REG - Manx Financial Group - Half-year Report <Origin Href="QuoteRef">MFX.L</Origin> - Part 2
03/10/2016 10:44
- Part 2: For the preceding part double click ID:nRSd2326La
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 June2016 30 June2015 31 Dec2015
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 June2016£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 June2016£000(unaudited) 30 June2015£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 June2016£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 June2016£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 June2016£000(unaudited) 30 June2015£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 June2016£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
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