Thursday, 27 November 2014

Charles Stanley - Interim Results

Charles Stanley  is one of the UK's leading independently owned, full service stockbroking and investment management groups. It is one of the oldest firms on the London Stock Exchange with its origins in a banking partnership established in Sheffield in 1792. Over the past two centuries, it has grown both organically and via acquisitions and developed into the modern day stockbroker firm offering a wide range of services to both individual investors and corporate clients.

This is the most recent addition to my portfolio. Prior to purchase, the share price had fallen around 40% - I am not the best when it comes to timing of my purchases (and sales!), so I am pleased to see the share price appears to have stabilised over the past couple of months.

The company have issued its half-year results to end Sept 2014 (link via Investegate). Revenues for the period increased 4.1% to 72.9m (2013 £70.0m) however costs were significantly higher at £77.0m. Excluding one-off costs, underlying profits were just £1.5m compared to £8.0m in the first half of 2013.

Notwithstanding the reduction in profits, the board felt sufficiently confident to maintain the interim dividend at 3.0p - the shares trade ex dividend 5th December.

Long standing CEO, Sir David Howard has stepped down and is replaced by Paul Abberley former chief executive of Aviva Investors. He has commenced a strategic review of the business to identify the measures required to enhance the profitability of the Group and drive its long-term growth, and will present to shareholders in due course.

Charles Stanley Direct

One of the considerations for my purchase (and also Hargreaves Lansdown recently) was the potential to tap into what I believe will be a growth area in the coming years - that is the self-directed diy investor.  The roll-out of RDR has no doubt made the provision of financial advice and personal investment services more costly to deliver. This increasing cost will make advice-led service unaffordable and/or inappropriate for clients of more modest means with smaller portfolios.

CSD offer the usual dealing a/c, ISA & Junior ISAs and SIPPs. Charges are very competitive and particularly attractive for the modest portfolio holding of under £50,000 as the charges are based on a percentage of the holding - 0.25%. This compares favourably with the likes of Hargreaves Lansdown 0.45% and Fidelity 0.35%.

It is encouraging to see this is making good progress with a further 3,300 new a/cs added in the past 6 months taking the total to over 17,500. Revenues from CSD rose 66.7%.

Hopefully the strategy review will be implemented in the coming months and the company can start to rebuild and restore a more profitable operation.

At close, the share price was down around 2% at 308p. More on this small cap following the full year results.

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