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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Manx Financial Group Plc | LSE:MFX | London | Ordinary Share | IM00B28ZPX83 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 20.50 | 19.00 | 22.00 | 20.50 | 20.50 | 20.50 | 39,530 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Personal Credit Institutions | 53.34M | 6.14M | 0.0532 | 3.85 | 23.68M |
From May 2022 to May 2024
TIDMMFX
RNS Number : 6511A
Manx Financial Group PLC
27 September 2022
FOR IMMEDIATE RELEASE 27(th) September 2022
Manx Financial Group PLC
Unaudited Interim Results for the 6 months to 30 June 2022
Manx Financial Group PLC (LSE: MFX), the financial services group which includes Conister Bank Limited, Conister Finance & Leasing Ltd, Blue Star Business Solutions Limited, MFX Limited and Edgewater Associates Limited, presents the Interim results for the six months ended 30 June 2022.
Jim Mellon, Executive Chairman, commented: " I am pleased to report that at GBP2.3 million, the Group had its strongest half-year pre-tax profit for over a decade, being a 105% increase over the GBP1.1 million for the same period last year."
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, Biddle Tel +44 (0) 203 963 1887 Executive Vice Chairman Tel +44 (0) 20 7628 Tel +44 (0)1624 694694 3396
Dear Shareholders
Introduction
As I reported in my last Chairman's Statement, inflationary pressures and central bank interventions still continue to be a negative influence on the global economy, with the Isle of Man and the UK being no exceptions to these burdens. But as a counter to this uncertainty, I believe that our diverse portfolio of financial services companies provides a level of insulation during these difficult times not afforded to many of our competitors. In addition, the strength of our Balance Sheet provides the Group with the opportunity for further selective acquisition, continuing our strategy of vertical integration by taking significant positions in specialist lending introducers.
Financial Review
Against this backdrop, I am pleased to report that at GBP2.3 million (2021: GBP1.1 million), the Group had its strongest half-year pre-tax profit for over a decade, being a 105% increase over the same period last year. There are several positives to draw out from this result:
Firstly, our dependency on intermediaries has fallen considerably with a record net trading income margin of 87% (2021: 81%) as our loans and advances to customers increased by GBP33.5 million to GBP244.9 million (2021: GBP211.4 million). This generated growth of GBP2.3 million in interest income to GBP13.2 million (2021: GBP11.0 million). Fee and commission expense reduced by GBP0.4 million to GBP1.5 million (2021: GBP1.9 million). I am particularly pleased with the latter decrease. This was a key objective about which I first wrote in my 2017 annual report when fee and commission expense stood at an unsustainable GBP8.4 million for that year.
Secondly, we have improved the Loan-to-Deposit ratio, a key performance measure. This ratio has increased by 6% to 97% (2021: 91%), which, in turn, has improved our net interest income margin by 2% to 80% (2021: 78%).
Finally, our cost of risk has fallen by 0.2% to 1.9% (2021: 2.1%), now at the lowest level since the onset of COVID at the beginning of 2020. This reduction is a positive trend and confirms that the bulk of delinquency caused by Covid has now passed, leaving a residual level of default with which to deal.
Turning to our Balance Sheet, our total assets increased by 12% to GBP317.7 million (2021: GBP283.7 million). Deposits increased by 10% to GBP253.6 million (2021: GBP231.2 million) as the Group optimised the headroom available in its Loan-to-Deposit ratio.
In short, the Group is well placed to enter into the anticipated recession with liquid assets of GBP54.5 million (2021: GBP57.2 million). This includes a HQLA (High-Quality Liquid Assets - those assets which can be immediately converted into cash) cover of 21.5% (2021: 24.7%); and the Bank's Tier 1 capital ratio of 14.2% (2021: 13.7%); and a total capital ratio of 17.7% (2021: 17.8%).
Shareholder Equity has also increased by 17% to GBP27.0 million (GBP23.1 million), with basic total comprehensive income earnings per share now at 1.94 pence (2021: 0.88 pence). Based on the last twelve months' profit, the Price/Earnings ratio is now 2.32, and the earnings yield over the same period (including share price movement plus the 2021 dividend) is 43.1%.
