Final Results

RNS Number : 2058N

Charles Stanley Group PLC

08 June 2010

 

CHARLES STANLEY GROUP PLC

RESULTS FOR THE YEAR ENDED 31 MARCH 2010

 

Charles Stanley is one of the UK's leading independently owned, full service stockbroking and investment management groups, advising on substantial funds. Today it announces its preliminary results for the year ended 31 March 2010.

 

Highlights:

 

§ Revenue for the year £115.0 million (2009: £101.8 million) 13% increase

 

§ Reported profit before tax £10.3 million (2009: £9.2 million) 12% increase

 

§ Adjusted profit before tax £13.7 million (2009: £12.5 million) 10% increase

 

§ Funds under management and administration £12.8 billion (2009: £9.0 billion)

 

§ Private Client income up 14% to £96.1 million (2009: £84.5 million)

 

§ Reported earnings per share 15.44p (2009: 14.65p)

 

§ Adjusted earnings per share 21.18p (2009: 20.00p)

 

§ Total dividend increased to 9.45p up 8% (2009: 8.75p)

 

§ Joined by Matterley Asset Management - strengthening our fund management capability

 

Commenting on the results for the latest year, Sir David Howard, chairman, said:

 

"We view this as a good set of results against a turbulent economic and political background, demonstrating once again the resilience of the Group. While there are many indications that the worst of the financial crisis is over, there is still a difficult and winding path ahead. It may be too early to predict a sustained recovery at this stage, but looking towards the medium term I am rather more confident about the outlook than I have been in the past couple of years."

 

For further information please contact:

 

Charles Stanley Group PLC		Canaccord Adams	Oriel Securities Ltd
Sir David Howard, Chairman		Simon Bridges	Tom Durie
Peter A Hurst, Finance Director		Managing Director	Partner
Phone: 020 7739 8200		Phone: 020 7050 6742	Phone: 020 7710 7600
Fax: 020 7953 2948
Magnus Wheatley
Public Relations Manager
Phone 020 7149 6273

 

 

 

 

 

 

 

CHAIRMAN'S STATEMENT

 

Charles Stanley Group is pleased to report that revenue for the year ended 31 March 2010 has risen by 13.0% to a new record of £115.0 million (2009: £101.8 million), while the profit before tax has risen by 12.0% to £10.3 million (2009: £9.2 million). The adjusted profit before tax, which excludes the effect of investment disposals, amortisation and certain one-off costs, was 9.6% higher at £13.7 million (2009: £12.5 million). We view this as a good set of results against a turbulent economic and political background, demonstrating once again the resilience of the Group.

 

Client funds managed or administered by Charles Stanley Group have risen to £12.8 billion at 31 March 2010, an increase of 42.2% compared with the total of £9.0 billion at 31 March 2009. Within this figure the funds under discretionary management have risen from £2.7 billion to £3.9 billion, an increase of 44.4%. This is in line with the increase in the FTSE 100 Share Index which rose by 44.7% in the period, and is well ahead of the rise of 28.3% in our principal benchmark, the APCIMS Balanced Portfolio Index. Our clients' discretionary funds now represent 61.9% of the funds for which we provide investment management (at £6.3 billion) compared with 58.7% (of a total of £4.6 billion) at 31 March 2009.

 

As reported in the interim statement in November last year, we were joined in August by Matterley Asset Management, a small specialised fund management boutique. We are building on this opportunity to develop a more focussed fund management activity for the Group, and Matterley has made an excellent start.

 

The Group has traditionally placed particular emphasis on maintaining strong cash balances, and never more so than in challenging economic conditions. Even though we fund our programme of expansion from our own resources the figure for our cash balances at 31 March was £36.6 million compared to £36.0 million at 31 March 2009.

 

In the light of these results we propose increasing the total dividend for the year by paying a final dividend of 2.25p net per share. Taken together with the first interim dividend of 2.2p and the second interim dividend of 5.0p this will make a total dividend for the year of 9.45p, an increase of 8.0% on last year's total dividend of 8.75p. The dividend will be paid on 5 August 2010 to shareholders registered on 18 June 2010. Once again we are also offering shareholders the opportunity to choose to receive part or all of their dividends in the form of shares rather than in cash.

 

Charles Stanley Group provides a comprehensive range of investment, wealth management and financial planning services to retail, institutional and corporate clients. A detailed report is set out in the following Business Review and Operating and Financial Review.

 

This improvement has been achieved despite two adverse factors of some significance. First, with interest rates at continuing very low levels there is a direct impact on a business which traditionally holds substantial cash balances, both on its own account and on behalf of clients. This had an adverse impact of £4.4 million at the pre-tax level over the previous year.

 

The second is the cost of the Financial Services Compensation Service levy which we are required to pay to compensate victims of loss caused by the collapse or misbehaviour of other, completely unrelated firms. Historically stock exchange firms provided unlimited guarantees for the clients of other stock exchange firms who suffered loss if a firm failed - happily a very rare occurrence. Now we are required to compensate the victims of failed companies which offer a very different service to ours. This has taken some £686,000 off our pre-tax profit this year, and sadly I see no end to this continuing, inappropriate and disproportionate levy on companies in our sector of the financial services world.

 

The quality of our service

 

Charles Stanley relies on the unstinting efforts of its skilled and dedicated brokers and staff. I am delighted to welcome all those who have joined us during the year, and on behalf of shareholders I offer my thanks to everyone in the Group for their hard work in producing another set of good results.

 

Outlook

 

In my report to shareholders last year I pointed to the increasing signs of recovery, though it was too early to tell if these were a short-lived bounce or the beginning of a cyclical upturn. My optimism has proved to be justified, but the very wide swings in the market, on every piece of news, show that conditions remain very sensitive and unpredictable.

 

At home we can only glimpse the medium-term outlook for the UK economy, which could stall again in the event of policy errors. The coalition offers firm government, with a large enough majority in Parliament to drive through significant changes. But at this early stage the details remain unclear. Abroad we are witnessing growing turmoil in the currency markets, and disagreement, too, over the scope for global solutions to the current problems. 

 

The outlook for regulation looks equally uncertain. We await with some concern the outcome of the debate about the future of the FSA.

