IFG Group plc: Preliminary Statement

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IFG Group plc (IFP) 
IFG Group plc: Preliminary Statement 
 
25-March-2019 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information 
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
IFG GROUP PLC PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 
2018 
****************************************************************************** 
**** 
 
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION 
 
 The IFG Directors accept responsibility for the information contained in this 
announcement To the best of the knowledge and belief of the IFG Directors (who 
   have taken all reasonable care to ensure such is the case), the information 
   contained in this announcement is in accordance with the facts and does not 
omit anything likely to affect the import of such information. The sources and 
bases for the information in this announcement relating to the Acquisition are 
set out in Appendix A to the Rule 2.5 Announcement relating to the Acquisition 
         dated 25 March 2019. 
 
RECOMMENDED OFFER 
 
    IFG Group plc ("IFG") is pleased to announce that it has reached agreement 
     with Epiris GP Limited, as General Partner of the Epiris Funds advised by 
   Epiris LLP ("Epiris"), on the terms of a recommended cash offer pursuant to 
  which SaintMichelCo Limited ("Bidco"), a wholly owned indirect subsidiary of 
       the Epiris Funds, will acquire the entire issued and to be issued share 
 capital of IFG. Consequently, Bidco has today announced its firm intention to 
         make an offer for IFG under Rule 2.5 of the Takeover Rules. 
 
Under the terms of the proposed acquisition, IFG shareholders will be entitled 
to receive GBP1.93 for each IFG Ordinary Share, valuing the entire issued and to 
        be issued ordinary share capital of IFG at approximately GBP206 million. 
 
         The proposed acquisition represents: 
 
  · a premium of approximately 46 per cent to IFG's closing share price of 
  GBP1.325 on 22 March 2019 (being the last practicable date prior to the 
  publication of this Announcement); 
 
  · a premium of approximately 44 per cent to IFG's volume weighted average 
  share price of approximately GBP1.34 over the one-month period ended on 22 
  March 2019; 
 
  · a premium of approximately 42 per cent to IFG's volume weighted average 
  share price of approximately GBP1.36 over the three-month period ended on 22 
  March 2019; and 
 
  · a multiple of approximately 21.4 times IFG's adjusted after tax earnings 
  for the year ended 31 December 2018. 
 
improved underlying performance 
............................... 
 
Financial Highlights 
 
                                   2018   2017 Change 
                  Revenue (GBPm)     87.6   78.4    12% 
Adjusted operating profit (GBPm)     12.4   10.5    18% 
  Operating profit/(loss) (GBPm)      0.3  (0.4)      - 
              Adjusted EPS (p)     9.14   8.34    10% 
                 Basic EPS (p)   (0.90) (0.32)      - 
           Free cash flow (GBPm)      6.6    5.7    16% 
 
· Revenue growth of 12% to GBP87.6 million (2017: GBP78.4 million) driven by 
repricing and increases in the Bank of England interest rate in James Hay 
and strong performance in Saunderson House 
 
· Adjusted operating profit increased 18% to GBP12.4 million (2017: GBP10.5 
million) demonstrating the strength of the underlying businesses 
 
· Exceptional costs of GBP9.9 million (2017 GBP8.8 million) including a 
provision of GBP4.9 million in relation to the dual trustee review and GBP3.0 
million retention payments following the cancelled sales process of 
Saunderson House 
 
· Operating profit (after exceptional costs and amortisation) was GBP0.3 
million up from a loss of GBP0.4 million in 2017 
 
· A 10% increase in adjusted EPS to 9.14 pence (2017 8.34 pence). Basic loss 
per share was 0.90 pence, compared to a loss of 0.32 pence in the prior year 
 
· Based on a more prudent assessment of regulatory capital, the group has 
capital resources of GBP25.6 million (2017: GBP49.5 million) which is 502% of 
its Pillar 1 requirement (2017: 750%) and surplus to its Pillar 2 
requirements 
 
Operational 
 
James Hay 
 
                                      2018   2017 
Assets under administration (GBPbn)     25.3   25.5 
                      New Clients    4,651  6,116 
                    Total Clients   58,753 58,551 
                   Retention rate      93%    93% 
   Adjusted Operating Profit (GBPm)     10.3    6.1 
 
· AUA 1% lower than 2017 at GBP25.3 billion (2017: GBP25.5 billion) with adverse 
market movements over the year offsetting net inflows 
 
· James Hay added 4,651 new clients during 2018, down 24% on 2017, driven 
largely by the slow-down in the defined benefit ("DB") transfer market 
following a significant rise in this market in 2017 
 
