TIDMMFX
RNS Number : 4003N
Manx Financial Group PLC
29 September 2021
FOR IMMEDIATE RELEASE 29 September 2021
Manx Financial Group PLC (the 'Company')
Unaudited Interim Results for the 6 months to 30 June 2021
Manx Financial Group PLC (LSE: MFX), the financial services
group which includes Conister Bank Limited, Conister Finance &
Leasing Ltd, Blue Star Business Solutions Limited, Edgewater
Associates Limited and Manx FX Limited, presents the Interim
results for the six months ended 30 June 2021.
Jim Mellon, Executive Chairman, commented: "Each of our business
units is making steady progress. I have great confidence that the
2021 full year will see the Group well on the way to recording the
levels of growth and profitability we experienced prior to the
onset of this awful pandemic."
Copies of the Interim Report will shortly be available on our
website www.mfg.im
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU No. 596/2014) AS IT FORMS PART
OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT
2018.
For further information, please contact:
Manx Financial Group Beaumont Cornish Limited Greentarget Limited
PLC Roland Cornish/James Dafina Grapci-Penney
Denham Eke, Chief Executive Biddle Tel +44 (0) 203 963 1887
Tel +44 (0)1624 694694 Tel +44 (0) 20 7628
3396
Dear Shareholders
I am pleased to present my half-year report for the period ended
30 June 2021.
The effects of COVID-19 on our various businesses continued to
be an issue during the first half of 2021. Against this complex
backdrop, it is encouraging to report that the Group's pre-tax
profit for the first six months of the year was just over GBP1.1
million (2020: GBP1.0 million) - an increase of 13% on the same
period last year. Each of our business units is making steady
progress and, unless there is a resumption of lock-downs and
associated measures - events which I believe to be extremely
unlikely, I have great confidence that the 2021 full year will see
the Group well on the way to recording the levels of growth and
profitability we experienced prior to the onset of this awful
pandemic.
Financial Review
Our operating income showed an increase of 6.2% to GBP9.0
million (2020: GBP8.5 million), including gains in both net
interest income of 9.5% to GBP8.6 million (2020: GBP7.8 million),
and in net trading income of 12.2% to GBP8.9 million (2020: GBP7.9
million). Our interest yield on loans fell slightly to 10.9% (2020:
11.6%), due mainly to our success in promoting the
Government-backed loan schemes and our move away from sub-prime
lending to prime and near prime propositions. Our interest expense
on deposits showed a marginal decrease to 2.2% (2020: 2.4%).
Operating expenses grew by 5.3% to GBP7.8 million (2020: GBP7.5
million), principally as a result of our prudent policy of
recognising further impairments of GBP2.1 million (2020: GBP1.9
million) to protect the integrity of our balance sheet. As a
result, and as already stated, our profit before tax increased to
GBP1.1 million.
Turning to our balance sheet, despite the challenges of the
trading environment, our net loan book has increased by 16.4% to
GBP211.4 million (2020: GBP181.6 million), with impairments falling
to 2.9% (2020: 3.3%) of the gross total. We continue to ensure that
liquidity is maintained to provide a prudent buffer until the
economic situation fully normalises and, as a result, our cash and
debt securities stand at GBP57.2 million (2020: GBP64.0 million) -
a decrease of 10.7%, keeping us in a more advantageous competitive
position with our capacity for increased lending. Our customer
deposits have grown by 6.2% to GBP231.2 million (2020: GBP217.8
million) and are carefully managed by our Treasury function,
especially important at this time.
All of which leads to an 8.8% growth in our total asset base to
GBP283.8 million (2020: GBP260.7 million). Shareholder equity has
increased by 6.0% to GBP23.1 million (2020: GBP21.8 million),
providing net assets per share, adjusted for the post-period script
dividend, of 20.2 pence (2020: 19.1 pence).
Business Review
Conister Bank Limited ("Bank")
In my last Chairman's Statement, I promised to provide an update
on the Bank's second VAT claim of GBP0.6 million. I am pleased to
report that the Bank resolved its claim against the Isle of Man's
Customs and Excise and has been paid in full. A subsequent claim of
statutory interest due on this claim has been lodged with the
first-tier tribunal in the UK, alongside other High Street Banks,
but no value has been recognised in these financial statements for
the claim.
The Bank continues to attract deposits at historically low
market rates which will position it well against any inflationary
pressure. With UK Gilts attracting negative interest rates, our
treasury management strategy increased our cash balance to GBP25.6
million (2020: GBP6.0 million) and reduced our debt securities to
GBP27.6 million (2020: GBP57.0 million).
The Bank continues to be supportive of both the Isle of Man and
UK Governments' business support schemes and has now been
accredited for the UK Government's Recovery Loan Scheme. Along with
this, the Bank has repositioned its distribution to support more
COVID-19 and recession-proof markets. This repositioning, including
moving to a more prime customer base, drove loan book growth to
16.4% (2020: 6.8%), which is encouraging during a period of
short-notice economic lockdowns.
