REG - Manx Financial Group - Interim Results for the 6 months to 30 June 2024
24/09/2024 07:00
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RNS Number : 3095F Manx Financial Group PLC 24 September 2024
FOR IMMEDIATE RELEASE
24 September 2024
Manx Financial Group PLC (the 'Company' or the 'Group')
Unaudited Interim Results for the 6 months to 30 June 2024
Manx Financial Group PLC (LSE: MFX), the financial services group which
includes Conister Bank Limited, Conister Finance & Leasing Ltd, MFX
Limited, Payment Assist Limited, Blue Star Business Solutions Limited,
Edgewater Associates Limited, Ninkasi Rentals & Finance Limited and The
Business Lending Exchange Limited, presents the Interim results for the six
months ended 30 June 2024.
Jim Mellon, Executive Chair, commented: "I am pleased to report another set of
record results with a 16% increase in Profit Before Tax to £3.5 million."
Copies of the Interim Report will shortly be available on our website
www.mfg.im (http://www.mfg.im) .
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU No. 596/2014) AS IT FORMS PART OF UK DOMESTIC LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE
INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS
SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
For further information, please contact:
Manx Financial Group PLC Beaumont Cornish Limited Greentarget Limited
Denham Eke, Roland Cornish/James Biddle Jamie Brownlee
Executive Vice Chair Tel +44 (0) 20 7628 3396 Tel +44 (0) 203 307 5726
Tel +44 (0)1624 694694
Dear Shareholders
Introduction
We are lucky that, as an Isle of Man centric company, we are somewhat shielded
from the UK Government-inspired gloom that currently characterises the UK
economy, or at least we are for the time being. An annual report on the Isle
of Man's financial standing has assessed its economic growth to be 'stronger
than in most of Europe'. International credit ratings agency Moody's expects
growth to climb from an estimated 1.5% in 2023 to 3% by 2025, rating the
Island's economic strength as 'a3' which reflects "a robust record of economic
growth and high income levels." However, while Moody's analysis of the fiscal
positions of different jurisdictions puts the Island's overall credit rating
on par with the UK, as 'Aa3 stable', it also notes the 'substantial' linkages
between the two countries.
As I reported previously, inflationary pressure in the UK would remain
stubbornly above the Bank of England's 2% target for longer than certain
economists were forecasting. Whilst the transitionary element of double-digit
inflation has abated, there remains a permanent wage related element which
will now be exacerbated by the new Government's recently announced public
sector pay rises, setting a precedent which is significantly above inflation.
This, along with the UK Prime Minister's recent comments on the difficult
financial decisions that rest with his Chancellor, leaves businesses and
individuals in little doubt that tax rises will be the main focus of the
autumn budget. The UK Government is treading a thin line if they are seeking
growth to cure the country's financial woes whilst paradoxically applying
constraints to that growth through increased taxation.
How much of the effect of the UK's attempts at deficit remediation and income
rebalancing will spill over to the Island remains open to question. But there
is no doubt that the timing of large expenditure items by consumers and
businesses alike will reduce the need for larger credit facilities until
greater certainty returns to the market. The next nine to twelve months will
prove more challenging for both of the jurisdictions in which we operate.
Despite the difficult conditions that lie ahead, it is pleasing to announce
another record half year with a 16% increase in our Profit Before Tax to £3.5
million (30 June 2023: £3.0 million). Our basic and diluted Earnings Per
Share for the period increased to 2.07 pence (30 June 2023: 1.67 pence), and
1.59 pence (30 June 2023: 1.34 pence) respectively. Disappointingly, despite
these impressive results, the Group is still trading at a 45% discount to Net
Asset Value as at 19 September 2024
Acquisition of the outstanding shareholding in Payment Assist Limited
As recently announced on 16 September 2024, the Group is pleased to have
brought forward the acquisition of the remaining shareholding (49.9%) in
Payment Assist Limited ("PAL") for a £5 million consideration. The economic
environment will continue to bring opportunities for a well-regulated business
that supplies short-term credit for essential products, such as those relied
upon by PAL's customers. PAL's market position, together with our long-term
vision for the company, were among the reasons the Board brought forward its
option to acquire the remaining shares in this business. The Board anticipates
that this transaction will reduce the cost of acquiring the remaining
shareholding under the original Option by up to £4 million, principally
derived by the savings in any future dividends previously due to the sellers.
Strategy update
We continue to make satisfactory progress against our strategic priorities by
taking decisive action to grow and simplify our business and to manage our
liquidity, capital and costs more efficiently in compliance with our
regulatory and ESG requirements.
In this regard, we will:
§ commence taking retail deposits in the UK in the autumn. This will
provide Conister Bank with a source of alternative liquidity to alleviate the
reliance on our loyal Isle of Man retail and commercial deposit customers;
§ further simplify the Group's structure to deliver cost
efficiencies through supplier reviews and technological enhancements;
§ continue to enhance our customers' experience through the deployment
of technology where it really adds value, by taking a digital first approach.
This will include introducing self-service functionality for our lending and
deposit customers and introducing a digital deposit taking system;
§ expand our product offering in markets that have shown resilience
in recent years and seek to increase our market share in these markets through
accretive acquisitions;
§ withdraw from markets that do not deliver the credit experience we
require, or where price is the only differentiator;
§ deploy our capital in the most sustainable markets, and in products
that produce the best outcomes for our customers; and
§ develop and use technology to reduce our carbon footprint and
encourage the Group, and its stakeholders, to better understand the
consequence of their actions or inactions.
