Source - RNS
RNS Number : 2326L
Manx Financial Group PLC
30 September 2016
 

 

 

FOR IMMEDIATE RELEASE                                                                                            30 September 2016

Manx Financial Group PLC

 

Unaudited Interim Results for the 6 months ended 30 June 2016

 

Manx Financial Group PLC (LSE: MFX), the financial services Group which includes Conister Bank Limited, Edgewater Associates Limited, Conister Card Services Limited and Manx Incahoot Limited, presents its interim results for the six months ended 30 June 2016. Copies of the Interim Report will shortly be available on our website www.mfg.im

 

 

Financial Highlights

 

 

Profit before income tax on continuing operations*:

£0.81 million - up 2%

 

 

Profit before income tax:

£0.71 million - down 29%

 

 

Net interest income on continuing operations*:

£7.36 million - up 18%

 

 

Net interest income:

£7.36 million - up 18%

 

 

Total equity:

£12.81 million - up 18%

 

 

Total assets:

£149.09 million - up 18%

 

 

Loans:

£111.75 million - up 21%

 

 

Customer accounts:

£122.20 million - up 16%

 

 

 

 

Contacts:

 

Manx Financial Group PLC

 

Denham Eke, Chief Executive

Tel: +44 (0)1624 694694

 

Britton Financial PR

Tim Blackstone

Tel: +44 (0)7957 140416

 

Beaumont Cornish Limited

Roland Cornish/James Biddle

Tel: +44 (0)20 7628 3396 

 

The financial information set out below comprises non-statutory accounts. The financial information has been extracted from published accounts for the six months ended 30 June 2016.

 

*Continued operations are defined as Profit before income tax adjusted for earnings relating to Terminal Funding which ceased in September 2014.  This is contrary to the International Financial Reporting Standards' definition which required the Terminal Funding portfolio to be included within all operations.

 

 

Dear Shareholders,

 

2016 Group Interim Results

I am pleased to announce significant improvements in the performance and results throughout the Group, but with the exception of one notable item which resulted in our interim profit before income tax declining to £0.712 million (2015: £1.007 million). Whilst this result is acceptable, it does represent a drop of nearly 30% over the same period of the previous year. It is worth examining the underlying figures which make up this total and why this decrease has occurred.

 

We have made a number of substantial gains in the first six months of this year. We have grown our loan book by 21% to £111.7 million (2015: £92.5 million) and our customer deposit accounts by 16% to £122.2 million (2015: £105.7 million) - thus increasing the Group's total assets by 18% to £149.1 million (2015: £126.2 million), with a corresponding growth in shareholder equity to £12.8 million (2015: £10.9 million). Our net interest income has shown a similar increase to £7.4 million (2015: £6.3 million) and our operating expenses at £3.2 million (2015: £3.2 million) continue to be well managed and in line with our budget. 

 

Further positive advances have been made with Conister Bank Limited and its associates: Manx Financial Limited; Conister Finance & Leasing Ltd; and ECF Asset Finance plc; where all have now been granted full authorisation for UK FCA-regulated Consumer Credit activities allowing us to continue with the development of regulated consumer loans within the UK.

 

Despite this encouraging progress, the principal area of business in which we have suffered, however, is the increased levels of commission paid to our UK intermediaries, including hire purchase early settlements - a rise of 48% to £3.9 million (2015: £2.6 million). This expense reflects our changing business mix as the UK becomes an ever more significant market, now totalling over three quarters of our total loan book. The hire purchase early settlements contained within this commission expense are as a result of largely unanticipated market-driven decreases in realised asset values during the first half of the year. Under the UK Consumer Credit Act, the difference between the realised value of an asset and the actuarial value is charged to the Income Statement should the loan not go to full term. 

 

As background and up to this point, we have utilised our UK intermediaries' network as a convenient method of accessing lending opportunities without us having to take on the burden of UK establishment, operating and tax charges. Your board is considering whether this strategy of reliance on UK intermediaries should now be augmented with our own direct UK business development initiatives, not as competition to our intermediaries, but to allow us to pursue complementary or differentiated lending streams under our own control. To this end, we have already started direct lending into the UK since July 2016 and the initial signs are very promising. We will continue to monitor this development and, if appropriate, consider building a UK branch structure as the direct business expands. We have also strengthened our Isle of Man operations with significant progress being continued since the half year. 

