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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ifg Group Plc | LSE:IFP | London | Ordinary Share | IE0002325243 | ORD EUR0.12 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 193.00 | 192.00 | 194.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
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
Hot Features
Premium
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
(END) Dow Jones Newswires
August 25, 2016 02:01 ET (06:01 GMT)
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