Financial review
The Group's results for the period continued to be negatively impacted by the
Bank of England's fight to reduce inflation as our Net Interest Income ("NII")
reduced by 13.43% to 66.4% (30 June 2023: 79.7%). Notwithstanding, this result
was more favourable than our internal expectations. Our margin erosion was
partly offset by net loan book growth of £29.5 million which was supported by
an improved net yield of 12.6% (30 June 2023: 10.7%) as we strived to offset
the expected reduction in our NII. It is also encouraging that, as both our
lending and deposits are almost exclusively at fixed rates, and the deposit
book matures more quickly than the lending book, we will experience an
improvement in our NII as deposit rates start to decrease. We are already
experiencing this uplift at the beginning of the second half.
Whilst the NII reduced as a percentage, in income terms it actually increased
by £0.9 million to £17.3 million (30 June 2023: £16.4 million).
Year-on-year, this improvement helped increase Operating Income by £1.3
million to £17.6 million (30 June 2023: £16.3 million).
With Employment expenses reducing slightly year-on-year, and all costs other
than Administration expenses remaining constant, the Group's Profit before Tax
increased by 16% to £3.5 million (30 June 2023: £3.0 million), leading to
the Profit attributable to the Group's owners increasing by 25.1% to £2.4
million (30 June 2023: £1.9 million).
Turning to the Balance Sheet, the loan book growth of £10.1 million to
£372.8 million since the year-end (31 December 2023: £362.7 million) was
supported by an increase in deposits of £18.9 million to £409.3 million (31
December 2023: £390.4 million). This gain in deposits allowed the Group to
improve its liquidity, which it holds as cash or UK Government Treasury Bills,
by £7.7 million to £95.9 million (31 December 2023: £88.2 million). Total
Equity attributable to shareholders of the parent increased by £2.2 million
to £37.1 million since the year-end (31 December 2023: £34.9 million).
I reported at the end of 2023 that Conister Bank's exposure and potential
liability following the UK FCA's review of discretionary commission
arrangements in the motor finance sector was expected to be minimal. The UK
FCA was due to publish its findings in September 2024, which would have given
clarity on the position, but it has delayed its final announcement until 2025.
Pending the announcement, the Board continues to be of the view that there is
no present need for any provision, and Conister Bank continues to consider a
range of possible outcomes.
Business review
Conister Bank Limited ("The Bank") remains the Group's principal profit driver
and continues to perform admirably through these turbulent times. With net
loan book growth of £10.3 million to £370.4 million (31 December 2023:
£360.1 million) supported by a greater increase in deposits to £409.3
million (31 December 2023: £390.4 million) the Bank's Loan to Deposit ratio
eased to 90.5%.
Excess liquidity, which will support future lending, is currently generating a
positive return in short-term UK Government Treasury Bills. We are in an
exceptionally good liquidity position. Turning to regulatory capital, the Bank
continues to enjoy a robust CET1 of 12.0% (31 December 2023: 10.9%) and will
continue to evolve its liquidity and capital deployment to ensure it optimises
its return to all stakeholders. Part of its redeployment of capital strategy
enabled the Bank to withdraw from the UK Credit Broker market as returns were
volatile. Access to the markets that were being introduced to the Bank can be
better served either a) directly, or b) more securely through our Structured
Finance products. Accessing these markets utilising either of these two
methods will reduce the Bank's credit risk.
I am pleased to welcome Lynsey Elliott as an independent non-executive
director to the Bank's board and also a member of the Audit, Risk and
Compliance Committee. Lynsey has spent 25 years working in the Isle of Man's
finance sector and is a Fellow of the Association of Chartered Certified
Accountants.
As anticipated, PAL has had a difficult start to this year, despite recording
a profit of £1.9 million (30 June 2023: £1.5 million), but we have every
confidence that our remedial actions will be successful, leading to a renewal
of profitability in 2025. Despite this, I fully expect this business to still
have a major positive impact on the Group's full year results.
Our foreign exchange advisory business, MFX, continues to thrive during these
turbulent times and has a recorded a profit of £0.5 million (30 June 2023:
£0.4 million), significantly ahead of last year. Equally pleasingly, our Isle
of Man Independent Financial Advisor, Edgewater Associates Limited, recorded
aa profit of £0.3 million (30 June 2023: £0.1 million). Our UK based
sub-prime lender, The British Lending Exchange Limited recorded a profit of
£0.4 million (30 June 2023: £0.3 million). All other operating subsidiaries
are trading admirably and contributed, on a consolidated basis, a further
£0.5 million to the Interim results.
Outlook
Whilst we do not know the exact content of the UK Chancellor's autumn budget
statement on 30 October, I do believe the ground has been adequately prepared
to ensure the UK public are not surprised by the scale and breadth of the
increase in tax burden the country is being asked to accept. This can only
lead to a deferment of investment and expenditure as people and businesses
alike will prudently take stock of their financial position. Whilst Bank of
England interest rate reductions will provide some level of stimulus, the
overall position will be less positive than that experienced in the first half
of the year, and we expect that will be reflected in our full year financial
performance.
Notwithstanding, we have businesses in the Group which thrive on volatility
and there will be credit markets that will also be attractive to the Bank and
our other lending subsidiaries. However, we will continue to position the
Group for the longer term, whilst seeking opportunities as and when they
arise.
