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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% | 19.00 | 18.00 | 20.00 | 19.00 | 18.50 | 18.50 | 13,921 | 10:06:17 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Personal Credit Institutions | 53.34M | 6.14M | 0.0527 | 3.61 | 22.14M |
TIDMMFX
RNS Number : 4003N
Manx Financial Group PLC
29 September 2021
FOR IMMEDIATE RELEASE 29 September 2021
Manx Financial Group PLC (the 'Company')
Unaudited Interim Results for the 6 months to 30 June 2021
Manx Financial Group PLC (LSE: MFX), the financial services group which includes Conister Bank Limited, Conister Finance & Leasing Ltd, Blue Star Business Solutions Limited, Edgewater Associates Limited and Manx FX Limited, presents the Interim results for the six months ended 30 June 2021.
Jim Mellon, Executive Chairman, commented: "Each of our business units is making steady progress. I have great confidence that the 2021 full year will see the Group well on the way to recording the levels of growth and profitability we experienced prior to the onset of this awful pandemic."
Copies of the Interim Report will shortly be available on our website www.mfg.im
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU No. 596/2014) AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.
For further information, please contact:
Manx Financial Group Beaumont Cornish Limited Greentarget Limited PLC Roland Cornish/James Dafina Grapci-Penney Denham Eke, Chief Executive Biddle Tel +44 (0) 203 963 1887 Tel +44 (0)1624 694694 Tel +44 (0) 20 7628 3396
Dear Shareholders
I am pleased to present my half-year report for the period ended 30 June 2021.
The effects of COVID-19 on our various businesses continued to be an issue during the first half of 2021. Against this complex backdrop, it is encouraging to report that the Group's pre-tax profit for the first six months of the year was just over GBP1.1 million (2020: GBP1.0 million) - an increase of 13% on the same period last year. Each of our business units is making steady progress and, unless there is a resumption of lock-downs and associated measures - events which I believe to be extremely unlikely, I have great confidence that the 2021 full year will see the Group well on the way to recording the levels of growth and profitability we experienced prior to the onset of this awful pandemic.
Financial Review
Our operating income showed an increase of 6.2% to GBP9.0 million (2020: GBP8.5 million), including gains in both net interest income of 9.5% to GBP8.6 million (2020: GBP7.8 million), and in net trading income of 12.2% to GBP8.9 million (2020: GBP7.9 million). Our interest yield on loans fell slightly to 10.9% (2020: 11.6%), due mainly to our success in promoting the Government-backed loan schemes and our move away from sub-prime lending to prime and near prime propositions. Our interest expense on deposits showed a marginal decrease to 2.2% (2020: 2.4%). Operating expenses grew by 5.3% to GBP7.8 million (2020: GBP7.5 million), principally as a result of our prudent policy of recognising further impairments of GBP2.1 million (2020: GBP1.9 million) to protect the integrity of our balance sheet. As a result, and as already stated, our profit before tax increased to GBP1.1 million.
Turning to our balance sheet, despite the challenges of the trading environment, our net loan book has increased by 16.4% to GBP211.4 million (2020: GBP181.6 million), with impairments falling to 2.9% (2020: 3.3%) of the gross total. We continue to ensure that liquidity is maintained to provide a prudent buffer until the economic situation fully normalises and, as a result, our cash and debt securities stand at GBP57.2 million (2020: GBP64.0 million) - a decrease of 10.7%, keeping us in a more advantageous competitive position with our capacity for increased lending. Our customer deposits have grown by 6.2% to GBP231.2 million (2020: GBP217.8 million) and are carefully managed by our Treasury function, especially important at this time.
All of which leads to an 8.8% growth in our total asset base to GBP283.8 million (2020: GBP260.7 million). Shareholder equity has increased by 6.0% to GBP23.1 million (2020: GBP21.8 million), providing net assets per share, adjusted for the post-period script dividend, of 20.2 pence (2020: 19.1 pence).
Business Review
Conister Bank Limited ("Bank")
In my last Chairman's Statement, I promised to provide an update on the Bank's second VAT claim of GBP0.6 million. I am pleased to report that the Bank resolved its claim against the Isle of Man's Customs and Excise and has been paid in full. A subsequent claim of statutory interest due on this claim has been lodged with the first-tier tribunal in the UK, alongside other High Street Banks, but no value has been recognised in these financial statements for the claim.
The Bank continues to attract deposits at historically low market rates which will position it well against any inflationary pressure. With UK Gilts attracting negative interest rates, our treasury management strategy increased our cash balance to GBP25.6 million (2020: GBP6.0 million) and reduced our debt securities to GBP27.6 million (2020: GBP57.0 million).
The Bank continues to be supportive of both the Isle of Man and UK Governments' business support schemes and has now been accredited for the UK Government's Recovery Loan Scheme. Along with this, the Bank has repositioned its distribution to support more COVID-19 and recession-proof markets. This repositioning, including moving to a more prime customer base, drove loan book growth to 16.4% (2020: 6.8%), which is encouraging during a period of short-notice economic lockdowns.