 

Conister Bank Limited

With advances increasing by 36% to £36.2 million (2015: £26.6 million), there remains a strong demand for our product range. We continue to develop new products for both existing customers and new relationships. As mentioned above, we will concentrate diversifying our UK loan book during the second half of the year - an initiative which is already showing significant growth. The increase in advances led to an uplift in the interest income for our banking subsidiary of 15% to £8.9 million (2015: £7.8 million). Operating income, however, remains unchanged at £3.5 million (2015: £3.5 million) as the commission payments to our UK intermediaries, including early settlements, increased by £1.2 million to £3.8 million (2015: £2.6 million). This decline in the operating income margin masks both the improvement in our cost of funds - a decrease of 7.7% to 2.4% per annum (2015: 2.6% per annum) and our improved use of deposits demonstrated by the 'Loan to Deposit Ratio' (a key ratio for tracking banking efficiency) improving by 2.5% to 89.7% (2015: 87.5%). Our goal is to move this ratio to over 93.0% by the year end.

 

New lending increased our gross loan book by 18% to £142.5 million (2015: £121.1 million), which includes the embedded deferred income growing by 16% to £30.8 million (2015: £26.5 million). Most notably, Isle of Man direct lending has beaten our expectations with a consistent monthly new business figure in excess of £1 million, which has continued throughout the first half to date. Despite this large increase in advances, our provision requirement has decreased by 5% to £2.1 million (2015: £2.2 million) due to our integrated wholesale funding arrangements being partially protected through their legal structure. As such, our provisions are now 1.5% (2015: 1.8%) of our gross loan book. The effect of this has allowed our net loan book to increase by 19.0% to £109.7 million (2015: £92.5 million). Our financing of the UK hand held debit/credit card payment terminals ceased in 2014 and we continue to collect out on this loan book and legal action has commenced to ensure that we will obtain the maximum recovery possible, with the anticipation that the majority of this discontinued lending stream will have run-off by the end of 2017. 

 

Under the HMRC's Partial Exemption Special Method, we have increased our VAT debtor by a further £224,000, to a total of £690,000. Following further discussions and correspondence with the IoM C&E, the Directors remain confident that the VAT claimed will be secured. 

 

As a consequence, Conister Bank Limited's total assets grew by 17% to £144.3 million (2015: £123.7 million) and the total equity increased by 15% to £13.3 million (2015: £11.6 million). Thus we continue to remain highly liquid and well capitalised to sustain our planned growth.

 

I would also like to take this opportunity to welcome Ian Morley as an independent non-executive Director to the Conister Bank Limited board. Ian brings a wealth of financial services experience, having been involved in regulated entities in many jurisdictions. His experience and contacts in the City of London and elsewhere have already contributed positively to our development.   

 

Edgewater Associates Limited

The strategy for our Isle of Man based Independent Financial Advisor business continues to be that of targeted organic growth and also by seeking suitable acquisitions to augment our existing portfolio of clients. We continue to deliver improved advice and service to our existing customer base by employing experienced advisors supported by enhanced IT. This philosophy has borne fruit in the increase of our market share from referrals and selected business development.

 

Our acquisition strategy is progressing and I hope to be able to announce further developments on this topic in due course. Our significant investment in technology will allow us to deliver operational efficiencies in the event of any acquisition and will also allow the consequent integration to occur more smoothly.

 

Other operating subsidiaries

We continue to incubate new business lines with the most promising being Manx FX Limited, our foreign exchange advisory subsidiary, which I am pleased to report has now started to trade profitably.

 

Our internet-based discounted shopping and financial services comparison subsidiary, Manx Incahoot Limited ("MIL"), has been re-positioned to enter the UK employee benefit market, a sector worth in excess of £750 billion a year. MIL has a market leading technology platform which includes an excellent rewards and recognition module. The product will be launched in October this year and will also be made available to all of the Group's customer base. 

 

We have retained our MasterCard® prepaid/credit card license for the Isle of Man and UK and continue to explore ways to profitably leverage this asset. 

 

Outlook

The Group has delivered a meaningful profit for the first half of 2016 and I have every confidence that the measures that we are undertaking will maintain our current bottom line to the year end and beyond. New business opportunities remain strong but we must continue our hard work to maximize these. The acquisition of full authorisation for UK Consumer Credit activities will allow us increased direct access to this important market. We continue to manage our operational costs in a careful manner. Thus our clear vision for the Group's future remains the combination of organic growth with the development of complementary business lines. Notwithstanding, and as always, we are on the lookout for meaningful and affordable acquisitions as we continue our diversification into an integrated banking and financial services group.