This loan book growth resulted in the net interest income margin
net of commissions increasing by 5.4% (2020: 2.2%) but we expect a
normalised position over the life of these loans due to their prime
nature and the Government guarantees.
Personnel expenses increased by GBP0.1 million as the Bank's
headcount increased by nine as part of launching a new debt
collection company, Manx Collections Limited, which generated
GBP0.1 million of profitability in the first six months of trading.
Overheads increased by GBP0.2 million, which is primarily due to
the recovery costs on delinquent debts. During these uncertain
times we continue to operate a prudent provisioning policy, with an
allowance of GBP2.1 million (2020: GBP1.9 million). Finally, in
relation to our cost base, depreciation and amortisation increased
by GBP0.1 million to GBP0.4 million (2020: GBP0.3 million), driven
by continued investment in our IT strategy.
Edgewater Associates Limited
Our independent financial advisory business remains the largest
on the Isle of Man and had a difficult half-year with the trading
conditions negatively impacted by COVID-19. Meeting clients became
problematic and many sought to delay investment decisions due to
market turbulence. Despite a UK economic recovery being underway,
the sustained threat of inflation has dampened client confidence
and stifled investment. As a result, profitability has remained
broadly similar year-on-year despite assets under management
increasing by 11.6% to GBP375.0 million (2020: GBP336.0 million)
and renewal income increasing to GBP0.6 million (2020: GBP0.5
million).
Manx FX Limited ("MFX")
Our foreign exchange advisory business has had a remarkable
half-year. Whereas our IFA business suffered from market
volatility, MFX benefitted, demonstrating the importance in having
a diversified financial services group. Turnover remained constant
at GBP0.9 million, particularly trading in Euros and South African
Rand following the wide-ranging impact of BREXIT. The business
continues to have a very liquid balance sheet and declared an
interim dividend to the Group of GBP0.6 million during the
half-year (2020: GBPnil).
Beer Swaps Limited ("BSL")
On 14 June 2021, the Bank acquired further shares in BSL to
increase its ordinary shareholding to 90% for a cash consideration
of GBP0.3 million. For the period under ownership, BSL reported
turnover of GBP0.6 million and a profit before tax of GBP0.2
million with net assets of GBP0.3 million. BSL is now the largest
tank lessor in the UK brewing market.
Blue Star Business Solutions Limited ("BBSL")
BBSL has traded well through difficult economic conditions in
which the economic impact of UK Government support schemes
distorted the credit broker sector. However, and notwithstanding,
BBSL has reported a GBP0.1 million profit (2020: GBP0.0 million).
BBSL brokered GBP6.4 million (2020: GBP3.8 million) of which GBP3.8
million (2020: GBP2.1 million) was referred to the Bank. BBSL
receives no loan interest income for lending placed with the Bank,
but if it did, the imputed profitability for the first half would
have been GBP0.5 million.
Strategic Objectives for 2021
Our strategic priorities for 2021 remain unchanged, and I will
report on these in detail in my next Chairman's Statement. As ever,
we strive to increase shareholder value, both in a prudent yet
progressive manner. I repeat our 2021 key objectives:
-- Treating customers in both as fair and appropriate manner as
possible. Our Treating Customers Fairly ("TCF") regime continues to
be enhanced throughout our businesses and I am pleased to report
that we have a negligible level of complaints, all of which have
been settled to the customers' satisfaction. TCF is the cornerstone
of all our operations as we make every effort to ensure that our
customer service offering is second to none.
-- Adopting a pro-active strategy of managing risk. We have
taken active steps to rebase our loan book away from sub-prime
lending into prime and near-prime advances. In doing so, we
recognise that the gross interest rates may diminish somewhat, but
we anticipate that this erosion will be more than compensated by a
lower incidence of arrears and write-offs. Our new segregated debt
collection subsidiary - Manx Collections Limited - received its FCA
licence in June 2021 and has already made significant progress not
only in recoveries, but also in the early identification of
problems, working with our customers to ensure a better outcome for
the Bank. We continue to make prudential impairments as part of our
policy of strengthening our balance sheet to minimise the risk of
any unforeseen event adversely affecting our profitability.
-- Developing our core businesses by considered acquisitions.
The current economic environment has produced a number of
interesting potential acquisition opportunities. Each of these is
evaluated carefully before commitment. We also recognise that our
recent acquisitions have become significant contributors to our
profitability.
-- Developing and implementing a coherent digital
infrastructure. We recognise the importance of IT to service the
operational requirements of a growing Group and to remain
competitive. We continue with our investment in core systems which
is already minimising the time taken to consider advances, allowing
us to redeploy staff into more productive areas.
-- Managing the liabilities side of our balance sheet. Our new
Treasury management function is working well, ensuring that our
liquidity matches the anticipated growth of our lending. Our
recently launched Isle of Man notice accounts continue to gain
traction and we will continue to develop attractive deposit
products with competitive interest rates for our depositors.