This loan book growth resulted in the net interest income margin net of commissions increasing by 5.4% (2020: 2.2%) but we expect a normalised position over the life of these loans due to their prime nature and the Government guarantees.
Personnel expenses increased by GBP0.1 million as the Bank's headcount increased by nine as part of launching a new debt collection company, Manx Collections Limited, which generated GBP0.1 million of profitability in the first six months of trading. Overheads increased by GBP0.2 million, which is primarily due to the recovery costs on delinquent debts. During these uncertain times we continue to operate a prudent provisioning policy, with an allowance of GBP2.1 million (2020: GBP1.9 million). Finally, in relation to our cost base, depreciation and amortisation increased by GBP0.1 million to GBP0.4 million (2020: GBP0.3 million), driven by continued investment in our IT strategy.
Edgewater Associates Limited
Our independent financial advisory business remains the largest on the Isle of Man and had a difficult half-year with the trading conditions negatively impacted by COVID-19. Meeting clients became problematic and many sought to delay investment decisions due to market turbulence. Despite a UK economic recovery being underway, the sustained threat of inflation has dampened client confidence and stifled investment. As a result, profitability has remained broadly similar year-on-year despite assets under management increasing by 11.6% to GBP375.0 million (2020: GBP336.0 million) and renewal income increasing to GBP0.6 million (2020: GBP0.5 million).
Manx FX Limited ("MFX")
Our foreign exchange advisory business has had a remarkable half-year. Whereas our IFA business suffered from market volatility, MFX benefitted, demonstrating the importance in having a diversified financial services group. Turnover remained constant at GBP0.9 million, particularly trading in Euros and South African Rand following the wide-ranging impact of BREXIT. The business continues to have a very liquid balance sheet and declared an interim dividend to the Group of GBP0.6 million during the half-year (2020: GBPnil).
Beer Swaps Limited ("BSL")
On 14 June 2021, the Bank acquired further shares in BSL to increase its ordinary shareholding to 90% for a cash consideration of GBP0.3 million. For the period under ownership, BSL reported turnover of GBP0.6 million and a profit before tax of GBP0.2 million with net assets of GBP0.3 million. BSL is now the largest tank lessor in the UK brewing market.
Blue Star Business Solutions Limited ("BBSL")
BBSL has traded well through difficult economic conditions in which the economic impact of UK Government support schemes distorted the credit broker sector. However, and notwithstanding, BBSL has reported a GBP0.1 million profit (2020: GBP0.0 million). BBSL brokered GBP6.4 million (2020: GBP3.8 million) of which GBP3.8 million (2020: GBP2.1 million) was referred to the Bank. BBSL receives no loan interest income for lending placed with the Bank, but if it did, the imputed profitability for the first half would have been GBP0.5 million.
Strategic Objectives for 2021
Our strategic priorities for 2021 remain unchanged, and I will report on these in detail in my next Chairman's Statement. As ever, we strive to increase shareholder value, both in a prudent yet progressive manner. I repeat our 2021 key objectives:
-- Treating customers in both as fair and appropriate manner as possible. Our Treating Customers Fairly ("TCF") regime continues to be enhanced throughout our businesses and I am pleased to report that we have a negligible level of complaints, all of which have been settled to the customers' satisfaction. TCF is the cornerstone of all our operations as we make every effort to ensure that our customer service offering is second to none.
-- Adopting a pro-active strategy of managing risk. We have taken active steps to rebase our loan book away from sub-prime lending into prime and near-prime advances. In doing so, we recognise that the gross interest rates may diminish somewhat, but we anticipate that this erosion will be more than compensated by a lower incidence of arrears and write-offs. Our new segregated debt collection subsidiary - Manx Collections Limited - received its FCA licence in June 2021 and has already made significant progress not only in recoveries, but also in the early identification of problems, working with our customers to ensure a better outcome for the Bank. We continue to make prudential impairments as part of our policy of strengthening our balance sheet to minimise the risk of any unforeseen event adversely affecting our profitability.
-- Developing our core businesses by considered acquisitions. The current economic environment has produced a number of interesting potential acquisition opportunities. Each of these is evaluated carefully before commitment. We also recognise that our recent acquisitions have become significant contributors to our profitability.
-- Developing and implementing a coherent digital infrastructure. We recognise the importance of IT to service the operational requirements of a growing Group and to remain competitive. We continue with our investment in core systems which is already minimising the time taken to consider advances, allowing us to redeploy staff into more productive areas.
-- Managing the liabilities side of our balance sheet. Our new Treasury management function is working well, ensuring that our liquidity matches the anticipated growth of our lending. Our recently launched Isle of Man notice accounts continue to gain traction and we will continue to develop attractive deposit products with competitive interest rates for our depositors.