Presentation and webcast for analysts and investors
A conference call with management, including an opportunity to ask questions,
will commence at 2:00 pm (BST) on 1 October 2024. A copy of the presentation
will be available in the Investor Relations section of www.mfg.im
(http://www.mfg.im) from 4:00 pm (BST) that day. To access the webcast, please
register your interest by writing to investor@mfg.im (mailto:investor@mfg.im)
, together with any advanced questions you may have by 5:00 pm (BST) on 27
September 2024.
Thank you
These results have been achieved despite a difficult operating environment and
are a testament to our loyal customer base, our staff, and your Board.
Jim Mellon
Executive Chair
23 September 2024
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
Notes For the six months ended For the six months ended For the year ended
30 June 30 June 31 December 2023
2024 2023 £'000
£'000 £'000 (audited)
(unaudited) (unaudited)
Interest revenue calculated using the effective interest method 6 27,243 21,458 45,356
Other interest income 6 766 713 1,535
Interest expense (10,684) (5,787) (14,530)
Net interest income 17,325 16,384 32,361
Fee and commission income 2,178 2,248 3,997
Fee and commission expense (3,851) (3,046) (7,327)
Net trading income 15,652 15,586 29,031
Other operating income 275 62 364
Gain on financial instruments - - 195
Realised gain on debt securities 9 1,671 664 1,893
Operating income 17,598 16,312 31,483
Employment expenses (6,211) (6,236) (12,170)
Administration expenses (3,938) (3,031) (6,627)
Provision for impairment on loans and advances to customers (3,304) (3,294) (4,135)
Depreciation (444) (407) (825)
Amortisation and impairment of intangibles (217) (312) (683)
Share of profit of equity accounted investees, net of tax 37 - -
Profit before tax payable 3,521 3,032 7,043
Income tax expense (739) (493) (903)
Profit for the period / year 2,782 2,539 6,140
The notes form an integral part of these condensed consolidated interim
financial statements.
Notes For the six months ended For the six months ended For the year ended
30 June 30 June 31 December 2023
2024 2023 £'000
£'000 £'000 (audited)
(unaudited) (unaudited)
Profit for the period / year 2,782 2,539 6,140
Other comprehensive income:
Items that will be reclassified to profit or loss
Net unrealised gain on debt securities - 62 324
Related - - (32)
tax
Items that will never be reclassified to profit or loss
Actuarial gain on defined benefit pension scheme taken to equity - - 29
Related tax - - (3)
Other comprehensive income, net of tax - 62 318
Total comprehensive income for the period / year 2,782 2,601 6,458
Profit attributable to:
Owners of the Company 2,410 1,927 5,288
Non-controlling interest 372 612 852
2,782 2,539 6,140
Total comprehensive income attributable to:
Owners of the Company 2,410 1,989 5,606
Non-controlling interest 372 612 852
2,782 2,601 6,458
Earnings per share - profit for the period / year
Basic earnings per share (pence) 8 2.07 1.67 4.59
Diluted earnings per share (pence) 8 1.59 1.30 3.51
Earnings per share - total comprehensive income
for the period / year
Basic earnings per share (pence) 8 2.07 1.73 4.86
Diluted earnings per share (pence) 8 1.59 1.34 3.71
The notes form an integral part of these condensed consolidated interim
financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 30 June 31 December 2023
2024 2023 £'000
£'000 £'000 (audited)
As at Notes (unaudited) (unaudited)
Assets
Cash and cash equivalents 18,651 17,267 12,107
Debt securities 9 77,257 31,371 76,129
Equity held at Fair Value Through Profit or Loss 138 122 138
Loans and advances to customers 5,10 372,775 343,244 362,653
Trade and other receivables 11 11,623 7,227 8,227
Property, plant and equipment 6,072 6,665 6,410
Intangible assets 4,905 3,028 4,268
Investment in associates 233 197 197
Goodwill 12 10,576 10,576 10,576
Total assets 502,230 419,697 480,705
Liabilities
Deposits from customers 409,284 332,510 390,421
Creditors and accrued charges 13 14,357 14,857 14,409
Deferred consideration 16 5 216 20
Loan notes 14 41,407 39,492 39,317
Pension liability 105 240 162
Deferred tax liability 377 353 392
Total liabilities 465,535 387,668 444,721
Equity
Called up share capital 15 19,626 19,286 19,384
Profit and loss account 17,425 11,927 15,544
Revaluation reserve 15 15 15
Non-controlling interest (371) 801 1,041
Total equity 36,695 32,029 35,984
Total liabilities and equity 502,230 419,697 480,705
The notes form an integral part of these condensed consolidated interim
financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the Company
Profit and loss account Revaluati-on reserve Non-controlling interest
Share capital £'000 £'000 £'000 Total
£'000 Total equity
For the six months ended 30 June 2024 £'000 £'000
Balance at 1 January 2023 19,195 10,371 15 29,581 189 29,770
Total comprehensive income for the period:
Profit for the period - 1,927 - 1,927 612 2,539
Other comprehensive income - 62 - 62 - 62
-
Total comprehensive income for the period - 1,989 - 1,989 612 2,601
Changes in ownership interests:
Dividend declared (see Note 15) 91 (433) - (342) - (342)
Total changes in ownership interests 91 (433) - (342) - (342)
Balance at 30 June 2023 19,286 11,927 15 31,228 801 32,029
Balance at 1 July 2023 19,286 11,927 15 31,228 801 32,029
Total comprehensive income for the period:
Profit for the period - 3,361 - 3,361 240 3,601
Other comprehensive income - 256 - 256 - 256
Total comprehensive income for the period - 3,617 - 3,617 240 3,857
