TIDMIFP
RNS Number : 0784I
IFG Group PLC
25 August 2016
IFG Group plc
Half-yearly financial report for the six months ended 30 June
2016
Solid first half performance, with uncertain market conditions
ahead
-- Increase in revenue and operating profit reflecting strong
organic growth in prior year, translating into increased earnings
and cash flow
-- Assets under administration and advice increased to GBP24.4
billion, with James Hay passing the GBP20 billion threshold in H1
2016
-- Organic growth rate of new clients in both businesses
impacted by client inertia pre and post Brexit decision
-- Increased demand for advice from existing clients of
Saunderson House given volatile market conditions
-- Relocation of remaining Group functions from Dublin to London
and closure of legacy UK finance functions underway, incurring
restructuring costs but delivering long-term benefits through
closer alignment with the businesses
-- Interim dividend increased by 11% to 1.60p in line with our progressive policy
Financial highlights
Six months Six months
ended ended Movement
30 June 2016 30 June 2015 %
---------- --------------------------------- --------------------------------------- -----------------------------------
Revenue GBP39.9m GBP34.5m +16%
Operating
profit GBP4.0m GBP2.2m +82%
Adjusted
operating
profit GBP5.8m GBP4.4m +31%
Basic EPS 2.63p 1.26p +109%
Adjusted
EPS 4.05p 2.87p +41%
Interim
dividend 1.60p 1.44p +11%
Twelve months Twelve months
ended ended Movement
30 June 2016 30 June 2015 %
---------- --------------------------------- --------------------------------------- -----------------------------------
Free cash
flow -
Twelve
months GBP10.2m GBP3.1m +229%
Business highlights
Six months Six months
ended ended Movement
30 June 2016 30 June 2015 %
--------------------------- ---------------------------------- ------------- --------------------------------------
Assets under administration
and advice
- Group GBP24.4bn GBP21.4bn +14%
Total SIPPs - James Hay 51,875 45,613 +14%
New SIPPs - James Hay 2,053 3,781 (46%)
SIPP attrition rates -
James Hay (annualised) 6.8% 6.4% +6%
Total clients - Saunderson
House 1,895 1,753 +8%
New clients - Saunderson
House 126 166 (24%)
Paul McNamara, Chief Executive of IFG Group plc, commented;
'We have delivered a solid first-half performance, with further
growth in revenue and profits as James Hay and Saunderson House
each continue to offer a compelling and distinctive proposition to
their clients. Market conditions are more challenging, impacted by
the possible consequences of Brexit, political uncertainty, lower
interest rates and stock market volatility. We are cautious that
the short-term trajectory for growth and profitability has
therefore moderated, notably in the Platform business. However, we
are confident our business model is robust and see no reason to
modify our strategic plans as we continue to invest in our
businesses to meet the increasing and evolving needs of our
customers and to generate sustainable returns for our
shareholders.'
Enquiries:
Paul McNamara Group Chief Executive Tel: +353 (0)1 632 4800
John Cotter Group Finance Director Tel: +353 (0)1 632 4800
Chief Executive's statement
Strategy and Performance
Benefiting from the investments we have made to enhance our
propositions for the clients of James Hay and Saunderson House, we
have delivered solid progress in H1 2016, with both businesses
growing revenue, profits and assets under administration and
advice. The growth was achieved organically, with increased demand
for advice from existing clients in Saunderson House, and James Hay
delivering growth from our focus on key strategic relationships,
offset by reduced flows from non-strategic relationships.
The focus on the two core businesses and the client growth
achieved in 2015 has delivered strong top-line growth, translating
into improved profitability and cash generation in both businesses,
compared to the first half of 2015. Assets under administration and
advice increased from GBP21.4 billion to GBP24.4 billion in the 12
months to 30 June 2016, with James Hay now administering more than
GBP20 billion of client assets. Revenue increased by 16% and the
adjusted operating profit increased by 31% from GBP4.4m to
GBP5.8m.
Profit attributable to the equity Shareholders of the parent
company increased by 108% to GBP2.8 million (2015 - GBP1.3
million).
The Group delivered earnings per share (EPS) of 2.63p in H1 2016
compared to 1.26p in H1 2015, an increase of 109%.
The Group delivered adjusted EPS of 4.05p in H1 2016 compared to
2.87p in H1 2015, an increase of 41%.
The detailed financial performance of the Group is outlined in
the Financial Review on pages 4 to 7. The individual performance of
the two businesses are discussed in more detail on pages 8 to
11.
Market and Environment
The markets in which we operate are growing, but increased
volatility in global markets and the impact of an uncertain
political environment, including the recent vote in the UK to exit
the EU, have impacted client activity, both positively and
negatively, in both businesses.
In James Hay, the macro environment, including turbulent
markets, Brexit, and continued uncertainty over possible changes
affecting pensions in the UK budget, led to an overall softening in
the market. The quality of new clients has been maintained as
evidenced in continued net inflows to the platform and the assets
under administration growth. However, in the absence of client book
acquisitions new business flow overall has reduced compared to H1
2015, in part as we continue to focus our distribution strategy on
fewer higher quality adviser relationships. The lowering of
interest rates will impact revenues in the second half and into
2017, though clearly the interest rate environment is fluid and
could move further. Attrition has increased marginally, and we also
continue to focus on rationalising legacy products and
consolidating client holdings in one account, where possible, onto
the strategic MiPlan service. This is beneficial for clients who
benefit from a more integrated view of their assets and simplified
reporting, and also reduces our operational complexity and costs to
support clients, which will in turn improve efficiency and deliver
improved operating metrics over time.
We believe the changes to regulatory capital requirements in
September 2016, and ongoing consolidation in the platform market,
may provide further opportunities for acquiring books of business,
such as the Capita and Towry transactions in 2015. We have not
concluded any such transactions in H1 2016 but will continue to
explore such options, where there is a complimentary fit with our
MiPlan product focus. The pace of these opportunities may
accelerate after the new capital rules have taken effect in late
2016, and therefore may defer such opportunities into 2017.
In Saunderson House, existing client activity and therefore
revenue in H1 2016 reflected increased client demand for advice.
However, it negatively impacted client appetite in the short-term
to switch advisers or employ new advisers, resulting in lower than
expected new client take-on. We see limited opportunities for
acquiring similar businesses, given the cultural and structural
differences which exist in these businesses. However, we continue
to explore opportunities to partner with individuals or
distributors, to further enhance organic growth opportunities. The
successful soft launch of our discretionary management service in
H1 2016 will be an increasing focus for growth as we go forward,
and will broaden and deepen the offering which Saunderson House can
offer to institutional and individual clients.
Clients are at the heart of our business. Advising and
supporting our clients through their investment lifecycle and
providing high quality execution and administrative capability,
will drive the sustainable long-term success of our business.
Operating in a complex and changing landscape for pension and
retirement wealth planning, the quality of our advice and the
transparency and capability of our service must continue to adapt
to meet those changes and to support our clients in achieving their
objectives.
In James Hay, our investment in the digital capabilities of our
offering will further enhance our service to direct and advised
clients, including efficient access to information and flexibility
as they manage and monitor their investment and retirement wealth,
with their independent financial advisors as appropriate. We are
committed to developing Saunderson House to meet the needs of
clients beyond the current advisory service, as reflected in our
investment in the discretionary management service offering, which
may be more appropriate for some of our new and existing
clients.
Putting the needs of our clients first is a guiding principle
and will ultimately drive the success of the business going
forward.
SHAREHOLDER RETURNS
A final dividend of 3.00 pence per share was approved by
Shareholders on 11 May 2016 and was paid on 20 June 2016. The Board
declares an interim dividend of 1.60 pence per share (2015 - 1.44
pence per share), representing an increase of 11% on last year, in
line with the Group's progressive dividend policy and the increase
in earnings.
Board Changes
Evelyn Bourke stepped down from the Board on 24 August 2016, and
from her roles as Chairperson of the Risk Committee and member of
the Remuneration Committee. The Board would like to express its
appreciation to Evelyn for her significant contribution.
We welcome Kathryn Purves who joined the IFG Board in May 2016,
bringing a wealth of experience in financial services and risk
management to the Group. Kathryn was appointed to replace Evelyn as
Chairperson of the Risk Committee on 24 August 2016.