Business Review
The Bank's interest income increased by 9.4% to GBP11.9 million (2021: GBP10.9 million), which was partly offset by the additional interest expense of 13.3% to GBP2.3 million (2021: GBP2.0 million). Market uncertainty and inflation have impacted the Isle of Man deposit market, with depositors preferring to invest their savings in shorter-term products. Consequently, with interest rates rising, particularly in the fixed-term deposit market, the Bank's weighted average cost of funds on Deposits from customers is slowly rising by 0.1% to 1.6% (2021: 1.5%) to both retain and attract new depositors.
Similarly, Treasury Bills and UK Gilts have also seen a strong recovery of yields to over 2.0%. This has generated a positive return on the Treasury book. As such, our Treasury Assets have moved from Cash and Cash Equivalents to Debt Securities, generating a 45.4% increase to GBP40.2 million (2021: GBP27.6 million).
Following the Bank's participation in both the Isle of Man and UK Governments' business support schemes, the Bank has applied to continue in the UK Government's extension of the Recovery Loan Scheme. Along with this, the Bank has invested in its UK Structured Finance portfolio, as it protects the Bank with additional credit enhancements by Finance Intermediaries. The division grew by 53.7% to GBP46.7 million (2021: GBP30.34 million). This has been identified as a safe market segment for the Bank to grow its loan book sustainably whilst protecting the Bank against defaults. Pursuing a prime customer base over the last 18-months has also positioned the Bank well for a recession-proof loan book. Overall, the credit quality improved from a 78.5% exposure to prime customers to 85.0%
Personnel expenses increased by GBP0.2 million, driven by the impact of wage inflation. Overheads increased by only GBP0.2 million.
The Bank has an established IFRS 9 provision methodology and, together with its specific provisioning, has reserved GBP8.5 million (2021: GBP6.3 million) for delinquent debts. This, together with other credit enhancements offered by Government Guarantees and Financial Intermediaries, again provides the Bank with some insulation against the economic headwinds we face.
Turning towards our other operating subsidiaries. We continue to be fortunate to have a highly motivated group of executive directors whom we can depend upon to maximise their business's opportunities within our agreed risk profile in this difficult market.
Of particular note is our foreign exchange advisory business. It continues to go from strength-to-strength with an impressive first-half profit before tax of GBP0.8 million (2021: GBP0.7 million). Whereas our IFA business suffered from market volatility, our foreign exchange advisory business benefitted, demonstrating the importance of having a diversified financial services group. The cost-income ratio of 16.3% (2021: 15.8%) is noticeably low and allows the company to expand and scale. The business continues to have a very liquid balance sheet and declared an interim dividend to the Group of GBP1.0 million during the half-year (2021: GBP0.6 million).
All our other operating subsidiaries traded profitably in the period under review, which is also pleasing to report.
Strategic Objectives
Our stated 2022 strategic priorities remain unchanged. As I reported in my last Chairman's Statement, one of the priorities is for the Group to develop its core business by considered acquisitions that could help accelerate shareholder value by addressing our discount between Net Asset Value and our market capitalisation.
You would have noted by my market announcement in May that the Group entered into a conditional agreement to acquire 50.1% of Payment Assist Limited's ("PAL") share capital. PAL is the UK's leading automotive repair point-of-sale finance provider, working with premier national chains such as National Tyres, Halfords and Formula One. PAL has now diversified lending into insured products and retail and had a loan book of GBP21.3 million as at 31 December 2021, an increase of 72% since 2019. As disclosed in their last published financial statements, PAL achieved revenue of GBP6.6 million in the 12 months to 31 December 2021, an increase of 69% since 2019 and EBITDA of GBP2.5 million for the period to 31 December 2021, an increase of 108% since 2019.
Our acquisition of PAL now has the regulatory approval to proceed, and we announced the completion of the 50.1% acquisition on 21 September 2022. I would personally like to thank the Executives for identifying a profitable acquisition which I expect will be transformational to the Group.
Board changes
In May, I also announced the retirement of our long-standing Non-Executive Director, David Gibson, who also served as Chairman of the Bank's Board. I would like to take this opportunity to once again thank David for his years of service to the Group, who undoubtedly assisted us in moving the Group forward into the levels of profitability which I bring to you in this report. In his stead of Bank Chairman, John Spellman, a fellow Group Non-Executive Director of the Bank and the Group, has succeeded David. John brings considerable experience of active engagement in the financial services sector, including acting as the strategic advisor to the Isle of Man government, specialising in finance and foreign direct investment.