 

Sadly there are too many examples of the threat of stifling over-regulation which could cause severe damage to Britain's financial services industry. The latest proposal from HM Treasury, "Establishing Resolution Arrangements for Investment Banks", requires all financial firms to conduct detailed and expensive due-diligence style self-examination, and maintain this continuously in force, so as to provide for their orderly wind-down in the event of failure. This imposes a disproportionate cost on every financial firm, the overwhelming majority of which are well-run, solvent businesses that pose negligible systemic risk.

 

So, while there are many indications that the worst of the financial crisis is over, there is still a difficult and winding path ahead. But Charles Stanley continues to demonstrate its resilience. It may be too early to predict a sustained recovery at this stage, but looking towards the medium term, perhaps beyond the year we have just started, I am rather more confident about the outlook than I have been in the past couple of years.

 

Sir David Howard

Chairman

 

8 June 2010

 

BUSINESS REVIEW

 

The Group is organised into three operating divisions: Private Clients, Financial Services and Charles Stanley Securities.

 

Private Clients

 

Total funds under management and administration are shown below:

 

	2010	2009
	£ billion	£ billion
Discretionary funds under management
In Group's nominee or Euroclear UK and Ireland ("EUI") personal membership	3.9	2.7
Advisory managed funds
In Group's nominee or EUI personal membership	2.2	1.7
Not held in Group's nominee	0.2	0.2
	2.4	1.9
Total managed funds	6.3	4.6
Advisory dealing funds
In Group's nominee or EUI personal membership	2.8	2.0
Execution only funds
In Group's nominee or EUI personal membership	3.7	2.4
Total administered funds	6.5	4.4
Total funds under management and administration	12.8	9.0

 

The Private Client division provides specialist services for charities and trusts as well as individual clients.

 

The division has demonstrated the strength of the core retail business. Total income has risen by 13.7% to £96.1 million from £84.5 million, and on a like for like basis income has risen by 10.0%. Income comprises commission on trades on behalf of clients, investment management fees for the division's discretionary and advisory managed clients, and administration fees.

 

The Group has seen a 42.2% increase in the value of its funds under management from March 2009, compared with an increase in the FTSE 100 of 44.7% and the APCIMS Balanced Portfolio Index of 28.3%. The Group continues to attract discretionary funds, and we are pleased to see such funds are 30% of total funds under management and administration.

 

Transaction levels have risen by 19.0% from 2009 leading to commission income of £54.8 million compared with £46.0 million in 2009.

 

The division's fee income has been resilient in light of the changed world of near-zero base rates. Total fee income rose 7.5% to £41.4 million from £38.5 million, and within that, investment management fees increased by 31.2% to £22.7 million from £17.3 million in 2009. This overall increase has been achieved despite the loss of significant levels of interest turn income due to low base rates.

The Private Client ratio of commission to fee income is 57.0% to 43.0% compared with 54.4% and 45.6% respectively for 2009.

 

The division has consolidated and focussed on embedding prior year acquisitions into the Group. We have secured significant levels of new business from third party sources and, post year end, announced the opening of a new branch in Cirencester. This will bolster our presence in the West of England.

 

Market conditions have improved dramatically since March 2009 although with considerable volatility. There is, however, a degree of uncertainty over the sustainability of the recovery, and the impact of public spending cuts, rising interest rates and an end to quantitative easing remains to be seen. Nevertheless the division continues to look for suitably priced acquisitions whilst being vigilant to the wider economic and regulatory environment.

 

Michael Clark

Director of Private Client Stockbroking

 

Peter Hurst

Finance Director

 

Financial Services

 

The division includes EBS Management PLC ("EBS"), a SIPP administration services provider, Garrison Investment Analysis ("Garrison"), a discount financial intermediary, Griffiths & Armour (Financial Services) Ltd ("Griffiths & Armour"), an employee benefits provider together with the existing Charles Stanley financial planning and wealth management areas.

 

Total income has risen by 28.8% during 2010 although the like for like basis increase is 2.2%. Income within the division is shown below:

 

	2010 £m	2009 £m
EBS	1.8	1.7
Garrison	1.6	1.7
Griffiths & Armour	2.8	1.1
Financial Planning	2.3	2.1
Total	8.5	6.6

 

EBS

 

EBS has had a good year with revenues growing from £1.7 million to £1.8 million with margins of around 20%. At the year end we administered 2608 SIPPs (March 2009: 2293) and 366 SSASs (March 2009: 363). The revenue profile alluded to in last year's statement remains with more fixed revenues versus time costed income. During the year several new third party administration agreements were progressed and we are confident of accelerated growth occurring in the business. 

 

Garrison

 

Garrison Investment Analysis has had a slight dip in revenues over the year to £1.6 million (March 2009: £1.7 million), though due to reduced costs profits were much in-line with last year. Assets held were relatively steady throughout the year, March 2010 at £405.0 million (March 2009: £337.7 million), though the average level of the FTSE which governs the calculation of administration fees by the platform and unit trust groups was some 20% lower than in the year to the end of 2009. We have re-launched the website and are now beginning to reap the benefits of an increased marketing campaign. 

 

Griffiths & Armour

 

Griffiths & Armour revenues were £2.8 million for the year to March 2010 versus £1.1 million for the 6 months to March 2009. We have nearly completed the process of amalgamating all of the Group's Benefit Consultancy business within this company and we look forward to offering a uniform employee benefits service across our geographical reach. Margins in the division were depressed due to relatively significant merger and infrastructure costs, but we look forward to an improvement in these going forward.

 

Financial Planning

 

The financial planning and wealth management teams have put in a solid performance during the year. The teams have been strengthened by new joiners in the year.

 

Fund Management

 

During the year we were joined by Matterley Asset Management in order to strengthen our fund management capability. We are looking to develop a more focussed fund management activity within the Group. The Group currently has 5 funds in-house together with the IHT Portfolio fund and total funds under management were £104.4 million (March 2009: £51.3 million). 

 

	2010 £m	2009 £m
International Growth Portfolio	14.4	7.8
Regular High Income Fund	36.5	26.6
Equity	7.0	4.9
UK & International Growth	26.2	-
Matterley Fund	6.2	-
IHT Portfolio	14.1	12.0
Total Funds	104.4	51.3

 

Charles Stanley Securities

 

CS Securities, the Group's advisory, broking and corporate finance arm for smaller and mid cap UK listed companies, produced slightly lower revenues for 2010 at £10.4 million versus £10.7 million for 2009. During the year Sutherlands Bond Trading made a good contribution and advisory work also improved with a number of different types of advisory mandate. Secondary equity commission was about 11% lower than in previous years but in recent weeks has shown a marked improvement. The overall contribution from the division was reduced due to a number of personnel changes throughout the year.