Changes in ownership interests:
Share issue (see Note 15) 98 - - 98 - 98
Total changes in ownership interests 98 - - 98 - 98
Balance at 31 December 2023 19,384 15,544 15 34,943 1,041 35,984
Balance at 1 January 2024 19,384 15,544 15 34,943 1,041 35,984
Total comprehensive income for the period:
Profit for the period - 2,410 - 2,410 372 2,782
Other comprehensive income - - - - - -
Total comprehensive income for the period - 2,410 - 2,410 372 2,782
Changes in ownership interests:
Dividend declared (see Note 15) 193 (529) - (336) (1,784) (2,120)
Share issue (see Note 15) 49 - - 49 - 49
Total changes in ownership interests 242 (529) - (287) (1,784) (2,071)
Balance at 30 June 2024 19,626 17,425 15 37,066 (371) 36,695
The notes form an integral part of these condensed consolidated interim
financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended For the six months ended For the year ended
30 June 30 June 31 December 2023
2024 2023 £'000
£'000 £'000 (audited)
(unaudited) (unaudited)
Notes
RECONCILIATION OF PROFIT BEFORE TAXATION TO OPERATING CASH FLOWS
Profit before tax 3,521 3,032 7,043
Adjustments for:
Depreciation 444 407 825
Amortisation of intangibles 217 312 683
Impairment of loans and advances to customers 3,304 3,294 4,135
Net interest income (18,646) (17,500) (34,726)
Realised gains on debt securities (1,671) (664) (1,893)
Share of profit of equity accounted investees (37) - -
Contingent consideration interest expense - 4 4
Pension charge included in employment expenses - 3 11
Gain on financial instruments - - (195)
(12,868) (11,112) (24,113)
Changes in:
Trade and other receivables (3,396) (3,016) (4,016)
Creditors and accrued charges (379) 1,283 1,953
Net cash used in trading activities (16,643) (12,845) (26,176)
Changes in:
Loans and advances to customers (13,748) (52,852) (75,590)
Deposits from customers 19,838 28,974 88,116
Pension contribution (57) - (57)
Cash used in operating activities (10,610) (36,723) (13,707)
The notes form an integral part of these condensed consolidated interim
financial statements.
For the six months ended For the six months ended For the year ended
30 June 30 June 31 December 2023
2024 2023 £'000
£'000 £'000 (audited)
(unaudited) (unaudited)
Notes
CASH FLOW STATEMENT
Cash from operating activities
Cash outflow from operating activities (10,610) (36,723) (13,707)
Interest received 28,331 20,888 47,168
Interest paid (10,338) (5,599) (14,059)
Income taxes paid (91) (331) (1,337)
Net cash from / (used) from operating activities 7,292 (21,765) 18,065
Cash flows from investing activities
Purchase of property, plant and equipment (106) (356) (1,280)
Purchase of intangible assets (853) (638) (2,248)
Sale of property, plant and equipment - - 759
Net sale of debt securities 9 543 9,366 (33,237)
Contingent consideration 16 (15) (50) (67)
Net cash (used in) / from investing activities (431) 8,322 (36,073)
Cash flows from financing activities
Receipt of loan notes 14 2,090 8,159 7,985
Payment of lease liabilities (capital) (336) (79) (256)
Dividend paid (2,120) - (342)
Share issue 49 - 98
Net cash (used in) / from financing activities (317) 8,080 7,485
Net increase / (decrease) in cash and cash equivalents 6,544 (5,363) (10,523)
Cash and cash equivalents - opening 12,107 22,630 22,630
Cash and cash equivalents - closing 18,651 17,267 12,107
NOTES
FOR THE SIX MONTHS ENDED 30 JUNE 2024
1. Reporting entity
Manx Financial Group PLC (the "Company" or "MFG") is a company incorporated in
the Isle of Man. These condensed consolidated interim financial statements
("interim financial statements") are as at and for the six months ended 30
June 2024 and comprise the Company and its subsidiaries ("Group").
2. Basis of accounting
These interim financial statements have been prepared in accordance with IAS
34 Interim Financial Reporting and should be read in conjunction with the last
annual consolidated financial statements as at and for the year ended 31
December 2023 ("Annual Financial Statements 2023"). They do not include all of
the information required for a complete set of IFRS financial statements.
However, selected explanatory notes are included to explain events and
transactions that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual financial
statements.
3. Functional and presentation currency
These financial statements are presented in pounds sterling, which is the
parent entity's functional currency. All amounts have been rounded to the
nearest thousand, unless otherwise indicated. All subsidiaries of the Group
have pounds sterling as their functional currency.
4. Use of judgements and estimates
In preparing these interim financial statements, management make judgements,
estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
The significant judgements made by management in applying the Group's
accounting policies and key sources of estimation uncertainty are the same as
those described in the last annual financial statements.
All Company financial assets and liabilities carrying amounts are deemed to be
reasonable approximation of fair value.
5. Credit risk
A summary of the Group's current policies and practices for the management of
credit risk is set out in Note 7 - Financial risk review and Note 42 -
Financial risk management on pages 64 and 96 respectively of the Annual
Financial Statements 2023.
An explanation of the terms Stage 1, Stage 2 and Stage 3 is included in Note
44 (G)(vi) on page 106 of the Annual Financial Statements 2023.
