Charles Stanley boosts profits 200% in business turnaround

Abberley-Paul-Charles Stanley-2014Charles Stanley has increased profit before tax by 200 per cent, up to £3m, having turned around its declining profits.

The group has made a start on its three to five year turnaround plan announced in its previous results. It has boosted profit before tax to £3m in the six months to the end of September for its core business, from £1m in the same period last year. Core business excludes those parts of the company that are marked for sale.

Total profit before tax, including divisions marked for sale, was £2m, compared to a £3.9m loss for the previous six months.

The firm has also completed the sale of “non core” assets, namely Charles Stanley Securities and Charles Stanley Financial Solutions.

Total funds under management and administration at the group dropped to £20bn from £20.2bn in the same period last year and £21bn as at March this year.

The firm was hit with net outflows and market losses, losing £200m in net outflows and £900m in investment losses.

In the period Charles Stanley Direct added 5,000 new account holders. The new account holders led to a 2 per cent increase in revenues to £2.6m and a 29 per cent cut in costs.

“Our digital offering, Charles Stanley Direct, has now been woven more closely into the core business and its encouraging performance during the period – significant account growth, increased profitability and reduced overhead costs – is a pattern we hope to continue moving forward,” says Paul Abberley, chief executive of Charles Stanley Group.

The group reached higher profitability after cutting costs by 5 per cent, to £73.1m, and increasing revenues 3.5 per cent.

“Significant progress has been made during the period, in line with the stated three to five year strategy announced at the last set of results. Our first priority was to arrest the decline in profitability, which we are pleased to have achieved, whilst maintaining our high levels of client delivery,” says Abberley.

“Initial milestones include the successful completion of our client suitability upgrade programme, the sale of non-core businesses and the determination of a revised rate card. We have articulated our intention to build a holistic offering, built around full service and bespoke investment management, complemented by asset management and financial planning divisions, and have successfully reorganised the business divisions to reflect this,” he adds.

Among the other changes in the period was bringing the asset management teams under one division, bringing the financial planning staff into one divisions, restructuring Charles Stanley Direct and bringing in a new charging structure from the start of December.

The company is also restructuring the pay for its investment managers, bringing all staff on to the same model. The move will initially cost the company more, in order to bring staff on board, but will ultimately base pay on profit-based model, including giving staff an employee share plan.

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