Charles Stanley — H1 2016 Earnings Presentation
25 slides from Charles Stanley's earnings presentation, September 2015
Slide 1: Interim Results for the Half Year, September 2015
-_- - INTERIM RESULTS FOR THE HALF YEAR > SEPTEMBER 2015
Slide 2: Interim Results for the Half Year Ended 31.09.2015
INTERIM RESULTS FOR THE HALF YEAR ENDED 31.09.2015
Slide 3: Interim results highlights and milestones for H2
Profitability of Core Operations* increased 200.0% to £3.0m (H1 2014/15: £1.0m) Arrested decline in profitability. Reported profit £2.0m (H1 2014/15: loss £3.9m) Balance sheet strengthened. Net assets £86.9m (31/3/15: £68.9m). 148% regulatory capital surplus Progress made in-line with previo
Slide 4: Key metrics: funds, profit, margin, dividend, net assets
Funds under management Reported profit/(loss) before Reported Core profit before (3.4)% £11.6m tax tax £11.2m £2.9m £2.0m £2.3m 200.0 % 151.3 % £(3.9)m £3.0m £8.9m £8.7m £1.0m H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 Discretionary Advisory Managed Margin from Core Operations Interim Dividend
Slide 5: Interim Results for the Half Year Ended 31.09.2015
INTERIM RESULTS FOR THE HALF YEAR ENDED 31.09.2015
Slide 6: Group financial summary H1 2016 vs H1 2015
H1 2016 H1 2015 % Change FUMA (£bn) 20.0 20.2 (1.0)% FUMA movement in-line with WMA balance index over the Managed 11.2 11.6 (3.4)% period (1.0)% (FTSE 100: (8.5)%) Administered 8.8 8.6 2.3 % Core Operations Core Operations trending positively Revenue (£m) 70.8 68.4 3.5 % Profit before tax (£m) 3.0
Slide 7: Funds under management and administration
£bn H1 2016 H1 2015 % Change Discretionary 8.9 8.7 2.3 % Growth in discretionary and execution only via Charles Advisory Managed 2.3 2.9 (20.7)% Stanley Direct offset by market movement and Total Managed 11.2 11.6 (3.4)% declines in other services Advisory Dealing 2.0 2.2 (9.1)% Execution Only 6.8 6
Slide 8: Funds under management movement bridge
Inflow from Existing and New Clients, £0.8bn Lost Clients, £(0.6)bn Market Opening Movement, FUMA £(1.5)bn Closing (1st Apr), FUMA £21.3bn (30th Sep), £20.0bn INTERIM RESULTS FOR THE HALF YEAR ENDED 31.09.2015
Slide 9: Income margins by service category
Discretionary H1 '16 0.57 % 0.26 % 0.02 % 0.85 % Income margins remain stable H1 '15 0.56 % 0.24 % 0.02 % 0.82 % New rates to be introduced H1 '16 0.53 % 0.23 % 0.01 % 0.78 % to end discount pricing on managed Advisory smaller accounts and price 0.64 % service levels appropriately H1 '15 0.45 % 0.17
Slide 10: Revenue and underlying profit
£m H1 2016 H1 2015 % Change Fees Commission Interest Total Revenue Net finance and other income Underlying income Underlying operating expenses Underlying profit Improvement in fees due to improved fee revenue margin and continuing shift toward fee only tariffs Trading volumes up 10.3% by comparison
Slide 11: Adjusted profit bridge H1 2015 to H1 2016
Settlement, Client and Business Remuneration Costs, costs, £0.2m Marketing, £1.9m £0.7m IT, Establishment, Commission, £(0.9)m £(0.1)m £1.1m Professional Fees, £(1.4)m Fee Interest, Income, Finance & £1.7m Other Income, Admin £(0.5)m and Other Costs, £(0.9)m Adjusted Profit H1 2016, £3.0m Adjusted P
Slide 12: Underlying profit to reported profit reconciliation
£m H1 2016 H1 2015 % Change Underlying profit before tax of Core Operations Held for Sale items Adjusting Items Amortisation of client relationships Intangible and Investment Asset Impairment (1) Profit from sale of Matterley Undervalued (2) Other net exceptional costs Profit/(Loss) before tax 1. Cu
Slide 13: Productivity per CF30 and revenue ratios
FuMA per CF30 Discretionary Income per CF30 £112.6k 15.0 % £59.5m £97.9k 7.1 % £55.6m £34.8k £26.2m £28.7k £23.7m £6.8m £8.0m £77.8k £69.2k £26.5m £23.9m H1 2016 H1 2015 H1 2016 H1 2015 Discretionary Advisory managed Non-managed Fees Commission Fees to Revenue Ratio Cost to Revenue Ratio (0.6)% 7.6