Outlook
Despite the economic challenges that we face, I have every confidence that your Group will successfully weather this period of uncertainty. Our banking division continues to have a strong demand for its structured finance products in sectors that have proved resilient in recent years. This will not only be funded by our loyal Isle of Man deposit base but also through new sources of liquidity to further diversify the funding of this substantial lending pipeline.
Market volatility will continue to benefit our foreign exchange advisory business, but it will be less beneficial to our IFA business which, in turn, may have a negative impact on the carrying value of our goodwill at the year-end. That said, I would still expect the net effect on these two businesses to be positive.
Also, this economic environment has allowed the Group to develop its acquisition strategy, and I fully expect we will continue to acquire strategic shareholdings in other financial service businesses in the coming months. Our acquisitions in Payment Assist Limited, Blue Star Business Solutions Limited, Ninkasi Leasing & Rental Limited and The Business Lending Exchange Limited have all proved very accretive and we will continue to focus our efforts in identifying other acquisitions in niche, resilient markets.
In summary, we are well positioned to grow both organically and through acquisition despite the challenging economic headwinds.
Thank you
On behalf of your Board, I would like to take this opportunity to thank our staff for their splendid efforts in generating the results for this report and also to thank our shareholders and other stakeholders for their enduring loyalty.
Jim Mellon ,
Executive Chairman.
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
Hot Features
Premium
For the For the
six months six months For the
ended ended year ended
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
Notes (unaudited) (unaudited) (audited)
---------------------------------------- ------ --------------- ------------- -------------
Interest income 6 13,244 10,979 22,947
Interest expense (2,712) (2,424) (4,967)
Net interest income 10,532 8,555 17,980
Fee and commission income 2,503 2,356 4,621
Fee and commission expense (1,517) (1,878) (3,339)
Depreciation on leasing assets (16) (173) (269)
Net trading income 11,502 8,860 18,993
Other operating income 275 129 365
(Loss) / gain on financial instruments 17 (139) - 30
Realised gain / (loss) on debt
securities 26 (1) (1)
Revaluation on acquisition of
subsidiary - - 660
Operating income 11,664 8,988 20,047
Personnel expenses (4,091) (3,241) (7,156)
Other expenses (2,355) (2,099) (4,500)
Impairment on loans and advances
to customers (2,268) (2,142) (4,360)
Depreciation (357) (323) (675)
Amortisation and impairment of
intangibles (256) (216) (458)
Share of profit of equity accounted
investees, net of tax - 59 32
VAT recovery - 113 113
Profit before tax payable 2,337 1,139 3,043
Income tax expense (160) (122) (234)
Profit for the period / year 2,177 1,017 2,809
For the For the
six months six months For the
ended ended year ended
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
Notes (unaudited) (unaudited) (audited)
------------------------------------------ ------ --------------- --------------- -----------------
Profit for the period / year 2,177 1,017 2,809
Other comprehensive income:
Items that will be reclassified
to profit or loss
Unrealised gain / (loss) on debt
securities 43 (9) (18)
Revaluation gain on property, plant
and equipment - - 15
Recognition of deferred tax credit
on defined benefit pension - - 67
Items that will never be reclassified
to profit or loss
Actuarial gain on defined benefit
pension scheme taken to equity - - 172
Total comprehensive income for
the period / year 2,220 1,008 3,045
Profit attributable to:
Owners of the Company 2,161 1,029 2,793
Non-controlling interest 16 (12) 16
2,177 1,017 2,809
Total comprehensive income attributable
to:
Owners of the Company 2,204 1,020 3,029
Non-controlling interest 16 (12) 16
2,220 1,008 3,045
Earnings per share - profit for
the period / year
Basic earnings per share (pence) 8 1.90 0.89 2.46
Diluted earnings per share (pence) 8 1.49 0.73 1.97
Earnings per share - total comprehensive
income
for the period / year
Basic earnings per share (pence) 8 1.94 0.88 2.66
Diluted earnings per share (pence) 8 1.52 0.72 2.13
Condensed Consolidated Statement of Financial Position
30 June 30 June 31 December
2021
2022 2021 GBP'000
As at GBP'000 GBP'000 (audited)
Notes (unaudited) (unaudited)
--------------------------------- ------- -------------- ------------- ------------
Assets
Cash and cash equivalents 14,369 29,577 20,279
Debt securities 9 40,151 27,610 40,987
Equity held at FVTPL 68 68 68
Loans and advances to customers 5,10 244,923 211,445 229,251
Trade and other receivables 11 2,822 1,458 1,947
Property, plant and equipment 6,468 6,472 7,257
Intangible assets 2,431 2,329 2,508
Investment in associates 137 375 136
Goodwill 12 6,320 4,412 6,320