Cara Ryan was appointed to replace Evelyn on the Remuneration
Committee on 24 August 2016. Cara also serves on the Audit and
Nomination Committees.
Outlook
As we look forward into H2 2016 and 2017, we see continued
market volatility as well as political and policy uncertainty in
the UK bringing both opportunities and challenges for our
businesses.
In James Hay, the reduction of the Bank of England base rate
will negatively impact revenues in the short-term. The recently
announced 25 bps reduction will reduce H2 2016 revenues by up to
GBP1.2 million, with a larger impact in 2017 assuming no further
changes to interest rates. We continue to look at our pricing
models, which may need to adapt to these circumstances as we
continue to invest in the product and service proposition we offer
to clients.
In Saunderson House, should market volatility and uncertainty
subside from the significant levels seen before and immediately
following the UK referendum, the additional activity to support
existing clients is likely to fall slightly in H2 2016 compared to
H1 2016 and allow for an increased focus on new client
activity.
Both markets in which our businesses operate, the platform and
the independent wealth management markets, will continue to benefit
from growth in a changing macro and regulatory environment. Overall
client demand for administration and advice will continue to
increase, and we believe the quality of our propositions and our
focus on supporting our clients through their investment
life-cycle, positions the Group for continued growth. We are
mindful of opportunities to accelerate that development through
inorganic means, where such opportunities are consistent with our
overall strategy and the philosophy of our existing businesses.
At a Group level, the change of our Group headquarters to
London, whilst incurring cost in the short-term, will improve the
overall efficiency and cohesiveness of the Group. This change does
not affect the domicile of the Group nor our current listing
arrangements.
We remain confident that our business is well positioned to
continue to develop and grow despite the challenging market
environment, as we go forward into 2017. However, the pace of that
growth in clients, assets, revenues and profits will be impacted if
market conditions remain difficult.
Financial review
cOMMENTARY On THE RESULTS
Revenue
Six months ended Six months ended
30 June 2016 30 June 2015
GBP'000 GBP'000
============================== ================ ================
Platform 24,032 20,860
Independent wealth management 15,869 13,653
============================== ================ ================
Total revenue 39,901 34,513
============================== ================ ================
Total revenues for the six months to 30 June 2016 rose 16% to
GBP39.9 million driven by growth of clients and assets and some of
the pricing changes implemented in 2015 translating into revenue
growth in H1 2016. While net client growth was behind expectations,
partly due to Brexit concerns, average revenue per client in James
Hay continues to improve reflecting the fact that our focus is to
attract clients with higher assets and more complex needs. In
Saunderson House the growth of the discretionary management service
will over time reduce average income per client levels, as the
business attracts clients to a less bespoke and therefore less
costly offering.
Assets under administration and advice
Six months ended
Six months ended 31 December Six months ended
30 June 2016 2015 30 June 2015
GBP'billion GBP'billion GBP'billion
============================== ================ ================ ================
Opening 23.5 21.4 20.1
Net inflows 0.8 2.1 0.6
Market movement 0.1 - 0.7
============================== ================ ================ ================
Closing 24.4 23.5 21.4
============================== ================ ================ ================
Platform 20.3 19.5 17.5
Independent wealth management 4.1 4.0 3.9
------------------------------ ---------------- ---------------- ----------------
Total 24.4 23.5 21.4
------------------------------ ---------------- ---------------- ----------------
During the period of 12 months to 30 June 2016, the total value
of assets under administration and advice increased by 14% from
GBP21.4 billion to GBP24.4 billion, with James Hay now
administering more than GBP20 billion of client assets. The Group
achieved net new business inflows of GBP0.8 billion in H1 2016,
with market movements having an immaterial impact on assets under
administration and advice for the period.
Operating profit and adjusted operating profit
Six months ended Six months ended
30 June 2016 30 June 2015
GBP'000 GBP'000
-------------------------------------- ---------------- ----------------
Platform 4,242 3,826
Independent wealth management 3,632 2,733
Group/other (2,054) (2,124)
====================================== ================ ================
Total adjusted operating profit 5,820 4,435
Amortisation of acquired intangibles (989) (868)
Exceptional items (799) (1,350)
====================================== ================ ================
Operating profit 4,032 2,217
Finance income 255 286
Finance costs (251) (238)
====================================== ================ ================
Profit before income tax 4,036 2,265
Income tax expense (1,269) (842)
====================================== ================ ================
Profit for the period from continuing
operations 2,767 1,423
====================================== ================ ================
Adjusted operating profit, before amortisation of acquired
intangibles and exceptional items, increased by 31% to GBP5.8
million from GBP4.4 million in H1 2015. The Group operating profit
rose 82% to GBP4.0 million. The increase in operating margin was
driven by a relative decrease in operating expenses, reflecting our
continued focus on driving operational efficiencies, as well as a
reduction in exceptional items.
Group/Other
Group costs include costs associated with our Dublin and London
based Group teams, the Board of Directors and other costs
associated with being a publicly listed company. Costs associated
with the relocating of Group functions are included in exceptional
items.
Exceptional items
Exceptional items of GBP0.8 million relate to the restructuring
provision for the relocation and consolidation of Group
headquarters (GBP1.3 million), which involves the transfer of the
Dublin office and the legacy UK finance function to London in late
2016, offset by a GBP0.5 million gain following the agreement of
the final consideration payable for the IFG UK Financial Services
(IFG UK FS) businesses sold in 2014.
Taxation
The Group effective tax rate has decreased to 31%, which remains
in excess of the UK corporate tax rate of 20%. This is mainly being
driven by the non-deductibility of certain exceptional costs. We
expect that the effective rate will reduce closer to the UK
corporate tax rate in H2 2016.
Adjusted EPS and adjusted earnings
Six
months
ended
Six months ended 30 June
30 June 2016 2015
-------------- ---------------------------------------------------------------------- ------------------------------------------
Per share Earnings Per share Earnings
pence GBP'000 pence GBP'000
============== ====================================== ============================== ========== ==============================
Profit
attributable
to owners of
the parent
Company 2.63 2,767 1.26 1,331
Amortisation
of
acquisition
related
intangible
assets 0.79 836 0.66 698
Exceptional
items 0.76 799 1.08 1,135
Discontinued
operations - - 0.09 92
Unwinding of
discount
applicable
to contingent
consideration (0.13) (133) (0.22) (229)
============== ====================================== ============================== ========== ==============================
Adjusted
earnings 4.05 4,269 2.87 3,027
============== ====================================== ============================== ========== ==============================
The Group uses adjusted operating profit and adjusted earnings
as measures of performance to eliminate the impact of items it does
not consider indicative of ongoing underlying performance due to
their unusual, exceptional or non-recurring nature or because they
result from an event of a similar nature. The above amounts are net
of tax if applicable.
Summary of cash flows
Six months Six months
ended ended
30 June 2016 30 June 2015
GBP'000 GBP'000
============================================== ============= =============
Cash flows generated from/(used in) operating
activities 1,330 (22)
Net capital expenditure (2,023) (2,276)
---------------------------------------------- ------------- -------------
Free cash flow (693) (2,298)
Interest and tax (210) (701)
Disposals of subsidiaries (66) 332
Dividends paid (3,025) (2,857)
Share issues 162 423
============================================== ============= =============
Net cash outflow (3,832) (5,101)
============================================== ============= =============
The Group's financial position remains highly liquid with cash
increasing by GBP6.6 million in the 12 months. Consistent with
prior years, the Group consumed cash in H1 2016 mainly due to the
payment of the final dividend and 2015 bonuses. This will reverse
in H2 such that the year-end cash position will likely be in excess
of the closing cash position as at 31 December 2015.
Financial and capital position
As signalled within the 2015 Annual Report and Accounts,
management have commenced a review of our future borrowing needs to
ensure we retain flexibility in our funding capability. The
existing facility of GBP17.5 million, of which we have drawn down
GBP7.0 million is due to expire in November 2016. The GBP7.0
million continues to be treated as a current liability within the
Consolidated Financial Statements. We are currently considering our
requirements for a replacement facility.
The Pillar 1 regulatory capital resources for the Group as at 31
December 2015 were GBP40.5 million. The Group continues to maintain
a level of capital resources which exceeds both the regulatory
capital requirements and working capital requirements of the Group.
Further disclosures are published in the Pillar 3 document on the
Group's website at www.ifggroup.com.