-- Managing our balance sheet to exceed the regulatory
requirements for capital adequacy. We are well capitalised with our
Total Capital Ratio standing at 17.8% (2020: 16.0%). We will
maintain our strategy of converting Group retained earnings into
Tier 1 capital for the Bank to support its lending growth.
Meanwhile, we will continue to maintain a heightened level of cash
liquidity.
-- Increase shareholder value. The discount between Net Asset
Value and market capitalisation is an issue that we are working to
rectify. The strategic aim of returning to being a dividend paying
company has now been achieved and I see no reason to prevent us
returning 10% of profit attributable to shareholders as a dividend
for the foreseeable future. This, together with enhanced investor
relations, should help the market in rerating our shares.
Current trading and outlook
The Isle of Man economy continues to be resilient under the
strain of COVID-19 and our local new business growth shows no signs
of slowing down. The UK also shows signs of a real return to growth
with Gross Domestic Product for Quarter 2 this year increasing by
22.2% over the same quarter last year, and our UK lending growth
reflects this. Taken together, I have every confidence that our
full year will show a significant improvement in profitability
providing the requirement for impairments remain at their current
level.
The Bank's appointments as accredited lenders to the various
Government-backed schemes will help second-half lending growth and
we will continue to strengthen our balance sheet by maintaining
adequate liquidity.
It remains for me, as always, to thank on behalf of the Board,
our staff for their splendid efforts coping with the additional
demands of dealing with the COVID pandemic whilst continuing to
develop the Group in such a successful manner and, finally, to
thank our shareholders for their enduring loyalty.
Jim Mellon
Executive Chairman
27 September 2021
Condensed Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the For the
six months six months For the
ended ended year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
Notes (unaudited) (unaudited) (audited)
------------------------------------ ------ --------------- ------------- -------------
Interest income 6 10,979 10,428 20,692
Interest expense (2,424) (2,617) (5,222)
Net interest income 8,555 7,811 15,470
Fee and commission income 2,356 2,157 3,865
Fee and commission expense (1,878) (1,870) (3,481)
Depreciation on leasing assets (173) (203) (406)
Net trading income 8,860 7,895 15,448
Other operating income 129 111 200
Gain on financial instruments - 6 259
Realised (loss) / gain on debt
securities (1) 212 261
Revaluation on acquisition of
subsidiary - 237 237
Operating income 8,988 8,461 16,405
Personnel expenses (3,241) (3,337) (6,823)
Other expenses (2,099) (1,772) (3,707)
Impairment on loans and advances
to customers (2,142) (1,895) (3,950)
Depreciation (323) (222) (490)
Amortisation and impairment of
intangibles (216) (172) (374)
Share of profit / (loss) of equity
accounted investees, net of tax 59 (91) 54
VAT recovery 113 36 906
Profit before tax payable 1,139 1,008 2,021
Income tax expense (122) (16) (53)
Profit for the period / year 1,017 992 1,968
For the For the
six months six months For the
ended ended year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
Notes (unaudited) (unaudited) (audited)
------------------------------------------ ------ --------------- --------------- -----------------
Profit for the period / year 1,017 992 1,968
Other comprehensive income:
Items that will be reclassified
to profit or loss
Unrealised (loss) / gain on debt
securities (9) 102 (51)
Items that will never be reclassified
to profit or loss
Actuarial loss on defined benefit
pension scheme taken to equity - - (241)
Total comprehensive income for
the period / year 1,008 1,094 1,676
Profit attributable to:
Owners of the Company 1,029 997 1,935
Non-controlling interest (12) (5) 33
1,017 992 1,968
Total comprehensive income attributable
to:
Owners of the Company 1,020 1,099 1,643
Non-controlling interest (12) (5) 33
1,008 1,094 1,676
Earnings per share - profit for
the period / year
Basic earnings per share (pence) 8 0.89 0.87 1.65
Diluted earnings per share (pence) 8 0.73 0.71 1.37
Earnings per share - total comprehensive
income
for the period / year
Basic earnings per share (pence) 8 0.88 0.96 1.41
Diluted earnings per share (pence) 8 0.72 0.78 1.19
Condensed Consolidated Statement of Financial Position
30 June 30 June 31 December
2020
2021 2020 GBP'000
GBP'000 GBP'000 (audited)
As at Notes (unaudited) (unaudited)
---------------------------------- ------- ------------- ------------- ------------
Assets
Cash and cash equivalents 29,577 6,991 34,053
Debt securities 9 27,610 57,036 25,532
Trading assets - 4 4
Loans and advances to customers 5,10 211,445 181,581 193,143
Trade and other receivables 11 1,458 2,521 2,170
Property, plant and equipment 6,472 5,793 6,045
Intangible assets 2,329 2,290 2,286
Investment in associate 375 171 316
Other investments 17 68 - -
Goodwill 12 4,412 4,361 4,412
Total assets 283,746 260,748 267,961
Liabilities
Deposits from customers 231,179 217,758 218,285
Creditors and accrued charges 13 4,058 3,148 3,206
Contingent consideration 613 921 672
Loan notes 14 23,722 16,222 22,222
Pension liability 846 688 944
Deferred tax liability 195 141 197