-- Managing our balance sheet to exceed the regulatory requirements for capital adequacy. We are well capitalised with our Total Capital Ratio standing at 17.8% (2020: 16.0%). We will maintain our strategy of converting Group retained earnings into Tier 1 capital for the Bank to support its lending growth. Meanwhile, we will continue to maintain a heightened level of cash liquidity.
-- Increase shareholder value. The discount between Net Asset Value and market capitalisation is an issue that we are working to rectify. The strategic aim of returning to being a dividend paying company has now been achieved and I see no reason to prevent us returning 10% of profit attributable to shareholders as a dividend for the foreseeable future. This, together with enhanced investor relations, should help the market in rerating our shares.
Current trading and outlook
The Isle of Man economy continues to be resilient under the strain of COVID-19 and our local new business growth shows no signs of slowing down. The UK also shows signs of a real return to growth with Gross Domestic Product for Quarter 2 this year increasing by 22.2% over the same quarter last year, and our UK lending growth reflects this. Taken together, I have every confidence that our full year will show a significant improvement in profitability providing the requirement for impairments remain at their current level.
The Bank's appointments as accredited lenders to the various Government-backed schemes will help second-half lending growth and we will continue to strengthen our balance sheet by maintaining adequate liquidity.
It remains for me, as always, to thank on behalf of the Board, our staff for their splendid efforts coping with the additional demands of dealing with the COVID pandemic whilst continuing to develop the Group in such a successful manner and, finally, to thank our shareholders for their enduring loyalty.
Jim Mellon
Executive Chairman
27 September 2021
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the For the six months six months For the ended ended year ended 30 June 30 June 31 December 2021 2020 2020 GBP'000 GBP'000 GBP'000 Notes (unaudited) (unaudited) (audited) ------------------------------------ ------ --------------- ------------- ------------- Interest income 6 10,979 10,428 20,692 Interest expense (2,424) (2,617) (5,222) Net interest income 8,555 7,811 15,470 Fee and commission income 2,356 2,157 3,865 Fee and commission expense (1,878) (1,870) (3,481) Depreciation on leasing assets (173) (203) (406) Net trading income 8,860 7,895 15,448 Other operating income 129 111 200 Gain on financial instruments - 6 259 Realised (loss) / gain on debt securities (1) 212 261 Revaluation on acquisition of subsidiary - 237 237 Operating income 8,988 8,461 16,405 Personnel expenses (3,241) (3,337) (6,823) Other expenses (2,099) (1,772) (3,707) Impairment on loans and advances to customers (2,142) (1,895) (3,950) Depreciation (323) (222) (490) Amortisation and impairment of intangibles (216) (172) (374) Share of profit / (loss) of equity accounted investees, net of tax 59 (91) 54 VAT recovery 113 36 906 Profit before tax payable 1,139 1,008 2,021 Income tax expense (122) (16) (53) Profit for the period / year 1,017 992 1,968 For the For the six months six months For the ended ended year ended 30 June 30 June 31 December 2021 2020 2020 GBP'000 GBP'000 GBP'000 Notes (unaudited) (unaudited) (audited) ------------------------------------------ ------ --------------- --------------- ----------------- Profit for the period / year 1,017 992 1,968 Other comprehensive income: Items that will be reclassified to profit or loss Unrealised (loss) / gain on debt securities (9) 102 (51) Items that will never be reclassified to profit or loss Actuarial loss on defined benefit pension scheme taken to equity - - (241) Total comprehensive income for the period / year 1,008 1,094 1,676 Profit attributable to: Owners of the Company 1,029 997 1,935 Non-controlling interest (12) (5) 33 1,017 992 1,968 Total comprehensive income attributable to: Owners of the Company 1,020 1,099 1,643 Non-controlling interest (12) (5) 33 1,008 1,094 1,676 Earnings per share - profit for the period / year Basic earnings per share (pence) 8 0.89 0.87 1.65 Diluted earnings per share (pence) 8 0.73 0.71 1.37 Earnings per share - total comprehensive income for the period / year Basic earnings per share (pence) 8 0.88 0.96 1.41 Diluted earnings per share (pence) 8 0.72 0.78 1.19
Condensed Consolidated Statement of Financial Position
30 June 30 June 31 December 2020 2021 2020 GBP'000 GBP'000 GBP'000 (audited) As at Notes (unaudited) (unaudited) ---------------------------------- ------- ------------- ------------- ------------ Assets Cash and cash equivalents 29,577 6,991 34,053 Debt securities 9 27,610 57,036 25,532 Trading assets - 4 4 Loans and advances to customers 5,10 211,445 181,581 193,143 Trade and other receivables 11 1,458 2,521 2,170 Property, plant and equipment 6,472 5,793 6,045 Intangible assets 2,329 2,290 2,286 Investment in associate 375 171 316 Other investments 17 68 - - Goodwill 12 4,412 4,361 4,412 Total assets 283,746 260,748 267,961 Liabilities Deposits from customers 231,179 217,758 218,285 Creditors and accrued charges 13 4,058 3,148 3,206 Contingent consideration 613 921 672 Loan notes 14 23,722 16,222 22,222 Pension liability 846 688 944 Deferred tax liability 195 141 197 Total liabilities 260,613 238,878 245,526 Equity Called up share capital 15 19,121 19,121 19,121 Retained earnings 3,984 2,686 3,230 Equity attributable to owners of the Company 23,105 21,807 22,351 Non-controlling interest 28 63 84 Total equity 23,133 21,870 22,435 Total liabilities and equity 283,746 260,748 267,961