Dividend
The Board has declared an interim dividend of 1.60 pence per
share (H1 2015: 1.44 pence per share), which is an increase of 11%
on 2015, and reflects our commitment to a progressive dividend
policy. A final dividend for 2015 of 3.00 pence per share was
approved by the shareholders on 11 May 2016 and was paid on 20 June
2016.
Share price and market capitalisation
The Company's shares traded between a range of 148 pence and 186
pence during the period. The share price at 30 June 2016 was 174
pence (30 June 2015: 139 pence), reflecting an increase of 25% in
the 12-month period to 30 June 2016 and an increase of 2% since 31
December 2015. The market capitalisation at 30 June 2016 was
GBP183.4 million (30 June 2015: GBP146.3 million). There were
105,405,665 shares in issue as at 30 June 2016.
Return on capital employed
Return on capital employed is calculated as earnings before
interest and tax divided by capital employed. The return on capital
employed was 9.4% versus 5.4% in H1 2015, reflecting the
improvement in profitability in our underlying businesses.
Related party transactions
There were no material changes in the related party transactions
during the financial period. Transactions disclosed in note 12 are
consistent in nature with the disclosure in note 33 to the 2015
Annual Report and Accounts.
Going concern
Having reassessed the principal risks, the Directors considered
it appropriate to retain the going concern basis of accounting in
preparing the interim financial information.
Principal risks and uncertainties
The detailed review of the principal risks and uncertainties
which could impact the Group are detailed on pages 28 to 30 of the
Group's 2015 Annual Report and Accounts, a copy of which is
available on the Group's website www.ifggroup.com. The key risks
and uncertainties have not materially changed and are not expected
to materially change in the second half of the 2016 financial
year.
The impact of Brexit has been discussed in detail earlier in the
report, and we consider it premature to speculate on the potential
longer term impact until the basis of the UK's exit from the EU is
clarified. In the meantime, the short-term impact to the businesses
has been mainly felt in reduced interest rates and increased market
volatility, which in turn has affected customer confidence. The
Board have continued to monitor and review the principal risks and
uncertainties of the Group throughout the accounting period.
The table below shows a summary of the principal key risks and
uncertainties which could impact the Group for the remainder of the
financial year.
Strategic Risks
---------------------------------------------------------------------
1. Changing market conditions and increased competition
The Group operates in a highly competitive environment in which
economic, technological and other macro factors can negatively
impact on the demand for services. In addition, as a result
of tax and regulatory changes, market competition has increased
which may result in a decline in market share and profitability.
---------------------------------------------------------------------
2. Acquisitions & disposals
In respect of acquisitions, failures in selecting appropriate
investment targets, failing to integrate them into existing
businesses and successfully realising the growth expected from
such transactions may have an adverse impact on the Group. In
addition, financial and strategic risks related to business
disposals could lead to material warranty and indemnity claims.
=====================================================================
Operational risks
=====================================================================
3. Loss of key customers/intermediaries
Loss of key customers or intermediaries due to poor customer
outcomes may have an adverse effect on the Group's results.
=====================================================================
4. Loss of key management resources
Strong and effective management has been fundamental to the
Group's success. Failure to attract and retain highly skilled
employees and executives may have a material adverse effect
on the Group's operations and implementation of strategy.
5. Disruption to Information technology systems
Catastrophic loss of systems, undiscovered systems errors or
other external events could cause disruption to our businesses
and result in inability to perform core business activities
or reduction in client services.
=====================================================================
6. Cybercrime, fraud or security breaches in respect of the
Group's data, software or information technology systems
Failure to protect our information technology systems against
cybercrime, fraud or security breaches could result in loss
of data or disruption to business.
=====================================================================
Financial Risks
=====================================================================
7. Fluctuations in capital markets
Volatility within capital markets may adversely impact on the
value of assets under administration and advice or management
held by our underlying businesses which may affect revenues.
=====================================================================
8. Liquidity
Lack of sufficient, readily realisable financial resources to
meet the Group's obligations as they fall due or lack of access
to liquid funds on commercially viable terms could lead to inability
to pay clients and to regulatory breaches.
=====================================================================
9. Interest rates
A reduction in interest rates would have a negative impact on
interest income earned.
=====================================================================
10. Credit risk
The exposure to a financial loss as a result of a default by
customers or counterparties with which the Group transacts business,
including failure to receive contingent consideration on businesses
sold.
=====================================================================
11. Regulation and tax, including conduct considerations
Ongoing changes to regulation, taxation and the legislative
environment applicable to the Group's activities, operating
model or business opportunities can increase implementation
costs and disruption to our businesses. The Group could face
a loss arising from customer complaints, a fine and/or regulatory
censure from failure to comply with applicable regulations.
=====================================================================
Divisional performance
James Hay
Six months Six months
ended ended Movement
30 June 2016 30 June 2015 %
--------------- --------------------------------- ------------------------------ ------------------------------------
Revenue GBP24.0m GBP20.9m +15%
Adjusted
operating
profit GBP4.2m GBP3.8m +11%
Assets under
administration GBP20.3bn GBP17.5bn +16%
Total SIPPs 51,875 45,613 +14%
New SIPPs 2,053 3,781 (46%)
SIPP attrition
rates
(annualised) 6.8% 6.4% +6%
Industry overview
Volatile stock market performance and uncertainty in the run up
to the EU referendum negatively impacted investor sentiment. These
factors have impacted client activity levels and asset flows have
softened. Lower UK interest rates will impact revenues as we go
forward, though the situation remains fluid.
The platform market is expected to see continued consolidation
and change, particularly post impending changes to the capital
regime. Profitability in the platform industry remains a challenge
with many providers citing technology costs and operational
investment as the key drivers of rising costs. This provides
challenges and opportunities for James Hay. With our proprietary
technology and a profitable business, we can continue to invest in,
grow and develop our offering. Whilst there is potential for
further changes to pensions taxation, we see clear opportunities to
serve clients who increasingly seek a flexible and transparent
service to manage their pre and post retirement wealth.
The focus on end customer outcomes, and the quality of service
to clients remain key differentiators in the platform market, and
we continue to invest in improving our service to end consumers, as
well as their advisers, with an ongoing focus on enhancing the
client experience through our digital capabilities. We have further
invested in our IT and operational capability in 2016, adding
resource to focus on increased automation, broader investment
choice and improved reporting to clients and advisers.
Business review
The first half of 2016 has been challenging for James Hay and
the platform industry as a whole. The growth achieved in 2015 has
translated into increased revenues, profits and assets under
administration in H1 2016, compared to H1 2015, although the
operating margin reduced slightly as we increased spend in the IT
and change capability in the business to continue the drive for
increased automation and operational efficiency. We believe this is
key to our ability to scale the business efficiently going forward,
increasing the operating margin over time whilst continuing to
improve our service offering to end-consumers.
The MiPlan product remains at the core to our growth strategy
and underpins the majority of new end investor activity.
Rationalising legacy products, where it makes sense for clients,
will also remain a focus.
During 2015, the business made a strategic decision to focus
distribution efforts on a smaller number of high volume adviser
partners. This focus on quality rather than quantity has started to
deliver, with an increase in average case size to GBP364,000, and
with strong asset flows offsetting a decrease in overall new client
numbers.
Attrition rates (excluding client consolidations) have risen
marginally during the period, as expected, which is partly driven
by the new pension flexibilities as well as a number of pricing
changes that have been made to certain product lines.
Key achievements
-- James Hay retained their position as 6th largest platform in
the UK, based on Platforum Adviser Platform Research Q1 2016
-- Achieved 'Excellent' FinalytiQ rating for SIPP financial stability
-- Awarded 5 star Life and Pensions award for our online service
- FTAdviser Online Innovation and Service awards
-- Added additional discretionary fund managers to the new managed portfolio panel
-- Awarded 'Rapid Riser' for 2016 for being the most improved
platform by CoreData in relation to 44 key service criteria, rated
by c.1000 financial advisers
Strategy
The demand for flexible investment and drawdown options, and
improved reporting and analysis, will continue to be key themes
from investors and their advisers. The focus continues to be on
creating a 'digital platform' for the future and developing a range
of new online services. This will both benefit customers in
improved service quality whilst also offering scope for improved
efficiency and scalability in the business.