A. Summary of credit risk on loans and advances to customers
2024 2023
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
30 June (unaudited) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Grade A 352,431 - - 352,431 324,303 - - 324,303
Grade B - 9,251 4,538 13,789 - 2,557 8,483 11,040
Grade C - 5 28,732 28,737 5,280 306 20,179 25,765
Gross value 352,431 9,256 33,270 394,957 329,583 2,863 28,662 361,108
Allowance for impairment (279) (8) (21,895) (22,182) (3,529) (119) (14,216) (17,864)
Carrying value 352,152 9,248 11,375 372,775 326,054 2,744 14,446 343,244
2023 2022
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
31 December (audited) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Grade A 341,953 - - 341,953 273,332 - - 273,332
Grade B - 7,822 3,700 11,522 - 5,006 9,347 14,353
Grade C - 2 28,791 28,793 391 - 19,576 19,967
Gross value 341,953 7,824 32,491 382,268 273,723 5,006 28,923 307,652
Allowance for impairment (184) (6) (19,425) (19,615) (303) (3) (15,871) (16,177)
Carrying value 341,769 7,818 13,066 362,653 273,420 5,003 13,052 291,475
Loans are graded A to C depending on the level of risk. Grade C relates to
agreements with the highest of risk, Grade B with medium risk and Grade A
relates to agreements with the lowest risk.
B. Summary of overdue status of loans and advances to customers
2024 2023
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
30 June (unaudited) £000 £000 £000 £000 £000 £000 £000 £000
Current 340,658 - - 340,658 323,949 - - 323,949
Overdue < 30 days 11,773 - - 11,773 5,634 - - 5,634
Overdue > 30 days - 9,256 33,270 42,526 - 2,863 28,662 31,525
352,431 9,256 33,270 394,957 329,583 2,863 28,662 361,108
2023 2022
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
31 December (audited) £000 £000 £000 £000 £000 £000 £000 £000
Current 333,740 - - 333,740 269,130 - - 269,130
Overdue < 30 days 8,213 - - 8,213 4,593 604 - 5,197
Overdue > 30 days - 7,825 32,490 40,315 - 4,402 28,923 33,325
341,953 7,825 32,490 382,268 273,723 5,006 28,923 307,652
6. Interest revenue and other interest income
Interest revenue and other 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.
7. Operating segments
Segmental information is presented in respect of the Group's business
segments. The Directors consider that the Group currently operates in one
geographic segment comprising of the Isle of Man, UK and Channel Islands. The
primary format for business segments is based on the Group's management and
internal reporting structure. The Directors consider that the Group operates
in three (2023: three) product orientated segments in addition to its
financial activities to allocate the Group's capital (investing activities):
(i) Asset and Personal Finance (including provision of HP contracts, finance
leases, personal loans, commercial loans, block discounting, vehicle stocking
plans and wholesale funding agreements); (ii) Edgewater Associates Limited
(provision of financial advice), and (iii) MFX Limited (provision of foreign
currency transaction services).
Asset and
Personal Edgewater Associates MFX Limited Investing
Finance £000 £000 Activities Total
For the 6 months ended 30 June 2024 (unaudited) £000 £000 £000
Interest revenue calculated using the effective interest method
27,243 - - - 27,243
Other interest income 766 - - - 766
Interest expense (10,684) - - - (10,684)
Net interest income 17,325 - - - 17,325
Components of Net trading income (3,405) 1,077 655 - (1,673)
Net trading income 13,920 1,077 655 - 15,652
Components of Operating income 1,927 - 1 18 1,946
Operating income 15,847 1,077 656 18 17,598
Depreciation (371) (12) (1) (60) (444)
Amortisation and impairment of intangibles (89) (39) (2) (87) (217)
All other expenses (12,435) (732) (148) (138) (13,453)
Share of profit of equity accounted investees, net of tax 37 - - - 37
Profit / (loss) before tax payable 2,989 294 505 (267) 3,521
Capital expenditure 959 - - - 959
Total assets 457,023 1,890 419 42,898 502,230
Total liabilities 437,350 297 7 27,881 465,535
Asset and
Personal Edgewater Associates MFX Limited Investing
Finance £000 £000 Activities Total
For the 6 months ended 30 June 2023 (unaudited) £000 £000 £000
Interest revenue calculated using the effective interest method 21,458 - - - 21,458
Other interest income 713 - - - 713
Interest expense (4,660) - - (1,127) (5,787)
Net interest income 17,511 - - (1,127) 16,384
Components of Net trading income (2,603) 1,200 605 - (798)
Net trading income 14,908 1,200 605 (1,127) 15,586
Components of Operating income 726 - - - 726
Operating income 15,634 1,200 605 (1,127) 16,312
Depreciation (364) (10) (1) (32) (407)
Amortisation and impairment of intangibles (271) (37) (2) (2) (312)
All other expenses (10,995) (1,009) (168) (389) (12,561)
Share of profit of equity accounted investees, net of tax - - - - -
Profit / (loss) before tax payable 4,004 144 434 (1,550) 3,032
Capital expenditure 994 - - - 994
Total assets 365,236 1,499 271 52,691 419,697
Total liabilities 347,391 21 8 40,247 387,667
Asset and
Personal Edgewater Associates MFX Limited Investing
Finance £000 £000 Activities Total
For the year ended 31 December 2023 (audited) £000 £000 £000
Interest revenue calculated using the effective interest method 45,356 - - - 45,356
Other interest income 1,535 - - - 1,535
Interest expense (14,538) - - 8 (14,530)
Net interest income 32,353 - - 8 32,361
Components of Net trading income (6,410) 2,032 1,048 - (3,330)
Net trading income 25,943 2,032 1,048 8 29,031
Components of Operating income 2,450 2 - - 2,452
Operating income 28,393 2,034 1,048 8 31,483
Depreciation (739) (22) (1) (63) (825)
Amortisation and impairment of intangibles (545) (76) (5) (57) (683)
All other expenses (20,294) (1,972) (364) (302) (22,932)
Share of profit of equity accounted investees, net of tax - - - - -
Profit / (loss) before tax payable 6,815 (36) 678 (414) 7,043
Capital expenditure 2,627 6 - 895 3,528
Total assets 438,916 1,578 267 39,944 480,705
Total liabilities 418,794 279 10 25,638 444,721
8. Earnings per share
For the 6 months ended For the 6 months ended For the
30 June 2024 30 June 2023 year ended
(unaudited) (unaudited) 31 Dec 2023
(audited)
Profit for the period / year attributable to owners of the Company £2,410,000 £1,927,000 £5,288,000
Weighted average number of ordinary shares in issue (basic) 116,378,211 115,072,988 115,330,589
Basic earnings per share (pence) 2.07 1.67 4.59
Diluted earnings per share (pence) 1.59 1.30 3.51
Total comprehensive income for the period / year attributable to owners of the
Company
£2,410,000 £1,989,000 £5,606,000
Weighted average number of ordinary shares in issue (basic) 116,378,211 115,072,988 115,330,589
Basic earnings per share (pence) 2.07 1.73 4.86
Diluted earnings per share (pence) 1.59 1.34 3.71
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.
