The IFG Group has reported adjusted operating profit from James Hay and Saunderson House up by 12 per cent to £4.4m, from £4m during the first half last year, despite increased regulatory fees.
First half results, published today (27 August), revealed Saunderson House’s revenues grew by 7 per cent, however its profitability was impacted by a £1.1m charge for regulatory fees, compared with £300,000 during the first half last year.
Saunderson House added 166 new clients - compared to 133 in the first half of 2014 - with assets under advice up 12 per cent to £3.9bn, from £3.5bn.
The wealth management arm now serves over 1,750 clients, but admitted that average revenue from new clients is lower than existing clients, as the focus on acquiring new clients earlier in their career is building longer term client relationships at lower initial fees.
“This affects short-term margins but will benefit future revenue growth,” read the results. “The significant increase in the FSCS levy, together with our continued investment in the business, has increased the cost base.”
As a result, the adjusted operating profit for Saunderson House decreased by 11 per cent to £2.7m, from £3.1m during the comparable period.
The results also promised that delivery of a new client portal and the launch of the discretionary fund management offering, both in the second half this year, will improve client service and expand the client offering.
For James Hay, profit was driven by a 26 per cent growth spurt in self-invested personal pensions from 2,998 in the first half of last year to 3,781 now.
Previously announced agreements with Capita and Towry will further boost growth in the second half, according to the results, with 6,500 clients to join in addition to organic growth.
James Hay also saw its assets under administration now stand at £17.5bn, up from £15.9bn, on the back of a 10 per cent increase in net inflows in the first half of 2015.
“We will continue to monitor the competitive landscape for acquisition opportunities and strategic partnerships, which make operational, financial and regulatory sense,” read the results.
IFG reported that total assets under administration and advice in continuing businesses was up 11 per cent to £21.5bn for the first six months of 2015, compared to £19.4bn in the comparable period.
The group’s sale of its Irish general insurance business has now been agreed and is expected to close in the fourth quarter, subject to Irish regulatory consent, which concludes the two year restructuring programme.
Group operating profit from continuing businesses was £2.2m in the first six months of this year, down marginally from £2.3m in the same period last year, although the first half of 2014’s figure included a contribution of £400,000 from the sale of IFG FS.
peter.walker@ft.com