 

 Income within the division is shown below:

 

	2010 £m	2009 £m
Commission	7.1	8.0
Fees	3.3	2.7
Total	10.4	10.7

 

 

CS Securities now offers a much deeper and broader research capability which we are hopeful will pay dividends in the future. 

 

Since the year end CS Sutherlands has seen a reduction in activity due to the resurgence in equity markets which has led to a corresponding decline for the moment in investors' focus on bonds. 

 

The new year has got off to an encouraging start within the division and we are hopeful that this will continue.

 

Michael Lilwall

Director

 

OPERATING AND FINANCIAL REVIEW

 

During 2010 total revenue for the Group grew by 13.0% to £115.0 million from £101.8 million. Reported profit for the year of £10.3 million includes profits on disposal and revaluation of available for sale investments of £0.2 million, amortisation of £1.7 million and one-off costs of £1.9 million (£1.5 million) relating to new investment teams and the Financial Services Compensation Scheme Levy.

 

	2010 £m	2009 £m	Change £m	%
Revenue	115.0	101.8	13.2	13.0%
Administrative expenses	(105.4)	(93.8)	(11.6)	(12.4)%
Other income	0.1	-	0.1	-
Operating profit	9.7	8.0	1.7	21.3%
Net interest and finance income	0.4	1.3	(0.9)	(69.2)%
Gains and losses on available for sale financial assets	0.2	(0.1)	0.3
Reported profit	10.3	9.2	1.1	12.0%
Ratio to revenue	9.0%	9.0%
Add back gains and losses on available for sale financial assets	(0.2)	0.1
Add back one-off costs for investment teams	1.2	1.5
Add back Compensation Scheme Levy	0.7	-
Add back amortisation of customer relationships	1.7	1.7
Adjusted profit	13.7	12.5	1.2	9.6%
Ratio to revenue	11.9%	12.3%

 

Revenue by division for the year is summarised below:

 

	2010 £m	2009 £m	Change £m	%
Private Client	96.1	84.5	11.6	13.7%
Financial Services	8.5	6.6	1.9	28.8%
Charles Stanley Securities	10.4	10.7	(0.3)	(2.8)%
Total	115.0	101.8	13.2	13.0%

 

The Group seeks, over time, to alter the balance between commission and fee income increasingly in favour of fees. In 2009-10 the proportion of fee income (excluding corporate finance fees) to total revenue was 44.6% compared to 45.4% in 2008-09 and 40.9% the previous year. The ratio has decreased in 2010 due to the impact of falling interest rates on revenue as already referred to in the Chairman's Statement.

 

Administrative expenses

 

Administrative expenses are summarised below:

 

	2010 £m	2009 £m	Change £m	%
Staff costs	47.3	42.7	(4.6)	(10.8%)
Depreciation	2.7	2.7	-	0.0%
Amortisation of intangible assets	1.7	1.7	-	0.0%
Other costs	51.8	45.2	(6.6)	(14.6%)
Total before one-off costs	103.5	92.3	(11.2)	(12.1%)
One-off costs relating to new teams	1.2	1.5	0.3	20.0%
Compensation Scheme Levy	0.7	-	(0.7)	-
Total	105.4	93.8	(11.6)	(12.4%)
Allocated to:
Private Client division	58.1	52.1	(6.0)	(11.5%)
Financial Services	8.5	6.3	(2.2)	(34.9%)
Charles Stanley Securities	10.5	10.0	(0.5)	(5.0%)
Total allocated to divisions and other income	77.1	68.4	(8.7)	(12.7%)
Unallocated	28.3	25.4	(2.9)	(11.4%)
	105.4	93.8	(11.6)	(12.4%)

 

Total costs have increased by 12.4% from £93.8 million to £105.4 million. Staff costs are analysed in note 4. These have increased by 10.8% to £47.3 million from £42.7 million and represent 44.9% of our total costs (2009: 45.5%). Average employee numbers have risen by 7.4% to 729 from 679.

 

For management purposes costs are allocated to divisions by direct attribution and this is shown in note 2.

 

Due to acquisitions and joiners, salary costs of client facing staff have risen and the ratio of the number of times these salaries are covered by revenue has changed.

 

	2010 £m	2009 £m	Change £m	%
Client facing staff salaries	21.6	18.8	(2.8)	(14.9)%
Total income to salary ratio	5.3	5.4

 

Given the increases in revenue, non-salary fixed costs have decreased slightly relative to revenue as follows:

	2010 £m	2009 £m
Business support costs as % of revenue	16.9%	18.3%
Overhead costs as % of revenue	15.1%	14.4%
Total general fixed costs as % of income	32.0%	32.7%

 

The Group has incurred costs of £1.2 million in respect of new investment teams (2009: £1.5 million) and Compensation Scheme costs of £0.7m. When excluding these one-off costs, total expenses have increased by 12.1% to £103.5 million from £92.3 million.

 

Costs also include depreciation of £2.7 million (2009: £2.7 million) and amortisation of intangible assets of £1.7 million (2009: £1.7 million). Further details are shown in notes 10 and 11. The proportion of our total costs which are fixed decreased slightly to 66% from 67%. The proportion of fixed costs which is covered by fees has therefore increased fractionally to 78% from 77%.

 

Interest receivable of £0.4 million (2009: £1.4 million) includes interest on bank deposits and interest earned from interest bearing available for sale investments. The Group's cash balances stood at £36.6 million as at 31 March 2010 (2009: £36.0 million). Interest rates have been held by the Bank of England at 0.5% for the year leading to a lower level of interest income.

 

The tax charge of £3.4 million is analysed in note 7. This represents 33.0% of the Group's profit before tax of £10.3 million (2009: 29.3% of £9.2 million). The effective rate is higher than the UK standard rate of 28% due to differences between accounting and taxation treatment of certain items, and the effects of prior year taxation adjustments.

 

Earnings per share after one-off costs were 15.44p (2009: 14.65p). There was no dilution at 31 March 2010 of earnings. Further details on earnings per share are explained in note 8.

 

As indicated in the Chairman's Statement the final dividend for the year is recommended to be 2.25p in addition to the interim dividends of 2.2p and 5.0p giving a total dividend for the year of 9.45p. Shareholders will, subject to approval at the Annual General Meeting, be offered a scrip alternative.

