21 Jul 2017 09:31
21 July 2017
IFG Group plc (the "Company")
Trading Update
The Company issues the following pre-results update for its half year up to 30 June 2017:
As disclosed in our Interim Management Statement on the 9th May 2017, both of the businesses, James Hay and Saunderson House, have seen strong growth in new client activity during 2017 to date, which has translated into assets under administration and advice increasing to more than £29 billion (H1 2016, £24.4 billion).
James Hay has added more than 3,000 clients in H1 2017, which amounts to a 50% increase compared to the same period in 2016. Pricing changes have now been implemented in James Hay meaningfully offsetting the previously announced reduction in interest income and providing a more stable and predictable revenue stream for James Hay. Attrition within James Hay, at 6.2%, is lower than the equivalent period in 2016 (6.8%). Saunderson House has added 144 clients compared to 126 for the same period for 2016, which was driven by the faster than anticipated growth in its new discretionary management offering. In aggregate, we expect both businesses to deliver an adjusted operating profit in line with market consensus in 2017 and replace lost interest income with more stable and predictable fee income, strongly positioning both businesses to deliver meaningful growth in profitability in 2018.
As previously disclosed, the Group is incurring material legal and remediation costs in relation to legacy non-standard investments in which some of James Hay's clients invested, principally a structured bio-fuels investment known as Elysian Fuels. We are engaged in on-going discussions with HMRC to clarify any potential sanction charges but due to the complexity of the matter, any financial exposure to the Group, which is a function of any sanction charges offset by recoveries, is unlikely to be resolved by the time of the announcement of our interim results on the 30th August.
At a Board meeting on the 20th July 2017, the Company's Board approved an acceleration of the restructuring plan for James Hay, which will deliver improvements to the operational capability of the business, supporting increased efficiency, reduced on-going costs and improved service levels to clients.
As a result of the above matters, the level of exceptional costs that will be incurred in 2017 is expected to increase materially, which will lead to reduced statutory profits for the Group. We believe this is the correct course of action to firmly position the Company to deliver meaningful profit growth in 2018.
John Cotter, IFG Group CEO, commented "It is pleasing that both businesses are strongly growing clients and assets, reflecting the quality propositions we offer to our clients. The pricing changes we have implemented will deliver growth in revenues in H2, and the acceleration of the restructuring within James Hay reflects our confidence that the changes will deliver a more efficient, and more profitable, business going forward. We are focused on resolving the legacy issues within James Hay, which are distracting from the strong underlying performance of the businesses."
This trading update contains inside information.
Enquiries:
John Cotter Group Chief Executive Tel: +44 203 887 6181 Andrew Price Group Chief Financial Officer Tel: +44 203 887 6181
This announcement has been issued through the Companies Announcement Service of
The Irish Stock Exchange