Charles Stanley — FY2021 Earnings Presentation
34 slides from Charles Stanley's earnings presentation, May 27, 2021
Slide 1: Final Results Presentation
Charles Stanley Final Results Presentation For the year ended 31 March 2021
Slide 2: Agenda
Agenda 1. Overview 2. FY 2021 financial results 3. Focus for FY 2022 – IMS, FPS, CFS 4. Outlook Appendices Paul Abberley Ben Money-Coutts Ian Sackfield Andrew Meigh John Porteous Chief Executive Officer Chief Financial Officer Managing Director of Managing Director of Managing Director of Investment
Slide 3: Overview
1. Overview 2. FY 2021 financial results 3. Focus for FY 2022 – IMS, FPS, CFS 4. Outlook Strong performance amidst global disruption with dedication from colleagues to high levels of client support and continuing focus on projects to improve operational efficiency. Paul Abberley Chief Executive Offi
Slide 4: Overview
Overview Resilient financial performance against challenging backdrop of the coronavirus pandemic. Year end with FuMA at record levels Group transitioned to home-working effectively and maintained its normal high level of client service throughout the year Successful completion of outsourcing
Slide 5: FY 2021 financial results
1. Overview 2. FY 2021 financial results 3. Focus for FY 2022 – IMS, FPS, CFS 4. Outlook A resilient performance, exemplifying the strength of the business model and quality of client service. Record levels of FuMA with fee and commission income ahead of the prior year but offset by lower interest i
Slide 6: FY 2021 – progress of key financial metrics
FY 2021 – progress of key financial metrics FuMA (£bn) 25.6 24.1 1.2 1.3 1.3 1.5 20.2 Average FuMA • Average FuMA year-on-year decreased 4.1% to £23.2bn (2020: 8.2 1.0 1.2 7.9 Total marginally lower £24.2bn) 6.0 Advisory Dealing but now at • FuMA at record levels – increased by 26.7% to £25.6bn (202
Slide 7: Underlying profit before tax – good recovery in H2 2021
Underlying profit before tax – good recovery in H2 2021 £20.0m £19.3m £18.0m £17.2m £16.0m £14.0m £13.3m £10.2m £12.0m £10.9m £10.5m £10.0m £9.5m £6.7m H2 H1 £8.0m £5.6m £5.6m £6.0m £9.1m £4.0m £6.6m £6.7m £5.3m £2.0m £3.9m - FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 6
Slide 8: FuMA – record levels at £25.6bn
FuMA – record levels at £25.6bn Advisory Advisory Execution Discretionary Managed Dealing only Total £bn £bn £bn £bn £bn Funds at 1 April 2020 12.0 1.2 1.0 6.0 20.2 • Record levels of FuMA up 26.7% to £25.6bn (2020: £20.2bn) New clients1 0.6 - - 0.3 0.9 • Overall increase in funds was Net outflows f
Slide 9: Financial summary
Financial summary • Fee and commission income grew 2.7% but was offset by a 68.8% decline in FY 2021 FY 2020 Change interest income as base rates were cut. £m £m Financial Planning fees grew 14.9% and Revenue 171.2 173.0 (1.0%) the overall revenue margin grew to Expenditure (153.7) (153.2) (0.3%) 74
Slide 10: Revenue
Revenue 2021 2020 Change £m £m Investment Management Services (IMS) 151.6 154.8 (2.1%) Financial Planning (FP) 10.0 8.7 14.9% Charles Stanley Direct (CSD) 9.6 9.5 1.1% • IMS revenues fell marginally as a result of 171.2 173.0 (1.0%) lower average FuMA of £19.6bn (2020: £20.7bn) and loss of interest
Slide 11: Underlying expenditure – remained flat
Underlying expenditure – remained flat Front office Support • Overall, underlying expenditure divisions Functions 2021 Total 2020 Total remained constant, with only 0.3% £m £m £m £m increase to £153.7m (2020: £153.2m) Fixed staff costs (28.7) (26.2) (54.9) (53.4) • Fixed staff costs increased by £1.