 

At 31 March 2010 the Group had net assets of £73.4 million (2009: £72.2 million) equivalent to £1.67 per share (2009: £1.64 per share).

 

We monitor our performance against our financial objectives by using the following key performance indicators:

 

Indicator	Description	2010	2009	% change
Ratio of adjusted operating profit to revenue	Ratio of operating profit before amortisation and one-off costs as a percentage of revenue	11.6%	11.0%	5.5%
Ratio of adjusted profit to revenue	Profit before gains or losses on available for sale financial assets, amortisation and one-off costs as a percentage of revenue	11.9%	12.3%	(3.2)%
Adjusted earnings per share	Earnings before gains or losses on available for sale financial assets, amortisation and one-off costs divided by weighted average shares in issue during the year	21.18p	20.00p	5.9%
Funds under management and administration	Valuation of client assets at the year-end	£12.8 bn	£9.0 bn	42.2%
Discretionary funds under management	Valuation of discretionary client assets at the year-end	£3.9 bn	£2.7 bn	44.4%
APCIMS Balanced Portfolio Index	As at period end	2,861	2,230	28.3%
Staff turnover	Ratio of staff leavers to average staff during the year	6%	8%	25.0%
Fees growth	Value of non-commission income for Private Clients	£41.4m	£38.5m	7.5%

 

Peter Hurst

Finance Director

 

8 June 2010

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union. The financial statements are required by law to give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for the year.

 

In preparing these financial statements the Directors are required to:

 

§ Select suitable accounting policies and then apply them consistently;

§ Make judgements and estimates that are reasonable and prudent;

§ State that the financial statements comply with IFRSs as adopted by the European Union; and

§ Prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Group will continue in business.

 

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Statement of responsibility

 

Each of the Directors, whose name and functions are set out in the Annual Report, confirm that, to the best of their knowledge and belief:

 

§ The financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and

§ The Directors' reports contained in the Annual Report includes a fair review of the development and performance of the business and the position of the Group taken as a whole, together with a description of the principal risks and uncertainties that they face.

 

By order of the Board

 

Peter Hurst

 

Finance Director

 

8 June 2010

 

Charles Stanley Group PLC

CONDENSED CONSOLIDATED INCOME STATEMENT

YEAR ENDED 31 MARCH 2010

 

		2010	2009
	Notes	£'000	£'000
Continuing operations
Revenue	2	114,992	101,752
Administrative expenses		(105,356)	(93,834)
Other income	3	88	13
Operating profit	5	9,724	7,931
Finance income	6	399	1,445
Finance costs	6	(22)	(106)
Gains and losses on available for sale financial assets	6	170	(56)
Profit before tax		10,271	9,214
Tax expense	7	(3,428)	(2,746)
Profit for the year attributable to equity shareholders		6,843	6,468

 

Earnings per Share

Based on reported profit for the year
Basic	8	15.44p	14.65p
Diluted	8	15.44p	14.65p

 

Charles Stanley Group PLC

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 MARCH 2010

 

	2010	2009
	£'000	£'000
Profit for the year	6,843	6,468
Other comprehensive income
Gains and losses on available for sale financial assets	343	(380)
Deferred tax on available for sale financial assets	(95)	166
Retirement benefit scheme actuarial deficit	(993)	(2,048)
Deferred tax on retirement benefit scheme actuarial deficit	297	545
Other comprehensive income net of tax	(448)	(1,717)
Total comprehensive income for the year attributable to equity shareholders	6,395	4,751

 

Charles Stanley Group PLC

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 MARCH 2010

 

		2010	2009
	Notes	£'000	£'000
Assets
Non-current assets
Intangible assets	10	35,428	36,647
Property, plant and equipment	11	6,070	7,747
Deferred tax assets		516	587
Available for sale financial assets	12	6,426	6,200
Trade and other receivables	13	1,511	-
		49,951	51,181
Current assets
Trade and other receivables	13	188,103	257,187
Financial assets at fair value through profit and loss		75	163
Cash and cash equivalents	14	36,617	35,951
		224,795	293,301
Liabilities
Current liabilities
Trade and other payables	15	(192,945)	(264,363)
Borrowings	16	(843)	(1,749)
Current tax liabilities		(1,662)	(574)
		(195,450)	(266,686)
Net current assets		29,345	26,615
Non-current liabilities
Trade and other payables	15	(900)	(1,724)
Borrowings	16	(15)	(28)
Retirement benefit obligations	20	(4,956)	(3,894)
		(5,871)	(5,646)
Net assets		73,425	72,150
Shareholders' equity
Ordinary shares	17	11,136	11,035
Share premium	17	1,772	1,873
Revaluation reserve		2,323	2,295
Retained earnings		58,097	56,850
Total shareholders' equity		73,328	72,053
Minority interest in equity		97	97
Total equity		73,425	72,150

 

Charles Stanley Group PLC

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

YEAR ENDED 31 MARCH 2010

 

	Share capital	Share premium	Revalua-tion reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000
1 April 2008	11,029	1,855	2,509	55,589	70,982
Profit for the year	-	-	-	6,468	6,468
Other comprehensive income:
Gains and losses on available for sale financial assets	-	-	(380)	-	(380)
Deferred tax on available for sale financial assets	-	-	166	-	166
Retirement benefit scheme actuarial deficit	-	-	-	(2,048)	(2,048)
Deferred tax on retirement benefit scheme actuarial deficit	-	-	-	545	545
Total other comprehensive income for the year	-	-	(214)	(1,503)	(1,717)
Total comprehensive income for the year	-	-	(214)	4,965	4,751
Dividends paid	-	-	-	(3,796)	(3,796)
Share options - value of employee services	-	-	-	92	92
Share options - issue of shares	6	18	-	-	24
31 March 2009	11,035	1,873	2,295	56,850	72,053
Profit for the year	-	-	-	6,843	6,843
Other comprehensive income:
Gains and losses on available for sale financial assets	-	-	123	220	343
Deferred tax on available for sale financial assets	-	-	(95)	-	(95)
Retirement benefit scheme actuarial deficit	-	-	-	(993)	(993)
Deferred tax on retirement benefit scheme actuarial deficit	-	-	-	297	297
Total other comprehensive income for the year	-	-	28	(476)	(448)
Total comprehensive income for the year	-	-	28	6,367	6,395
Dividends paid				(5,162)	(5,162)
Scrip dividend	101	(101)	-	-	-
Share options - value of employee services	-	-	-	42	42
31 March 2010	11,136	1,772	2,323	58,097	73,328

