16th Apr 2014 09:28
LONDON (Alliance News) - Charles Stanley Group PLC Wednesday said pretax profit for its last financial year is likely to miss market expectations by more than 10%, partly due to "exceptional costs" in a year of transition.
In a pre-close update on trading for the year to March 31, Charles Stanley said the miss comes despite revenues being "well ahead" of expectations in the period, including a strong performance from Charles Stanley Securities. The stockbroker and investment manager had GBP20.1 billion in funds under management and administration at the end of March, unchanged since the end of 2013. At the end of March 2013 the figure stood at GB17.7 billion.
Charles Stanley said its has invested in retail distribution review consultancy work in light of the retail distribution review, which led to an increase in risk management head count and additional IT systems expenditure at its middle office.
The retail distribution review is a set of UK rules designed to increase transparency and fairness about pricing in the investment industry. In the most significant of the changes, financial advisers were barred from earning commission from fund companies in exchange for recommending investment products, with fees to be agreed from the off.
Charles Stanley admitted that elements of those costs aren't exceptional, but represent the costs of doing business in a highly regulated industry. The company said reviewing its cost base over the coming year in order to strengthen margins is part of group strategy.
Charles Stanley has also continued its governance structure review, which began with last year's appointment of non-executive Directors, it said. The review has incurred additional on-going costs in strengthening its management structures and systems, which Charles Stanley said it will benefit from in the future.
Having moved to acquire asset adviser Evercore Pan Asset Capital Management Ltd for an undisclosed amount in November 2013, Charles Stanley said not all of the acquisition's assets are yet on the Charles Stanley platform and did not make a significant contribution in its last financial year.
Meanwhile, the opening of the new Leicester branch has brought additional funds under management.
Charles Stanley also said changes made in Chancellor of the Exchequer's 2014 Budget that put an end to the effective compulsory status of annuities should benefit its self-invested personal pension administration business, as well as the wealth management sector.
The results for year to March 31 will be announced on Friday June 20.
Charles Stanley shares were Wednesday quoted at 475.00 pence, down 3.0%.
By Samuel Agini; [email protected]; @samuelagini
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