Slide 12: Divisional analysis
Divisional analysis Investment • IMS’s contribution 1.5% lower due Management Financial Charles Stanley Underlying to slight fall in revenues Services Planning Direct Performance Year ended 31 March 2021 £m £m £m £m • 14.9% increase in FP’s revenue Revenue 151.6 10.0 9.6 171.2 has brought it closer
Slide 13: Adjusting items
Adjusting items • Restructuring costs of £1.3m mainly relating to the outsourcing of IT infrastructure 2021 2020 £m £m • Amortisation of client relationships treated as an adjusting item in Restructuring costs (1.3) (3.5) common with industry practice Amortisation of client relationships (1.3) (1.2)
Slide 14: Robust Balance sheet – net assets at £123.3m
Robust Balance sheet – net assets at £123.3m FY 2021 FY 2020 Change £m £m Intangible assets 18.5 20.0 (7.5%) Tangible non-current assets 15.9 24.3 (34.6%) Total non-current assets 34.4 44.3 (22.3%) • Maintained a strong financial position with net assets at £123.3m (2020: £116.5m) and Cash and treas
Slide 15: Cash flow
Cash flow • Overall increase in cash of £16.9m • Strong cash generation from operating activities of £21.8m 1 Share issues under SAYE net of purchase of shares 14
Slide 16: Strategic measures – what we are working towards
Strategic measures – what we are working towards Operating Layer Our target and FY21 status Focus for FY 2022 • Ongoing development of our core client propositions to tap into specific target Grow average FuMA market opportunities • Build on business plans for each investment management team designe
Slide 17: Focus for FY 2022 – IMS, FPS, CFS
1. Overview 2. FY 2021 financial results 3. Focus for FY 2022 – IMS, FPS, CFS 4. Outlook 16
Slide 18: Investment Management Services Priorities
Investment Management Services Priorities Client Digital Operating Proposition Growth Offering Model Develop new and Leverage the breadth Expand our digital Enhance how we existing client of our offering making it operate reviewing relationships across offering, where easier for clients to our struc
Slide 19: Financial Planning Services
Financial Planning Services Continued focus on driving client numbers and divisional and per FP revenue. ‘Initiative 3,000’ commenced to support growth from existing cost base Simplify proposition for smaller clients Standardise review services and simplify report templates Increased use o
Slide 20: Central Financial Services
Central Financial Services Objectives • Develop Charles Stanley Direct proposition to compete and acquire new clients in the Digital D2C space. • Accelerate the existing plans to develop out the Foundation Planning Proposition so that its full service model can be brought to market exploiting a wide
Slide 21: Central Financial Services
Central Financial Services Alignment with CS Vision and Strategy • CFS represents ‘pivot’ toward a more institutional ‘outcome’ based service methodology • Build market profile and improve sales penetration into growth markets where there were previously barriers to entry for CS • Showcase strong di
Slide 22: Central Financial Services
Central Financial Services Go to market strategies • CSD will increase market awareness, content and Top down engagement with existing customers (via re-connecting demographics and re-engaging). New client segments and existing client cohorts will be targeted. Additionally, there will be increased c
Slide 23: Outlook
1. Overview 2. FY 2021 financial results 3. Focus for FY 2022 – IMS, FPS, CFS 4. Outlook Focus for the year ahead on evolving our holistic proposition, our digital offering to clients and increasing efficiencies. Paul Abberley Chief Executive Officer 22
Slide 24: Outlook
Outlook Market levels and trading activity appear reasonably well-supported Our focus for the year ahead is on: • Evolving our holistic proposition for client to drive growth • Implementation of our digital strategy • Continuing our programme of standardisation and greater operational efficiency
Slide 25: Appendices
1. Overview 2. FY 2021 financial results 3. Focus for FY 2022 – IMS, FPS, CFS 4. Outlook Appendices 24
Slide 26: Our business – new divisional structure
Our business – new divisional structure 25
Slide 27: Our business – results under new divisional structure
Our business – results under new divisional structure • Investment Management Services Investment Central division excludes performance of Asset Management Financial Financial Management services and other Services Planning Services Services Underlying miscellaneous services, which have transferred
Slide 28: Our vision is to become the UK's leading wealth manager
Our vision is to be come the UK’s leading wealth manager 27
Slide 29: Change in FuMA by service type in FY 2021
Change in FuMA by service type in FY 2021 Discretionary Advisory Managed 0.6 (0.2) New clients (0.1) (0.4) Lost clients +3.2bn Net outflow from existing clients +0.1bn Market movement Lost clients 0.2 3.2 Market movement Advisory Dealing Execution-only 0.3 (0.1) (0.1) New clients (0.5) +0.2bn Net ou
Slide 30: IMS – Divisional performance
IMS – Divisional performance 2021 2020 Change £m £m Fee 111.6 109.6 1.8% Commission 37.6 38.1 (1.3%) Interest 2.4 7.1 (66.2%) Revenue 151.6 154.8 (2.1%) Direct costs (35.5) (33.2) (6.9%) Variable costs (44.8) (49.2) 8.9% Contribution 71.3 72.4 (1.5%) Profit before tax 20.5 23.4 (12.4%) 1 Operating m
Slide 31: Financial Planning – Divisional performance
Financial Planning – Divisional performance 2021 2020 Change £m £m Revenue 10.0 8.7 14.9% Direct costs (9.0) (8.9) (1.1%) Variable costs (1.4) (1.7) 17.6% Contribution (0.4) (1.9) 78.9% Loss before tax (4.1) (5.1) 19.6% Contribution margin (4.0%) (21.8%) 17.8% Margin (41.0%) (58.6%) 17.7% Closing nu
Slide 32: Charles Stanley Direct – Divisional performance
Charles Stanley Direct – Divisional performance 2021 2020 Change £m £m Revenue 9.6 9.5 1.1% Direct costs (4.1) (3.8) (7.9%) Variable costs - (0.2) 100.0% Contribution 5.5 5.5 - Profit before tax 1.1 1.6 (31.3%) Revenue margin (bps) 29 30 (1) Contribution margin 57.3% 57.9% (0.6%) Profit margin 11.5%
Slide 33: Disclaimer
Disclaimer The information contained in this document has been prepared by Charles Stanley Group PLC (the ‘Group’ or ‘Company’) and is valid at 27 May 2021. 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 Com
Slide 34: End
End Charles Stanley Group PLC May 2021 55 Bishopsgate, London EC2N 3AS www.charles-Stanley.co.uk/investor-relations