 

 Charles Stanley Group PLC

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED 31 MARCH 2010

 

		2010	2009
	Notes	£'000	£'000
Cash flows from operating activities
Cash generated from operations	18	12,405	20,472
Interest received		399	1,445
Interest paid		(22)	(106)
Tax paid		(2,067)	(3,029)
Net cash inflow from operating activities		10,715	18,782
Cash flows from investing activities
Acquisition of subsidiaries and other businesses		(4,132)	(1,471)
Acquisition of intangible assets		(493)	(5,295)
Purchase of property, plant and equipment		(542)	(3,118)
Proceeds from sale of property, plant and equipment		39	-
Proceeds from available for sale financial assets		2,770	3,715
Purchase of available for sale financial assets		(2,484)	(5,349)
Dividends received		88	79
Net cash used in investing activities		(4,754)	(11,439)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		-	24
Cash outflow from change in debt and lease financing		(133)	(147)
Dividends paid to shareholders		(5,162)	(3,796)
Net cash used in financing activities		(5,295)	(3,919)
Net increase in cash and cash equivalents		666	3,424
Cash and cash equivalents at start of year		35,951	32,527
Cash and cash equivalents at end of year		36,617	35,951

 

Charles Stanley Group PLC

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

YEAR ENDED 31 MARCH 2010

 

1. GENERAL INFORMATION

 

Charles Stanley Group PLC and its subsidiaries provide investment services within the UK. During the year Matterley Asset Management, a fund management boutique, joined the Group.

 

The Company is a public limited company which is listed on the London Stock Exchange and is incorporated and domiciled in the UK. The address of its registered office is 25 Luke Street, London EC2A 4AR. This condensed consolidated financial information was approved by the Board for issue on 8 June 2010.

 

Cautionary statement

The chairman's statement, business review and operating and financial review which form part of the preliminary announcement for the year ended 31 March 2010 have been prepared to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. They should not be relied on by any other party or for any other purpose. These reviews contain certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

 

Basis of preparation

The results are an abridged extract from the financial statements for the year ended 31 March 2010, which have not yet been delivered to the Registrar of Companies. The auditors' report on the full financial statements has yet to be signed.

The results have been prepared on a basis consistent with the accounting policies set out in the statutory financial statements for the year ended 31 March 2009 except as explained below. The condensed financial information as set out in this report is unaudited and does not comprise statutory accounts for the purposes of the Companies Act 2006.

The comparative figures for the year ended 31 March 2009 have been taken from, but do not constitute, the Group's statutory financial statements for that financial year. Those financial statements have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report was unqualified.

Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less that 12 months from the date of this report. Accordingly they continue to adopt the going concern basis in preparing the financial statements.

 

Adjustment to 2009 comparatives

In 2009 the acquisition and disposal (£2,951,000) of an available for sale financial asset were posted to financial assets at fair value through profit and loss. The comparatives in the cash flow statement and in notes 12 and 18 have been amended to reflect the correct position. The profit on disposal had been treated correctly as a profit on disposal of an available for sale financial asset so these amendments have no impact on either the income statement or the statement of financial position.

 

Adjusted profit before income tax and adjusted earnings

The Board believes that a truer reflection of the performance of the Group's on-going business is given by the measure "Adjusted profit before tax", which represents operating profit plus net interest but excludes gains and losses on available for sale financial assets, amortisation of customer relationships and one-off costs. The table below reconciles these measures to the consolidated income statement. In 2009 no adjustment was made for the Financial Services Compensation Scheme Levy of £250,000.

 

		2010		2009
	£'000	£'000	£'000	£'000
Reported profit before tax		10,271		9,214
Exclude:
Gains and losses on available for sale financial assets	(170)		56
Amortisation of customer relationships	1,712		1,659
One-off costs relating to investment teams	1,217		1,564
Financial Services Compensation Scheme Levy	686		-
		3,445		3,279
Adjusted profit before tax		13,716		12,493
Tax expense	(3,428)		(2,746)
Add tax on excluded items	(903)		(918)
Adjusted tax expense		(4,331)		(3,664)
Adjusted earnings		9,385		8,829
Adjusted basic and diluted earnings per share		21.18p		20.00p

 

Changes in accounting policy and disclosure

The same accounting policies, presentation and methods of computation are followed in these financial statements as applied in the Group's financial statements for the year ended 31 March 2009 except as described below.

 

The Group has adopted the following new and amended IFRSs as of 1 April 2009:

 

IFRS 7 "Financial Instruments - Disclosures" (amendment). The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy.

 

IAS 1 (revised). "Presentation of financial statements". The revised standard prohibits the presentation of items of income and expenses (that is, "non-owner changes in equity" in the statement of changes in equity, requiring "non-owner changes in equity" to be presented separately from owner changes in equity in a statement of comprehensive income. As a result the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. Comparative information has been re-presented so that it also is in conformity with the revised standard. As the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

 

IFRS 2 (amendment), "Share-based payment". The amendment deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. These features would need to be included in the grant date fair value for transactions with employees and others providing similar services; they would not impact the number of awards expected to vest or valuation thereof subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The Group and Company has adopted IFRS 2 (amendment) from 1 January 2009. The amendment does not have a material impact on the Group or Company's financial statements.

 

Related party transactions

Transactions between the Parent Company and its subsidiaries have been eliminated on consolidation and are not disclosed. The Parent Company received £3.3 million (2009: £0.5 million) in dividends and £2 million (2009: £1.5 million) in management charges from its subsidiaries during the year.

 

Principal risks and uncertainties

The Directors consider that the nature of the principal risks and uncertainties which may have a material effect on the Group's performance remain unchanged from those identified in the financial statements for the year ended 31 March 2009. In summary the major risks identified were:

 

Credit risk - risk of loss through default by counterparty;

Market risk - risk that arises from fluctuations in values of, or income from, assets or in interest or exchange rates;

Operational risk - risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, including legal risk;

Liquidity risk - risk that the Group, although solvent, does not have available sufficient financial resources to enable it to meet its obligations;

Business risk - risk exposure to macro economic, geopolitical, regulatory and other external risks; and

Reputational risk - risk of damage to client base leading to financial loss.