30 June 2024 30 June 2023 31 Dec 2023
As at (unaudited) (unaudited) (audited)
Reconciliation of weighted average number of ordinary shares in issue between
basic and diluted
Weighted average number of ordinary shares (basic) 116,378,211 115,072,988 115,330,589
Number of shares issued if all convertible loan notes were exchanged for 37,916,667 37,916,667 37,916,667
equity
Dilutive element of share options if exercised 2,922,088 2,409,005 2,460,929
Weighted average number of ordinary shares (diluted) 157,216,966 155,398,660 155,708,185
Reconciliation of profit for the period / year between basic and diluted
Profit for the period / year (basic) £2,410,000 £1,927,000 £5,288,000
Interest expense saved if all convertible loan notes were exchanged for equity £97,500 £97,500 £171,415
Profit for the period / year (diluted) £2,507,500 £2,024,500 £5,459,415
The diluted earnings per share calculation assumes that all convertible loan
notes have been converted / exercised at the beginning of the period in which
they are dilutive.
30 June 2024 30 June 2023 31 Dec 2023
As at (unaudited) (unaudited) (audited)
Reconciliation of total comprehensive income for the period / year between
basic and diluted
Total comprehensive income for the period / year (basic) £2,410,000 £1,989,000 £5,606,000
Interest expense saved if all convertible loan notes were exchanged for equity £97,500 £97,500 £171,415
Total comprehensive income for the period / year (diluted) £2,507,500 £2,086,500 £5,777,415
9. Debt securities
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
As at (unaudited) (unaudited) (audited)
Financial assets at fair value through other comprehensive income:
UK Government treasury bills 77,257 31,371 76,129
77,257 31,371 76,129
UK Government Treasury Bills are stated at fair value and unrealised changes
in the fair value are reflected in other comprehensive income. Realised gains
of £1,671,000 (30 June 2023: £664,000 and 31 December 2023: £1,893,000)
were reclassified from other comprehensive income to profit and loss during
the period. Net unrealised gains of £nil (30 June 2023: £62,000 and 31
December 2023: £324,000) have been recognised in other comprehensive income
during the period.
10. Loans and advances to customers
30 June 2024 30 June 2023 31 Dec 2023
Carrying Carrying Carrying
Gross Impairment Allowance Value Value Value
Amount £'000 £'000 £'000 £'000
As at £'000 (unaudited) (unaudited) (audited)
HP balances 121,453 (4,264) 117,189 98,058 115,390
Finance lease balances 26,220 (2,930) 23,290 17,503 21,828
Unsecured personal loans 121,971 (13,237) 108,734 66,715 77,814
Vehicle stocking plans 1,537 - 1,537 1,904 1,973
Wholesale funding arrangements 11,812 - 11,812 25,214 21,503
Block discounting 37,823 - 37,823 54,873 47,520
Secured commercial loans 31,613 (578) 31,035 12,086 25,272
Secured personal loans 905 - 905 964 1,075
Government backed loans 32,042 (1,173) 30,869 46,836 40,210
Property secured 9,581 - 9,581 19,091 10,068
394,957 (22,182) 372,775 343,244 362,653
11. Trade and other receivables
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
As at (unaudited) (unaudited) (audited)
Prepayments 613 4,495 497
Other debtors 11,010 2,732 7,730
11,623 7,227 8,227
12. Goodwill
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
As at (unaudited) (unaudited) (audited)
Payment Assist Limited 4,456 4,456 4,456
Edgewater Associates Limited 1,649 1,649 1,649
British Lending Exchange Limited 1,908 1,908 1,908
Blue Star Business Solutions Limited 1,390 1,390 1,390
Ninkasi Rentals & Finance Limited 678 678 678
Manx Collections Limited 454 454 454
Three Spires Insurance Services Limited 41 41 41
10,576 10,576 10,576
13. Creditors and accrued charges
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
As at (unaudited) (unaudited) (audited)
Commission creditors 171 726 174
Other creditors and accruals 11,809 11,742 12,623
Lease liability 1,022 1,535 1,358
Taxation creditors 1,355 854 254
14,357 14,857 14,409
14. Loan notes
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
As at Notes (unaudited) (unaudited) (audited)
Related parties
J Mellon JM 1,750 1,750 1,750
Burnbrae Limited BL 3,200 3,200 3,200
Culminant Reinsurance Ltd CR 1,000 1,000 1,000
John Spellman JS 400 - -
Ian Morley IM 250 - -
Alan Clarke AC 100
6,700 5,950 5,950
Unrelated parties UP 34,707 33,542 33,367
41,407 39,492 39,317
JM - Two loans, one of £1,250,000 maturing on 26 February 2025 with interest
payable of 5.4% per annum, convertible to ordinary shares of the Company at a
rate of 9.0 pence, one of £500,000 maturing on 31 July 2027, paying interest
of 7.5% per annum and convertible to ordinary shares of the Company at a rate
of 8.0 pence.
