IFG Group PLC Trading Update (7118D)
02 February 2018 - 6:00PM
UK Regulatory
TIDMIFP
RNS Number : 7118D
IFG Group PLC
02 February 2018
IFG Group plc
Update on Trading, Elysian Fuels and Other Matters
2(nd) February 2018
This announcement contains inside information.
IFG Group plc (the "Company" or the "Group") is a focused
financial services group with full market listings in London and
Dublin. The Company provides a range of financial solutions through
its subsidiaries, James Hay and Saunderson House. James Hay is a
market leading UK retirement wealth planning platform and
Saunderson House is an award-winning independent financial
adviser.
Trading update
The Group continues to make good progress in the implementation
of its strategy of developing its two first class, client-centric
businesses.
James Hay has added more than 6,000 new clients in 2017, an
increase of over 30% compared to 2016 and has GBP25.5bn assets
under administration (2016: GBP22.1bn). Attrition within James Hay
was 6.2% (2016: 6.3%). The pricing changes implemented, together
with the increase in interest rates in November 2017, provide an
improved and more stable and predictable revenue stream for James
Hay in 2018, in addition to further organic growth.
Saunderson House has added 247 new clients compared to 215 in
2016, driven by the faster than anticipated growth in its new
discretionary management offering. Saunderson House now advises on
GBP5.1bn of clients' assets (2016 - GBP4.6bn).
On the basis of preliminary, unaudited financial information,
the Group expects to report adjusted operating profits for the year
ended 31(st) December 2017 in line with market consensus.
Strategy Update
Saunderson House continues to perform strongly, winning clients
and growing assets under advice, and is uniquely positioned in its
core markets. The Board, in consultation with its advisers, has
however concluded that greater value for shareholders may be
created by a sale of Saunderson House. In this regard, we have
received a number of approaches. Discussions are at a preliminary
stage. The Group will consider a sale if appropriate value for
shareholders can be achieved. There can, however, be no certainty
that a transaction will complete.
Legacy Matters
1. Elysian Fuels
As previously disclosed, the Group is incurring material legal
and remediation costs relating to James Hay's inception of Elysian
Fuels investments between 2011-2015. James Hay received notices of
assessment arising from Elysian Fuels for tax years 2011/2012 and
2012/2013 totalling GBP1.8m, which have been appealed, and our
discussions with the HMRC seeking an acceptable potential
resolution of James Hay's inception of Elysian Fuels investments
over the overall 2011-2015 period are on-going. If the matter is
not resolved by the end of March 2018, James Hay would expect to
receive further assessments for one or both of the additional tax
years. Such further notices of assessment could be materially
higher than the initial two years reflecting the volume of business
incepted. James Hay is committed to working collaboratively with
HMRC to resolve this matter and will continue to do so. However, if
assessments are received James Hay will apply to HMRC for the
assessments to be discharged and pursue appeals to the Tax
Tribunals as necessary to protect its position.
The maximum potential sanction charge which may be assessed by
HMRC against James Hay for the overall 2011-2015 period would be
approximately GBP20m, assuming all Elysian Fuels shares are deemed
valueless at inception, and no underlying clients discharge their
own tax liabilities.
Based on advice from the Group's legal advisers, the directors
are confident that the outcome at Tribunal and/or any settlement
with HMRC would be substantially lower than the maximum potential
sanction charge, and would be fundable from the Company's cash
resources. The potential exposure remains uncertain and is expected
to remain so whilst discussions with HMRC and/or any Tribunal
proceedings continue.
2. Other matters
As previously reported, the Company received a legacy claim
relating to a legal action in Jersey, pursuant to indemnities
provided in respect of the 2012 sale of its International Division.
The underlying claim has now been settled by the acquirer who may
seek redress from the Company under the indemnity. The total amount
of the possible claim of up to GBP3m has now been reduced to GBP2m.
The Company is seeking legal advice on whether the indemnity is
valid and the extent, if any, to which the Company is liable.
The Group has continued its reviews of other legacy business,
using external advisers, to check that any other legacy exposures
are identified and remediated. Over time these may result in
further remediation costs, including legal costs for legacy claims,
and whilst the exposures are uncertain, they are not expected to
exceed GBP5m. These reviews remain in progress and an update will
be given with the year-end results. They are designed to enable all
identified legacy issues in those businesses to be assessed and
remediated.
The level of exceptional costs, provisions and contingent
liabilities in 2017 may be significantly greater than market
expectations, depending upon the extent to which they crystallise
or are determined, which could lead to materially reduced statutory
accounting results for 2017 for the Group. In light of the inherent
uncertainty noted above, the Board has taken the prudent decision
that no final dividend will be paid in respect of 2017.
John Cotter, Group Chief Executive, commented:
"Strong fundamentals, good growth and improving underlying
financial performance in both our businesses has been overshadowed
by a number of legacy issues. Our desire is to bring closure to
these issues as soon as possible and we will provide further
updates as matters develop".
Enquiries:
IFG
John Cotter Group CEO Tel: +44 203 887 6181
Mark Dearsley Interim Group CFO Tel: +44 203 887 6181
Joint Corporate Brokers
Nicholas Harland Macquarie Capital (Europe) Ltd
Tel: +44 203 037 2369
Charlotte Craigie Goodbody Stockbrokers UC
Tel: +44 203 841 6202
This information is provided by RNS
The company news service from the London Stock Exchange
END
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