Stonehage Fleming’s pre-tax profit fell 73% to £1.1 million over the year to 31 March 2018, as a result of higher costs across the business.
Despite enjoying revenue growth of 11% year-on-year, pre-tax profits at Stonehage Fleming’s UK business were £3 million lower during the 12-month period.
The drop was attributed to foreign exchange costs of £1.5 million, a £600,000 increase in revenue-related costs, and a £2.7 million increase in the fees charged by parent Stonehage Fleming Group for management and other services. The latter cost repleted its asset growth.
The company also experienced losses of £300,000 on the fair value of investments, which compares to gains of £400,000 in 2017.
Meanwhile, operating costs rose 22% to £31.6 million, which dampened an 11% rise in revenues to £32.9 million.
Assets under management totalled £7.1 billion at the end of March 2018, up from £6.9 billion.
During the year, dividends of £3.2 million were paid to shareholders, compared to zero in 2017.
The directors said they expected the group’s underlying results to improve over the next financial year, buoyed by continued revenue growth. However, they noted that costs were expected to rise due to plans to hire more staff and invest in systems.
Growing recurring revenues, investment performance and the retention of profitable funds under management and increased shareholder returns were identified by the board as the three main drivers of success.
At the end of March 2018, earnings per share stood at 0.18p, 0.59p lower than 2017’s total.
In 2018, the group undertook a capital restructuring, resulting in the entire share premium account being converted into a distributable reserve.
Three of the company’s non-trading subsidiaries, Stonehage Investment Partners LLP, FF&P Capital Management and Fleming Family & Partners Capital Management LLP, were dissolved.