We will continue our focus on the higher-end of the adviser
market and seek to accelerate our new client flows through this
more targeted strategy in H2 2016, although this may be partially
offset by reduced flows from clients of non-strategic advisers.
The changing interest rate environment, increasing regulatory
expectations, and the need to offer a differentiated service
capability to clients, will require ongoing investment in the
business and changes to our pricing structures, to ensure our
commitment to continued improvement to our business model and
end-client outcomes can be delivered, whilst continuing to drive
improved financial performance.
Saunderson House
Six months Six months
ended ended Movement
30 June 2016 30 June 2015 %
---------- ----------------------------------- --------------------------------------- --------------------------------------
Revenue GBP15.9m GBP13.7m +16%
Adjusted
operating
profit GBP3.6m GBP2.7m +33%
Assets
under
advice GBP4.1bn GBP3.9bn +5%
Total
clients 1,895 1,753 +8%
New
clients 126 166 (24%)
Industry overview
The result of the UK's referendum on its membership of the EU,
and associated market volatility, has caused much uncertainty for
clients. Although the longer-term political and economic impacts of
Brexit remain unclear, Saunderson House is well placed to weather
such volatility, supporting its clients to manage their risk
profile and take advantage of opportunities in their investment
portfolios.
Key socio-demographic and structural market changes, such as the
increasing emphasis on pension planning and the introduction of
alternative savings vehicles also continue to support our ability
to add value to our clients through our comprehensive wealth
management offering.
The regulatory landscape continues to change, and whilst we do
not anticipate that the UK's exit from the EU will impact on
pending regulation changes such as the implementation of MiFID II,
we continue to monitor developments to ensure our operational
readiness for changes that may come.
Business review
We are building resilience into our business to provide the
foundations for controlled growth. We continue to focus upon a
number of business development opportunities, client service
enhancements and operational efficiency improvement projects which
will help to deliver this.
Revenues increased by 16% compared to H1 2015, and adjusted
operating profits by 33%. Assets under advice increased to GBP4.1
billion, and we now serve 1,895 clients. Whilst organic growth
slowed, partly in response to uncertain market conditions, demand
from our existing clients for advice has increased.
We continue to enhance our service delivery and develop our
proposition. Our discretionary management service has broadened our
offering to existing and prospective clients. It has also
strengthened our ability to leverage our investment proposition
which will develop the business in new and existing markets. Since
the beginning of 2016 we have been progressively rolling out our
client portal, Saunderson House Online, and continue to develop our
digital roadmap to meet the needs and expectations of our
clients.
We have continued to grow our client and asset base. New client
volumes were impacted somewhat during Q2 as we focused on serving
existing clients during the volatility triggered by the referendum.
However, expected revenue and volume of assets from new clients
continue to grow at a similar pace to 2015.
Delivering a high quality service to clients remains our primary
focus. Our ongoing client feedback programme has revealed high
satisfaction ratings amongst our client base, with an average
client advocacy score of 9.2 out of 10. Qualitative feedback shows
that clients value our personal service, communication,
professionalism, sound advice and relationship-driven approach.
Recruiting and retaining high-quality, motivated staff is
crucial to our success. We have undertaken a structural review of
the career paths and rewards available for our professional
advisers within the firm and are now in the process of implementing
the resulting recommendations. This aims to ensure that the skills
of our people are aligned with our clients' needs and those of an
expanding business.
Key achievements
We are also proud to have won the following awards in 2016.
These underline the strength of our proposition:
-- Money Marketing Awards 2016 - Best Investment Adviser
-- Wealth & Money Management Awards 2016 - Best HNWI Financial Planning Firm
-- WealthBriefing European Awards 2016 - Pensions Advisory Firm of the Year
-- Corporate Livewire 2016 Finance Award - Excellence in
Inheritance Tax & Estate Planning - UK
Investment proposition
Over the last decade, our Wealth Accumulation Balanced Model has
delivered an investment return of almost 75%, outperforming the
appropriate Asset Risk Consultants (ARC) comparator by over 14%. In
monetary terms, based on a starting portfolio value of GBP1.0
million, this equates to more than GBP140,000 of additional value
when compared with the ARC peer group comparator.
This performance has also been achieved over one, three and
five-year time horizons, demonstrating consistency of performance
over the long-term. These results have been achieved by strict
adherence to our straightforward and transparent process.
To reassure our clients and keep them abreast of developments
relating to the referendum and its aftermath, we actively
communicated our views and analysis both before and after the vote.
This included producing a series of Investment Bulletins in the run
up to 23 June 2016 as well as running seminars to facilitate open
discussion and inform the debate. Following the referendum result,
we have issued further updates, including our views on the
challenges facing commercial property funds and our view on the
outlook for equity markets. We also publish monthly video
interviews on our client portal and website from our Investment
Director, Christopher Sexton at www.saundersonhouse.co.uk.
Strategy
Our strategy remains consistent, to continue to offer a quality
service to our sophisticated clients, who value their trusted
relationship and the quality of investment advice which Saunderson
House offers to its clients. We see further growth in the
discretionary management service which was launched in H1 2016. We
will continue to invest in the digital capability of our business,
both to meet end-customer expectations for access to information,
and to improve the efficiency of the delivery of that service.
Condensed Consolidated Income Statement
Six months ended 30 June 2016
Six months
ended Six months
30 June ended
2016 30 June 2015
Unaudited Unaudited
Notes GBP'000 GBP'000
=================================================== ===== ============ =============
Continuing operations
Revenue 3 39,901 34,513
Cost of sales (31,407) (28,306)
=================================================== ===== ============ =============
Gross profit 8,494 6,207
Administrative expenses (3,663) (2,640)
Other gains 4 501 -
Other losses 4 (1,300) (1,350)
=================================================== ===== ============ =============
Operating profit 4,032 2,217
=================================================== ===== ============ =============
Analysed as:
Operating profit before exceptional items 4,831 3,567
Exceptional items 4 (799) (1,350)
=================================================== ===== ============ =============
Operating profit 4,032 2,217
Finance income 255 286
Finance costs (251) (238)
=================================================== ===== ============ =============
Profit before income tax 4,036 2,265
Income tax expense 6 (1,269) (842)
=================================================== ===== ============ =============
Profit for the period from continuing operations 3 2,767 1,423
Discontinued operations
Profit from discontinued operations (net of income
tax) 5 - 28
=================================================== ===== ============ =============
Profit for the period 2,767 1,451
=================================================== ===== ============ =============
Profit for financial period attributable to:
Owners of the parent company 2,767 1,331
Non-controlling interest - 120
=================================================== ===== ============ =============
Profit for the period 2,767 1,451
=================================================== ===== ============ =============
Earnings per share from continuing and discontinued operations
attributable to the owners of the Company during the period:
Six months Six months
ended ended
30 June 2016 30 June 2015
Unaudited Unaudited
============================================ =============== =============
Basic earnings per ordinary share (pence)
From continuing operations 2.63 1.35
From discontinued operations - (0.09)
============================================= =============== =============
From profit for the period 2.63 1.26
============================================= =============== =============
Diluted earnings per ordinary share (pence)
From continuing operations 2.61 1.35
From discontinued operations - (0.09)
============================================= =============== =============
From profit for the period 2.61 1.26
============================================= =============== =============
Condensed Consolidated Statement of Comprehensive Income
Six months ended 30 June 2016
Six months Six months
ended ended
30 June 2016 30 June 2015
Unaudited Unaudited
GBP'000 GBP'000
======================================================== ============== =============
Profit for the period 2,767 1,451
Other comprehensive income:
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of foreign currency
operations 270 (306)
Reclassification adjustment of exchange reserve upon
strike off of subsidiaries (516) -
Recycled to the condensed Consolidated Income Statement
on disposal of subsidiary (48) -
Other comprehensive income (294) (306)
======================================================== ============== =============
Total comprehensive income for the period 2,473 1,145
======================================================== ============== =============
Total comprehensive income attributable to:
Owners of the Company 2,473 1,086
Non-controlling interest - 59
======================================================== ============== =============
Total comprehensive income for the period 2,473 1,145
======================================================== ============== =============
Condensed Consolidated Statement of Financial Position
As at 30 June 2016
30 June 30 June
2016 Unaudited 31 December 2015
GBP'000 2015 Audited Unaudited
Notes GBP'000 GBP'000
========================================= ==================== =============== ============= ==========
ASSETS