Condensed Consolidated Statement of Changes in Equity
Attributable to owners of the Company ----------------------------------- Non-controlling Share Retained interest Total capital earnings Total GBP'000 equity For the six months ended GBP'000 GBP'000 GBP'000 GBP'000 30 June 2021 --------------------------------- ---------- ----------- ---------- ------------------ ---------- Balance at 1 January 2020 20,732 1,587 22,319 - 22,319 Total comprehensive income for the period: Profit for the period - 997 997 (5) 992 Other comprehensive income - 102 102 - 102 Total comprehensive income for the period - 1,099 1,099 (5) 1,094 Transactions with owners: Purchase of ordinary shares (1,611) - (1,611) - (1,611) Total transactions with owners of the Company (1,611) - (1,611) - (1,611) Changes in ownership interests: Change in ownership interest of a subsidiary - - - 68 68 Total changes in ownership interests - - - 68 68 Balance at 30 June 2020 19,121 2,686 21,807 63 21,870 Balance at 1 July 2020 19,121 2,686 21,807 63 21,870 Total comprehensive income for the period: Profit for the period - 938 938 38 976 Other comprehensive income - (394) (394) - (394) Total comprehensive income for the period - 544 544 38 582 Changes in ownership interests: Change in ownership interest of a subsidiary - - - (17) (17) Total changes in ownership interests - - - (17) (17) Balance at 31 December 2020 19,121 3,230 22,351 84 22,435 Balance at 1 January 2021 19,121 3,230 22,351 84 22,435 Total comprehensive income for the period: Profit for the period - 1,029 1,029 (12) 1,017 Other comprehensive income - (9) (9) - (9) Total comprehensive income for the period - 1,020 1,020 (12) 1,008 Changes in ownership interests: Acquisition of subsidiary with non-controlling interest (Note 16) - (266) (266) (44) (310) Total changes in ownership interests - (266) (266) (44) (310) Balance at 30 June 2021 19,121 3,984 23,105 28 23,133 Condensed Consolidated Statement of Cash Flows For the For the For the six months six months year ended ended ended 31 December 30 June 30 June 2020 2021 2020 GBP'000 Notes GBP'000 GBP'000 (audited) (unaudited) (unaudited) --------------------------------------- -------- ------------- ------------- ------------- RECONCILIATION OF PROFIT BEFORE TAXATION TO OPERATING CASH FLOWS Profit before tax 1,139 1,008 2,021 Adjustments for: Depreciation 496 425 896 Amortisation and impairment of intangibles 216 172 374 Realised gain on debt securities - (212) (237) Share of (profit) / loss of equity accounted investees (59) 91 (54) Contingent consideration interest expense 61 58 122 Pension charge included in personnel costs - - 15 Gain on acquisition of subsidiary - (237) (253) 1,853 1,305 2,884 Changes in: Trading asset 4 15 15 Trade and other receivables 11 712 73 415 Creditors and accrued charges 13 767 (15) 315 Net cash flow from trading activities 3,336 1,378 3,629 Changes in: Loans and advances to customers 10 (18,302) (4,461) (16,023) Deposits from customers 12,894 7,825 8,352 Pension contribution (98) - - Cash (outflow) / inflow from operating activities (2,170) 4,742 (4,042) For the For the For the six months six months year ended ended ended 31 December
30 June 30 June 2020 2021 2020 GBP'000 Notes GBP'000 GBP'000 (audited) (unaudited) (unaudited) -------------------------------------- -------- ------------- ------------- ------------- CASH FLOW STATEMENT Cash from operating activities Cash (outflow) / inflow from operating activities (2,170) 4,742 (4,042) Income taxes paid - - (172) Net cash (outflow) / inflow from operating activities (2,170) 4,742 (4,214) Cash flows from investing activities Purchase of property, plant and equipment (1,172) (322) (1,187) Purchase of intangible assets (259) (35) (231) Sale of property, plant and equipment 249 - 127 Acquisition of subsidiary or associate, net of cash acquired 16 (310) (622) (648) (Purchase) / sale of debt securities at fair value through other comprehensive income 9 (3,188) (3,608) 1,101 Sale / (purchase) of debt securities at amortised cost 9 1,101 (6,322) 20,108 Contingent consideration (120) - (59) Net cash (outflow) / inflow from investing activities (3,699) (10,909) 19,211 Cash flows from financing activities Receipt / (repayment) of loan notes 14 1,500 (1,360) 4,640 Lease payments (107) (102) (204) Net cash inflow / (outflow) from financing activities 1,393 (1,462) 4,436 Net (decrease) / increase in cash and cash equivalents (4,476) (7,629) 19,433 Cash and cash equivalents - opening 34,053 14,620 14,620 Cash and cash equivalents - closing 29,577 6,991 34,053 Included in cash flows are: Interest received - cash amounts 10,757 10,741 20,274 Interest paid - cash amounts (2,345) (2,669) (5,053)
Notes
For the six months ended 30 June 2021
1. Reporting entity
Manx Financial Group PLC ("Company" or "MFG") is a company incorporated in the Isle of Man. These condensed consolidated interim financial statements ("interim financial statements") as at and for the six months ended 30 June 2021 comprise the Company and its subsidiaries ("Group").