 

 

Jim Mellon

Executive Chairman

29 September 2016

 

Condensed Consolidated Income Statement

 

 

Notes

 

For the 6

months ended

30 June 2016

£000

(unaudited)

 

For the 6

months ended

30 June 2015

£000

(unaudited)

 

For the

year ended

31 Dec 2015

£000

(audited)

 

 

 

 

 

 

 

 

Continuing operations

 

 

 

 

 

 

 

Interest income

2

 

9,030

 

7,762

 

16,545

Interest expense

 

 

(1,675)

 

(1,504)

 

(3,002)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

7,355

 

6,258

 

13,543

 

 

 

 

 

 

 

 

Fee and commission income

 

 

 

755

 

770

 

1,527

Profit on joint venture

 

 

-

 

5

 

28

Fee and commission expense

 

 

 

(363)

 

(452)

 

(792)

Commission share schemes

 

 

 

(3,852)

 

(2,601)

 

(6,196)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net trading income

 

 

3,895

 

3,980

 

8,110

Other operating income

 

 

100

 

40

 

166

Terminal Funding

4

 

(96)

 

217

 

157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

3,899

 

4,237

 

8,433

 

 

 

 

 

 

 

 

Personnel expenses

 

 

         (1,962)

 

         (1,751)

 

         (3,515)

Other expenses

 

 

(1,161)

 

(1,110)

 

(2,385)

Provision for impairment on loan assets

 

 

(183)

 

(337)

 

(397)

Depositors' Compensation Scheme recovery

 

 

-

 

-

 

10

Depreciation

 

 

(123)

 

(89)

 

(226)

Amortisation

 

 

(27)

 

(17)

 

(44)

VAT recovery

9

 

224

 

-

 

-

Realised gains on available-for-sale financial assets

 

 

37

 

40

 

80

Unrealised gain on financial assets carried at fair value

 

 

8

 

34

 

30

Gain on acquisition of subsidiary

 

 

-

 

-

 

28

Bargain purchase

 

 

-

 

-

 

295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before income tax

 

 

         712

 

         1,007

 

         2,309

 

 

 

 

 

 

 

 

Income tax expense

 

 

(82)

 

(118)

 

(207)

 

 

 

 

 

 

 

 

Profit for the period / year

 

 

         630

 

         889

 

         2,102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share (pence)

5

 

                0.62

 

                0.87

 

                2.06

Diluted earnings per share (pence)

5

 

                0.42

 

                0.54

 

                1.29

 

 

 

 

 

 

                   

 

  Condensed Consolidated Statement of Other Comprehensive Income

 

 

Notes

 

For the 6

months ended

30 June 2016

£000

(unaudited)

 

For the 6 months ended

30 June 2015

£000

(unaudited)

 

For the

year ended

31 Dec 2015

£000

(audited)

Profit for the period / year

 

 

630

 

889

 

2,102

Other comprehensive income:

 

 

 

 

 

 

 

Items that will be reclassified to profit or loss

 

 

 

 

 

 

 

Available for sale gains taken to equity

 

 

14

 

-

 

-

Items that will never be reclassified to profit or loss

 

 

 

 

 

 

 

Actuarial gain on defined benefit pension scheme taken to equity

 

 

-

 

-

 

19

Total comprehensive income for the period / year attributable to Shareholders

 

 

644

 

889

 

2,121

Basic earnings per share (pence)

5

 

0.63

 

0.87

 

                2.08

Diluted earnings per share (pence)

5

 

0.43

 

0.54

 

1.30

 

 

 

 

 

 

 

 

 

  Condensed Consolidated Statement of Financial Position

 

 

As at

 

Notes

 

30 June

2016

£000

(unaudited)

 

30 June

2015

£000

(unaudited)

 

31 Dec

2015

£000

(audited)

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

5,401

 

5,603

 

7,156

Financial assets at a fair value through profit or loss

6

 

85

 

81

 

77

Available for sale financial instruments

7

 

26,487

 

22,771

 

15,981

Loans and advances to customers

8

 

111,745

 

92,532

 

101,356

Commissions receivable

 

 

337

 

322

 

361

Property, plant and equipment

 

 

767

 

654

 

872

Intangible assets

 