Non-current assets
Property plant and equipment 11 2,844 2,597 2,159
Intangible assets 11 54,828 55,314 54,610
Deferred income tax asset 9 35 35
Other receivables - - 3,062
========================================= ==================== =============== ============= ==========
Total non-current assets 57,681 57,946 59,866
========================================= ==================== =============== ============= ==========
Current assets
Trade and other receivables 11 24,677 22,255 21,967
Income tax asset 18 15 -
Cash and cash equivalents 30,376 34,089 23,801
========================================= ==================== =============== ============= ==========
Total current assets 55,071 56,359 45,768
Assets of disposal group classified as
held for sale - - 3,495
========================================= ==================== =============== ============= ==========
55,071 56,359 49,263
========================================= ==================== =============== ============= ==========
Total assets 112,752 114,305 109,129
========================================= ==================== =============== ============= ==========
LIABILITIES
Non-current liabilities
Borrowings - - 6,746
Deferred income tax liabilities 2,785 2,903 2,937
Provisions for other liabilities 2,038 1,857 1,952
========================================= ==================== =============== ============= ==========
Total non-current liabilities 4,823 4,760 11,635
========================================= ==================== =============== ============= ==========
Current liabilities
Trade and other payables 11 18,859 22,813 17,171
Income tax liabilities 1,142 - 489
Borrowings 9 6,910 6,831 103
Derivative financial instrument - - 214
Provisions for other liabilities 1,795 703 1,129
========================================= ==================== =============== ============= ==========
Total current liabilities 28,706 30,347 19,106
Liabilities of disposal group classified
as held for sale - - 2,831
========================================= ==================== =============== ============= ==========
28,706 30,347 21,937
========================================= ==================== =============== ============= ==========
Total liabilities 33,529 35,107 33,572
========================================= ==================== =============== ============= ==========
Net assets 79,223 79,198 75,557
========================================= ==================== =============== ============= ==========
EQUITY
Share capital 10,093 10,078 10,078
Share premium 82,404 82,257 82,256
Other reserves 11 (14,240) (13,766) (13,995)
Retained earnings 966 629 (2,837)
========================================= ==================== =============== ============= ==========
79,223 79,198 75,502
Non-controlling interest - - 55
========================================= ==================== =============== ============= ==========
Total equity 79,223 79,198 75,557
========================================= ==================== =============== ============= ==========
Condensed Consolidated Statement of Cash Flows
Six months ended 30 June 2016
Six months Six months
ended ended
30 June 30 June
2016 2015
Unaudited Unaudited
Notes GBP'000 GBP'000
======================================================= ===== =============== ==========
Cash flows from operating activities
Cash generated from/(used in) operations 8 1,330 (22)
Interest received 98 49
Income taxes paid (194) (596)
======================================================= ===== =============== ==========
Net cash generated from/(used in) operating activities 1,234 (569)
======================================================= ===== =============== ==========
Cash flows from investing activities
Purchase of property, plant and equipment (715) (380)
Sale of property, plant and equipment - 4
Purchase of intangible assets (1,308) (1,900)
Disposal of subsidiaries (66) -
Contingent consideration received - 332
======================================================= ===== =============== ==========
Net cash used in investing activities (2,089) (1,944)
======================================================= ===== =============== ==========
Cash flows from financing activities
Dividends paid (3,025) (2,857)
Interest paid (114) (154)
Proceeds from issue of share capital 162 423
======================================================= ===== =============== ==========
Net cash used in financing activities (2,977) (2,588)
======================================================= ===== =============== ==========
Net decrease in cash and cash equivalents (3,832) (5,101)
Cash and cash equivalents at the beginning of
the period 34,085 30,040
Effect of foreign exchange rate changes 123 (172)
======================================================= ===== =============== ==========
Cash and cash equivalents at the end of the period 9 30,376 24,767
======================================================= ===== =============== ==========
Six months
Six months ended
ended 30 June
30 June 2015
2016 Unaudited Unaudited
Notes GBP'000 GBP'000
======================================================= ===== =============== ==========
Cash and short-term deposits:
- as disclosed on the condensed Consolidated Statement
of Financial Position 30,376 23,801
- cash and cash equivalents held in disposal group
classified as held for sale - 1,069
Bank overdrafts - (103)
======================================================= ===== =============== ==========
Cash and cash equivalents at the end of the period 9 30,376 24,767
======================================================= ===== =============== ==========
Condensed Consolidated Statement of Changes in Equity
Attributable
to the
owners
Share Share Other Retained of the Non-controlling Total
capital premium reserves earnings parent interest equity
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ---------- ---------- ---------- ------------ --------------- ----------
At 1 January 2016 10,078 82,257 (13,766) 629 79,198 - 79,198
--------------------------- ---------- ---------- ---------- ---------- ------------ --------------- ----------
Profit for the period - - - 2,767 2,767 - 2,767
Other comprehensive income
Currency translation:
- arising in the period - - 270 - 270 - 270
- reclassification
adjustment of
exchange reserve upon
strike off
of subsidiaries (see note
11) - - (516) - (516) - (516)
- recycled to the condensed
Consolidated
Income Statement on
disposal of
subsidiary - - (48) - (48) - (48)
=========================== ========== ========== ========== ========== ============ =============== ==========
Total comprehensive income
for
the period - - (294) 2,767 2,473 - 2,473
=========================== ========== ========== ========== ========== ============ =============== ==========
Dividends - - - (3,223) (3,223) - (3,223)
Issue of share capital 15 147 - - 162 - 162
Transfer of vested
share-based
payment - - (277) 277 - - -
Reclassification adjustment
of
exchange reserve upon
strike off
of subsidiaries (see note
11) - - - 516 516 - 516
Share-based payment
compensation:
- value of employee
services -
share options - - 97 - 97 - 97
Transaction with owners 15 147 (180) (2,430) (2,448) - (2,448)
=========================== ========== ========== ========== ========== ============ =============== ==========
At 30 June 2016 10,093 82,404 (14,240) 966 79,223 - 79,223
=========================== ========== ========== ========== ========== ============ =============== ==========
At 1 January 2015 10,039 81,872 (13,446) (1,747) 76,718 (4) 76,714
=========================== ========== ========== ========== ========== ============ =============== ==========
Profit for the period - - - 1,331 1,331 120 1,451
Other comprehensive income
Currency translation:
- arising in the period - - (245) - (245) (61) (306)
Total comprehensive income
for
the period - - (245) 1,331 1,086 59 1,145
=========================== ========== ========== ========== ========== ============ =============== ==========
Dividends - - - (2,857) (2,857) - (2,857)
Issue of share capital 39 384 - - 423 - 423
Transfer of vested
share-based
payment - - (436) 436 - - -
Share-based payment
compensation:
- value of employee
services -
share options - - 132 - 132 - 132
Transaction with owners 39 384 (304) (2,421) (2,302) - (2,302)
=========================== ========== ========== ========== ========== ============ =============== ==========
At 30 June 2015 10,078 82,256 (13,995) (2,837) 75,502 55 75,557
=========================== ========== ========== ========== ========== ============ =============== ==========
Attributable
to the
owners
Share Share Other Retained of the Non-controlling Total
capital premium reserves earnings parent interest equity
Audited Audited Audited Audited Audited Audited Audited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================== ======== ======== ============== ========= ============ =============== ========
At 1 January 2015 10,039 81,872 (13,446) (1,747) 76,718 (4) 76,714
============================== ======== ======== ============== ========= ============ =============== ========
Profit for the period - - - 6,325 6,325 598 6,923
Other comprehensive income
Currency translation:
- arising in the period - - (190) - (190) (54) (244)
- recycled to the Consolidated
Income Statement on disposal
of subsidiaries - - 102 - 102 - 102
============================== ======== ======== ============== ========= ============ =============== ========
Total comprehensive income
for the period - - (88) 6,325 6,237 544 6,781
============================== ======== ======== ============== ========= ============ =============== ========
Dividends - - - (4,385) (4,385) - (4,385)
Issue of share capital 39 393 - - 432 - 432
Share issue costs - (8) - - (8) - (8)
Transfer of vested share-based
payment - - (436) 436 - - -
Share-based payment
compensation:
- value of employee services
- share options - - 204 - 204 - 204
Disposal of subsidiaries - - - - - (540) (540)
============================== ======== ======== ============== ========= ============ =============== ========
Transaction with owners 39 385 (232) (3,949) (3,757) (540) (4,297)
============================== ======== ======== ============== ========= ============ =============== ========
At 31 December 2015 10,078 82,257 (13,766) 629 79,198 - 79,198
============================== ======== ======== ============== ========= ============ =============== ========
Notes to the Condensed Consolidated Financial Statements
1. Reporting entity
IFG Group plc is a public company, listed on the Irish and
London Stock Exchanges and is incorporated and domiciled in the
Republic of Ireland. This condensed set of financial statements
(financial information) comprise the Company and its subsidiaries.
