MIL.L Regulatory News (MIL)

9 May 2005 10:39

Millfield Group PLC09 May 2005 Date: 9 May 2005On behalf of: Millfield Group plc ("the Group") Millfield Group plcPre-Close Period Trading Update Prior to entering its close period, Millfield Group plc, a leading independentfinancial services advisory group, today announces an update on the Group'sprogress since its merger with Inter-Alliance Group Plc on 1 October 2004 and onthe enlarged Group's trading prior to its year end of 31 March 2005. Since the merger, we have achieved our key objective of undertaking all of themain elements of the integration of the two businesses within the six months to31 March 2005. The Group structure has now been considerably simplified and wehave successfully exited all non-core businesses, details of which are set outbelow. As a result, the Group is now positioned to focus on the growth anddevelopment of its trading activity. In the second half of the year trading performance in both parts of the mergedgroup has been consistent with that in the previous six months. Cash resourcesavailable to support the continued trading and development of the Group are inline with our expectations and the Directors believe that they are sufficientfor the foreseeable future. Underlying headcount in the core business has also remained stable with totalnumbers at the year end of 1,654 in the UK. In January previously non-regulatedbusiness was taken over by the FSA; as a result we closed down the Trinonnon-regulated network which had 86 contributing advisers and rationalised LegacyProtect, reducing numbers by 57 - average productivity from these advisers wasunder £25,000. We continue to implement minimum standard requirements which willresult in some further headcount reductions which we expect to be more thanoffset by recruitment. The main areas involved in the integration and restructuring of the Group havebeen: Corporate Structure and Branding - at 31 March 2005, the businesses ofInter-Alliance Group Plc and Inter-Alliance (Group Practices) Limited weretransferred to Millfield Partnership Limited. The UK National advisory businessnow trades under the Millfield brand and the Inter-Alliance brand is only usedfor the Group's International business. Disposals - we have disposed of, or closed down, Millfield Moncur JacksonLimited, Simply Millfield Limited, Product Innovations Limited, Inter-Alliance(Mortgages) Limited, Trinon Limited and the external business of Intelliflo Plc. Millfield Associate Partnership - we have restructured the arrangements with theAssociate firms so that we do not now necessarily expect to assume 100%ownership of them. They will now be accounted for as associates rather thansubsidiaries. Training - we have integrated the internal training arrangements for the Groupin Millfield Academy, a non-profit making company funded by the productproviders. Operations - the operations of the businesses have been merged. The mainchanges were: • Premises. A rationalisation plan is being implemented to reduceGroup properties from 46 at the merger to 14 strategic locations and 7satellites. 13 properties have already been closed, including the Inter-Alliance head office buildings, and the balance will be closed by 31 December2005. Our Hull operations centre has moved to new premises. • Staffing. Staff numbers engaged in overhead activities have been reducedfrom 546 at the time of the merger to 406. • Systems. Millfield Partnership has been migrated onto the Atlas system. Atthe end of May we will transfer to a new purpose built, hosted IT operationscentre and switch to Telstra, the AAA rated carrier, as a single telecomssupplier. • Business Processes. A single set of processes has been implemented, usingthe Millfield business centre in Hull. • Purchasing. A review has taken place of the Group's main suppliers. Commissions - Common fee and commission terms were implemented across the Groupwith effect from 1 April 2005. During this quarter we are launching three major business initiatives: 1. Multi-tie. Depolarisation is being implemented from 1 June and at the same time we are launching our multi-tie division, Millfield Alliance. This will allow advisers to offer over 100 products from our six multi-tie partners (Axa, Friends Provident, Norwich Union, Prudential, Scottish Widows and Skandia) and to operate whole of market to facilitate the servicing of existing client policies. 2. Mortgages. On 12 May we are launching the Millfield Mortgage Solutions Mortgage Club, providing specialist support to this large market segment. 3. Lifetime. Our joint venture wrap account business was launched with a pilot group of Millfield advisers on 25 April and will now be progressively rolled out. As set out above, we have carried through our plans for the integration andsimplification of the Group during the second half of last year. The Group'sprincipal operating businesses are now the National advisory company, MillfieldPartnership (incorporating the business received from the Millfield AssociatePartnership, and Millfield Enterprise firms as well as the branch basedbusiness), the Sage IFA network, RST, the accountancy firm and theInter-Alliance International business. Outlook We have laid the foundations for the new Group to move ahead successfully. Wehave implemented a structure which allows us to focus on the growth of a coregroup of businesses, each with a single operational base. The Group is now verydistinctively positioned in the IFA and advisory market which is otherwisepredominantly served by networks. As a result we currently have a recordrecruitment pipeline with 150 applications being processed at present. TheGroup has seen turnover growth recommence in the last two months and expectsrevenue in this financial year to be in line with market expectations. As a result of the integration and restructuring of the Group, we have achieveda 26% reduction in the run rate for overhead costs from £49m at the time of themerger to £36m at the start of the New Year. The reduction of overheads arisingfrom the restructuring of arrangements with Millfield Associate Partnershipfirms is mirrored by a reduction in the gross margin for the Group. The Group's gross margin for the current year will be dependent on the mix ofbusiness between the different channels. Initially we would anticipate a levelof around 25% with progressive growth through the year, as income from theaforementioned business initiatives develops, with the aim of achieving marginlevels of 30%. We have the resources to take the Group forward and have made excellent progressin building the successful and profitable business that we envisaged at the timeof the merger. In addition, we have a number of major business initiativesbeing delivered. Enquiries to Millfield Group plcPaul Tebbutt, Chief Executive Tel: 020 8604 2607 Redleaf CommunicationsEmma Kane/Sanna Lehtinen Tel: 020 7955 1410 Notes to Editors About Millfield • Further information on Millfield is available at:www.millfield-partnership.co.uk • Millfield Group plc was floated on the Alternative Investment Marketof the London Stock Exchange in March 2001; • Millfield is a national independent financial advisory company inthe UK, offering truly independent advice, primarily in the pensions, lifeinsurance, investment and mortgage sectors, as well as long-term care provision,personal wealth management and the corporate financial planning arena.Millfield also has specialist divisions dealing with offshore investment,insurance and employee benefits. This information is provided by RNS The company news service from the London Stock Exchange