Total liabilities 260,613 238,878 245,526
Equity
Called up share capital 15 19,121 19,121 19,121
Retained earnings 3,984 2,686 3,230
Equity attributable to owners of
the Company 23,105 21,807 22,351
Non-controlling interest 28 63 84
Total equity 23,133 21,870 22,435
Total liabilities and equity 283,746 260,748 267,961
Condensed Consolidated Statement of Changes in Equity
Attributable to owners
of the Company
-----------------------------------
Non-controlling
Share Retained interest Total
capital earnings Total GBP'000 equity
For the six months ended GBP'000 GBP'000 GBP'000 GBP'000
30 June 2021
--------------------------------- ---------- ----------- ---------- ------------------ ----------
Balance at 1 January 2020 20,732 1,587 22,319 - 22,319
Total comprehensive income
for the period:
Profit for the period - 997 997 (5) 992
Other comprehensive income - 102 102 - 102
Total comprehensive income
for the period - 1,099 1,099 (5) 1,094
Transactions with owners:
Purchase of ordinary shares (1,611) - (1,611) - (1,611)
Total transactions with
owners of the Company (1,611) - (1,611) - (1,611)
Changes in ownership interests:
Change in ownership interest
of a subsidiary - - - 68 68
Total changes in ownership
interests - - - 68 68
Balance at 30 June 2020 19,121 2,686 21,807 63 21,870
Balance at 1 July 2020 19,121 2,686 21,807 63 21,870
Total comprehensive income
for the period:
Profit for the period - 938 938 38 976
Other comprehensive income - (394) (394) - (394)
Total comprehensive income
for the period - 544 544 38 582
Changes in ownership interests:
Change in ownership interest
of a subsidiary - - - (17) (17)
Total changes in ownership
interests - - - (17) (17)
Balance at 31 December
2020 19,121 3,230 22,351 84 22,435
Balance at 1 January 2021 19,121 3,230 22,351 84 22,435
Total comprehensive income
for the period:
Profit for the period - 1,029 1,029 (12) 1,017
Other comprehensive income - (9) (9) - (9)
Total comprehensive income
for the period - 1,020 1,020 (12) 1,008
Changes in ownership interests:
Acquisition of subsidiary
with non-controlling interest
(Note 16) - (266) (266) (44) (310)
Total changes in ownership
interests - (266) (266) (44) (310)
Balance at 30 June 2021 19,121 3,984 23,105 28 23,133
Condensed Consolidated Statement of Cash Flows
For the For the For the
six months six months year ended
ended ended 31 December
30 June 30 June 2020
2021 2020 GBP'000
Notes GBP'000 GBP'000 (audited)
(unaudited) (unaudited)
--------------------------------------- -------- ------------- ------------- -------------
RECONCILIATION OF PROFIT BEFORE
TAXATION TO OPERATING CASH FLOWS
Profit before tax 1,139 1,008 2,021
Adjustments for:
Depreciation 496 425 896
Amortisation and impairment
of intangibles 216 172 374
Realised gain on debt securities - (212) (237)
Share of (profit) / loss of
equity accounted investees (59) 91 (54)
Contingent consideration interest
expense 61 58 122
Pension charge included in personnel
costs - - 15
Gain on acquisition of subsidiary - (237) (253)
1,853 1,305 2,884
Changes in:
Trading asset 4 15 15
Trade and other receivables 11 712 73 415
Creditors and accrued charges 13 767 (15) 315
Net cash flow from trading activities 3,336 1,378 3,629
Changes in:
Loans and advances to customers 10 (18,302) (4,461) (16,023)
Deposits from customers 12,894 7,825 8,352
Pension contribution (98) - -
Cash (outflow) / inflow from
operating activities (2,170) 4,742 (4,042)
For the For the For the
six months six months year ended
ended ended 31 December
30 June 30 June 2020
2021 2020 GBP'000
Notes GBP'000 GBP'000 (audited)
(unaudited) (unaudited)
-------------------------------------- -------- ------------- ------------- -------------
CASH FLOW STATEMENT
Cash from operating activities
Cash (outflow) / inflow from
operating activities (2,170) 4,742 (4,042)
Income taxes paid - - (172)
Net cash (outflow) / inflow
from operating activities (2,170) 4,742 (4,214)
Cash flows from investing activities
Purchase of property, plant
and equipment (1,172) (322) (1,187)
Purchase of intangible assets (259) (35) (231)
Sale of property, plant and
equipment 249 - 127
Acquisition of subsidiary or
associate, net of cash acquired 16 (310) (622) (648)
(Purchase) / sale of debt securities
at fair value through other
comprehensive income 9 (3,188) (3,608) 1,101
Sale / (purchase) of debt securities
at amortised cost 9 1,101 (6,322) 20,108
Contingent consideration (120) - (59)
Net cash (outflow) / inflow
from investing activities (3,699) (10,909) 19,211
Cash flows from financing activities
Receipt / (repayment) of loan
notes 14 1,500 (1,360) 4,640
Lease payments (107) (102) (204)
Net cash inflow / (outflow)
from financing activities 1,393 (1,462) 4,436
Net (decrease) / increase in
cash and cash equivalents (4,476) (7,629) 19,433
Cash and cash equivalents -
opening 34,053 14,620 14,620
Cash and cash equivalents -
closing 29,577 6,991 34,053
Included in cash flows are:
Interest received - cash amounts 10,757 10,741 20,274
Interest paid - cash amounts (2,345) (2,669) (5,053)
Notes
For the six months ended 30 June 2021
1. Reporting entity
Manx Financial Group PLC ("Company" or "MFG") is a company
incorporated in the Isle of Man. These condensed consolidated
interim financial statements ("interim financial statements") as at
and for the six months ended 30 June 2021 comprise the Company and
its subsidiaries ("Group").