Total assets 317,689 283,746 308,753
Liabilities
Deposits from customers 253,617 231,179 253,459
Creditors and accrued charges 13 4,605 4,058 4,745
Contingent consideration 17 335 613 1,023
Loan notes 14 31,332 23,722 23,672 Pension liability 631 846 687 Deferred tax liability 182 195 182 Total liabilities 290,702 260,613 283,768 Equity Called up share capital 15 19,195 19,121 19,133 Profit and loss account 7,705 3,984 5,781 Revaluation reserve 15 - 15 Non-controlling interest 72 28 56 Total equity 26,987 23,133 24,985 Total liabilities and equity 317,689 283,746 308,753
Condensed Consolidated Statement of Changes in Equity
Attributable to owners
of the Company
Non-controlling
Share Profit interest Total
capital and loss Revaluati-on Total GBP'000 equity
For the six months GBP'000 account reserve GBP'000 GBP'000
ended 30 June 2022 GBP'000 GBP'000
---------------------- ---------- ----------- ---------- ------------------ ----------
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
Balance at 1 July
2021 19,121 3,984 - 23,105 28 23,133
Total comprehensive
income for the
period:
Profit for the period - 1,764 - 1,764 28 1,792
Other comprehensive
income - 230 15 245 - 245
Total comprehensive
income for the
period - 1,994 15 2,009 28 2,037
Changes in ownership
interests:
Dividend declared
(see
note 15) 12 (197) - (185) - (185)
Total changes in
ownership
interests 12 (197) - (185) - (185)
Balance at 31
December
2021 19,133 5,781 15 24,929 56 24,985
Balance at 1 January
2022 19,133 5,781 15 24,929 56 24,985
Total comprehensive
income for the
period:
Profit for the period - 2,161 - 2,161 16 2,177
Other comprehensive
income - 43 - 43 - 43
Total comprehensive
income for the
period - 2,204 - 2,204 16 2,220
Changes in ownership
interests:
Dividend declared
(see
note 15) 62 (280) - (218) - (218)
Total changes in
ownership
interests 62 (280) - (218) - (218)
Balance at 30 June
2022 19,195 7,705 15 26,915 72 26,987
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 2021
2022 2021 GBP'000
Notes GBP'000 GBP'000 (audited)
(unaudited) (unaudited)
-------------------------------------- -------- ------------- ------------- -------------
RECONCILIATION OF PROFIT BEFORE
TAXATION TO OPERATING CASH FLOWS
Profit before tax 2,337 1,139 3,043
Adjustments for:
Depreciation 373 496 944
Amortisation of intangibles 256 216 458
Share of profit of equity accounted
investees - (59) (32)
Contingent consideration interest
expense 35 61 114
Pension charge included in personnel
expenses - - 13
Gain on financial instruments 139 - (30)
Revaluation on acquisition of
subsidiary - - (660)
3,140 1,853 3,850
Changes in:
Equity at FVTPL - 4 4
Trade and other receivables 11 (875) 712 223
Creditors and accrued charges 18 767 (109)
Net cash flow from trading
activities 2,283 3,336 3,968
Changes in:
Loans and advances to customers 10 (15,672) (18,302) (36,128)
Deposits from customers 158 12,894 35,174
Pension contribution (56) (98) (98)
Cash (outflow) / inflow from
operating activities (13,287) (2,170) 2,916
For the For the For the
six months six months year ended
ended ended 31 December
30 June 30 June 2021
2022 2021 GBP'000
Notes GBP'000 GBP'000 (audited)
(unaudited) (unaudited)
-------------------------------------- -------- ------------- ------------- -------------
CASH FLOW STATEMENT
Cash from operating activities
Cash (outflow) / inflow from
operating activities (13,287) (2,170) 2,916
Income taxes paid (256) - (10)
Net cash (outflow) / inflow
from operating activities (13,543) (2,170) 2,906
Cash flows from investing activities
Purchase of property, plant
and equipment (655) (1,172) (2,109)
Purchase of intangible assets (179) (259) (481)
Sale of property, plant and
equipment 1,071 249 961
Acquisition of subsidiary or
associate, net of cash acquired 16 - (310) (555)
Sale / (Purchase) of debt securities 9 878 (2,087) (15,473)
Contingent consideration 17 (862) (120) (120)
Net cash inflow / (outflow)
from investing activities 253 (3,699) (17,777)
Cash flows from financing activities
Receipt of loan notes 14 7,660 1,500 1,450
Payment of lease liabilities
(capital) (90) (107) (201)
Dividend paid (190) - (152)
Net cash inflow from financing
activities 7,380 1,393 1,097 Net decrease in cash and cash equivalents (5,910) (4,476) (13,774) Cash and cash equivalents - opening 20,279 34,053 34,053 Cash and cash equivalents - closing 14,369 29,577 20,279 Included in cash flows are: Interest received - cash amounts 12,976 10,757 22,624 Interest paid - cash amounts (2,624) (2,345) 4,936
Notes
For the six months ended 30 June 2022
1. Reporting entity
Manx Financial Group PLC (the "Company" or "MFG") is a company incorporated in the Isle of Man. These condensed consolidated interim financial statements ("interim financial statements") are as at and for the six months ended 30 June 2022, and 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 2021 ("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 are the same as those described in the last annual financial statements.