The Group provides a range of financial solutions including full
platform services, pension administration and independent financial
advice.
2. General information
The half-yearly financial information is considered
non-statutory financial statements for the purposes of the
Companies Act 2014 and in compliance with section 340(4) of that
Act we state that:
-- the financial information for the half year to 30 June 2016
has been prepared to meet our obligation to do so under the listing
rules of the main securities market of the Irish Stock Exchange and
S.I. No. 277 of 2007;
-- the financial information for the half year to 30 June 2016
does not constitute the statutory financial statements of the
Company;
-- the statutory financial statements for the financial year
ended 31 December 2015 have been annexed to the annual return and
filed with the Companies Registration Office in Ireland;
-- the statutory auditors of the Company have made a report
under section 391 of the Companies Act 2014; and
-- the matters referred to in the statutory auditors' report
were unqualified, and did not include a reference to any matters to
which the statutory auditors drew attention by way of emphasis
without qualifying the report.
Basis of preparation
This financial information, for the six months ended 30 June
2016, has been prepared in accordance with the Transparency
(directive 2004/109/EC) Regulations 2007, the Transparency Rules of
the Central Bank of Ireland and International Accounting Standard
34 'Interim Financial Reporting' as adopted by the EU. This
financial information should be read in conjunction with the
financial statements for the year ended 31 December 2015, which
have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU.
The accounting policies applied are consistent with those used
to prepare the financial statements for the year ended 31 December
2015 and the financial statements have been prepared on a basis
consistent with that reported for the year ended 31 December
2015.
Updates to technical pronouncements
The following standards and interpretations issued by the
International Accounting Standards Board ('IASB') and the
International Financial Reporting Interpretations Committee
('IFRIC') are effective, for the first time in the current year,
and have been adopted with no significant impact on the Group's
result for the period or financial position.
- Amendments to IFRS 10 'Consolidated Financial Statements'
- Amendments to IFRS 11 'Joint Arrangements'
- Amendments to IFRS 12 'Disclosure of Interests in Other
Entities'
- Amendments to IAS 16 'Property, Plant and Equipment' and IAS
41 'Agriculture'
- Amendments to IAS 16 'Property, Plant and Equipment' and IAS
38 'Intangible Assets'
- Annual improvements to IFRS 2012 - 2014 cycle
- Amendments to IAS 27 (revised 2011) 'Separate Financial
Statements'
- Amendments to IAS 28 (revised 2011) 'Investments in Associates
and Joint Ventures'
- Amendments to IAS 1 'Presentation of Financial Statements'
- Amendments to IFRS 14 'Regulatory Deferral Accounts'
The following standards, amendments and interpretations have
been issued but are not yet effective for the Group. The Group will
apply the relevant standards from their EU effective dates and is
currently assessing their impact on its financial statements.
- IFRS 9 'Financial Instruments'
- IFRS 15 'Revenue from contracts with customer'
- IFRS 16 'Leases'
- Amendments to IAS 7 - 'Disclosure Initiative'
- Amendments to IAS 12 - 'Recognition of Deferred Tax Assets for
Unrealised Losses'
Critical accounting estimates and judgements
In the six months ended 30 June 2016, there were no significant
changes to the Group's approach to, and method of, making critical
accounting estimates and judgements compared to those disclosed in
the Audit Committee report of the 2015 Annual Report and
Accounts.
Use of alternative performance measures
The Group has identified certain measures that it believes will
assist in the understanding of the performance of the business.
These measures are not defined under IFRS and they may not be
directly comparable with other companies' adjusted measures. These
alternative performance measures are not intended to be a
substitute for, or superior to, any IFRS measures of performance
but management have included them as they consider them to be
important comparables and key measures used within the business for
assessing performance.
The following are key alternative performance measures
identified by the Group and used in the Group financial statements
and in the financial information presented herein.
Adjusted operating profit
Adjusted operating profit is defined as operating profit, before
amortisation of acquired intangibles, exceptional items and
discontinued operations. Management believes excluding these items
from the calculation of operating profit is useful because
management excludes items that are not comparable when measuring
operating profitability, evaluating performance trends and setting
performance objectives. It allows investors to evaluate the Group's
performance for different periods on a more comparable basis.
The reconciliation of adjusted operating profit to profit before
income tax has been disclosed in note 3.
Adjusted earnings and adjusted EPS
Adjusted earnings is defined as profit attributable to owners of
the parent company before amortisation of acquired intangibles,
exceptional items, discontinued operations and unwinding of
discount applicable to contingent consideration, net of tax where
applicable.
Adjusted EPS is defined as the continuing basic earnings per
ordinary share adjusted for amortisation of acquired intangibles,
exceptional items, discontinued operations and unwinding of
discount applicable to contingent consideration, net of tax where
applicable.
The Group uses adjusted operating profit, adjusted earnings and
adjusted EPS as measures of performance to eliminate the impact of
items it does not consider indicative of ongoing operating
performance due to their inherent unusual, exceptional, or
non-recurring nature or because they result from an event of a
similar nature.
A table showing the reconciliation from basic EPS to adjusted
EPS and a reconciliation from profit attributable to owners of the
parent Company to adjusted earnings is included in the Financial
Review.
Free cash flow
Free cash flow represents the cash flow generated from operating
activities less cash used in relation to capital expenditure.
Management considers free cash flow an important measure of the
Group's ability to generate cash and profits. Free cash flow is an
accurate measure of how much cash the Group has generated to
service its debts, pay dividends and further invest in its
operations. The financial review includes a reconciliation of free
cash flow to the net cash flow in the period.
3. Segmental information
In line with the requirements of IFRS 8, 'Operating segments',
the Group has identified the Group Chief Executive of the Company
as its Chief Operating Decision Maker (CODM). The Group Chief
Executive reviews the Group's internal reporting in order to assess
the performance of the Group and allocate resources. The operating
segments have been identified based on these reports.
Throughout the period, the Group Chief Executive considered the
business line perspective, based on two reporting segments:
platform and independent wealth management. The segments were
managed by senior executives who reported to the Group Chief
Executive and the Board of Directors. These segments are described
in the interim management report.
The Group Chief Executive assessed the performance of the
segments based on a measure of adjusted earnings. He reviewed
working capital and overall balance sheet performance on a Group
wide basis but also received reports on all measures at an
individual business level.
The Group earns its revenues in these segments by way of fees
from the provision of services. Intersegment revenue is not
material and thus not subject to separate disclosure.
