The results presented a stark contrast to the £6.1 million it had generated in profit a year prior. As revenues climbed 0.5 per cent year-on-year to £149.7 million, the firm's adjusted pre-tax profit stood at £4.2 million, compared to £13.5 million a year ago.

“The past year has been one of substantial change for Charles Stanley. Whilst several of the underlying elements of the results give cause for encouragement, the overall result leaves significant room for improvement,” said Charles Stanley's new chief executive, Paul Abberley, who took on his role in December.

The year saw the firm invest in a major programme to upgrade its systems and record-keeping in response to higher regulatory demands. Its planned re-modelling of the interface with its client base is on track for completion very shortly, the firm said.

“The decline in our profitability is essentially due to a combination of the rising costs associated with these changes, and, to an extent, the inevitable diversion of focus from business generation. But the upside is that we firmly believe that we have built a stronger base to take our business forward,” said Charles Stanley's chairman, David Howard.

Under the firm's revised strategy, led by Abberley and due to “begin in earnest” in the coming year, Charles Stanley is set to focus exclusively on wealth management in the UK and dispose of non-core businesses. These include Charles Stanley Securities, which provides broking and corporate finance services, and Charles Stanley Financial Solutions, its employee benefit solution provider.

Amid the disappointing results, Charles Stanley highlighted “some encouraging trends”. These included a 13.4 per cent growth of discretionary funds under management and a 35.1 per cent growth of Charles Stanley Direct's assets under administration on its core direct-to-client platform. Total funds under management and administration grew 6 per cent over the year to £21.3 billion.

“We are confident that the core activities of Charles Stanley are sound and are committed to delivering significant progress over the coming financial year,” said Abberley.