 

2 SEGMENT INFORMATION

 

For management purposes the Group is organised into three divisions - Private Clients, Financial Services and Charles Stanley Securities. The principal activity of the private client division is the provision of investment management services to individuals, trusts and charities. The financial services division includes a SIPP administrator, a discount financial intermediary, employee benefits provider and financial planning and wealth management areas. Charles Stanley Securities is the Group's advisory, broking and corporate finance arm for smaller and mid cap UK listed companies. All of the Group's activities are undertaken in the United Kingdom.

	Private Client Division	Financial Services	Charles Stanley Securities	Other	Total
	£'000	£'000	£'000	£'000	£'000
Year ended 31 March 2010
Commission	54,768	135	7,123	-	62,026
Fees
Investment management	22,695	261	-	-	22,956
Administration	18,690	8,054	152	-	26,896
Corporate finance	-	-	3,114	-	3,114
	41,385	8,315	3,266	-	52,966
Total revenue	96,153	8,450	10,389	-	114,992
Administrative expenses	(58,064)	(8,511)	(10,478)	-	(77,053)
Other income	-	-	-	88	88
	38,089	(61)	(89)	88	38,027
Unallocated expenses					(28,303)
Operating profit					9,724
Segment assets	189,535	13,923	17,498
Segment liabilities	164,217	800	18,996
Year ended 31 March 2009
Commission	46,038	28	8,020	-	54,086
Fees
Investment management	17,252	155	-	-	17,407
Administration	21,200	6,404	-	-	27,604
Corporate finance	-	-	2,655	-	2,655
	38,452	6,559	2,655	-	47,666
Total revenue	84,490	6,587	10,675	-	101,752
Administrative expenses	(52,052)	(6,346)	(9,964)	-	(68,362)
Other income	-	-	-	13	13
	32,438	241	711	13	33,403
Unallocated expenses					(25,472)
Operating profit					7,931
Segment assets	274,031	13,308	2,393
Segment liabilities	247,794	5,174	4,778

 

3 OTHER INCOME

 

	2010	2009
	£'000	£'000
Dividend income on available for sale financial assets	88	13

 

4 EMPLOYEE BENEFIT EXPENSE

The average number of persons employed (including Directors) during the year was 729 (2009: 679).

 

	2010	2009
	£'000	£'000
Staff costs for the Group during the year:
Wages and salaries	39,313	35,954
Social security costs	4,276	3,601
Share options granted	42	92
Other pension costs - defined contribution plans	2,649	2,250
Other pension costs - defined benefit plan	1,056	852
	47,336	42,749

 

5 OPERATING PROFIT

 

The following items have been included in arriving at operating profit:

 

	2010	2009
	£'000	£'000
Depreciation of property, plant and equipment:
- owned assets	2,694	2,726
- assets held under finance leases	50	33
Amortisation of customer relationships	1,712	1,659
Auditors' remuneration:
- Audit of the Company's annual accounts	39	15
- Audit of the Company's subsidiaries	124	167
- Services relating to taxation	102	79
- All other services	14	13
Operating lease rentals payable	1,811	1,741
One-off revenue costs relating to new investment teams	1,217	1,564
Financial Services Compensation Scheme Levy	686	250

 

One-off revenue costs relating to new investment teams consist of the following:

 

	2010	2009
	£'000	£'000
Initial costs of setting up investment teams including rent, ICT costs and stock transfer costs	540	782
Recruitment costs	192	117
Incentive payments	485	665
	1,217	1,564

 

6 FINANCE INCOME - NET

	2010 £'000	2009 £'000
Interest income	399	1,445
Interest expense:
Interest payable on bank borrowings	(7)	(29)
Interest payable on other loans	(8)	(69)
Interest payable on finance leases	(7)	(8)
Interest payable and similar charges	(22)	(106)
Gains and losses on available for sale financial assets	170	196
Impairment	-	(252)
Finance income - net	547	1,283

 

7 TAX EXPENSE

	2010	2009
	£'000	£'000
Current taxation:
- Current tax on profits for the year	3,245	2,821
- Adjustment in respect of prior years	(91)	-
Deferred taxation:
Origination and reversal of timing differences:
- Current year	(220)	(75)
- Adjustment in respect of prior years	494	-
	3,428	2,746
The tax charge for the year is higher than the standard rate of corporation tax in the UK of 28% (2009: 28%). The differences are explained below.
	2010	2009
	£'000	£'000
Profit before tax	10,271	9,214
Profit multiplied by the rate of corporation tax of 28% (2009: 28%)	2,876	2,580
Tax effects of:
Income not subject to tax	(21)	-
Expenses not allowed for tax	193	144
Adjustments in respect of prior years	403	-
Other adjustments	(23)	22
	552	166
Tax charge for the year	3,428	2,746

 

8 EARNINGS PER SHARE

	2010	2009
	No.	No.
	000	000
Weighted average number of shares in issue in the year	44,320	44,136
	£'000	£'000
Reported earnings attributable to ordinary shareholders	6,843	6,468
Gains and losses on available for sale financial assets	(170)	56
Amortisation of client relationships	1,712	1,659
One-off revenue costs relating to new investment teams	1,217	1,564
Financial Services Compensation Scheme Levy	686	-
Tax on one-off costs	(903)	(918)
Adjusted earnings attributable to ordinary shareholders	9,385	8,829

 

Based on reported earnings
Basic and diluted earnings per share	15.44p	14.65p
Based on adjusted earnings
Basic and diluted earnings per share	21.18p	20.00p

 

9 DIVIDENDS PAID

 

Amounts recognised as distributions to equity shareholders in the period:

 

	2010	2009
	£'000	£'000
Final paid for 2009: 6.50p per share (2008: 6.50p)	2,375	2,869
Interim paid for 2010: 2.20p per share (2009: 2.10p)	813	927
Second interim paid for 2010: 5.00p per share (2009: nil)	1,974	-
	5,162	3,796

 

In addition, the Directors are proposing a final dividend in respect of the year ended 31 March 2010 of 2.25p per share which will absorb an estimated £1.0 million of shareholders' funds. It will be paid on 5 August 2010 to shareholders who are on the register of members on 18 June 2010.