2. Basis of accounting
These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the last annual consolidated financial statements as at and for the year ended 31 December 2020 ("last annual financial statements"). They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.
3. Functional and presentation currency
These financial statements are presented in pounds sterling, which is the Group's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated. All subsidiaries of the Group have pounds sterling as their functional currency.
4. Use of judgements and estimates
In preparing these interim financial statements, management make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same as those described in the last annual financial statements other than those described in Note 17 - Acquisition of financial instrument.
5. Credit risk
A summary of the Group's current policies and practices for the management of credit risk is set out in Note 7 - Financial risk review and Note 37 - Financial risk management on pages 46 and 71 respectively of the Annual Financial Statements 2020.
An explanation of the terms Stage 1, Stage 2 and Stage 3 is included in Note 39 (G)(vii) on page 80 of the Annual Financial Statements 2020.
A. Summary of credit risk on loans and advances to customers
2021 2020 Stage Stage Stage Total Stage Stage Stage Total 30 June (unaudited) 1 2 3 GBP'000 1 2 3 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ----------------------- --------- --------- --------- --------- --------- --------- --------- --------- Grade A 195,141 - - 195,141 164,648 - - 164,648 Grade B - 4,437 7,255 11,692 - 2,252 - 2,252 Grade C 589 50 10,248 10,887 5,558 2,211 13,074 20,843 Gross value 195,730 4,487 17,503 217,720 170,206 4,463 13,074 187,743 Allowance for ECL (698) (14) (5,563) (6,275) (220) (38) (5,904) (6,162) Carrying value 195,032 4,473 11,940 211,445 169,986 4,425 7,170 181,581 2020 2019 Stage Stage Stage Total Stage Stage Stage Total 31 December 1 2 3 GBP'000 1 2 3 GBP'000 (audited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ---------------- --------- --------- --------- --------- --------- --------- --------- --------- Grade A 173,673 - - 173,673 168,796 - - 168,796 Grade B - 5,728 7,751 13,479 1,143 1,675 - 2,818 Grade C 335 9 12,771 13,115 - 1,985 10,544 12,529 Gross value 174,008 5,737 20,522 200,267 169,939 3,660 10,544 184,143 Allowance for ECL (423) (18) (6,683) (7,124) (116) (467) (4,190) (4,773) Carrying value 173,585 5,719 13,839 193,143 169,823 3,193 6,354 179,370
Loans are graded A to C depending on the level of risk. Grade C relates to agreements with the highest of risk, Grade B with medium risk and Grade A relates to agreements with the lowest risk.
B. Summary of overdue status of loans and advances to customers
2021 2020 Stage Stage Stage Total Stage Stage Stage Total 30 June 2020 (unaudited) 1 2 3 GBP000 1 2 3 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ---------------------------- -------- -------- -------- -------- -------- -------- -------- -------- Current 193,435 - - 193,435 159,467 - - 159,467 Overdue < 30 days 2,293 - - 2,293 5,181 - - 5,181 Overdue > 30 days - 4,488 17,504 21,992 5,558 4,463 13,074 23,095 195,728 4,488 17,504 217,720 170,206 4,463 13,074 187,743 ---------------------------- -------- -------- -------- -------- -------- -------- -------- -------- 2020 2019 Stage Stage Stage Total Stage Stage Stage Total 31 December (audited) 1 2 3 GBP000 1 2 3 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ------------------------- -------- -------- -------- -------- -------- -------- -------- -------- Current 170,436 - - 170,436 145,373 - - 145,373 Overdue < 30 days 3,572 - - 3,572 24,259 - - 24,259 Overdue > 30 days - 5,737 20,522 26,259 307 3,660 10,544 14,511 174,008 5,737 20,522 200,267 169,939 3,660 10,544 184,143 ------------------------- -------- -------- -------- -------- -------- -------- -------- -------- 6. Interest income
Interest income represents charges and interest on finance and leasing agreements attributable to the period or year after adjusting for early settlements and interest on bank balances, excluding the Terminal funding portfolio.
