Contribution margin 36.8%

  20. Slide 20: Financial Planning divisional results

     The Group continues to invest in the Financial Planning division, increasing H1 2019 H1 2018 Change both the number of financial planners £m £m and support staff and investing in Revenue 3.5 2.9 20.7% operating systems Contribution (0.5) (0.2) (150.0%) Loss before tax (1.7) (1.2) (41.7%)  The Gro

  21. Slide 21: Charles Stanley Direct divisional results

    H1 2019 H1 2018 Change  CSD’s revenue grew 34.6% driven by £m £m increasing the division’s AuA by Revenue 3.5 2.6 34.6% attracting new customers and internal Contribution 1.9 0.8 137.5% fund transfers Profit/(loss) before tax 0.2 (0.7) 128.6% Revenue margin (bps) 24 22 2 Contribution margin 54.3% 3

  22. Slide 22: Core Business to reported profit reconciliation

    H1 2019 H1 2018 £m £m  The Board considers Core Business Core Business profit before tax 5.7 5.4 profit before tax and earnings per share Amortisation of client relationships (0.6) (0.5) to be a better reflection of underlying Accelerated depreciation of leasehold improvements - (0.6) business perf

  23. Slide 23: Cash movement

    £m 70 68 67.0 3.3 66 65.6 (0.2) 2.5 0.1 64 62 (2.8) 0.1 (1.5) (0.1) 60 58 56 54 52 50 Cash as at 1 Apr Purchase of fixed Dividends paid Purchase of Acquisition of Proceeds from Proceeds from sale Dividends received Net cash from Cash as at 30 Sep 2018 assets financial assets intangible assets issue

  24. Slide 24: Dividend history

    9.00 8.00 7.00 6.00 5.00 5.50 Full dividend 4.00 4.50 Interim dividend 3.00 3.50 2.00 2.50 2.75 1.00 1.50 1.50 - FY16 FY17 FY18 FY19 Page 23

  25. Slide 25: Important information

    The information contained in this document has been prepared by Charles Stanley Group PLC (the ‘Group’ or ‘Company’) and is valid at 21 November 2018. 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 n

  26. Slide 26: END

    CHARLES STANLEYs END

Charles Stanley Group — H1 2019 Earnings Presentation on 6ix