BL - Three loans, one of £1,200,000 maturing on 31 July 2027, paying interest
of 7.5% per annum, convertible to ordinary shares of the Company at a rate of
8.0 pence, one of £1,000,000 maturing 25 February 2025, paying interest of
5.4% per annum, and one of £1,000,000 maturing 28 February 2025 paying
interest of 6% per annum. Jim Mellon is the beneficial owner of BL and Denham
Eke is also a director.
CR - One loan consisting of £1,000,000 maturing on 12 October 2025, paying
interest of 6.0% per annum. Greg Bailey, a Director, is the beneficial owner
of CR.
JS - One loan consisting of £400,000 maturing on 3 May 2029, paying interest
of 8.5% per annum. John Spellman is a Director of the Group.
IM - One loan consisting of £250,000 maturing on 3 June 2026, paying interest
of 8.0% per annum. Ian Morley is a Director of the Conister Bank Limited, a
subsidiary of the Group.
AC - Two loans of £50,000 each, both maturing on 6 May 2025, paying interest
of 7.75% per annum. Alan Clarke is a Director of the Group.
UP - Forty six loans (2023: Forty), the earliest maturity date is 15 July
2024, and the latest maturity is 5 April 2029. The average interest payable is
6.36% (2023: 5.87%). The cause for the increase is due to the rising interest
environment increasing the cost of loan notes renewed particularly in the
first six months of 2024. With respect to the convertible loans, the interest
rate applied was deemed by the Directors to be equivalent to the market rate
at the time with no conversion option.
15. Called up share capital
Ordinary Shares of no-par value available for issue Number
At 30 June 2024, 30 June 2023, 31 December 2023 200,200,000
Issued and fully paid ordinary Shares of no par value Number £'000
Balance at 30 June 2024 117,555,757 19,626
Balance at 30 June 2023 116,191,936 19,287
Balance at 31 December 2023 115,072,988 19,384
Dividends
On 25 April, MFG declared a dividend of £529,000 (2023: £433,000) which was
calculated as being 10% of the profit after tax available to Shareholders,
which could either be taken up in cash or new ordinary shares. On 19 June 2024
1,013,821 new shares (2023: 418,948 new shares) were admitted to the
Alternative Investment Market ("AIM") at 19.0 pence per share (2023: 21.8974
pence per share), at a total cost of £193,000 (2023: £91,000). A dividend of
£1.784 million was paid to non-controlling interest shareholders during the
period.
Convertible loans
There are three convertible loans totalling £2,950,000 (30 June and 31
December 2023: three convertible loans totalling £2,950,000).
Share options and Restricted Stock Units
i. Issued during the financial year ended 31 December 2022 and 2023
On 5 July 2022, 27 October 2022 and 29 November 2023, MFG granted Restricted
Stock Units ("RSUs") under its 2022 RSU Plan. The Group issued, in total, RSUs
over 4,687,500 ordinary shares representing 4.1% of the issued share capital
of the Group, including 2,900,000 to certain Directors and 1,787,500 to
certain employees. The RSUs will have a 2-year term and are subject to certain
vesting conditions based upon an overall growth in profitability. Any RSUs
granted will fall away should the recipient leave employment before the 2-year
term expires. Should the individual vesting conditions be satisfied at the end
of the term, the stock can be exercised at nil cost.
The Group directors who received RSUs are as follows:
§ Douglas Grant, Group Chief Executive Officer, was issued 1,925,000
RSU's. Including the 1,243,129 Ordinary Shares in the Company he currently
owns, he would hold a total of 3,168,129 on a fully diluted basis, being 2.0%
of the new issued share capital of the Company; and
§ James Smeed, Group Finance Director, was issued 475,000 RSUs. On
the same basis, he would hold 0.3% of the new issued share capital of the
Company.
The terms and conditions of the grants are as follows: and will be settled by
the physical delivery of shares.
Contractual life of options
Number of Units
Grant date / employees entitled
Option grant to key employees at 5 July 2022 1,020,000 2 years
Option grant to Directors at 5 July 2022 1,100,000 2 years
Option grant to key employees at 27 October 2022 165,000 2 years
Option grant to Directors at 27 October 2022 150,000 2 years
Option grant to key employees at 29 November 2023 1,150,000 2 years
Option grant to Directors at 29 November 2023 1,102,500 2 years
Total share options 4,687,500
The fair value of employee services received in return for restricted stock
units granted is based on the fair value of them measured using the
Black-Scholes formula. Service related and non-market performance conditions
were not taken into account in measuring fair value. The inputs used in
measuring the fair values at the grant of the equity-settled restricted stock
unit payment plans were as follows.