7. Operating segments
Segmental information is presented in respect of the Group's business segments. The Directors consider that the Group currently operates in one geographic segment comprising of the Isle of Man, UK and Channel Islands. The primary format, business segments, is based on the Group's management and internal reporting structure. The Directors consider that the Group operates in three (2020: three) product orientated segments in addition to its investing activities: Asset and Personal Finance (including provision of HP contracts, finance leases, personal loans, commercial loans, block discounting, vehicle stocking plans and wholesale funding agreements); EAL and MFX.
Asset and Investing For the 6 months ended Personal EAL MFX Activities Total 30 June 2021 (unaudited) Finance GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Net interest income / (expense) 9,201 - - (646) 8,555 Fee and commission income 469 1,031 856 - 2,356 Operating income / (expense) 6,456 1,031 852 649 8,988 Profit / (loss) before tax payable 759 (12) 717 (325) 1,139 Capital expenditure 1,384 - 24 23 1,431 Total assets 274,832 2,150 615 6,259 283,856 Total liabilities 243,136 545 8 17,034 260,723 Asset and Investing For the 6 months ended Personal EAL MFX Activities Total 30 June 2020 (unaudited) Finance GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Net interest income / (expense) 8,287 - - (476) 7,811 Fee and commission income 207 1,075 875 - 2,157 Operating income / (expense) 6,932 1,075 872 (215) 8,664 Profit / (loss) before tax payable 843 6 785 (626) 1,008 Capital expenditure 357 - - - 357 Total assets 257,310 2,292 321 825 260,748 Total liabilities 228,416 633 7 9,822 238,878 Asset and Investing For the year ended Personal EAL MFX Activities Total 31 December 2020 (audited) Finance GBP000 GBP000 GBP000 GBP000 GBP000 Net interest income 15,470 - - - 15,470 Fee and commission income 430 2,103 1,332 - 3,865 Operating income 13,206 2,103 1,096 - 16,405 Profit / (loss) before tax payable 1,316 (94) 1,096 (297) 2,021 Capital expenditure 1,138 46 2 1 1,187 Total assets 260,155 2,638 536 4,632 267,961 Total liabilities 230,001 660 12 14,853 245,526 ------------------------------------ ---------- --------- --------- ------------- --------- 8. Earnings per share For the For the For the 6 months 6 months ended ended year ended 30 June 30 June 31 Dec 2021 2020 2020 (unaudited) (unaudited) (audited) Profit for the period / year GBP1,017,000 GBP992,000 GBP1,968,000 Weighted average number of ordinary shares in issue (basic) 114,130,077 114,130,077 118,964,270 Basic earnings per share (pence) 0.89 0.87 1.65 Diluted earnings per share (pence) 0.73 0.71 1.37 Total comprehensive income for the period GBP1,008,000 GBP1,094,000 GBP1,676,000 / year Weighted average number of ordinary shares in issue (basic) 114,130,077 114,130,077 118,964,270 Basic earnings per share (pence) 0.88 0.96 1.41 Diluted earnings per share (pence) 0.72 0.78 1.19
The basic earnings per share calculation is based upon the profit for the period / year after taxation and the weighted average of the number of shares in issue throughout the period / year.
30 June 30 June 31 Dec 2021 2020 2020 As at (unaudited) (unaudited) (audited) Reconciliation of weighted average number of ordinary shares in issue between basic and diluted Weighted average number of ordinary shares (basic) 114,130,077 114,130,077 118,964,270 Number of shares issued if all convertible loan notes were exchanged for equity 36,555,556 36,555,556 36,555,556 Dilutive element of share options if - - - exercised Weighted average number of ordinary shares (diluted) 150,685,633 150,685,633 155,519,826 Reconciliation of profit for the period / year between basic and diluted Profit for the period / year (basic) GBP1,017,000 GBP992,000 GBP1,968,000 Interest expense saved if all convertible GBP83,125 GBP83,125 GBP166,250 loan notes were exchanged for equity Profit for the period / year (diluted) GBP1,100,125 GBP1,075,125 GBP2,134,250
The diluted earnings per share calculation assumes that all convertible loan notes and share options have been converted / exercised at the beginning of the period where they are dilutive.