Slide 14: Balance sheet
£m 30/09/2015 31/03/2015 30/09/2014 Goodwill and customer relationships 22.9 23.3 32.0 Software 3.0 2.8 2.4 Total intangible assets 25.9 26.1 34.4 Fixed assets 12.2 13.3 14.6 Other non-current assets 10.0 10.0 10.4 Total tangible non-current assets 22.2 23.3 25.0 Net cash 42.2 28.3 18.8 £16.3m placi
Slide 15: Net cash movement
Share Sale of Placement, Business, £16.3m £0.6m Acquisition of Intangible Assets, £(1.5)m Adjusted Working Operating capital , Profit, £(4.1)m £4.0m Capex, Closing Borrowings, Dividends, £(0.4)m (30th Sep), £(0.1)m £(1.0)m £42.3m Opening (1st Apr), £28.4m INTERIM RESULTS FOR THE HALF YEAR ENDED 31.0
Slide 16: Interim Results for the Half Year Ended 31.09.2015
INTERIM RESULTS FOR THE HALF YEAR ENDED 31.09.2015
Slide 17: Market conditions, repricing and remuneration changes
Market conditions currently more subdued than earlier in the year Repricing New rate card from 1st December 2015 for new clients Phased implementation for existing clients Rebased Investment Manager remuneration Profit rather than revenue based 20% conduct element Intended to be impl
Slide 18: Strategic priorities and 2018 margin target
Complement bespoke discretionary investment management offering with suite of asset management products Holistic wealth management offering Focused approach to intermediaries Closer integration of Charles Stanley Direct Sales training and support for investment manager population Continu
Slide 19: Interim Results for the Half Year Ended 31.09.2015
INTERIM RESULTS FOR THE HALF YEAR ENDED 31.09.2015
Slide 20: Investment Management Services division
£m H1 2016 H1 2015 % Change 2015 Revenue Costs Net finance and other income Profit before tax Margin Bargains Managed Non-managed Average Bargain Value (£) Funds (£bn) Managed Non-managed Investment Management Services division provides personal investment services to individuals, companies, trusts
Slide 21: IMS funds and clients by account size
IMS Proportion of funds by account size IMS Proportion of clients by account size 45.9 % 41.3 % 26.2 % 17.7 % 19.0 % 17.0 % 12.8 % 4.7 % 9.3 % 6.1 % £0 to £100k £100k to £250k to £500k to £1m > £1m £0 to £100k £100k to £250k to £500k to £1m > £1m £250k £500k £250k £500k INTERIM RESULTS FOR THE HALF
Slide 22: Asset Management division
£m H1 2016 H1 2015 % Change 2015 Revenue Costs Loss before tax Bargains Managed Non-managed Funds (£bn) Asset Management division provides specialist asset management services through its Matterley range of funds, active and passive model portfolios, IHT services, and investment research to the Inve
Slide 23: Financial Planning division
£m H1 2016 H1 2015 % Change 2015 Revenue Costs Loss before tax The Financial Planning division provides financial planning and advice services The table above reflects the contribution from the continuing operations of the division and thus excludes Charles Stanley Financial Solutions, which is clas
Slide 24: Charles Stanley Direct
£m H1 2016 H1 2015 % Change 2015 Revenue Costs (Loss) before tax Bargains Clients Funds (£bn) D2C Garrison & Fidelity Charles Stanley Direct provides direct to client online dealing and fund broking services. Significant progress has been made reducing costs whilst continuing to grow the client and
Slide 25: Held for Sale activities
£m H1 2016 H1 2015 % Change 2015 Revenue Costs Profit/(Loss) before tax Held for Sale activities comprise Charles Stanley Securities and Charles Stanley Financial Solutions. Charles Stanley Securities was sold to Panmure Gordon in July 2015 for an initial consideration of £1.5m. Deferred considerati
Charles Stanley Group — H1 2016 Earnings Presentation on 6ix