Charles Stanley — H1 2018 Earnings Presentation
31 slides from Charles Stanley's earnings presentation, November 2017
Slide 1: Good progress in the Core Business
Good progress in the Core Business Results presentation for six months ended 30 September 2017
Slide 2: Agenda
Agenda 1. Key messages 2. Financial results Paul Abberley CEO 3. Outlook 4. Appendices Ben Money-Coutts CFO 1 Interim results: Six months ended 30 September 2017
Slide 3: 1. Key messages
CHARLES STANLEY, 1. Key messages
Slide 4: Key messages from H1 2018 – Building profitability
Key messages from H1 2018 – Building profitability • Reported PBT £6.9m (H1 2017: £4.5m) Increased profitability • Core business PBT £5.4m (H1 2017: £4.2m) Core Business operating margin • 7.3% (H1 2017: 6.2%) Interim dividend • Increased to 2.5 pence per share (H1 2017: 1.5 pence) Balance sheet str
Slide 5: Operational highlights – Progress across all divisions
Operational highlights – Progress across all divisions • Growth in its discretionary service from upgrades and new business Investment Management Services (IMS) • Continued restructuring to streamline processes and ensure teams are best placed to serve our clients and grow business • Launch of the P
Slide 6: Financial KPIs
Financial KPIs H1 2018 H1 2017 Business growth FuMA growth 1.3% 9.7% Discretionary FuMA growth 6.1% 12.4% Core Business revenue growth 9.8% (3.0%) Operating efficiency IMS Managed funds per CF30 (£m) 47.0 41.5 Revenues per Financial Planner (£k) 351 224 Core Business staff costs / revenue 65.1% 66.0
Slide 7: Areas of current focus
Areas of current focus Revenue growth Operational efficiencies • Revenue growth from: • Appointment of Transformation director New business • Attention being given to end-to-end Repricing processes to improve both the client Upselling experience and reduce the administrative burden • Divisiona
Slide 8: 2. Financial results
CHARLES STANLEY, 2. Financial results
Slide 9: Financial headlines
Financial headlines Core Business profit Reported profit Core Business FuMA Discretionary Funds before tax and before tax earnings per share 1.3% £24.3bn operating margin £24.0bn 9.8% £5.4m 7.75p 28.6% £6.9m 7.06p £12.1bn 6.1% 53.3% £4.2m £4.5m £11.4bn 6.2% 7.3% FY 2017 H1 2018 FY 2017 H1
Slide 10: Funds under Management and Administration (FuMA)
Funds under Management and Administration (FuMA) H1 2018 FY 2017 Change FuMA up 1.3% overall compared to flat markets over the £bn £bn period. Discretionary funds 12.1 11.4 6.1% Advisory Managed funds 2.2 2.4 (8.3%) Discretionary funds up 6.1% as we continue to upgrade advisory services into the
Slide 11: FuMA movement – inflows of £0.9 billion in H1 2018
FuMA movement – inflows of £0.9 billion in H1 2018 £bn 25 0.1 0.8 - 24.3 (0.6) 24.0 24 23 Funds at 1 April 2017 New clients Net inflow from existing Lost clients Market movement Funds at 30 September clients 2017 10 Interim results: Six months ended 30 September 2017
Slide 12: FuMA – flows by service
FuMA – flows by service £bn 1 0.8 - 0.1 0 (0.6) -1 New clients Transfers Net inflow/(outflow) from Lost clients existing clients Discretionary Advisory managed Advisory dealing Execution-only As noted above, net inflows were primarily directed to the higher margin discretionary service whilst outflo
Slide 13: H1 2018 financial summary – Core Business
H1 2018 financial summary – Core Business H1 2018 H1 2017 Change £m £m Revenue up by 9.8% to £74.0m, driven by an increase in Revenue 74.0 67.4 9.8% fee income from higher and improved FuMA mix combined with positive markets on prior year. (For Expenses (69.0) (63.9) (8.0%) further detail see page
Slide 14: Core Business – Revenue
Core Business – Revenue H1 2018 H1 2017 Change £m £m Fees 51.0 43.1 18.3% Commission 22.4 23.0 (2.6%) Significant improvement in fee income up 18.3% on prior year driven by higher average FuMA and upgrades to Interest income 0.6 1.3 (53.8%) discretionary service. Total revenue 74.0 67.4 9.8% Com
Slide 15: Core Business – Expenditure
Core Business – Expenditure H1 2018 H1 2017 Change £m £m Staff costs: Fixed employment costs are relatively flat on prior year as savings achieved from a 2.4% reduction in headcount were Fixed 24.9 24.9 - offset by costs incurred in connection with restructure Variable 23.3 19.7 18.3% costs and te
Slide 16: Core Business – Expenses breakdown