30 June 30 June 31 Dec 2021 2020 2020 As at (unaudited) (unaudited) (audited) Reconciliation of total comprehensive income for the period / year between basic and diluted Total comprehensive income for the period GBP1,008,000 GBP1,094,000 GBP1,676,000 / year (basic) Interest expense saved if all convertible GBP83,125 GBP83,125 GBP166,250 loan notes were exchanged for equity Total comprehensive income for the period GBP1,091,125 GBP1,177,125 GBP1,842,250 / year (diluted) 9. Debt securities 30 June 30 June 31 Dec 2021 2020 2020 GBP'000 GBP'000 GBP'000 As at (unaudited) (unaudited) (audited) Financial assets at fair value through other comprehensive income: UK Government treasury bills 27,610 48,612 24,431 Financial assets at amortised cost: UK Certificates of Deposit - 8,424 1,101 27,610 57,036 25,532
UK Government Treasury Bills are stated at fair value and unrealised changes in the fair value are reflected in other comprehensive income. There were realised losses of GBP1,000 (30 June 2020: realised gains of GBP212,000 and 31 December 2020: realised gains of GBP261,000) and unrealised losses of GBP9,000 (30 June 2020: unrealised gains of GBP102,000 and 31 December 2020: unrealised losses of GBP51,000) for the period.
10. Loans and advances to customers
30 June 30 June 31 Dec 2021 2020 2020 Carrying Carrying Carrying Gross Impairment Value Value Value Allowance Amount GBP'000 GBP'000 GBP'000 GBP'000 As at GBP'000 (unaudited) (unaudited) (audited) HP 69,747 (2,115) 67,632 70,168 71,151 Finance lease 32,775 (3,237) 29,538 35,841 31,132 Wholesale funding arrangements 16,890 16,890 18,832 17,272 Block discounting 13,488 - 13,488 14,911 13,430 Unsecured personal loans 32,040 (432) 31,608 24,788 27,398 Secured commercial loans 10,170 (469) 9,701 12,237 9,091 Secured personal loans 1,746 - 1,746 3,182 2,152 Vehicle stocking plans 1,520 - 1,520 1,622 1,807 Government backed loans 39,344 (22) 39,322 - 19,710 217,720 (6,275) 211,445 181,581 193,143
11. Trade and other receivables
30 June 30 June 31 Dec 2021 2020 2020 GBP'000 GBP'000 GBP'000 As at (unaudited) (unaudited) (audited) VAT claim - 871 586 Prepayments 360 309 482 Other debtors 1,098 1,341 1,102 1,458 2,521 2,170
The VAT claim was settled in full and the Bank received GBP699,000 during the period. An additional recovery of GBP113,000 over and above the carrying amount recognised at year end has been recognised in profit and loss.
12. Goodwill
30 June 30 June 31 Dec 2021 2020 2020 GBP'000 GBP'000 GBP'000 As at (unaudited) (unaudited) (audited) EAL 1,849 1,849 1,849 BBSL 1,390 1,390 1,390 BSL 678 627 678 ECF Asset Finance PLC ("ECF") 454 454 454 Three Spires Insurance Services Limited ("Three Spires") 41 41 41 4,412 4,361 4,412
13. Creditors and accrued charges
30 June 30 June 31 Dec 2021 2020 2020 GBP'000 GBP'000 GBP'000 As at (unaudited) (unaudited) (audited) Commission creditors 2,345 1,110 1,748 Other creditors and accruals 999 1,089 822 Lease liability 396 605 503 Taxation creditors 254 344 133 Deferred interest (Note 17) 64 - - 4,058 3,148 3,206
14. Loan notes
30 June 30 June 31 Dec 2021 2020 2020 GBP'000 GBP'000 GBP'000 As at Notes (unaudited) (unaudited) (audited) Related parties J Mellon JM 1,750 1,750 1,750 Burnbrae Limited BL 3,200 2,200 3,200 4,950 3,950 4,950 Unrelated parties UP 18,772 12,272 17,272 23,722 16,222 22,222
JM - Two loans, one of GBP1,250,000 maturing on 26 February 2025 with interest payable of 5.4% per annum, and one of GBP500,000 maturing on 31 July 2022, paying interest of 5.0% per annum. Both loans are convertible to ordinary shares of the Company at the rate of 7.5 pence and 9 pence respectively.
BL - Three loans, one of GBP1,200,000 maturing on 31 July 2022, paying interest of 5.0% per annum, one of GBP1,000,000 maturing on 25 February 2025, paying interest of 5.4% per annum, and one of GBP1,000,000 maturing on 28 February 2025 paying interest of 6% per annum. Jim Mellon is the beneficial owner of BL and Denham Eke is also a director. The GBP1,200,000 loan is convertible to ordinary shares of the Company at a rate of 7.5 pence.
UP - Thirty-six loans consisting of an average GBP521,447 with an average interest payable of 5.7% per annum. The earliest maturity date is 4 May 2022 and the latest maturity is 30 March 2026.
With respect to the convertible loans, the interest rate applied was deemed by the Directors to be equivalent to the market rate at the time with no conversion option.