 

10 INTANGIBLE ASSETS

	Goodwill   £'000	Client relationships £'000	Brand costs £'000	Total £'000
Cost
1 April 2008	23,238	6,031	183	29,452
Acquisitions	2,420	7,295	-	9,715
Adjustments to deferred consideration	(208)	-	-	(208)
31 March 2009	25,450	13,326	183	38,959
Acquisitions	-	493	-	493
Disposal	-	-	(183)	(183)
As at 31 March 2010	25,450	13,819	-	39,269
Amortisation
1 April 2008	-	616	37	653
Amortisation during year	-	1,513	146	1,659
31 March 2009	-	2,129	183	2,312
Amortisation during the year	-	1,712	-	1,712
Disposal	-		(183)	(183)
31 March 2010	-	3,841	-	3,841
Net book value
31 March 2010	25,450	9,978	-	35,428
31 March 2009	25,450	11,197	-	36,647
31 March 2008	23,238	5,415	146	28,799

 

Impairment tests for goodwill

Goodwill is allocated to the Group's cash generating units (CGUs) according to operating division as follows:

	2010	2009
	£'000	£'000
Private Client division	10,618	10,618
Financial Services division	13,308	13,308
Charles Stanley Securities	1,524	1,524
	25,450	25,450

 

The recoverable amount of a CGU is determined by first calculating the fair value less costs to sell. These calculations are based on recent transactions in the market. Where the fair value less costs to sell is lower than the carrying amount the recoverable amount is then determined based on value in use calculations. These calculations use pre-tax cash flow projections based on budgets approved by management and extrapolated using the following assumptions:

 

Growth rate 5% Inflation 3% Discount rate 7.2%

 

The discount rate used is the weighted average cost of capital for the Group.

Based on these calculations there was no impairment to goodwill at 31 March 2010.

 

 

11 PROPERTY, PLANT AND EQUIPMENT

	Freehold premises	Long leasehold premises	Short leasehold premises	Office equipment and motor vehicles	Total
	£'000	£'000	£'000	£'000	£'000
Cost
1 April 2008	474	1,984	4,585	10,510	17,553
Additions	-	18	666	2,434	3,118
Disposals	-	-	-	(3,290)	(3,290)
31 March 2009	474	2,002	5,251	9,654	17,381
Additions	-	10	94	988	1,092
Disposals	-	-	-	(646)	(646)
31 March 2010	474	2,012	5,345	9,996	17,827
Depreciation
1 April 2008	31	1,600	2,280	6,222	10,133
Charge for the year	9	27	411	2,312	2,759
Disposals	-	-	-	(3,258)	(3,258)
31 March 2009	40	1,627	2,691	5,276	9,634
Charge for the year	10	27	441	2,266	2,744
Disposals	-	-	-	(621)	(621)
31 March 2010	50	1,654	3,132	6,921	11,757
Net book value
31 March 2010	424	358	2,213	3,075	6,070
31 March 2009	434	375	2,560	4,378	7,747
31 March 2008	443	384	2,305	4,288	7,420

 

Office equipment and motor vehicles include the following amounts where the Group is a lessee under a finance lease:

 

	2010	2009
	£'000	£'000
Cost - capitalised finance leases	654	230
Accumulated depreciation	(81)	(95)
Net book value	573	135

 

The Group leases various vehicles and equipment under non-cancellable finance lease agreements. The lease terms are between one and three years, and ownership of assets lie within the Group.

12 AVAILABLE FOR SALE FINANCIAL ASSETS

	Listed investments	Unlisted investments	Total
	£'000	£'000	£'000
1 April 2008	1,515	3,392	4,907
Additions	5,349	-	5,349
Disposals	(3,423)	-	(3,423)
Revaluation in year	(381)	-	(381)
Impairment	(252)	-	(252)
31 March 2009	2,808	3,392	6,200
Additions	2,454	30	2,484
Disposals	(2,592)	(9)	(2,601)
Revaluation in year	346	(3)	343
31 March 2010	3,016	3,410	6,426

 

The 2009 figures have been adjusted to include the addition and disposal (£2,951,000) of an available for sale financial asset which had been included in the movement on financial assets at fair value through profit and loss last year.

 

13 TRADE AND OTHER RECEIVABLES

	2010 £'000	2009 £'000
Current:
Trade receivables	184,142	253,086
Other receivables	1,048	780
Prepayments and accrued income	2,913	3,321
	188,103	257,187
Non-current:
Other receivables	200	-
Prepayments and accrued income	1,311	-
	1,511	-

 

14 CASH AND CASH EQUIVALENTS

	2010	2009
	£'000	£'000
Cash at bank and in hand	36,617	35,951

 

At the balance sheet date there were also deposits for clients, not included in the consolidated balance sheet, which were held in trust in segregated bank accounts, amounting to £927 million (2009: £916 million).

 

15 TRADE AND OTHER PAYABLES

	2010	2009
	£'000	£'000
Current
Trade payables	181,692	248,848
Other taxes and social security	3,627	2,628
Other payables	4,236	8,047
Accruals and deferred income	3,390	4,840
	192,945	264,363
Non-current
Other payables - deferred consideration	900	1,724

 

16 BORROWINGS

 

	2010	2009
	£'000	£'000
Current
Bank of England base rate redeemable loan	157	157
4.5% convertible redeemable loan note	172	201
Bank of England base rate unsecured loan note	-	1,336
Finance leases liabilities	514	55
	843	1,749
Non-current
Finance leases liabilities	15	28

 

17 CALLED UP SHARE CAPITAL AND SHARE PREMIUM

 

	Number of shares '000	Ordinary shares £'000	Share premium £'000	Total £'000
Authorised shares with a par value of 25p each	80,000	20,000	-	20,000
Allotted and fully paid:
1 April 2008	44,118	11,029	1,855	12,884
Share options - issue of shares	25	6	18	24
31 March 2009	44,143	11,035	1,873	12,908
Scrip dividend	405	101	(101)	-
31 March 2010	44,548	11,136	1,772	12,908

 

During the year, 404,792 ordinary shares were issued fully paid as scrip dividends.

 

 

 

 

On 31 March 2010 the following options have been granted and remain outstanding in respect of ordinary shares of 25p in the Group under the Group's Save As You Earn Scheme.

