18 May 2012 07:00
IFG Group plc - Interim Management Statement
18 May 2012
Highlights:
·; James Hay Partnership making clear progress in distribution, sales and marketing and service delivery.
·; Total number of SIPPs under administration of 37,956 at end April 2012
·; Saunderson House revenue and profit ahead of prior year period; 43 new client wins
·; Agreement to dispose of the International Division to AnaCap Partners for £70m (€88m)
·; Financial position further strengthened as net debt insignificant and balance sheet to be further strengthened by proceeds from sale of International business.
IFG Group plc, the leading provider of bespoke SIPPs (self-invested personal pensions) and un-conflicted and fee based Financial Advice in the UK and Ireland issues the following update covering its business year to date.
Group Performance
The Group is performing well amid continued uncertainty globally and weak market conditions. Despite the ongoing challenges posed by the current market, the Group is strategically focussed, financially sound and continuing to make progress.
On 29th March, we announced that we had signed an agreement for the sale of the entire International Division (Segment) to AnaCap Financial Partners II LP for £70m (€88m). The agreement for sale is subject to the Shareholders approval and regulatory consent. The regulatory process is underway and the circular is being prepared and will issue in order to allow shareholders to vote in advance of the AGM.
We believe that there is a compelling strategic logic for this transaction as it provides financial flexibility and a clearly focused advisory and administration business in the UK and Ireland.
Divisional Update
UK
The UK business segment (65% of 2011 profits) is delivering a robust performance. Our two principal businesses, namely James Hay Partnership (Pensions Administration) and Saunderson House (Independent Financial Advisory) have both recorded a good start to the year.
Pensions Administration
James Hay Partnership administers over 40,000 self-directed pension schemes in SIPPs, SSAS' (small self administered schemes) and Wraps with circa £12bn assets under administration. We are pleased with the clear progress being made in James Hay Partnership and its performance against targets set at acquisition and ongoing key performance indicators, particularly:
·; New SIPPs: Sales of new SIPPs to end April were 756 (Full year 2011: 2,150)
·; Attrition: Year to date attrition levels on both our legacy books are at or ahead of our plan. As disclosed previously, planned attrition levels are 10% for the old James Hay book (7% driven by the more seasoned demographic profile).
·; Interest Margin: While UK base rates remain at historically low levels, the impact on profitability of an increase remains on hold. Renegotiated bank deposit rates have however partially compensated.
Through a combination of the above new business and attrition levels, the total number of SIPPs under administration was 37,956 at end April, just marginally lower than the 38,289 administered at end December 2011. Given the planned attrition levels mentioned above, this is a positive development and augers well for the cross-over point when new business exceeds attrition.
Business efforts continue to focus on distribution, sales and marketing initiatives. We are also encouraged by the positive trends experienced in customer satisfaction, service delivery and operating efficiency so far this year.
Independent Financial Advisory
Saunderson House is performing well. Revenue and operating profit through the first four months of the year are ahead of the equivalent prior year period. Under the management of Tony Overy and his team, SHL continues to win clients, improve the customer proposition and drive operational efficiency.
As a pure fee-based advisor, Saunderson House generates revenue on a time-charge basis with targeted recovery rates of billable hours of greater than 80%. This has been achieved through the first four months of the year. The team-based business model has proven robust with new client wins of 43.
International
Trading conditions remain tough for the International business segment (35% of 2011 profits) which provides Trust and Corporate Services.
Revenue has held up and new entity numbers are slightly ahead of the prior year period. However, intense competition and subdued client activity levels continue to weigh on performance.
Ireland
Our Corporate Pensions and Individual Advisory business has performed well in terms of client wins and profitability. The Irish economic backdrop remains depressed, however, our efforts to widen distribution and promote our proposition are yielding positive results.
The focus in the General Broking business remains on achieving neutral contribution as market conditions, capital constraints and a minimal level of transactions curtail activity.
Financial Management
The Group is in a strong financial position. The receipt of the International sale proceeds will transform our business giving us significant optionality. As a Group we are now considering further investment in our core business, substantially reducing gross debt and the opportunity of returning cash to shareholders.
We will continue to invest in our core Advisory and Administration Business. Our balance sheet strength, proven management team and recognised brands give us a unique opportunity to develop our business
Ends.
For furtherinformation please contact:
Mark Bourke Niamh Hore
Chief Executive Investor Relations Manager
IFG Group plc IFG Group plc
Tel +353 1 275 2800 Tel: +353 1 275 2866
Media enquiries:
FTI Consulting (formerly Financial Dynamics)
Ed Gascoigne-Pees / Laura Pope
Tel: +44 (0)20 7269 7132
IFG Group plc
Booterstown Hall
Booterstown
Co Dublin
www.ifggroup.com