 

386

 

83

 

398

Trade and other receivables

9

 

1,513

 

1,005

 

1,377

Investment in joint venture

 

 

-

 

505

 

-

Deferred tax asset

 

 

20

 

167

 

83

Goodwill

10

 

2,344

 

2,444

 

2,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

149,085

 

126,167

 

130,005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Customer accounts

 

 

122,198

 

105,671

 

106,328

Creditors and accrued charges

11

 

3,529

 

2,050

 

3,343

Loan notes

12

 

8,465

 

7,115

 

7,265

Block creditors

13

 

1,794

 

-

 

588

Deferred consideration

 

 

-

 

100

 

-

Pension liability

 

 

285

 

339

 

334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

136,271

 

115,275

 

117,858

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

Called up share capital

14

 

18,933

 

18,933

 

18,933

Profit and loss account

 

 

(6,119)

 

(8,041)

 

(6,786)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

12,814

 

10,892

 

12,147

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

 

149,085

 

126,167

 

130,005

 

 

 

 

 

 

 

 

                 

 

Condensed Consolidated Statement of Cash Flows

 

 

 

 

 

For the 6 months ended

30 June 2016

£000

(unaudited)

 

For the 6 months ended 30 June 2015

£000

(unaudited)

 

For the

year ended

31 Dec 2015

£000

(audited)

RECONCILIATION OF PROFIT BEFORE

TAXATION TO OPERATING CASH FLOWS

 

 

 

 

 

 

 

Profit before income tax

 

 

712

 

1,007

 

2,309

Unrealised gain on financial assets carried at fair value

 

 

(8)

 

(34)

 

(30)

Gain on disposal of property, plant and equipment

 

 

-

 

-

 

(12)

Profit on joint venture

 

 

-

 

(5)

 

(28)

Gain on acquisition of subsidiary

 

 

-

 

-

 

(28)

Depreciation charge

 

 

123

 

89

 

226

Amortisation charge

 

 

27

 

17

 

44

Bargain purchase

 

 

-

 

-

 

(295)

Realised gains on available for sale investments

 

 

(37)

 

(40)

 

(80)

Actuarial gain on defined benefit pension scheme taken to equity

 

 

-

 

-

 

19

Reduction in pension liability

 

 

(49)

 

(49)

 

(54)

Share-based payment expense

 

 

23

 

23

 

46

(Increase) / decrease in trade and other receivables

 

 

(136)

 

161

 

(208)

Increase in trade and other payables

 

 

683

 

335

 

1,168

Decrease / (increase) in commission debtors

 

 

24

 

4

 

(35)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash inflow from trading activities

 

 

1,362

 

1,508

 

3,042

 

 

 

 

 

 

 

 

Increase in loans and advances to customers

 

 

(10,389)

 

(3,194)

 

(11,369)

Increase in deposit accounts

 

 

15,870

 

5,412

 

6,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash inflow / (outflow) from operating activities

 

 

6,843

 

3,726

 

(2,258)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the 6 months ended

30 June 2016

£000

(unaudited)

 

For the 6 months ended 30 June 2015

£000

(unaudited)

 

For the

year ended

31 Dec 2015

£000

(audited)

 

CASH FLOW STATEMENT

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

Cash inflow from operating activities

 

 

6,843

 

3,726

 

(2,258)

Taxation paid

 

 

(16)

 

-

 

(6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash inflow / (outflow) from operating activities

 

 

6,827

 

3,726

 

(2,264)

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(18)

 

(138)

 

(493)

Purchase of intangible assets

 

 

(15)

 

-

 

(21)

(Purchase) / sale of available for sale financial instruments

 

 

(10,455)

 

(3,957)

 

2,874

Acquisition of Manx Financial Limited

 

 

(500)

 

-

 

-

Acquisition of Incahoot Limited business

 

 

-

 

(101)

 

(101)

Sale of property, plant and equipment

 

 

-

 

-

 

12

Cash acquired in acquisition of subsidiary

 

 

-

 

-

 

926

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (outflow) / inflow from investing activities

 

 

(10,988)

 

(4,196)

 

3,197

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Issue / (repayment) of loan notes

 

 

1,200

 

(50)

 

100

Issue of block funding

 

 

1,206

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash inflow / (outflow) from financing activities

 

 

2,406

 

(50)

 

100

 

 

 

 

 

 

 

 

