Charles Stanley — FY2014 Earnings Presentation
25 slides from Charles Stanley's earnings presentation, Jun 19, 2014
Slide 1: Analyst Presentation
Analyst Presentation Final results 12 months to March 2014 Mike Lilwall and James Rawlingson
Slide 2: Highlights
Highlights £BN £BN Funds under management: CS Direct: Overall 14% Funds 27% Organic 2.9% Clients 61% £M Funds from acquisitions: Turnover: 17% Leicester £122m PAN Asset £536m March 2014 results | 1
Slide 3: At a glance – managed funds
At a glance – managed funds £11.2bn £9.3bn Discretionary funds growth: 28% £7.8bn Total managed funds growth: 20% 2012 2013 2014 Discretionary Advisory managed March 2014 results | 2
Slide 4: At a glance – revenue
At a glance – revenue £149m Record revenue: £128m Up to £149m: 17% £120m Re-pricing impact: 2014 £3.9m Shifting business mix: Fee represents 61% of total revenue 2012 2013 2014 Fee Commission March 2014 results | 3
Slide 5: Profit and loss summary
Profit and loss summary £m 2012 2013 2014 Total Revenue 120.1 128.1 149.5 Revenue: 17% Costs 111.6 119.0 143.4 Adjustments 4.0 4.4 7.4 Costs: 21% Adjusted Profit 12.5 13.5 13.5 Client facing staff Increased staff levels: 9% growing quicker than Client facing: 11% middle office Middle office: 6% Reve
Slide 6: Underlying profit
Underlying profit Millions Underlying profit £15.7m £0.6m Fiscal drag from growth £0.6m Strategic repositioning Leicester office £1.0m Adjusted profit £13.5m Millions £1.3m CS Direct + others £2.4m Acquisitions £2.5m Amortisation of customer list Reported profit £6.1m £1.2m FSCS levy March 2014 resu
Slide 7: Leicester Office
Leicester Office £3.2m Costs: 2nd 6 months office costs Additional £1m trading loss in second half of the year Value of Acquisition: 2nd 6 months employment £200m managed funds Adjusted profit items: £2.2m £3m value (1.5%) 1st 6 months costs Continuing ramp-up of business in the pre-breakeven phase
Slide 8: Additional broker acquisitions
Additional broker acquisitions London: Additional 8 brokers at a cost of £400k Branches: Additional 5 brokers at a cost of £233k These acquisitions have brought £173m in new funds during the year so far March 2014 results | 7
Slide 9: Reported to adjusted profit
Reported to adjusted profit 2013 FSCS levy CS Direct one-off costs Deferred consideration £1.9m £0.9m £0.5m Amortisation of client list £2.1m Adjusted profit 2013 Reported £13.5m profit 2013 £9.1m Other costs £1.2m Additional Leicester 2014 costs £1.0m Aquisitions Professional fees £0.8m £2.4m FSCS
Slide 10: Investment management services – managed funds
Investment management services – managed funds Lost clients Market £0.13bn movement £0.22bn £52m from Net organic deceased inflow clients £0.49bn Closing FUM £10.29bn New clients of existing managers New £0.54bn investment Opening managers FUM £0.32bn £8.85bn Funds growth 16.3% March 2014 results |
Slide 11: Investment management services – total funds
Investment management services – total funds Market Lost Clients movements £0.28bn £0.41bn Net organic £52m from inflow deceased £0.58bn clients Closing New clients FUMA of existing £17.72bn managers New £0.54bn investment managers £0.34bn Managed Administered Opening FUMA £16.13bn Funds growth 9.8%
Slide 12: Funds under management
Funds under management Discretionary Managed funds: 20% £8.2bn Improved quality of earnings: £6.4bn Managed funds share 4% £5.0bn 2012 2013 2014 Advisory managed Managed funds as a proportion of FUMA 56% 52% £3.0bn £2.9bn 50% £2.7bn 2012 2013 2014 2012 2013 2014 March 2014 results | 11
Slide 13: Funds under administration
Funds under administration Advisory dealing Partial migration of advisory dealing into managed service levels £3.0bn £2.6bn £2.4bn 2012 2013 2014 Execution only Administered funds as a proportion of FUMA 50% 48% £6.5bn £5.8bn £4.6bn 44% 2012 2013 2014 2012 2013 2014 March 2014 results | 12