2. Basis of accounting
These interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting and should be
read in conjunction with the last annual consolidated financial
statements as at and for the year ended 31 December 2020 ("last
annual financial statements"). They do not include all of the
information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual financial statements.
3. Functional and presentation currency
These financial statements are presented in pounds sterling,
which is the Group's functional currency. All amounts have been
rounded to the nearest thousand, unless otherwise indicated. All
subsidiaries of the Group have pounds sterling as their functional
currency.
4. Use of judgements and estimates
In preparing these interim financial statements, management make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from
these estimates.
The significant judgements made by management in applying the
Group's accounting policies and key sources of estimation
uncertainty were the same as those described in the last annual
financial statements other than those described in Note 17 -
Acquisition of financial instrument.
5. Credit risk
A summary of the Group's current policies and practices for the
management of credit risk is set out in Note 7 - Financial risk
review and Note 37 - Financial risk management on pages 46 and 71
respectively of the Annual Financial Statements 2020.
An explanation of the terms Stage 1, Stage 2 and Stage 3 is
included in Note 39 (G)(vii) on page 80 of the Annual Financial
Statements 2020.
A. Summary of credit risk on loans and advances to customers
2021 2020
Stage Stage Stage Total Stage Stage Stage Total
30 June (unaudited) 1 2 3 GBP'000 1 2 3 GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Grade A 195,141 - - 195,141 164,648 - - 164,648
Grade B - 4,437 7,255 11,692 - 2,252 - 2,252
Grade C 589 50 10,248 10,887 5,558 2,211 13,074 20,843
Gross value 195,730 4,487 17,503 217,720 170,206 4,463 13,074 187,743
Allowance for
ECL (698) (14) (5,563) (6,275) (220) (38) (5,904) (6,162)
Carrying value 195,032 4,473 11,940 211,445 169,986 4,425 7,170 181,581
2020 2019
Stage Stage Stage Total Stage Stage Stage Total
31 December 1 2 3 GBP'000 1 2 3 GBP'000
(audited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- --------- --------- --------- --------- --------- --------- ---------
Grade A 173,673 - - 173,673 168,796 - - 168,796
Grade B - 5,728 7,751 13,479 1,143 1,675 - 2,818
Grade C 335 9 12,771 13,115 - 1,985 10,544 12,529
Gross value 174,008 5,737 20,522 200,267 169,939 3,660 10,544 184,143
Allowance for
ECL (423) (18) (6,683) (7,124) (116) (467) (4,190) (4,773)
Carrying value 173,585 5,719 13,839 193,143 169,823 3,193 6,354 179,370
Loans are graded A to C depending on the level of risk. Grade C
relates to agreements with the highest of risk, Grade B with medium
risk and Grade A relates to agreements with the lowest risk.
B. Summary of overdue status of loans and advances to
customers
2021 2020
Stage Stage Stage Total Stage Stage Stage Total
30 June 2020 (unaudited) 1 2 3 GBP000 1 2 3 GBP000
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Current 193,435 - - 193,435 159,467 - - 159,467
Overdue < 30 days 2,293 - - 2,293 5,181 - - 5,181
Overdue > 30 days - 4,488 17,504 21,992 5,558 4,463 13,074 23,095
195,728 4,488 17,504 217,720 170,206 4,463 13,074 187,743
---------------------------- -------- -------- -------- -------- -------- -------- -------- --------
2020 2019
Stage Stage Stage Total Stage Stage Stage Total
31 December (audited) 1 2 3 GBP000 1 2 3 GBP000
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Current 170,436 - - 170,436 145,373 - - 145,373
Overdue < 30 days 3,572 - - 3,572 24,259 - - 24,259
Overdue > 30 days - 5,737 20,522 26,259 307 3,660 10,544 14,511
174,008 5,737 20,522 200,267 169,939 3,660 10,544 184,143
------------------------- -------- -------- -------- -------- -------- -------- -------- --------
6. Interest income
Interest income represents charges and interest on finance and
leasing agreements attributable to the period or year after
adjusting for early settlements and interest on bank balances,
excluding the Terminal funding portfolio.
