Charles Stanley warns over regulatory changes

Wealth manager Charles Stanley posted a jump in interim profit on Wednesday but cautioned that it may struggle to meet current market expectations if it does not see a higher level of trading activity or other revenue increases in the second half.

In the six months to the end of September, reported pre-tax profit was up 53% to £6.9m, with funds under management 1.3% higher at £24.3bn. Core business revenue rose 9.8% to £74m and the company upped its interim dividend to 2.5p per share from 1.5p.

However, the group warned over the impact of regulatory changes, which are pushing up IT costs and reducing commissions.

Chief executive Paul Abberley said: "The group continues to benefit from favourable markets which we think are likely to persist on a 6-12 month view. We do, however, face headwinds in the form of major regulatory change which is driving additional IT and process change costs and, in recent months, from lower than expected commission income. We will therefore need either a higher level of trading activity or other revenue increases to be generated in the second half in order to meet current market expectations.

"Notwithstanding this note of caution, we remain confident about the long-term prospects for Charles Stanley as the benefits from the detailed execution of the third leg of our strategy begin to bear fruit."

At 1000 GMT, the shares were down 5% to 364.85p.