Outlook good says Charles Stanley boss

INDEPENDENT stockbroker Charles Stanley yesterday posted a 24.4 per cent decline in full-year underlying pre-tax profit, but said it was optimistic for the next six to 12 months.

The company said funds under management fell 18 per cent to £9bn, and that revenue fell by 3.6 per cent to £101.8m.

For the full year ended 31 March, the broker posted an underlying pre-tax profit of £9.3m, compared with £12.4m a year ago.

But chairman Sir David Howard was upbeat about the future.

“Charles Stanley has demonstrated its resilience even in the harshest conditions,” he said.

Howard added:“We are well placed if these continue and well placed, equally, to move forward when the economy recovers.”

“It is too early to say if this is a short-lived bounce or if the gathering momentum is the beginning of a cyclical upturn,” he said, adding that he veered toward the latter view.

Private client income was up nearly one per cent to £84.5m, and the company raised its final dividend to 6.65p per share from 6.50p.

In May, rival London-based broker Collins Stewart said it was cautious about the outlook as market conditions remained uncertain, while Evolution said it was trading profitably.

Numis Securities analyst David McCann said the quality of Charles Stanley’s recurring income and discretionary funds under management is below the average among traditional wealth management peers.

McCann, who has a 171p price target on the stock, cut his rating to “sell” from “reduce”, saying Charles Stanley is overvalued on both a relative and absolute basis.

Shares of Charles Stanley have gained 56 per cent in the last three months, outperforming the FTSE Small Cap Index, which has gained 41 per cent during the period.

But yesterday its shares fell five per cent to 238p.