Grant at 29 November 2023 Grant at Grant at
27 October 2022 5 July 2022
Fair value of restricted stock units and assumptions
Share price at grant date 17.5 pence 14.0 pence 8.5 pence
Exercise price nil nil nil
Expected volatility *^ 638.12% 107.71% 55.14%
Expected life (weighted average) 2 years 2 years 2 years
Risk-free interest rate (based on government bonds)*^ 4.43% 3.15% 1.65%
Fair value at grant date 17.5 pence 14.0 pence 8.5 pence
^ Based on past 3 years
* Annual rates
The expected volatility is based on both historical average share price
volatility and implied volatility derived from traded options over the group's
ordinary shares of maturity similar to those of the employee options.
The charge for the period for share options granted was £153,000 (30 June
2023: £56,000 and 31 December 2023: £113,000) which is included in
employment expenses.
30 June 2024 30 June 2023 31 Dec 2023
Grant Date £'000 £'000 £'000
(unaudited) (unaudited) (audited)
5 July 27 Oct 2022 29 Nov 2022
Remaining options 2022
Granted 2,120,000 315,000 2,252,500 4,687,500 4,687,500 4,687,500
Lapsed (200,000) (75,000) (50,000) (325,000) - (135,000)
Remaining 1,920,000 240,000 2,202,500 4,362,500 4,687,500 4,552,500
ii. Issued during the financial year ended 31 December 2014
On 23 June 2014, 1,750,000 share options were issued to Executive Directors
and senior management within the Group at an exercise price of 14 pence per
share. The options vest over three years with a charge based on the fair value
of 8 pence per option at the date of grant. The period of grant is for 10
years less 1 day ending 22 June 2024 with the condition of three-years
continuous employment being met.
The fair value of services received in return for share options granted is
based on the fair value of share options granted, measured using a binomial
probability model with the following inputs for each award:
23 June
2014
Fair value at date of grant £0.08
Share price at date of grant £0.14
Exercise price £0.14
Expected volatility 55.0%
Option life 3
Risk-free interest rate (based on government bonds) 0.5%
Forfeiture rate 33.3%
On 30 November 2023, Douglas Grant, Chief Executive Officer, exercised options
over 700,000 ordinary shares of no par value ("New Ordinary Shares") in the
Company (the "Options"), at an exercise price of 14 pence per New Ordinary
Share, for an aggregate consideration of £98,000.
On 26 April 2024, the Group received and accepted a request to exercise
options over 350,000 ordinary shares of no par value in the Company at an
exercise price of 14 pence for an aggregate consideration of £49,000.
Of the 1,750,000 share options issued, £nil (30 June and 31 December
2023:350,000) remain outstanding.
16. Deferred consideration
Deferred consideration relates to contingent payments due to the sellers on
the acquisition BLX.
On the acquisition of BLX on 11 October 2021, the Group agreed that a further
conditional consideration of up to £483,663 is payable to the sellers in
addition to the cash consideration paid. The total amount payable is
contingent on the recovery of certain loans and advances found to be in
default at acquisition. The fair value on acquisition date was determined to
be £387,000. The Group made a payment of £15,000 to the sellers during the
period.
30 June 2024 30 June 2023 31 Dec 2023
£'000 £'000 £'000
As at (unaudited) (unaudited) (audited)
BLX 5 216 20
5 216 20
17. Regulators
Certain Group subsidiaries are regulated by the Isle of Man Financial Services
Authority (FSA) and the United Kingdom Financial Conduct Authority (FCA) as
detailed below.
The Bank and EAL are regulated by the FSA under a Class 1(1) - Deposit Taking
licence, and a Class 2 - Investment Business licence, respectively. The Bank
is also regulated by the UK Bank of England's Prudential Regulatory Authority
("PRA") as a Bank incorporated outside the UK authorised to accept deposits
through a branch in the UK, and the UK's Financial Conduct Authority ("FCA")
as a Branch (UK) of an Overseas Firm.
18. Contingent liabilities
The Bank is required to be a member of the Isle of Man Government Depositors'
Compensation Scheme which was introduced by the Isle of Man Government under
the Banking Business (Compensation of Depositors) Regulations 1991. This
creates a liability on the Bank to participate in the compensation of
depositors should it be activated.
The possibility of an outflow of resources embodying economic benefits for all
other contingent liabilities of the Group are considered remote and thus do
not require separate disclosure.
19. Subsequent events
On 11 July 2024, following the satisfaction of vesting criteria, the Group
received and accepted requests to exercise RSU's over 1,920,000 ordinary
shares of no par value at £nil cost in the Company. These requests relate to
the RSU's issued on 5(th) July 2022. Douglas Grant and James Smeed, both
Directors of the Company, have elected to be issued 925,000 and 175,000 New
Ordinary Shares of no par value respectively at nil cost. Haseeb Qureshi, a
Person Discharging Managerial Responsibilities within the Company has elected
to be issued 150,000 New Ordinary Shares of no par value at nil cost.
As announced on 16 September 2024, Manx Ventures Limited ("MVL") brought
forward the acquisition the remaining 49.9% of Payment Assist Limited ("PAL")
for a consideration of £5 million. MVL now owns 100% of PAL and its results
will be fully consolidated from that date onwards. The Group's board believe
this acquisition will have a positive material impact on profitability from
2025.
20. Approval of interim financial statements
The interim financial statements were approved by the Board on 23 September
2024. The interim report will be available from that date at the Group's
website - www.mfg.im (http://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, Building 3, 566
Chiswick High Road, London W4 5YA. The interim and annual financial statements
along with other supplementary information of interest to shareholders, are
included on the Group's website. The website includes investor relations
information, including corporate governance observance and contact details.
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