· James Hay now serves 58,753 clients (2017: 58,551) of which 55,200 are in 
SIPPs with the remaining 3,553 in SSAS and Wrap products. Client retention 
remains stable at 93% 
 
· Reviewed c.20% of dual-trustee SSAS schemes and provided GBP4.9 million as a 
best estimate of costs to resolve these matters across the whole book 
 
· We have submitted an application under s268 Finance Act 2004 for the 
discharge of the HMRC assessment in respect of Elysian Fuels for tax years 
ended 5 April 2012 and 5 April 2013 and expect to submit applications in 
relation to later tax years in due course. We currently expect that a 
process involving appeals to tribunal would be unlikely to complete before 
the end of 2019 
 
Saunderson House 
 
                                  2018  2017 
     Assets under advice (GBPbn)     4.9   5.1 
                   New Clients     239   247 
                 Total Clients   2,342 2,121 
                Retention rate     99%   96% 
Adjusted Operating Profit (GBPm)     7.1   8.6 
 
· AUA 4% lower than 2017 with adverse market movements over the year 
offsetting net inflows 
 
· Saunderson House achieved 239 new client wins in 2018, slightly down 
compared to 247 in 2017 but a strong result, particularly in light of 
distraction from the cancelled sale process 
 
· Continued strong demand for Discretionary Management Services (DMS) making 
up c.60% of new client wins 
 
· Saunderson House now serves 2,342 clients (up 10% from 2,121 in 2017) with 
client retention improving to 99% (2017: 96%) 
 
Strategic and proposed acquisition 
 
         Following a challenging start to 2018, we have made good progress on 
         identifying and implementing our near-term priorities; building two 
        self-reliant businesses within an efficient group structure and making 
         meaningful progress in relation to legacy issues. 
 
   During the course of 2018, we have reviewed a range of options available to 
  the Group to assess whether greater value might be realised for shareholders 
through alternative ownership structures. The review considered, amongst other 
         options, a demerger and the sale of one or both of the subsidiaries. 
 
  Having taken into account the relevant factors and applicable risks, the IFG 
         Board consider the terms of the proposed acquisition to be fair and 
        reasonable. Accordingly, the IFG Board unanimously recommends that IFG 
       shareholders vote in favour of the acquisition, as they intend to do in 
         respect of their own holdings. 
 
Kathryn Purves, Chief Executive of IFG Group plc, commented: 
 
  "We are pleased to be announcing this transaction today and believe it is an 
 excellent outcome for shareholders, for the company, and for our clients. The 
       offer by Epiris represents a compelling opportunity for shareholders to 
  realise an immediate and attractive cash value for their shareholding in IFG 
today. In addition, our employees and clients will benefit under the ownership 
      of Epiris which should help broaden and accelerate the delivery of IFG's 
strategic objectives and the underlying strategies of James Hay and Saunderson 
         House." 
 
Contacts: 
 
Kathryn Purves        Gavin Howard 
 
Group Chief Executive Group Chief Financial Officer 
 
        IFG Group plc                 IFG Group plc 
 
Tel: [phone]         Tel: [phone] 
 
Media enquiries: 
 
Justin Griffiths      Jack Hickey 
 
          Powerscourt         Powerscourt 
 
Tel: [phone] Tel: [phone] 
 
Presentation of results and dial-in 
 
  There will be a presentation of these results to analysts and investors/fund 
  managers at 9.30am today at Macquarie offices, Ropemaker Place, 28 Ropemaker 
   Street, London EC2Y 9HD. The slides for this presentation can be downloaded 
         from IFG's website, www.ifggroup.com. 
 
    There will also be audio conference access to the presentation. The access 
         details for the presentation are: 
 
            Confirmation Code: 9484905 
' 
 
  Location       Phone Number 
  United Kingdom   [phone] 
 
         Ireland    [phone] 
          France  [phone] 
         Germany  [phone] 
     Switzerland    [phone] 
              US       [phone] 
 
Extract from Chairman's Statement 
********************************** 
 
DELIVERING SHAREHOLDER VALUE 
............................ 
 
STRATEGY 
 
       I believe we have made substantive progress at IFG Group this year. The 
    underlying businesses have performed well, in spite of distractions in the 
    first four months of the year which were dominated by the assessments from 
     HMRC in relation to Elysian Fuels and the Saunderson House sales process, 
   which was later cancelled. These issues provided the backdrop against which 
         the new management team was appointed in April 2018. 
 
  Since then, we have focused on operational performance within our businesses 

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