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 41 - Financial risk management on pages 47 and 72 respectively of the Annual Financial Statements 2021.
An explanation of the terms Stage 1, Stage 2 and Stage 3 is included in Note 43 (G)(vii) on page 81 of the Annual Financial Statements 2021.
A. Summary of credit risk on loans and advances to customers
2022 2021
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 226,577 - - 226,577 195,141 - - 195,141
Grade B - 5,579 8,591 14,170 - 4,437 7,255 11,692
Grade C 516 - 12,197 12,713 589 50 10,248 10,887
Gross value 227,093 5,579 20,788 253,460 195,730 4,487 17,503 217,720
Allowance for
impairment (341) (10) (8,186) (8,537) (698) (14) (5,563) (6,275)
Carrying value 226,752 5,569 12,602 244,923 195,032 4,473 11,940 211,445
2021 2020
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 213,103 - - 213,103 173,673 - - 173,673
Grade B - 5,735 5,594 11,329 - 5,728 7,751 13,479
Grade C 342 541 12,656 13,539 335 9 12,771 13,115
Gross value 213,445 6,276 18,250 237,971 174,008 5,737 20,522 200,267
Allowance for
impairment (503) (124) (8,093) (8,720) (423) (18) (6,683) (7,124)
Carrying value 212,942 6,152 10,157 229,251 173,585 5,719 13,839 193,143
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
2022 2021
Stage Stage Stage Total Stage Stage Stage Total
30 June (unaudited) 1 2 3 GBP000 1 2 3 GBP000
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- -------- -------- ---------- ---------- -------- -------- -------- --------
Current 221,901 - - 221,901 193,435 - - 193,435
Overdue < 30
days 5,192 - - 5,192 2,293 - - 2,293
Overdue > 30
days - 5,579 20,788 26,367 - 4,488 17,504 21,992
227,093 5,579 20,788 253,460 195,728 4,488 17,504 217,720
----------------------- -------- -------- ---------- ---------- -------- -------- -------- --------
2021 2020
Stage Stage Stage Total Stage Stage Stage Total
31 December 1 2 3 GBP000 1 2 3 GBP000
(audited) GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- -------- -------- -------- -------- -------- -------- -------- --------
Current 210,491 - - 210,491 170,436 - - 170,436
Overdue < 30
days 2,954 - - 2,954 3,572 - - 3,572
Overdue > 30
days - 6,276 18,250 24,526 - 5,737 20,522 26,259
213,445 6,276 18,250 237,971 174,008 5,737 20,522 200,267
--------------- -------- -------- -------- -------- -------- -------- -------- --------
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.
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 for business segments is based on the Group's management and internal reporting structure. The Directors consider that the Group operates in three (2021: three) product orientated segments in addition to its investing activities: (i) Asset and Personal Finance (including provision of HP contracts, finance leases, personal loans, commercial loans, block discounting, vehicle stocking plans and wholesale funding agreements); (ii) Edgewater Associates Limited (provision of financial advice), and (iii) MFX Limited (provision of foreign currency transaction services).
