9 May 2018 07:00
IFG Group plc ("IFG" or the "Group")
Q1 2018 TRADING UPDATE
09 May 2018
This announcement contains inside information.
IFG releases the following update in advance of its AGM which takes place today at 12:00 (BST).
While the Group has updated the market on a number of issues since the start of 2018, the underlying businesses have had a positive first quarter. As expected, Group profitability is materially ahead of the same period in 2017 and the Board believes that both businesses are well positioned for long term growth.
The Group's businesses have total Assets under Administration and Advice of over £30.5bn; slightly down since 31 December 2017 (£30.6bn) with adverse market movements offsetting net inflows, but up 8.9% compared to 31 March 2017 (£28.0bn). We now serve approximately 61,000 clients across the two businesses (up 3.5% from 31 March 2017 and 0.4% from 31 December 2017).
James Hay
· James Hay now serves almost 59,000 clients (up 3.3% from 31 March 2017). New client wins of 1,400 are down 10.8% on the prior quarter and 14.2% lower than the first quarter in 2017. We believe this reflects the performance of the wider platform market, driven by a slowdown in the DB transfer market, equity market volatility, and adviser focus on factors such as GDPR and MiFID.
· Assets under Administration at 31 March 2018 were £25.4bn - up 9.1% from 31 March 2017. This figure is slightly below 31 December 2017 (£25.5bn) with net inflows during the quarter offset by adverse market movements.
· Repricing in 2017 has increased fee income. Whilst there has been a modest fall in cash balances held on the platform, the repricing, together with the increase in the Bank of England Base Rate announced in November 2017, delivered significantly improved revenues and profits in the first quarter compared to the same period in 2017.
Saunderson House
· Saunderson House achieved 77 new client wins across both advisory and discretionary management services in the 3 months to 31 March 2018 and now serves 2,214 clients, up 9.8% from March 2017.
· Assets under Advice at 31 March 2018 were £5.1bn - up 8.0% on 31 March 2017. This figure is in line with 31 December 2017 with net inflows during the quarter offset by adverse market movements.
· The sales process has not had a material effect on new client wins to date although some existing clients deferred making new investments. We may see some knock-on impact in the coming months as the creation of new client pipeline is likely to have been affected to some extent. However, clarity brought about by the decision not to proceed with the sales process will remove uncertainty for both new and existing clients.
Group
· The new leadership team, announced on 18 April, is currently undertaking a review of the Group. We will update the market in due course. This review and the cost of recent management changes will result in higher Group costs in 2018.
· The Group is focused on resolving its legacy issues and James Hay has appealed the HMRC assessments in relation to Elysian Fuels in order to protect its position. The Group will continue to work collaboratively with HMRC to resolve the issue and believes James Hay acted appropriately and in accordance with its clients' instructions.
· We have previously announced a retention award for the senior management and employees of Saunderson House of £1.5m in each of the 2018 and 2019 financial years. Under IAS 37, we expect to recognise the full cost of both payments in our 2018 results, provided that the targets required for payment are likely to be met.
Kathryn Purves, Group Chief Executive, commented:
"I am delighted to have joined the executive team at IFG Group. The Group owns two businesses which continue to perform well and we have a clear focus on addressing the legacy issues within the business and delivering value to shareholders. We are reviewing how best to deliver this and I look forward to updating the market in due course."
Enquiries:
Kathryn Purves Group Chief Executive +44(0) 203 8876181
Gavin Howard Group Chief Financial Officer +44(0) 203 8876181
Joint Corporate Brokers:
Nicholas Harland Macquarie Capital (Europe) Ltd +44 203 037 2369
Charlotte Craigie Goodbody Stockbrokers UC +44 203 841 6202
Notes to the editors:
IFG Group plc provides a range of financial solutions through its subsidiaries, James Hay Partnership and Saunderson House Limited. James Hay is a leading retirement wealth planning platform and Saunderson House is an award winning independent financial adviser.