7. Operating segments
Segmental information is presented in respect of the Group's
business segments. The Directors consider that the Group currently
operates in one geographic segment comprising of the Isle of Man,
UK and Channel Islands. The primary format, business segments, is
based on the Group's management and internal reporting structure.
The Directors consider that the Group operates in three (2020:
three) product orientated segments in addition to its investing
activities: Asset and Personal Finance (including provision of HP
contracts, finance leases, personal loans, commercial loans, block
discounting, vehicle stocking plans and wholesale funding
agreements); EAL and MFX.
Asset
and Investing
For the 6 months ended Personal EAL MFX Activities Total
30 June 2021 (unaudited) Finance GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
Net interest income / (expense) 9,201 - - (646) 8,555
Fee and commission income 469 1,031 856 - 2,356
Operating income / (expense) 6,456 1,031 852 649 8,988
Profit / (loss) before tax payable 759 (12) 717 (325) 1,139
Capital expenditure 1,384 - 24 23 1,431
Total assets 274,832 2,150 615 6,259 283,856
Total liabilities 243,136 545 8 17,034 260,723
Asset
and Investing
For the 6 months ended Personal EAL MFX Activities Total
30 June 2020 (unaudited) Finance GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
Net interest income / (expense) 8,287 - - (476) 7,811
Fee and commission income 207 1,075 875 - 2,157
Operating income / (expense) 6,932 1,075 872 (215) 8,664
Profit / (loss) before tax payable 843 6 785 (626) 1,008
Capital expenditure 357 - - - 357
Total assets 257,310 2,292 321 825 260,748
Total liabilities 228,416 633 7 9,822 238,878
Asset
and Investing
For the year ended Personal EAL MFX Activities Total
31 December 2020 (audited) Finance GBP000 GBP000 GBP000 GBP000
GBP000
Net interest income 15,470 - - - 15,470
Fee and commission income 430 2,103 1,332 - 3,865
Operating income 13,206 2,103 1,096 - 16,405
Profit / (loss) before tax payable 1,316 (94) 1,096 (297) 2,021
Capital expenditure 1,138 46 2 1 1,187
Total assets 260,155 2,638 536 4,632 267,961
Total liabilities 230,001 660 12 14,853 245,526
------------------------------------ ---------- --------- --------- ------------- ---------
8. Earnings per share
For the
For the For the
6 months 6 months
ended ended year ended
30 June 30 June 31 Dec
2021 2020 2020
(unaudited) (unaudited) (audited)
Profit for the period / year GBP1,017,000 GBP992,000 GBP1,968,000
Weighted average number of ordinary
shares in issue (basic) 114,130,077 114,130,077 118,964,270
Basic earnings per share (pence) 0.89 0.87 1.65
Diluted earnings per share (pence) 0.73 0.71 1.37
Total comprehensive income for the period GBP1,008,000 GBP1,094,000 GBP1,676,000
/ year
Weighted average number of ordinary
shares in issue (basic) 114,130,077 114,130,077 118,964,270
Basic earnings per share (pence) 0.88 0.96 1.41
Diluted earnings per share (pence) 0.72 0.78 1.19
The basic earnings per share calculation is based upon the
profit for the period / year after taxation and the weighted
average of the number of shares in issue throughout the period /
year.
30 June 30 June 31 Dec
2021 2020 2020
As at (unaudited) (unaudited) (audited)
Reconciliation of weighted average number
of ordinary shares in issue between
basic and diluted
Weighted average number of ordinary
shares (basic) 114,130,077 114,130,077 118,964,270
Number of shares issued if all convertible
loan notes were exchanged for equity 36,555,556 36,555,556 36,555,556
Dilutive element of share options if - - -
exercised
Weighted average number of ordinary
shares (diluted) 150,685,633 150,685,633 155,519,826
Reconciliation of profit for the period
/ year between basic and diluted
Profit for the period / year (basic) GBP1,017,000 GBP992,000 GBP1,968,000
Interest expense saved if all convertible GBP83,125 GBP83,125 GBP166,250
loan notes were exchanged for equity
Profit for the period / year (diluted) GBP1,100,125 GBP1,075,125 GBP2,134,250
The diluted earnings per share calculation assumes that all
convertible loan notes and share options have been converted /
exercised at the beginning of the period where they are
dilutive.
30 June 30 June 31 Dec
2021 2020 2020
As at (unaudited) (unaudited) (audited)
Reconciliation of total comprehensive
income for the period / year between
basic and diluted
Total comprehensive income for the period GBP1,008,000 GBP1,094,000 GBP1,676,000
/ year (basic)
Interest expense saved if all convertible GBP83,125 GBP83,125 GBP166,250
loan notes were exchanged for equity
Total comprehensive income for the period GBP1,091,125 GBP1,177,125 GBP1,842,250
/ year (diluted)
9. Debt securities
30 June 30 June 31 Dec
2021 2020 2020
GBP'000 GBP'000 GBP'000
As at (unaudited) (unaudited) (audited)
Financial assets at fair value through
other comprehensive income:
UK Government treasury bills 27,610 48,612 24,431
Financial assets at amortised cost:
UK Certificates of Deposit - 8,424 1,101
27,610 57,036 25,532
UK Government Treasury Bills are stated at fair value and
unrealised changes in the fair value are reflected in other
comprehensive income. There were realised losses of GBP1,000 (30
June 2020: realised gains of GBP212,000 and 31 December 2020:
realised gains of GBP261,000) and unrealised losses of GBP9,000 (30
June 2020: unrealised gains of GBP102,000 and 31 December 2020:
unrealised losses of GBP51,000) for the period.