15. Called up share capital
Ordinary Shares of no-par value available for Number issue ----------------------------------------------- ------------ At 30 June 2021, 31 December 2020 and 30 June 2020 200,200,000 ----------------------------------------------- ------------ Issued and fully paid ordinary Shares of no Number GBP'000 par value --------------------------------------------- ------------ -------- At 31 December 2020 and 30 June 2020 114,130,077 19,121 At 30 June 2021 114,130,077 19,121 --------------------------------------------- ------------ --------
There are three convertible loans totalling GBP2,950,000 (30 June and 31 December 2020: three convertible loans totalling GBP2,950,000). On 23 June 2014, 1,750,000 share options were issued to Executive Directors and senior management within the Group at an exercise price of 14 pence per share.
The options vest over three years with a charge based on the fair value of 8 pence per option at the date of grant. The period of grant is for 10 years less 1 day ending 22 June 2024.
Of the 1,750,000 share options issued, 1,050,000 (30 June and 31 December 2020:1,050,000) remain outstanding.
16. Acquisition of non-controlling interest
On 14 June 2021, the Group increased its shareholding in Beer Swaps Limited ("BSL"), trading as Ninkasi Rentals and Finance, to 90% (30 June and 31 December 2020: 75%) for a cash consideration of GBP310,000.
The carrying value of non-controlling interest acquired at the date of acquisition was GBP44,000. The consideration in excess of the carrying amount of GBP266,000 has been charged directly to the profit and loss account.
17. Acquisition of financial instrument
On 9 June 2021 the Group acquired 10% of the issued share capital of RFG for nil consideration. The receipt of the issued share capital is considered to be a commitment fee receivable by the Group in order to originate loan facilities in aggregate not exceeding GBP6,250,000 to RFG. The commitment fee is an integral part of the effective interest rate of the associated loan facilities issued to RFG.
The Group is not considered to have a significant influence over RFG as it holds less than a 20% shareholding and is not considered to participate in the policy making decisions of the entity. The 10% shareholding has thus been classified as a financial instrument.
The Group continues to obtain information necessary to measure the fair value of the shares obtained. The fair value of the financial instrument received has been provisionally determined as GBP68,000 at initial recognition based on the proportionate share of the net asset value of RFG.
As part of the transaction, the Group has been granted two warrants to acquire further shares. The first warrant is for 5% of the share capital and the second warrant is for a further 5% of the share capital.
The two warrants are exercisable dependent upon the Group's banking subsidiary, the Bank, contracting with RFG, for a larger facility. The fair value of the two warrants has been determined to be nil due to the significant uncertainty that exists at acquisition date and the period end in issuing a further debt facility.
18. Regulators
Certain Group subsidiaries are regulated by the FSA and the FCA as detailed below.
The Bank and EAL are regulated by the FSA under a Class 1(1) - Deposit Taking licence and Class 2 - Investment Business licence respectively. The Bank and CFL are regulated by the FCA to provide regulated products and services.
19. Contingent liabilities
The Bank is required to be a member of the Isle of Man Government Depositors' Compensation Scheme which was introduced by the Isle of Man Government under the Banking Business (Compensation of Depositors) Regulations 1991 and creates a liability on the Bank to participate in the compensation of depositors should it be activated.
20. Subsequent events
On 7 July 2021, the Company announced a dividend of 0.1724 pence per Ordinary Share for the period from 1 January 2020 to 31 December 2020, calculated as being 10% of the profit after tax available to Shareholders. The dividend was paid on 10th August 2021 to holders of Ordinary Shares recorded on the register on 16 July 2021. MFG also offered a Script Dividend Scheme under which Shareholders could elect to receive New Ordinary Shares in lieu of the cash dividend.
There were no other significant subsequent events identified after 30 June 2021.
21. Approval of interim financial statements
The interim financial statements were approved by the Board on 27 September 2021. The interim report will be available from that date at the Group's website - www.mfg.im and at the Registered Office: Clarendon House, Victoria Street, Douglas, Isle of Man, IM1 2LN. The Group's nominated adviser and broker is Beaumont Cornish Limited, Building 3, 566 Chiswick High Road, London W4 5YA. The interim and annual financial statements along with other supplementary information of interest to shareholders, are included on the Group's website. The website includes investor relations information, including corporate governance observance and contact details.
Appendix - Glossary of terms
BBSL Blue Star Business Solutions Limited BL Burnbrae Limited BSL Beer Swaps Limited Bank Conister Bank Limited CFL Conister Finance & Leasing Ltd Company Manx Financial Group PLC EAL Edgewater Associates Limited ECF ECF Asset finance PLC FCA UK Financial Conduct Authority FSA Isle of Man Financial Services Authority Group Comprise the Company and its subsidiaries HP Hire Purchase IFA Independent Financial Advisors Interim financial Condensed consolidated interim financial statements statements JM Jim Mellon LSE London Stock Exchange MFG Manx Financial Group PLC MFX Manx FX Limited MFX.L Manx Financial Group PLC ticker symbol on the LSE RFG Rivers Finance Group Plc Subsidiaries MFG's subsidiaries being EAL, MFX, BBSL, BSL, Bank, CFL, ECF, Three Spires UK United Kingdom UP Unrelated parties
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