 

	No of shares	Option price
Grant dated 19 December 2007	362,013	£2.48
Exercisable during the six months commencing 1 February 2011

 

18 RECONCILIATION OF NET PROFIT TO CASH GENERATED FROM OPERATIONS

 

	2010 £'000	2009 £'000
Net profit	10,271	9,214
Adjustments for:
Depreciation	2,744	2,759
Amortisation of intangible assets	1,712	1,659
Share options - value of employee services	42	92
Retirement Benefit Scheme	69	-
Dividend income	(88)	(79)
Interest income	(399)	(1,445)
Interest expense	22	106
(Profit)/loss on disposal of fixed assets	(12)	25
(Profit)/loss on disposal of available for sale financial assets	(170)	56
Changes in working capital:
Decrease in held for trading investments	89	2,092
Decrease in debtors	67,573	42,152
Decrease in creditors	(69,448)	(36,159)
Cash generated from operations	12,405	20,472

 

19 LEASE COMMITMENTS

 

Operating leases

	2010	2009
Group and company	£'000	£'000
Total commitments under leases at 31 March were:
Operating leases - Land and buildings
Not later than one year	2,029	1,773
Later than one but not later then five years	6,764	5,944
Later than five years	2,991	3,485
	11,784	11,202

 

20 PENSION COSTS

 

The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in independently administered funds.

The Group also sponsors the Charles Stanley & Co Ltd Retirement Benefits Scheme ("the Scheme"), which is a funded defined benefit arrangement. A full actuarial valuation of the Scheme was carried out at 13 May 2008 and updated to 31 March 2010 by a qualified actuary, independent of the Scheme's sponsoring employer. The major assumptions used by the actuary are shown below.

The Company currently pays contributions at the rate of 24.3% of pensionable pay plus £243,000 per annum. Member contributions of 3% of pensionable pay (nil for Directors) are included in the rate above.

It is the policy of the Group to recognise all actuarial gains and losses in the year in which they occur outside the income statement and in the statement of comprehensive income.

Present values of defined benefit obligations, fair value of assets and deficit

 

	2010	2009	2008	2007	2006
	£'000	£'000	£'000	£'000	£'000
Fair value of plan assets	21,696	16,163	17,956	18,672	15,852
Present value of defined benefit obligation	(26,652)	(20,057)	(19,908)	(20,193)	(18,281)
Deficit in scheme	(4,956)	(3,894)	(1,952)	(1,521)	(2,429)

 

As all actuarial gains and assets are recognised, the deficits shown above are those recognised in the balance sheet.

 

Reconciliation of opening and closing balances of the fair value of plan assets

 

	2010	2009
	£'000	£'000
Fair value of assets at start of year	16,163	17,956
Expected return on assets	938	1,123
Actuarial gains/ (losses)	3,740	(3,741)
Contributions by employer	987	958
Contributions by plan participants	86	90
Benefits paid, death in service insurance premiums and expenses	(218)	(223)
Fair value of assets at end of year	21,696	16,163

 

Reconciliation of opening and closing balances of the present value of the defined benefit obligation

	2010	2009
	£'000	£'000
Defined benefit obligation at start of year	20,057	19,908
Total employer current service cost	672	694
Interest cost	1,322	1,281
Employee contributions	86	90
Actuarial loss/ (gain)	4,733	(1,693)
Benefits paid, death in service insurance premiums and expenses	(218)	(223)
Defined benefit obligation at end of year	26,652	20,057

 

 

Total expense recognised in the income statement

 

	2010	2009
	£'000	£'000
Current service cost	672	694
Interest on pension scheme liabilities	1,322	1,281
Expected return on pension scheme assets	(938)	(1,123)
Total expense	1,056	852

 

Gains (losses) recognised in statement of comprehensive income

 

	2010	2009
	£'000	£'000
Difference between expected and actual return on scheme assets:
Amount	3,740	(3,741)
Percentage of scheme assets	17%	(23%)
Experience gains and losses arising on the scheme liabilities:
Amount	105	410
Percentage of present value of scheme liabilities	0%	2%
Effects of changes in the demographic and financial assumptions underlying the present value of the scheme liabilities:
Amount	(4,838)	1,283
Percentage of present value of scheme liabilities	(18%)	6%
Total amount recognised in statement of comprehensive income:
Amount	(993)	(2,048)
Percentage of present value of scheme liabilities	(4%)	(10%)

 

The cumulative amount of actuarial losses recognised in the statement of comprehensive income since adoption of IAS19 is £5.4 million (2009: £4.4 million).

 

Assets

 

	2010	2009	2008	2007
	£'000	£'000	£'000	£'000
Equities	10,291	7,671	9,142	10,989
Bonds	9,770	7,528	2,921	3,108
Other	1,635	964	5,893	4,575
	21,696	16,163	17,956	18,672

 

The fair values of the assets shown above at 31 March 2010 include £575,134 (2009: £510,625) of shares in Charles Stanley Group PLC.

 

Expected long term rates of return

 

The expected return on bonds is determined by reference to UK long dated gilt and bond yields at the balance sheet date. The expected rate of return on equities has been determined by setting an appropriate risk premium above gilt/bond yields having regard to market conditions at the balance sheet date.

 

The expected long term rates of return are as follows:

 

	2010	2009	2008	2007
Equities	7.50%	6.75%	7.25%	6.75%
Bonds	5.50%	4.75%	6.35%	5.50%
Cash	4.30%	4.00%	4.25%	4.00%
Overall for scheme	6.36%	5.65%	6.12%	5.78%

 

Assumptions

 

	2010	2009	2008	2007
	% per annum	% per annum	% per annum	% per annum
Inflation	3.50	3.10	3.70	3.30
Salary increases	3.00	3.00	3.00	3.50
Rate of discount	5.66	6.50	6.35	5.50
Allowance for pension in payment increases of RPI or 5% p.a. if less	3.45	3.05	3.65	3.30
Allowance for revaluation of deferred pensions of RPI or 5% p.a. if less	3.50	3.10	3.70	3.30

 

The mortality assumptions adopted at 31 March 2010 imply the following life expectations at age 65:

 

Male retiring at age 65 in 2010 22.3 years

Female retiring at age 65 in 2010 24.9 years

Male retiring at age 65 in 2030 24.3 years

Female retiring at age 65 in 2030 26.7 years

 

Best estimate of contributions to be paid to plan for the year ending 31 March 2011

 

The best estimate of contributions (employer and employee) to be paid to the plan for the year ending 31 March 2011 is £990,000 (2010: £960,000).