(Decrease) / increase in cash and cash equivalents

 

 

(1,755)

 

(520)

 

1,033

 

 

 

 

 

 

 

 

Included in cash flows are:

 

 

 

 

 

 

 

Interest received - cash amounts

 

 

9,176

 

8,267

 

17,203

Interest paid - cash amounts

 

 

(1,621)

 

(1,499)

 

(2,906)

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Changes in Equity

 

 

Share capital

£000

 

 

Retained

earnings

and other reserves

£000

 

 

Total

30 June 2016

£000

(unaudited)

 

Total

30 June

2015

£000

(unaudited)

 

Total

31 Dec

2015

£000

(audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance brought forward

18,933

 

(6,786)

 

12,147

 

9,980

 

9,980

 

Profit for the period / year

-

 

630

 

630

 

889

 

2,102

 

Other comprehensive income

-

 

14

 

14

 

-

 

19

 

 

 

 

 

 

 

 

 

 

 

 

Transactions with Shareholders:

 

 

 

 

 

 

 

 

 

 

Share-based payment expense

-

 

23

 

23

 

23

 

46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance carried forward

18,933

 

(6,119)

 

12,814

 

10,892

 

12,147

 

 

 

Notes to the Consolidated Financial Statements

 

1.       Preparation of the interim statements

The financial information included in this interim financial report for the six months ended 30 June 2016 is unaudited. The interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting". The accounting policies have been applied consistently with those presented in the Annual Report for the year ended 31 December 2015 and comply with IFRSs and IFRIC interpretations applicable to companies reporting under IFRS as adopted by the EU.

In the current period, the Terminal Funding portfolio has been separately presented as a line item in the Condensed Consolidated Income Statement, which demonstrates the contributing results of the business stream.  See note 4 for further analysis.

2.       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.

 

3.       Segmental analysis

Segment information is presented in respect of the Group's business segments. The Directors consider that the Group currently operates in one geographic segment, the Isle of Man and UK. The primary business segments are based on the Group's management and internal reporting structure. The Directors consider that the Group operates in four product orientated segments in addition to its investing activities: Asset and Personal Finance (including provision of HP contracts, finance leases, personal loans, commercial loans and block discounting); Manx Incahoot; Conister Card Services; and Edgewater Associates Limited. 

 

 

 

For the 6 months ended 30 June 2016

Asset and

Personal

Finance

£000

 

 

Manx Incahoot

£000

Conister Card Services

£000

 

 

Edgewater Associates

£000

 

 

Investing

Activities

£000

 

Total

30 June 2016

£000

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / (expense)

7,586

 

-

 

-

 

-

 

(231)

 

7,355

Operating income / (loss)

3,454

 

55

 

(50)

 

671

 

(231)

 

3,899

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax payable

680

 

(66)

 

(51)

 

156

 

(7)

 

712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditure

15

 

17

 

-

 

1

 

-

 

                  33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

147,680

 

426

 

116

 

582

 

281

 

149,085

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the 6 months ended 30 June 2015

Asset and

Personal

Finance

£000

 

 

Manx Incahoot

£000

Conister

Card Services

£000

 

 

Edgewater Associates

£000

 

 

Investing

Activities

£000

 

Total

30 June 2015

£000

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / (expense)

6,473

 

-

 

-

 

-

 

(215)

 

6,258

Operating income / (loss)

3,724

 

39

 

(10)

 

699

 

(215)

 

4,237

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax payable

1,104

 

(32)

 

(82)

 

198

 

(181)

 

1,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditure

41

 

83

 

102

 

-

 

13

 

239

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

124,815

 

213

 

312

 

758

 

69

 

126,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended 31 December 2015

Asset and

Personal

Finance

£000

 

Manx Incahoot

£000

 

Conister Card Services

£000

 

 

Edgewater Associates

£000

 

 

Investing

Activities

£000

 

Total

31 Dec 2015

£000

(audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

13,543

 

-

 

-

 

-

 

-

 

13,543

Operating income

6,929

 

84

 

(98)

 

1,369

 

149

 

8,433

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax payable

2,299

 

203

 

(71)

 

148

 

(270)

 

2,309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditure

173

 

122

 

-

 

44

 

274

 

613

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

128,357

 

447

 

123

 

580

 

498

 

130,005

 

 

 

 

 

 

 

 

 

 

 

 

 

4.       (Loss) / profit from Terminal Funding

 

In September 2014, the Bank discontinued funding handheld payment devices (referred to as Terminal Funding) due to the volume of write offs.  Ever since, the book is being run off whilst the Bank vigorously pursues historical write offs.  A decision was made by the Board this year to permanently cease funding and wind up the book upon the final repayment date of August 2019.