10. Loans and advances to customers
30 June 30 June 31 Dec
2021 2020 2020
Carrying Carrying Carrying
Gross Impairment Value Value Value
Allowance
Amount GBP'000 GBP'000 GBP'000 GBP'000
As at GBP'000 (unaudited) (unaudited) (audited)
HP 69,747 (2,115) 67,632 70,168 71,151
Finance lease 32,775 (3,237) 29,538 35,841 31,132
Wholesale funding arrangements 16,890 16,890 18,832 17,272
Block discounting 13,488 - 13,488 14,911 13,430
Unsecured personal loans 32,040 (432) 31,608 24,788 27,398
Secured commercial loans 10,170 (469) 9,701 12,237 9,091
Secured personal loans 1,746 - 1,746 3,182 2,152
Vehicle stocking plans 1,520 - 1,520 1,622 1,807
Government backed loans 39,344 (22) 39,322 - 19,710
217,720 (6,275) 211,445 181,581 193,143
11. Trade and other receivables
30 June 30 June 31 Dec
2021 2020 2020
GBP'000 GBP'000 GBP'000
As at (unaudited) (unaudited) (audited)
VAT claim - 871 586
Prepayments 360 309 482
Other debtors 1,098 1,341 1,102
1,458 2,521 2,170
The VAT claim was settled in full and the Bank received
GBP699,000 during the period. An additional recovery of GBP113,000
over and above the carrying amount recognised at year end has been
recognised in profit and loss.
12. Goodwill
30 June 30 June 31 Dec
2021 2020 2020
GBP'000 GBP'000 GBP'000
As at (unaudited) (unaudited) (audited)
EAL 1,849 1,849 1,849
BBSL 1,390 1,390 1,390
BSL 678 627 678
ECF Asset Finance PLC ("ECF") 454 454 454
Three Spires Insurance Services Limited
("Three Spires") 41 41 41
4,412 4,361 4,412
13. Creditors and accrued charges
30 June 30 June 31 Dec
2021 2020 2020
GBP'000 GBP'000 GBP'000
As at (unaudited) (unaudited) (audited)
Commission creditors 2,345 1,110 1,748
Other creditors and accruals 999 1,089 822
Lease liability 396 605 503
Taxation creditors 254 344 133
Deferred interest (Note 17) 64 - -
4,058 3,148 3,206
14. Loan notes
30 June 30 June 31 Dec
2021 2020 2020
GBP'000 GBP'000 GBP'000
As at Notes (unaudited) (unaudited) (audited)
Related parties
J Mellon JM 1,750 1,750 1,750
Burnbrae Limited BL 3,200 2,200 3,200
4,950 3,950 4,950
Unrelated parties UP 18,772 12,272 17,272
23,722 16,222 22,222
JM - Two loans, one of GBP1,250,000 maturing on 26 February 2025
with interest payable of 5.4% per annum, and one of GBP500,000
maturing on 31 July 2022, paying interest of 5.0% per annum. Both
loans are convertible to ordinary shares of the Company at the rate
of 7.5 pence and 9 pence respectively.
BL - Three loans, one of GBP1,200,000 maturing on 31 July 2022,
paying interest of 5.0% per annum, one of GBP1,000,000 maturing on
25 February 2025, paying interest of 5.4% per annum, and one of
GBP1,000,000 maturing on 28 February 2025 paying interest of 6% per
annum. Jim Mellon is the beneficial owner of BL and Denham Eke is
also a director. The GBP1,200,000 loan is convertible to ordinary
shares of the Company at a rate of 7.5 pence.
UP - Thirty-six loans consisting of an average GBP521,447 with
an average interest payable of 5.7% per annum. The earliest
maturity date is 4 May 2022 and the latest maturity is 30 March
2026.
With respect to the convertible loans, the interest rate applied
was deemed by the Directors to be equivalent to the market rate at
the time with no conversion option.
15. Called up share capital
Ordinary Shares of no-par value available for Number
issue
----------------------------------------------- ------------
At 30 June 2021, 31 December 2020 and 30 June
2020 200,200,000
----------------------------------------------- ------------
Issued and fully paid ordinary Shares of no Number GBP'000
par value
--------------------------------------------- ------------ --------
At 31 December 2020 and 30 June 2020 114,130,077 19,121
At 30 June 2021 114,130,077 19,121
--------------------------------------------- ------------ --------
There are three convertible loans totalling GBP2,950,000 (30
June and 31 December 2020: three convertible loans totalling
GBP2,950,000). On 23 June 2014, 1,750,000 share options were issued
to Executive Directors and senior management within the Group at an
exercise price of 14 pence per share.