Asset
and
Personal Edgewater Investing
For the 6 months ended Finance Associates MFX Activities Total
30 June 2022 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net interest income 10,532 - - - 10,532
Fee and commission income 518 1,076 909 - 2,503
Operating income 9,688 1,076 900 - 11,664
Profit before tax payable 1,713 26 753 (155) 2,337
Capital expenditure 785 45 3 1 834
Total assets 303,163 2,298 620 11,608 317,689
Total liabilities 270,885 543 75 19,199 290,702
Asset
and
Personal Edgewater Investing
For the 6 months ended Finance Associates MFX Activities Total
30 June 2021 (unaudited) 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 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 6,149 283,746
Total liabilities 243,136 545 8 16,924 260,613
Asset
and
Personal Edgewater Investing
For the year ended Finance Associates MFX Activities Total
31 December 2021 (audited) GBP000 GBP000 GBP000 GBP000 GBP000
Net interest income 17,980 - - - 17,980
Fee and commission income 811 2,282 1,528 - 4,621
Operating income 16,251 2,282 1,514 - 20,047
Profit / (loss) before tax payable 2,528 114 1,277 (826) 3,043
Capital expenditure 3,083 13 1 5 3,102
Total assets 292,721 2,330 802 12,900 308,753
Total liabilities 265,751 638 61 17,318 283,768
------------------------------------ ---------- ------------- --------- ------------- ---------
8. Earnings per share
For the
For the For the
6 months 6 months
ended ended year ended
30 June 30 June 31 Dec
2022 2021 2021
(unaudited) (unaudited) (audited)
Profit for the period / year GBP2,177,000 GBP1,017,000 GBP2,809,000
Weighted average number of ordinary
shares in issue (basic) 114,447,909 114,130,077 114,291,639
Basic earnings per share (pence) 1.90 0.89 2.46
Diluted earnings per share (pence) 1.49 0.73 1.97
Total comprehensive income for the GBP2,220,000 GBP1,008,000 GBP3,045,000
period / year
Weighted average number of ordinary
shares in issue (basic) 114,447,909 114,130,077 114,291,639
Basic earnings per share (pence) 1.94 0.88 2.66
Diluted earnings per share (pence) 1.52 0.72 2.13
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
2022 2021 2021
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) 114,447,909 114,130,077 114,291,639
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) 151,003,465 150,685,633 150,847,195
Reconciliation of profit for the period
/ year between basic and diluted
Profit for the period / year (basic) GBP2,177,000 GBP1,017,000 GBP2,809,000
Interest expense saved if all convertible GBP76,250 GBP83,125 GBP166,250
loan notes were exchanged for equity
Profit for the period / year (diluted) GBP2,253,250 GBP1,100,125 GBP2,975,250
The diluted earnings per share calculation assumes that all convertible loan notes have been converted / exercised at the beginning of the period in which they are dilutive.
30 June 30 June 31 Dec
2022 2021 2021
As at (unaudited) (unaudited) (audited)
Reconciliation of total comprehensive
income for the period / year between
basic and diluted
Total comprehensive income for the period GBP2,220,000 GBP1,008,000 GBP3,045,000
/ year (basic)
Interest expense saved if all convertible GBP76,250 GBP83,125 GBP166,250
loan notes were exchanged for equity
Total comprehensive income for the period GBP2,296,250 GBP1,091,125 GBP3,211,250
/ year (diluted)
9. Debt securities
30 June 30 June 31 Dec
2022 2021 2021
GBP'000 GBP'000 GBP'000
As at (unaudited) (unaudited) (audited)
Financial assets at fair value through
other comprehensive income:
UK Government treasury bills 40,151 27,610 40,987
Financial assets at amortised cost:
UK Certificates of Deposit - - -
40,151 27,610 40,987
UK Government Treasury Bills are stated at fair value and unrealised changes in the fair value are reflected in other comprehensive income. There were GBP26,000 realised gains (30 June 2021: realised losses of GBP1,000 and 31 December 2021: realised losses of GBP1,000) and unrealised gains of GBP43,000 (30 June 2021: unrealised losses of GBP9,000 and 31 December 2021: unrealised losses of GBP18,000) for the period.