 

 

 

 

 

 

For the 6 months ended

30 June 2016

£000

(unaudited)

 

For the 6

months ended 30 June 2015

£000

(unaudited)

 

For the

year ended

31 Dec 2015

£000

(audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

334

 

612

 

1,011

Fee and commission expense

 

(87)

 

(98)

 

(192)

Provision for impairment on loan assets

 

(343)

 

(297)

 

(662)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(96)

 

217

 

157

 

 

 

 

 

 

 

 

5.       Earnings per share

 

 

 

 

For the 6 months ended

30 June 2016

£000

(unaudited)

 

For the 6 months ended 30 June 2015

£000

(unaudited)

For the

year ended

31 Dec 2015

£000

(audited)

 

 

 

 

 

 

 

Profit for the period / year

 

 

630

 

889

2,102

Weighted average number of ordinary shares in issue

 

 

102,070,252

 

102,070,252

102,070,252

Basic earnings per share

 

 

0.62p

 

0.87p

2.06p

Diluted earnings per share

 

 

0.42p

 

0.54p

1.29p

 

 

 

 

 

 

 

Total comprehensive income for the period / year

 

 

644

 

889

2,121

Weighted average number of ordinary shares in issue

 

 

102,070,252

 

102,070,252

102,070,252

Basic earnings per share

 

 

0.63p

 

0.87p

2.08p

Diluted earnings per share

 

 

0.43p

 

0.54p

1.30p

 

 

 

 

 

 

 

 

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.

 

 

As at

30 June

2016

 

30 June

2015

 

31 Dec

2015

 

 

 

 

 

 

Reconciliation of weighted average number of ordinary shares in issue between basic and diluted earnings per share

 

 

 

 

 

As per basic earnings per share

102,070,252

 

102,070,252

 

102,070,252

Number of shares issued if all convertible loan notes were exchanged for equity (note 12)

61,500,000

 

61,500,000

 

61,500,000

Dilutive element of warrants if taken up (note 12)

14,862,890

 

17,804,790

 

17,641,990

Dilutive element of share options if exercised (note 12)

-

 

26,334

 

22,665

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As per dilutive earnings per share

178,433,142

 

181,401,376

 

181,234,907

 

 

 

 

 

 

Reconciliation of earnings between basic and diluted earnings per share

 

 

 

 

 

As per basic earnings per share

£630,000

 

£889,000

 

£2,102,000

Interest expense saved if all convertible loan notes were exchanged for equity (note 12)

£115,075

 

£89,575

 

£230,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As per dilutive earnings per share

£745,075

 

£978,575

 

£2,332,150

 

 

 

 

 

 

 

The diluted earnings per share calculation assumes that all convertible loan notes, warrants and share options have been converted / exercised at the beginning of the period where they are dilutive.

 

6.       Financial assets at fair value through profit or loss

 

The investment represents shares in a UK quoted company which was elected to be classified as a financial asset at fair value through profit or loss. The investment is stated at market value and is classified as a level 1 investment in the IFRS 13 fair value hierarchy. The cost of the shares was £471,000. The unrealised difference between cost and market value has been taken to the income statement. Dividend income of £350,000 has been received from this investment since it was made.

7.       Available for sale financial instruments

 

Available for sale financial instruments comprise UK Government Treasury Bills which are stated at fair value and unrealised changes in the fair value are reflected in equity.

8.         Loans and advances to customers

 

 

 

 

As at

 

30 June

2016

£000

(unaudited)

 

30 June

2015

£000

(unaudited)

 

31 Dec

2015

£000

(audited)

 

 

 

 

 

 

 

Hire purchase

 

60,674

 

54,932

 

61,678

Finance leases

 

11,008

 

11,615

 

9,584

Unsecured personal loans

 

15,345

 

3,966

 

3,843

Vehicle stocking plans

 

1,219

 

1,057

 

1,119

Block discounting

 

13,490

 

6,828

 

8,935

Secured commercial loans

 

4,900

 

6,497

 

4,858

Secured personal loans

 

5,109

 

7,637

 