Slide 14: Funds under management
Funds under management Charles Stanley Leading Competitor Group 2013 2014 Dec 2013 Up to £250k 18.4% 16.1% £1.8 bn 10.8% £1.8 bn £250k to £500k 19.6% 18.7% £2.1 bn 14.9% £2.5 bn £500k to £1m 20.0% 26.9% £3.0 bn 18.4% £3.1 bn £1m to £5m 27.9% 26.7% £3.0 bn 31.4% £5.2 bn £5m to £10m 5.1% 4.2% £0.5 bn
Slide 15: Revenue movement March 2013 to March 2014
Revenue movement March 2013 to March 2014 Investment Management Services Financial Services Securities Commission Trail income commission Interest £0.2m £1.6m turn £3.2m Fees £1.8m Transaction charge Commission Corporate £1.4m £0.2m finance Investment fees management £7.0m £9.0m Other Commission Ann
Slide 16: Profitability movement March 2013 to March 2014
Profitability movement March 2013 to March 2014 £0.2m Other £0.3m £0.3m Internal audit £0.4m Business continuity £0.4m Treating customers fairly Commission Profit share £7.7m £7.4m £0.5m Strategic development Trail £1.1m Systems development Interest turn £0.6m £3.3m Legal advice Client facing staff
Slide 17: Operating margin development
Operating margin development Acquisitions Profit share Other 1.6% restructuring Re-pricing Fees Trail and 5.2% other CS Direct 2.0% Middle Client Interest office Interest facing turn turn staff 3.2% Professional related fees Adjustments costs 1.9% 1.5% 1.3% Other costs 0.3% Other Operating staff mar
Slide 18: Charles Stanley Direct
Charles Stanley Direct Funds £1.4bn £1.1bn Funds growth: 27% 3000+ External transfer requests received 8000+ Accounts opened since launch 2013 2014 Average fund balance greater than industry average Revenue £3.2m £3.2m Income unchanged: Payment Holidays Progressing towards break-even 2013 2014 Fee C
Slide 19: Financial Services
Financial Services Revenue £13.3m £11.7 m £10.1m Pan Asset Matterley Financial Planning EBS CS Financial Solutions Revenue growth: 14% 2012 2013 2014 Improved profitability: 25% Adjusted profit Strong contribution from Matterley £0.84m £0.69m £0.55m 2012 2013 2014 March 2014 results | 18
Slide 20: Pan Asset acquisition
Pan Asset acquisition Acquired 1st December 2013 Broadens our expertise in the area of passive funds £536m of managed funds (as at 31st March 2014) Integration: Pan will be able to leverage our existing established distribution channels (e.g. intermediary sales team) Synergies will be recognised in
Slide 21: Charles Stanley Securities
Charles Stanley Securities Revenue 49 retained clients 3 IPOs during the year Improved secondary fundraising and M&A £14.6m Revenue: 90% £7.5m £7.7m Profit: £3.2m > 500% 2012 2013 2014 Corporate finance revenue: 270% March 2014 results | 20
Slide 22: Unallocated costs are 16.5% of total costs
Unallocated costs are 16.5% of total costs 100% Legal Graduates DR Site Some costs remain unallocated: Internal Audit 90% Central Costs Cost allocation is being used to drive a cost aware culture HR 80% Finance Costs are allocated that can be directly attributed to front office revenue generating ac
Slide 23: Outlook
Outlook FCA has raised the bar for investment firms: suitability, compliance, risk, ICAAP Growing our front office faster than middle office Strengthening revenue streams: re-pricing successfully implemented Change in pension annuity rules is an opportunity March 2014 results | 22
Slide 24: Results highlights
Results highlights Share price Dividends 11.75p 12.25p 10.75p 11.25p 484 9.45p 8.75p 405 Apr Mar 2013 2014 2009 2010 2011 2012 2013 2014 Interim Final Share price: 19.5% Adjusted earnings per share 28.39p March 2014 March 2013 22.38p 23.00p 19.84p Total Client Funds £20.1 bn £17.7 bn Growth in Funds
Slide 25: Contact Details
Contact Details Mike Lilwall: 0207 149 6244 James Rawlingson: 0207 149 6255 Charles Stanley Group plc 25 Luke Street London EC2A 4AR