10. Loans and advances to customers
30 June 30 June 31 Dec
2022 2021 2021
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 balances 64,766 (3,444) 61,322 67,632 67,682
Finance lease balances 23,781 (3,629) 20,152 29,538 24,814
Unsecured personal loans 36,522 (587) 35,935 31,608 30,730
Vehicle stocking plans 1,825 - 1,825 1,520 1,675
Wholesale funding
arrangements 17,803 - 17,803 16,890 15,447
Block discounting 28,877 - 28,877 13,488 16,465
Secured commercial loans 13,046 (504) 12,542 9,701 10,580
Secured personal loans 1,422 - 1,422 1,746 1,739
Government backed loans 65,418 (373) 65,045 39,322 60,119
253,460 (8,537) 244,923 211,445 229,251
11. Trade and other receivables
30 June 30 June 31 Dec
2022 2021 2021
GBP'000 GBP'000 GBP'000
As at (unaudited) (unaudited) (audited)
Prepayments 1,068 360 498
Other debtors 1,754 1,098 1,449
2,822 1,458 1,947
12. Goodwill
30 June 30 June 31 Dec
2022 2021 2021
GBP'000 GBP'000 GBP'000
As at (unaudited) (unaudited) (audited)
EAL 1,849 1,849 1,849
BLX 1,908 - 1,908
BBSL 1,390 1,390 1,390
NRFL 678 678 678
Manx Collections Limited ("MCL") 454 454 454
Three Spires Insurance Services Limited
("Three Spires") 41 41 41
6,320 4,412 6,320
13. Creditors and accrued charges
30 June 30 June 31 Dec
2022 2021 2021
GBP'000 GBP'000 GBP'000
As at (unaudited) (unaudited) (audited)
Commission creditors 1,401 2,345 1,520
Other creditors and accruals 1,472 1,063 1,335
Lease liability 1,205 396 1,295
Taxation creditors 454 254 550
Dividend payable 73 - 45
4,605 4,058 4,745
14. Loan notes
30 June 30 June 31 Dec
2022 2021 2021
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 3,200 3,200
Culminant Reinsurance Ltd CR 1,000 1,000 1,000
5,950 5,950 5,950
Unrelated parties UP 25,382 17,772 17,722
31,332 23,722 23,672
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. Refer to Note 21 for post period end subsequent loan note renewals.
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. Refer to Note 21 for post period end subsequent loan note renewals.
CR - One loan consisting of GBP1,000,000 maturing on 12 October 2025, paying interest of 6.0% interest per annum. Greg Bailey, a Director, is the beneficial owner of CR.
UP - 39 loans with an average balance of GBP650,823 and an average interest payable of 5.66% per annum. The earliest maturity date is 31 July 2022 and the latest maturity is 4 January 2027.
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 2022, 31 December 2021 and 30 June 2021 200,200,000 ----------------------------------------------- ------------ Issued and fully paid ordinary Shares of no par Number GBP'000 value ------------------------------------------------- Balance at 30 June 2021 114,130,077 19,121 Scrip dividend at 7.0575 per share 161,562 12 Balance at 31 December 2021 114,291,639 19,133 Scrip dividend at 8.0250 per share 781,349 62 Balance at 30 June 2022 115,072,988 19,195 ------------------------------------------------- ------------ --------
On 25 May 2022, MFG declared a dividend of GBP279,200 (2021: GBP196,800 which could either be taken up in cash or new ordinary shares. 781,349 new shares (2021: 161,562 new shares) were admitted to the Alternative Investment Market ("AIM") at 8.02050 pence per share (2021: 7.0575 pence per share), at a total cost of GBP62,000 (2021: GBP11,402).
There are three convertible loans totalling GBP2,950,000 (30 June and 31 December 2021: 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 2021:1,050,000) remain outstanding.
16. Non-controlling interest
On 14 June 2021, the Group increased its shareholding in Ninkasi Rentals & Finance Limited ("NRFL") to 90%. Non-controlling interest represents ordinary share capital in NRFL held by the previous owners of NRFL who remain employed by NRFL.
17. Deferred consideration
30 June 30 June 31 Dec
2022 2021 2021
GBP'000 GBP'000 GBP'000
As at (unaudited) (unaudited) (audited)
Opening balance 1,023 672 672
Assumed in a business combination - 387
Finance costs 35 61 114
Net change in fair value (unrealised) 139 - (30)
174 61 84
Payment (862) (120) (120)
Closing balance 335 613 1,023
Deferred consideration relates to contingent payments due to the sellers on the acquisition of BBSL and BLX respectively.
On acquisition of BBSL on 16 April 2019, the Group agreed to pay the selling shareholders:
-- 50% of net profits in BBSL for 3 years post completion; and
-- 50% of the incremental net profit that the Group benefits from as a result of taking up BBSL loan proposals post completion up until the third anniversary.
This was to be paid on each anniversary with a final payment in year 4 for the unrealised lending profit. The Group made final instalment and settlement of this contingent consideration when it made the final payment of GBP781,095 during the period.