11,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

111,745

 

92,532

 

101,356

 

 

 

 

 

 

 

 

9.       Trade and other receivables

 

 

 

 

As at

 

30 June

2016

£000

(unaudited)

 

30 June

2015

£000

(unaudited)

 

31 Dec

2015

£000

(audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VAT claim

 

690

 

466

 

466

Prepayments and other debtors

 

769

 

485

 

857

Depositors' Compensation Scheme Receivable

 

54

 

54

 

54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

             1,513

 

          1,005

 

1,377

 

 

 

 

 

 

 

Included in trade and other receivables is an amount of £690,000 (30 June & 31 December 2015: £466,000) relating to a reclaim of value added tax (VAT). Conister Bank Limited (the Bank), as the Group VAT registered entity, has for some time considered the VAT recovery rate being obtained by the business as neither fair nor reasonable, specifically regarding the attribution of part of the residual input tax relating to the HP business not being considered as a taxable supply. Queries have been raised with the Isle of Man Government Customs & Excise Division (C&E), and several reviews of the mechanics of the recovery process were undertaken by the Company's professional advisors.

The decision of the First-Tier Tax Tribunal released 18 August 2011 in respect of Volkswagen Financial Services (UK) Limited (VWFS) v HM Revenue & Customs (TC01401) (VWFS Decision) added significant weight to the case put by the Bank and a request for a revised Partial Exemption Special Method was submitted in December 2011. The proposal put forward by the Bank was that the revised method would allocate 50% of costs in respect of HP transactions to a taxable supply and 50% to an exempt supply. In addition at this time a Voluntary Disclosure was made as a retrospective claim for input VAT under-claimed in the last 4 years. A secondary claim is also about to be made to cover periods Q4 2012 to Q1 2016 for the value of £224,000.

In November 2012, it was announced that the HMRC Upper Tribunal had overturned the First-Tier Tribunal in relation to the VWFS Decision. VWFS has subsequently been given leave to appeal and this was scheduled to be heard in October 2013. However, this was delayed and the case was heard by the Court of Appeal on 17 April 2015 who overturned the Upper Tribunal's decision ruling in favour of VWFS.  HMRC have now been given leave to appeal this decision to the Supreme Court.

The Bank's total exposure in relation to this matter has increased to £813,000, comprising the debtor balance referred to above plus an additional £123,000 VAT reclaimed under the partial Exemption Special Method, in the period from Q4 2011 to Q3 2012 (from Q4 2012 the Bank reverted back to the previous method). On the basis of the discussions and correspondence which have taken place between the Bank and C&E, in addition to the VWFS Decision appeal, the Directors are confident that the VAT claimed referred to above will be secured.

 

10.     Goodwill

 

 

 

 

As at

 

30 June

2016

£000

(unaudited)

 

30 June

2015

£000

(unaudited)

 

31 Dec

2015

£000

(audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Edgewater Associates Limited

 

1,849

 

1,849

 

1,849

ECF Asset finance PLC

 

454

 

454

 

454

Manx Incahoot Limited

 

-

 

100

 

-

Three Spires Insurance Services Limited

 

41

 

41

 

41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,344

 

2,444

 

2,344

 

 

 

 

 

 

 

 

11.     Creditors and accrued charges

 

 

 

 

As at

 

30 June

2016

£000

(unaudited)

 

30 June

2015

£000

(unaudited)

 

31 Dec

2015

£000

(audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commission creditors

 

2,736

 

1,610

 

2,313

Other creditors and accruals

 

793

 

440

 

530

Consideration of acquisition of Manx Financial Limited

 

-

 

-

 

500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,529

 

2,050

 

3,343

 

 

 

 

 

 

 

 

 

12.     Loan notes

 

 

 

 

As at

 

 

 

Notes

 

30 June

2016

£000

(unaudited)

 

30 June

2015

£000

(unaudited)

 

31 Dec

2015

£000

(audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Related parties

 

 

 

 

 

 

 

J Mellon

JM

 

1,750

 

1,750

 

1,750

Burnbrae Limited

BL

 

1,200

 

1,200

 

1,200

Southern Rock Insurance Company Limited

SR

 

460

 

460

 

460

Life Science Developments Limited

LS

 

500

 

500

 

500

 

 

 

3,910

 

3,910

 

3,910

Unrelated parties

UP

 

4,555

 

3,205

 

3,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,465

 

7,115

 

7,265

 

 

 

 

 

 

 

 

 

JM - Two loans, one of £500,000 maturing on 31 July 2017 with interest payable of 7.0% per annum, and one of £1,250,000 maturing on 26 February 2020, paying interest of 6.5% per annum. Both loans are convertible at the rate of 4 pence and 9 pence respectively. JM is also entitled to 8.3 million warrants at an exercise price of 6 pence which lapse on 31 July 2017.

