Manx Financial Group shares drop on first half results

Financial services company Manx Financial Group announced its interim results for the six months to 30 June on Friday, with profit before income tax on continuing operations growing 2% to £0.81m, from £0.79m.

The AIM-traded firm’s profit before income tax was down 29%, however, to £0.71m from £1.01m in the first half of 2015.

Net interest income was up 18% to £7.36m, which was also the company’s net interest income on continuing operations.

Total equity was up 18% to £12.81m, and total assets were also up 18% to £149.09m.

Manx Financial Group’s loans were up 21% year-on-year to £111.75m, with customer accounts up 16% to £122.2m.

“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 £3.9m,” said executive chairman Jim Mellon.

“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.”

Mellon said the hire purchase early settlements contained within that commission expense were as a result of largely unanticipated market-driven decreases in realised asset values during the first half of the year.

Nonetheless, Mellon said the group delivered a meaningful profit for the first half of 2016 and he has “every confidence” that the measures the board is undertaking will maintain its current bottom line to the year end and beyond.

“New business opportunities remain strong but we must continue our hard work to maximise these.

“The acquisition of full authorisation for UK Consumer Credit activities will allow us increased direct access to this important market.”

Mellon said the company was continuing to manage its 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.”

At 0907 BST, shares in Manx Financial Group were down 6.3% to 8.55p.