On the acquisition of BLX on 11 October 2021, the Group agreed that a further conditional consideration of up to GBP483,663 is payable to the sellers in addition to the cash consideration paid. The total amount payable is contingent on the recovery of certain loans and advances found to be in default at acquisition. The fair value on acquisition date was determined to be GBP387,000. The Group made a payment of GBP80,611 to the sellers during the period.
18. Conditional Acquisition
On 16 May 2022, Manx Ventures Limited ("MVL"), a wholly owned subsidiary of the Company, agreed to acquire a 50.1% interest (the "Acquisition") in UK focused, point of sale lender Payment Assist Limited ("Payment Assist") for a total initial consideration of GBP4 million payable in cash.
In addition to the Acquisition, Manx Ventures has agreed an option to acquire the remaining 49.9% of Payment Assist for cash consideration of up to GBP5 million (the "Option"). The Option can be exercised by Manx Ventures at any time for a period of two years after publication by Payment Assist of its audited accounts for the period to 31 December 2024. MFG will fund the initial GBP4 million consideration and deferred consideration of up to GBP5 million from its cash resources.
The Acquisition, and hence the Option, is subject to the satisfaction of certain conditions precedent including approval of the change of control by the FCA. The Acquisition was completed and announced to the market on 21 September 2022.
19. Regulators
Certain Group subsidiaries are regulated by the Isle of Man Financial Services Authority (FSA) and the United Kingdom Financial Conduct Authority (FCA) as detailed below.
The Bank and EAL are regulated by the FSA under a Class 1(1) - Deposit Taking licence, and a Class 2 - Investment Business licence respectively. The Bank and CFL are regulated by the FCA to provide regulated products and services.
20. 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. This creates a liability on the Bank to participate in the compensation of depositors should it be activated.
21. Subsequent events
On 22 July 2022, JM and BL agreed to extend outstanding unsecured convertible loans of GBP1.7 million, expiring on 31 July 2022, for a further five years to 31 July 2027. A loan of GBP1.2 million is from BL and the remaining loan of GBP0.5 million is from JM himself. The new annual interest rate will be 7.5% (previously 5.0%) and the new conversion price will be 8.0 pence per share (previously 7.5 pence). All other terms are unchanged, including the ability for the Company to repay the loans at any time during the period.
On 5 July 2022, MFG granted Restricted Stock Units ("RSUs") under its 2022 RSU Plan. The Group has issued, in total, RSUs over 2,120,000 ordinary shares representing 1.8% of the issued share capital of the Group, including 1,100,000 to certain directors and 1,020,000 to certain employees. The RSUs will have a 2-year term and are subject to certain vesting conditions based upon an overall growth in profitability, both at the Group and Company level and the satisfaction of individual performance targets and other metrics, including the achievement of additional sources of liquidity for increased lending requirements. Any RSUs granted will fall away should the recipient leave employment before the 2-year term expires. Should the individual vesting conditions be satisfied at the end of the term, the stock will be granted at nil cost.
The Group directors who received RSUs are as follows:
-- Douglas Grant, Group Chief Executive Officer, who currently owns 533,951 ordinary shares in the Company representing a holding of 0.46% was issued 925,000 RSUs. Including 700,000 Share Options issued 24 June 2014, he would hold a total of 2,158,951 ordinary shares, being 1.8% of the issued share capital of the Company on a fully diluted basis; and
-- James Smeed, Group Finance Director, was issued 175,000 RSUs. On the same basis, he would hold 0.15% of the new issued share capital of the Company.
The re were no other significant subsequent events identified after 30 June 2022.
22. Approval of interim financial statements
The interim financial statements were approved by the Board on 26(th) September 2022. 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
Bank Conister Bank Limited
CFL Conister Finance & Leasing Ltd
Company Manx Financial Group PLC
EAL Edgewater Associates Limited
FCA UK Financial Conduct Authority
FVTPL Fair value through profit and loss
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 MFX Limited
MFX.L Manx Financial Group PLC ticker symbol on the LSE
MVL Manx Ventures Limited
NRFL Ninkasi Rentals & Finance Limited
RFG Rivers Finance Group Plc
Subsidiaries MFG's subsidiaries being EAL, MFX, BBSL, NRFL, Bank,
CFL, MVL, Three Spires
UK United Kingdom
UP Unrelated parties
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IR PPUWCBUPPGUQ
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