BL - One loan consisting of £1,200,000 maturing on 31 July 2017 with interest payable of 7.0% per annum. Jim Mellon is the beneficial owner of BL and Denham Eke, an Executive Director, is also a director. The loan is convertible at a rate of 4 pence. BL is also entitled to 20 million warrants at an exercise price of 6 pence which lapse on 31 July 2017.

SR - One loan consisting of £460,000 maturing on 26 February 2020 with interest payable of 6.5% per annum. The loan is convertible at a rate of 9 pence. SR is also entitled to 8.3 million warrants on a previously converted loan note at an exercise price of 6 pence which lapse on 24 October 2017. Arron Banks, a major shareholder of the Group, is a director and a major shareholder of SR. John Banks, a Non-executive Director, is also a director of SR.

LS - One loan of £350,000 maturing on 5 September 2017 with interest payable of 5.0% per annum, and another loan of £150,000 maturing on 3 October 2017 paying interest of 5.0% per annum. Denham Eke is a director of LS.

UP - Nineteen loans consisting of an average £239,737, with an average interest payable of 5.18% per annum. The earliest maturity date is 1 October 2016 and the latest maturity is 4 May 2021.

 

With respect to the convertible loans, the interest rate applied was deemed by the Directors to be equivalent to the market rate with no conversion option.

 

13.     Block creditors

 

 

 

 

As at

 

30 June

2016

£000

(unaudited)

 

30 June

2015

£000

(unaudited)

 

31 Dec

2015

£000

(audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Drawdown 1 - repayable 25/12/2016, interest payable at 5.6%, secured on assets of Manx Financial Limited

 

98

 

-

 

194

Drawdown 2 - repayable 25/07/2018, interest payable at 5.6%, secured on assets of Manx Financial Limited

 

322

 

-

 

394

Drawdown 3 - repayable 29/03/2019, interest payable at 6.3%, secured on assets of Manx Financial Limited

 

1,374

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,794

 

-

 

588

 

 

 

 

 

 

 

 

14.     Called up share capital

 

Authorised: ordinary shares of no par value

  Number

 

At 30 June 2015

150,000,000

 

At 31 December 2015

150,000,000

 

At 30 June 2016

150,000,000

 

 

Issued and fully paid: ordinary shares of no par value

  Number

£000

At 30 June 2015

102,070,252

18,933

At 31 December 2015

102,070,252

18,933

At 30 June 2016

102,070,252

18,933

 

There are a number of convertible loans at 30 June 2016 of £3.41 million (30 June and 31 December 2015: £3.41 million) including warrants of 28.3 million (30 June and 31 December 2015: 28.3 million) (see note 12 for further details). The total number of warrants in issue at 30 June 2016 is 36.6 million (30 June and 31 December 2015: 36.6 million) (see note 12 for further details).

 

On 23 June 2014, 1.75 million share options were issued to Executive Directors and senior management within the Group at an exercise price of 14 pence. The options vest over three years with a charge based on the fair value of 8 pence per option at the date of grant.

 

15.     Regulators

 

The Group is regulated by the Isle of Man Government Financial Services Authority licensed to undertake banking activities and conduct investment business.  In addition the Group is regulated by the Financial Conduct Authority in the United Kingdom for credit and brokerage related activities.

 

16.     Contingent Liabilities

 

Conister Bank Limited is required to be a member of the Isle of Man Government Depositors' Compensation Scheme (the Scheme) which was introduced by the Isle of Man Government under the Banking Business (Compensation of Depositors) Regulations 1991. The Scheme creates a liability on the Bank to participate in the compensation of depositors should it be activated.

 

17.     Approval of Interim Statements

 

The Interim Statements were approved by the Board on 29 September 2016. 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, 2nd Floor, Bowman House, 29 Wilson Street, London, EC2M 2SJ. The Interim and Annual reports along with other supplementary information of interest to Shareholders, are included on the Group's website. The website includes investor relations information and contact details.

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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