Charles Stanley has warned that without an increase in trading volume or other revenue the house is likely to miss market expectations for 2017, despite first half profit climbing 53% to £6.9 million.
Shares in the business opened 5.6% lower, 21.6p down at 349p.
The note of caution was issued even as the group said it had ‘completed the initial turnaround and continued the trend of improving profitability,’ as a series of key metrics were achieved.
In addition to the stark rise in headline profits, the company’s core margin climbed from 6.2% to 7.3% and core revenue rose 9.8% to £7.4 million. It emphasised that its short term assessment of market conditions remained resilient.
‘That said, in recent months, we have faced various headwinds,’ chief executive Paul Abberley (pictured) said.
‘First, there is an unusually high level of regulatory change being introduced in 2018 which is expected to give rise to an additional IT and process change cost in the second half of approximately £900,000.
‘Secondly, although overall share trading volumes have been in line with our expectations, the commission income generated from it in recent months has been lower because of mix variances.
‘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.’
The company emphasised that its recent restructure was on track and continued to ‘bear fruit’ and upped its dividend from 1.5p to 2.5p.
Overall client funds within the business rose 1.3% over the period to a total of £24.3 billion.
The company added that it recently appointed a ‘highly experienced transformation director’ to drive internal cost management.
‘His work will complement process change already being implemented within each division. Currently this includes upgrading systems in the asset management and financial planning divisions and seeking to standardise tools used by the investment management services division.’