The options vest over three years with a charge based on the
fair value of 8 pence per option at the date of grant. The period
of grant is for 10 years less 1 day ending 22 June 2024.
Of the 1,750,000 share options issued, 1,050,000 (30 June and 31
December 2020:1,050,000) remain outstanding.
16. Acquisition of non-controlling interest
On 14 June 2021, the Group increased its shareholding in Beer
Swaps Limited ("BSL"), trading as Ninkasi Rentals and Finance, to
90% (30 June and 31 December 2020: 75%) for a cash consideration of
GBP310,000.
The carrying value of non-controlling interest acquired at the
date of acquisition was GBP44,000. The consideration in excess of
the carrying amount of GBP266,000 has been charged directly to the
profit and loss account.
17. Acquisition of financial instrument
On 9 June 2021 the Group acquired 10% of the issued share
capital of RFG for nil consideration. The receipt of the issued
share capital is considered to be a commitment fee receivable by
the Group in order to originate loan facilities in aggregate not
exceeding GBP6,250,000 to RFG. The commitment fee is an integral
part of the effective interest rate of the associated loan
facilities issued to RFG.
The Group is not considered to have a significant influence over
RFG as it holds less than a 20% shareholding and is not considered
to participate in the policy making decisions of the entity. The
10% shareholding has thus been classified as a financial
instrument.
The Group continues to obtain information necessary to measure
the fair value of the shares obtained. The fair value of the
financial instrument received has been provisionally determined as
GBP68,000 at initial recognition based on the proportionate share
of the net asset value of RFG.
As part of the transaction, the Group has been granted two
warrants to acquire further shares. The first warrant is for 5% of
the share capital and the second warrant is for a further 5% of the
share capital.
The two warrants are exercisable dependent upon the Group's
banking subsidiary, the Bank, contracting with RFG, for a larger
facility. The fair value of the two warrants has been determined to
be nil due to the significant uncertainty that exists at
acquisition date and the period end in issuing a further debt
facility.
18. Regulators
Certain Group subsidiaries are regulated by the FSA and the FCA
as detailed below.
The Bank and EAL are regulated by the FSA under a Class 1(1) -
Deposit Taking licence and Class 2 - Investment Business licence
respectively. The Bank and CFL are regulated by the FCA to provide
regulated products and services.
19. Contingent liabilities
The Bank is required to be a member of the Isle of Man
Government Depositors' Compensation Scheme which was introduced by
the Isle of Man Government under the Banking Business (Compensation
of Depositors) Regulations 1991 and creates a liability on the Bank
to participate in the compensation of depositors should it be
activated.
20. Subsequent events
On 7 July 2021, the Company announced a dividend of 0.1724 pence
per Ordinary Share for the period from 1 January 2020 to 31
December 2020, calculated as being 10% of the profit after tax
available to Shareholders. The dividend was paid on 10th August
2021 to holders of Ordinary Shares recorded on the register on 16
July 2021. MFG also offered a Script Dividend Scheme under which
Shareholders could elect to receive New Ordinary Shares in lieu of
the cash dividend.
There were no other significant subsequent events identified
after 30 June 2021.
21. Approval of interim financial statements
The interim financial statements were approved by the Board on
27 September 2021. The interim report will be available from that
date at the Group's website - www.mfg.im and at the Registered
Office: Clarendon House, Victoria Street, Douglas, Isle of Man, IM1
2LN. The Group's nominated adviser and broker is Beaumont Cornish
Limited, Building 3, 566 Chiswick High Road, London W4 5YA. The
interim and annual financial statements along with other
supplementary information of interest to shareholders, are included
on the Group's website. The website includes investor relations
information, including corporate governance observance and contact
details.
Appendix - Glossary of terms
BBSL Blue Star Business Solutions Limited
BL Burnbrae Limited
BSL Beer Swaps Limited
Bank Conister Bank Limited
CFL Conister Finance & Leasing Ltd
Company Manx Financial Group PLC
EAL Edgewater Associates Limited
ECF ECF Asset finance PLC
FCA UK Financial Conduct Authority
FSA Isle of Man Financial Services Authority
Group Comprise the Company and its subsidiaries
HP Hire Purchase
IFA Independent Financial Advisors
Interim financial Condensed consolidated interim financial statements
statements
JM Jim Mellon
LSE London Stock Exchange
MFG Manx Financial Group PLC
MFX Manx FX Limited
MFX.L Manx Financial Group PLC ticker symbol on the LSE
RFG Rivers Finance Group Plc
Subsidiaries MFG's subsidiaries being EAL, MFX, BBSL, BSL, Bank,
CFL, ECF, Three Spires
UK United Kingdom
UP Unrelated parties
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END
IR DKCBNKBKDFCB
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