Goodwill is allocated to cash-generating units on a reporting
segment level and that is the level at which it is assessed for
impairment. Income tax is managed on a centralised basis and is
therefore not allocated between operating segments for the purpose
of presenting information to the CODM. The information provided to
the Group Chief Executive for the reportable segments, for the
period ended 30 June 2016 is as follows:
Independent
wealth Group/
Platform management Other Total
GBP'000 GBP'000 GBP'000 GBP'000
====================================== ======== =========== =========================== ==========================
Revenue 24,032 15,869 - 39,901
====================================== ======== =========== =========================== ==========================
Adjusted operating profit/(loss) 4,242 3,632 (2,054) 5,820
Amortisation of acquired intangibles (989) - - (989)
Exceptional items - 501 (1,300) (799)
====================================== ======== =========== =========================== ==========================
Operating profit/(loss) 3,253 4,133 (3,354) 4,032
Finance income 74 91 90 255
Finance costs - - (251) (251)
====================================== ======== =========== =========================== ==========================
Profit/(loss) before income tax 3,327 4,224 (3,515) 4,036
Income tax expense (1,269)
====================================== ======== =========== =========================== ==========================
Profit for the period from continuing
operations 2,767
====================================== ======== =========== =========================== ==========================
The prior year comparatives are as follows:
Independent
wealth Group/
Platform management Other Total
GBP'000 GBP'000 GBP'000 GBP'000
============== ======== ============================== ================================ ============================
Revenue 20,860 13,653 - 34,513
============== ======== ============================== ================================ ============================
Adjusted
operating
profit/(loss) 3,826 2,733 (2,124) 4,435
Amortisation
of acquired
intangibles (868) - - (868)
Exceptional
items - (1,350) - (1,350)
-------------- -------- ------------------------------ -------------------------------- ----------------------------
Operating
profit/(loss) 2,958 1,383 (2,124) 2,217
Finance income 52 174 60 286
Finance costs - - (238) (238)
-------------- -------- ------------------------------ -------------------------------- ----------------------------
Profit/(loss)
before income
tax 3,010 1,557 (2,302) 2,265
Income tax
expense (842)
============== ======== ============================== ================================ ============================
Profit for the
period from
continuing
operations 1,423
============== ======== ============================== ================================ ============================
Assets and liabilities as at 30 June 2016
Independent
wealth Group/
Platform management Other Total
GBP'000 GBP'000 GBP'000 GBP'000
=============================================== ======== =========== ======== ==========
ASSETS
Segment assets 77,007 23,554 12,164 112,725
Deferred income tax asset 9
Income tax asset 18
=============================================== ======== =========== ======== ==========
Total assets as reported on the condensed
Consolidated Statement of Financial Position 112,752
=============================================== ======== =========== ======== ==========
LIABILITIES
Segment liabilities (10,753) (7,299) (11,550) (29,602)
Deferred income tax liabilities (2,785)
Current income tax liabilities (1,142)
=============================================== ======== =========== ======== ==========
Total liabilities as reported on the
condensed Consolidated Statement of Financial
Position (33,529)
=============================================== ======== =========== ======== ==========
Assets and liabilities as at 30 June 2015
Independent
wealth Group/
Platform management Other Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- -------- ----------- -------- --------
ASSETS
Segment assets 71,941 22,399 11,259 105,599
Deferred income tax asset 35
Asset of disposal group classified as
held for sale 3,495
=============================================== ======== =========== ======== ========
Total assets as reported on the condensed
Consolidated Statement of Financial Position 109,129
=============================================== ======== =========== ======== ========
LIABILITIES
Segment liabilities (10,030) (6,038) (11,247) (27,315)
Deferred income tax liabilities (2,937)
Current income tax liabilities (489)
Liabilities of disposal group classified
as held for sale (2,831)
=============================================== ======== =========== ======== ========
Total liabilities as reported on the condensed
Consolidated Statement of Financial Position (33,572)
=============================================== ======== =========== ======== ========
Assets and liabilities as at 31 December
2015
Independent
wealth Group/
Platform management Other Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- -------- ----------- -------- --------
ASSETS
Segment assets 76,236 21,591 16,428 114,255
Deferred income tax asset 35
Income tax asset 15
=============================================== ======== =========== ======== ========
Total assets as reported on the condensed
Consolidated Statement of Financial Position 114,305
=============================================== ======== =========== ======== ========
LIABILITIES
Segment liabilities (12,352) (9,084) (10,768) (32,204)
Deferred income tax liabilities (2,903)
=============================================== ======== =========== ======== ========
Total liabilities as reported on the condensed
Consolidated Statement of Financial Position (35,107)
=============================================== ======== =========== ======== ========
4. Exceptional items
Exceptional items charged against operating profit
Six months Six months
ended ended
30 June 2016 30 June 2015
GBP'000 GBP'000
==================================== ============== ==================================
Disposal of IFG UK FS 501 (1,350)
Group headquarters relocation costs (1,300) -
Total (799) (1,350)
==================================== ============== ==================================
2016
Disposal of IFG UK FS
A gain of GBP0.5 million has been recognised following the
agreement of the final consideration payable for the IFG UK FS
businesses sold in 2014. The 2015 provision for the ongoing costs
has been partly utilised during H1 2016. The remaining provision of
GBP0.8 million remains appropriate.
Group headquarters relocation costs
A provision of GBP1.3 million relating to the planned
restructuring of Group headquarters has been recognised in the
period, which involves the closure of the Dublin office and legacy
UK finance functions.
2015
Disposal of IFG UK FS
The exceptional item for the six-month period to 30 June 2015
related to the provision for ongoing costs for the sale of IFG UK
FS sold in 2014. Estimates of all costs associated with unwinding
the legal entity structure and associated regulatory and legal
costs were revised in 2015.
5. Discontinued operations
The 2015 numbers relate to the general insurance brokerage
business, ARB, which was sold during 2015. This transaction closed
in December 2015.
6. Income tax expense
Six months Six months
ended ended
30 June 2016 30 June 2015
GBP'000 GBP'000
============================================ ============= =============
Current tax
- current period expense (1,374) (1,124)
- prior period over/(under) provision 14 (14)
============================================ ============= =============
Total current tax expense (1,360) (1,138)
Movement in deferred tax 91 81
-------------------------------------------- ------------- -------------
Income tax expense before exceptional items (1,269) (1,057)
Tax effect of exceptional items - 215
============================================ ============= =============
Income tax expense (1,269) (842)
============================================ ============= =============
7. Dividends
A final dividend for 2015 of 3.00 pence per share was approved
by the shareholders on 11 May 2016 and was paid on 20 June 2016.
The Board has declared an interim dividend of 1.60 pence, an
increase of 11% on 2015.
8. Cash generated from/(used in) operations
Six months
ended Six months
30 June ended
2016 30 June 2015
GBP'000 GBP'000
==================================================== ========== =============
Continuing operations
Profit before income tax 4,036 2,265
Depreciation and amortisation 2,273 2,319
Disposal of subsidiaries (48) -
Gain on sale of property, plant and equipment - (4)
Finance costs 251 238
Finance income (255) (286)
Foreign exchange movement 21 24
Non-cash share-based payment compensation charges 97 132
Increase in trade and other receivables (2,098) (3,113)
Decrease in current and non-current liabilities (2,947) (1,903)
==================================================== ========== =============
Cash generated from/(used in) continuing operations 1,330 (328)
==================================================== ========== =============
Discontinued operations
Profit before income tax - 55
Impairment loss - 498
Finance income - (2)
Increase in trade and other receivables - (343)
Increase in current and non-current liabilities - 98
==================================================== ========== =============
Cash flow from discontinued operations - 306
==================================================== ========== =============
Cash generated from/(used in) operations - net 1,330 (22)
==================================================== ========== =============
9. Analysis of net cash/(debt)
Opening Cash Other Closing
balance flow movements balance
GBP'000 GBP'000 GBP'000 GBP'000
=============================== ======== ======== ========== ========
Cash and short-term deposits 34,089 (3,836) 123 30,376
Overdrafts (4) 4 - -
=============================== ======== ======== ========== ========
34,085 (3,832) 123 30,376
Bank loans due within one year (6,827) - (83) (6,910)
=============================== ======== ======== ========== ========
Total 27,258 (3,832) 40 23,466
=============================== ======== ======== ========== ========
OTHER MOVEMENTS
Other movements of GBP40,000 include the impact of exchange rate
movements of GBP150,000 arising on balances denominated in
currencies other than Sterling offset by the non-cash impact of
unamortised borrowing transaction costs of GBP110,000.
10. Financial risk management and financial instruments
Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk (including interest rate risk and foreign
currency risk), credit risk and liquidity risk.
The financial information does not include all financial risk
management information and disclosures required in the annual
financial statements, and should be read in conjunction with the
Group's 2015 Annual Report and Accounts as at 31 December 2015.
There have been no changes in any risk management policies adopted
by the Group.
Liquidity and capital resources
Compared to the year ended 31 December 2015, there was no change
in the contractual undiscounted cash outflows for financial
liabilities. The Group has in place a GBP17.5 million facility with
Barclays, with GBP7.0 million currently utilised. There have been
no scheduled repayments in the six-month period to 30 June 2016. A
repayment of GBP7.0 million is due in November 2016.
Fair value estimation
All financial instruments, for which fair value is recognised or
disclosed, are categorised within the fair value hierarchy
(described as follows) based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1 - Quoted market prices in an active market (that are
unadjusted) for identical assets or liabilities.
