Charles Stanley has quietly completed an overhaul of its board and members' skills as it installed ‘wholly new governance and administration’ procedures to increase ‘strategic control’ of the firm.
While the business had announced the recruitment of former Waverton boss Hugh Grootenhuis and Standard Life’s former Asia Pacific boss Marcia Campbell last year, it had previously offered little public hint of the scale of the change taking place.
That stood in stark contrast to an earlier long-running and at times fraught process of negotiating reform of the company’s pay structures, and a well-flagged reorganisation of operational management.
The reform was revealed in the group’s full year results for the 12 months to the end of March, showing profit before tax up from £8.8 million to £10.9 million and earnings per share up 40% to 17.2p.
Chair of the board and largest shareholder in the business Sir David Howard said: ‘To ensure that we are executing our strategic plan efficiently, we took steps to refresh Charles Stanley's governance.
‘We produced clear mandates for each of our boards and committees; we filled skills gaps and improved our management information. Taken together, the restructuring we have put in place over the course of the year has significantly enhanced our strategic control.
‘We [additionally] refreshed the enterprise risk framework to ensure that arising threats are even more closely monitored and managed. Specifically, we have reviewed in detail our tolerance for risk.
He added that the pace of change had required a ‘very demanding year for the board’.
Chief executive Paul Abberley (pictured) added that additional layers of administration were not ‘cost free’ however and that future revenue gains might not be added to the bottom line as quickly.
‘When combined with a substantial agenda of new regulation, [this] does limit the financial impact of the new business flows,' he added. ‘However, with much of this work behind us, we can increase the operational gearing of the business.’
Those notes of caution stood out in a year in which previous efforts to overhaul the company appeared to be paying off, with improved revenue across all areas of the business and consumer division Charles Stanley Direct this year reporting its maiden profit.
Core internal profit margins rose from 7.1% to 8%. The company lifted its annual dividend by a third to 8p per share.
Clients poured net inflows of £1.5 billion into the business, although more challenging market condition s at the end of the period marginally reduced total assets from £24 billion to £23.8 billion. Discretionary funds managed by the group rose 7.9% to £12.3 billion.
Abberley added that accelerating growth in the short term would likely be contingent on reforming the company’s distribution. ‘The focus for the 2019 financial year will be on driving top line revenue growth whilst improving operational efficiency and in turn harnessing operational gearing.
‘I am confident that we will continue to make meaningful progress toward attaining our target 15% operating margin. The speed with which we attain it will in part be dependent upon the pace of investment to develop sales channels and standardise processes, and in part on how quickly the group assimilates change.’