IFG targets strong growth and 'real value for shareholders in the medium term'
IFG has set ambitious revenue targets for the financial advisory unit it tried to sell earlier this year.
The Irish-founded financial services group, which has shifted its entire focus to the UK in recent years, said it is targeting annual revenue growth of around 9% from its Saunderson House business over the next three years.
IFG had, earlier this year, considered selling Saunderson House after receiving a number of takeover approaches - including one from Saunderson’s own management team. It shelved the plans, however, saying a sale would create lower shareholder value than if it were kept. The costs of keeping the business also put paid to a planned special dividend for shareholders.
As well as Saunderson House, IFG said it is targeting around 7% annual revenue growth over the next three years at its James Hay specialist pensions division.
IFG chief executive Kathryn Purves said that strengthening both divisions and minimising group costs can enhance “longer-term strategic optionality” for the group.
“Our businesses continue to deliver strong results, trading in line with expectations. I am encouraged by the opportunities for both businesses and expect this to translate into real value for shareholders in the medium term,” she said.
IFG’s share price - down by over 22% in the past 12 months - rose by 1.5%.
However, Davy called the new revenue growth targets “ambitious” and said they could be overshadowed by legacy issues.
“Achievement of these targets, together with reductions in central overheads, would materially increase profitability. However, Elysian Fuels and other legacy items continue to act as an overhang in the near-term,” Davy said.
Elysian Fuels refers to a Channel Islands-based biofuels fund in which a number of James Hay customers invested earlier this decade and over which IFG could have to pay out around £20m to cover tax payments.
In its trading update, IFG said it remains in discussions with the UK tax authorities over the matter and expects to update on its exposure in its full-year results. However, it said there remains “significant uncertainty” over the potential outcome and the issue “will take further time to resolve”.
IFG said its level of new client wins this year are down by around 22% on 2017 levels.