Level 2 - Valuation techniques (for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable).
Level 3 - Valuation techniques (for which the lowest level input
that is significant to the fair value measurement is
unobservable).
For financial instruments that are recognised at fair value on a
recurring basis, the Group determines whether transfers have
occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of each
reporting period.
At 30 June 2016, level 2 financial instruments at fair value
were GBP nil (30 June 2015: GBP0.2 million). There was no change in
the valuation method of financial instrument assets or liabilities,
carried at fair value, during the six-month period to 30 June
2016.
The fair value of the Group's financial assets and liabilities
approximates their carrying amount.
11. Other statement of financial position items
Property, plant and equipment and intangible assets
In the half year to 30 June 2016, the Group spent GBP2.0 million
(H1 2015: GBP2.3 million) on PPE and intangible assets, including
computer software to continue to enhance product capability and
operational efficiency, in both businesses. The Group also charged
amortisation and depreciation expense of GBP2.3 million (H1 2015:
GBP2.3 million) in relation to continuing operations.
At 30 June 2016, amounts authorised by the Directors as capital
commitments, but not contracted for, were GBP4.2 million (31
December 2015: GBP6.3 million).
Trade and other receivables
The increase in trade and other receivables from GBP22.3 million
as at 31 December 2015 to GBP24.7 million as at 30 June 2016 is
mainly due to the movement in work in progress in the period.
Trade and other payables
The decrease in trade and other payables from GBP22.8 million as
at 31 December 2015 to GBP18.9 million as at 30 June 2016 is due
principally to the payment of 2015 bonuses.
Other reserves
The other reserves balance increased by GBP0.4 million from
GBP13.8 million as at 31 December 2015 to GBP14.2 million as at 30
June 2016. This movement is attributable to the half year charge
for share options of GBP0.1 million, transfer of vested share based
payments to retained earnings of GBP0.3 million, movement of GBP0.3
million on the translation of the non-sterling foreign operations
and GBP0.5 million reclassification to retained earnings upon the
strike-off of certain foreign currency operations.
12. Related party transactions
Key management personnel compensation
As per IAS 24 'Related party disclosures', the Group has defined
the term 'key management personnel' as its Directors. In addition
to their salaries, the Group also provides non-cash benefits to
Directors and contributes to post-employment plans on behalf of
certain Directors.
30 June 30 June
2016 2015
GBP'000 GBP'000
=================================================== ======== ========
Salaries and other short-term benefits 486 412
Post-employment benefits 55 53
Long-term incentives and share-based payments 19 12
Charged to Condensed Consolidated Income Statement 560 477
=================================================== ======== ========
Transactions and balances with joint ventures and associates
At 30 June 2016, Group companies were owed GBP0.5 million (31
December 2015: GBP0.5 million) by Rayband Limited, an Irish
unlisted company and an associate of the Group. During the period
GBPnil was advanced to Rayband Limited. Amounts owed are interest
free and repayable on demand. The balance of GBP0.5 million (31
December 2015: GBP0.5 million) is fully provided for.
During the period, Rayband Limited entered into a transaction to
sell its only asset, land based in County Dublin. The sale was
completed in August 2016, and will materially improve the financial
position of Rayband Limited. Whilst we do not control this entity,
or have final clarity on the future plans in relation to it, we are
re-evaluating the extent of the provision required against the
receivable. The impact to the Group could be the reversal of some
or all of the provision of GBP0.5 million currently held. Any
recovery would be treated as an exceptional gain in the Group's
accounts. This position may be clarified in H2 2016.
Transactions involving entities in which key management have an
interest
During the period, Group companies earned GBP41,000 (2015:
GBP22,000) from key management for services provided by the two
businesses. All fees were charged on an arms-length basis with our
normal terms and conditions. At the end of the period, Group
companies were owed GBP27,000 (2015: GBP7,000).
13. Commitments, contingencies and guarantees
Given the nature of the business, the Group has a number of
claims against it. The Group has procedures in place to assess the
veracity of the claims and provision has been made to cover its
best estimate of the exposure in respect of these matters. No
provisions have been recorded for other contingencies, as the
Group's obligations under them are not probable and estimable.
In March 2016, the Group received a notice of a claim under the
indemnities provided in the sale of the International Segment
completed in
2012. The claim is considered by the purchaser to be an amount
of up to GBP3.0 million but we do not accept that it is a valid
claim under the terms of the sale agreement, and ongoing
discussions with the counterparty have not yet resolved the
position to our satisfaction. Therefore, in light of our view,
supported by legal advice, that this is not a valid claim, the
Group does not believe a provision is quantifiable, or necessary,
in respect of this matter.
The Company, along with some of its subsidiaries, has guaranteed
Group borrowings of GBP7.0 million (31 December 2015: GBP7.0
million). There are pledges over certain shares in some subsidiary
companies under the bank facility agreement.
The Company has provided rental guarantees, to landlords of
Group occupied premises, totalling GBP0.6 million over the period
to 2017 (H1 2015: GBP1.1 million).
Responsibility Statement
The Directors are responsible for preparing the half-yearly
financial report in accordance with the Transparency (directive
2004/109/EC) Regulations 2007, the related transparency rules of
the Central Bank of Ireland and with IAS 34 'Interim Financial
Reporting', as adopted by the EU.
The Directors are required to prepare the half-yearly financial
report on a going concern basis unless it is not appropriate. Since
the Directors are satisfied that the Group has the resources to
continue in business for the foreseeable future, the financial
information continues to be prepared on the going concern
basis.
Each of the Directors, whose names and functions are outlined
below, confirm that to the best of each persons' knowledge and
belief:
- the half-yearly set of financial statements, comprising the
condensed consolidated income statement, the condensed consolidated
statement of comprehensive income, the condensed consolidated
statement of financial position, the condensed consolidated
statement of cash flows, the condensed consolidated statement of
changes in equity and the related notes, have been prepared in
accordance with International Accounting Standard 34 'Interim
Financial Reporting' as adopted by the EU; and
- the financial information includes a fair review of the
information required by:
(a) regulation 8(2) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being an indication of important events that have
occurred during the first six months of the financial year and
their impact on the condensed set of financial statements and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) regulation 8(3) of the Transparency (Directive 2004/109/EC)
Regulations 2007, being related party transactions that have taken
place in the first six months of the current financial year and
that have materially affected the financial position or performance
of the Group during that period and any changes in the related
party transactions described in the last Annual Report that could
do so.
The names and functions of the Directors as of 30 June 2016 are
listed below:
John Gallagher - Chairman
Colm Barrington - Non-Executive
Evelyn Bourke - Non-Executive (Resigned 24 August 2016)
John Cotter - Group Finance Director
Paul McNamara - Group Chief Executive
David Paige - Non-Executive
Robin Phipps - Non-Executive
Peter Priestley - Non-Executive
Kathryn - Non-Executive (Appointed 17 May 2016)
Purves
Cara Ryan - Non-Executive
On behalf of the Board
P McNamara D Paige
Group Chief Executive Non-Executive Director
24 August 2016
Independent Review Report to IFG Group plc
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2016, which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated statement of
financial position, the condensed consolidated statement of cash
flows, the condensed consolidated statement of changes in equity
and the related notes 1 to 13. We have read the other information
contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this
report, or the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Transparency (Directive 2004/109/EC) Regulations 2007and the
Transparency Rules of the Central Bank of Ireland.
As disclosed in the basis of preparation, the annual financial
statements of the Group are prepared in accordance with IFRSs as
adopted by the European Union. The condensed set of financial
statements included in the half-yearly financial report has been
prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
Ireland and the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2016 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 "Interim Financial
Reporting" as adopted by the European Union, the Transparency
(Directive 2004/109/EC) Regulations 2007, the Transparency Rules of
the Central Bank of Ireland.
Deloitte
Chartered Accountants and Statutory Audit Firm
Dublin
24 August 2016
Forward looking statements
Certain statements in this report are forward-looking. Although
the Group believes that the expectations reflected in these
forward-looking statements are reasonable, it can give no guarantee
that these expectations will prove to have been correct. Because
these statements involve risks and uncertainties, actual results
may differ materially from those expressed or implied by these
forward-looking statements. The Group undertakes no commitment to
update any forward-looking statements whether as a result of new
information, future events or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR USRWRNKAWUAR
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