Core Business – Expenses breakdown £m H1 24.9 19.7 5.9 3.2 3.9 1.3 5.0 63.9 2017 H1 24.9 23.3 6.1 3.9 4.4 1.8 4.6 69.0 2018 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Fixed staff costs Variable staff costs IT costs Establishment costs Professional fees Marketing costs Admin costs 15 Interim results
Slide 17: Core Business profitability – positive H1 vs H1 increase
Core Business profitability – positive H1 vs H1 increase £m 14 7.7 12 (0.6) 10 (0.5) (0.3) 8 6 (3.6) 5.4 4.2 (1.5) 4 2 0 H1 2017 profit Fees Commission Interest income Net finance and Employment Other costs H1 2018 before tax other income related costs operating profit 16 Interim results: Six months
Slide 18: Reported performance and breakdown of adjusting items
Reported performance and breakdown of adjusting items £m 9 1.9 8 6.9 7 (0.6) 0.7 (0.5) 6 5.4 5 4 3 2 1 0 Core Business profit before Gain on sale of EBS Gain on part-sale of shares Accelerated depreciation Amortisation of client Reported profit before tax tax Management PLC held in Euroclear plc of
Slide 19: Balance sheet strengthened
Balance sheet strengthened H1 2018 FY 2017 Change £m £m Total intangible assets 20.2 21.2 (4.7%) Total tangible non-current assets 18.6 17.5 6.3% Non-current assets 38.8 38.7 0.3% Cash balances up marginally since year-end, with cash inflows from operations and proceeds from disposal of Cash 56.6
Slide 20: Cash flow movements in H1 2018
Cash flow movements in H1 2018 £m 60 58.4 58 (0.6) 1.6 56.6 56 2.1 0.2 (2.3) 54 (1.0) (0.4) (1.3) (0.1) 52 50 Cash as at 1 Apr Purchase of fixed Dividends paid Purchase of AFS Acquisition of Net cash outflow Purchase of own Proceeds from Dividends Net cash from Cash as at 30 Sep 2017 assets financia
Slide 21: 3. Outlook
CHARLES STANLEY, 3. Outlook
Slide 22: Outlook
Outlook Long term trends and current market backdrop remain favourable. Near term headwinds from higher than usual quantum of regulatory change and lower than expected commission income. Focus is now entirely on detailed execution, both to accelerate revenue growth and to improve the efficienc
Slide 23: 4. Appendices
CHARLES STANLEY, 4. Appendices
Slide 24: FuMA by service type
FuMA by service type 23 Interim results: Six months ended 30 September 2017
Slide 25: Core Business – Divisional breakdown
Core Business – Divisional breakdown Core Business Core IMS AM FP CSD Business £m £m £m £m £m H1 2018 Revenue 64.6 3.9 2.9 2.6 74.0 Expenditure (58.2) (3.4) (4.1) (3.3) (69.0) Other income 0.2 - - - 0.2 Operating profit/(loss) 6.6 0.5 (1.2) (0.7) 5.2 Net finance income 0.2 - - - 0.2 Profit/(loss) be
Slide 26: IMS – FuMA and revenue margins
IMS – FuMA and revenue margins H1 2018 FY 2017 Change £bn £bn Discretionary (£bn) 11.0 10.3 6.8% Advisory managed (£bn) 2.0 2.1 (4.8%) Total managed (£bn) 13.0 12.4 4.8% Advisory dealing (£bn) 1.7 1.8 (5.6%) Execution-only (£bn) 5.8 6.1 (4.9%) Total administered (£bn) 7.5 7.9 (5.1%) Total FuMA (£bn)
Slide 27: IMS – Financial performance
IMS – Financial performance H1 2018 H1 2017 Change £m £m Revenue 64.6 59.8 8.0% Direct Costs (34.7) (30.6) (13.4%) Other Income 0.2 0.2 0.0% Contribution 30.1 29.4 2.4% Allocated costs (23.5) (23.4) (0.4%) Operating Profit 6.6 6.0 10.0% Contribution margin 46.6% 49.2% Operating margin 10.2% 10.0% He
Slide 28: AM – Financial performance
AM – Financial performance H1 2018 H1 2017 Change £m £m Revenue 3.9 3.1 25.8% Direct costs (2.2) (1.5) (46.7%) Contribution 1.7 1.6 6.3% Allocated costs (1.2) (1.2) - Operating Profit/(loss) 0.5 0.4 25.0% Revenue margin (bps) 60 60 - Contribution margin 43.6% 51.6% Operating margin 12.8% 12.9% Headc
Slide 29: FP – Financial performance
FP – Financial performance H1 2018 H1 2017 Change £m £m Revenue 2.9 2.4 20.8% Direct costs (3.1) (2.5) (24.0%) Contribution (0.2) (0.1) (100.0%) Allocated costs (1.0) (1.9) 47.4% Operating loss (1.2) (2.0) 40.0% Contribution margin (6.9%) (4.2%) Operating margin (41.4%) (83.3%) No. of Financial plan
Slide 30: CSD – Financial performance
CSD – Financial performance H1 2018 H1 2017 Change £m £m Revenue 2.6 2.1 23.8% Direct costs (1.8) (1.2) (50.0%) Contribution 0.8 0.9 (11.1%) Allocated costs (1.5) (1.6) 6.3% Operating loss (0.7) (0.7) - Revenue margin (bps) 22 22 - Contribution margin 30.8% 42.9% Operating margin (26.9%) (33.3%) H1
Slide 31: Recent awards and recognitions
Recent awards and recognitions 30 Interim results: Six months ended 30 September 2017
Charles Stanley Group — H1 2018 Earnings Presentation on 6ix