Preliminary Results

RNS Number : 3813J

IFG Group PLC

30 March 2010

 

 

 

 

IFG Group plc

Preliminary statement of results for the year ended 31 December 2009

Highlights

 

 

IFG Group plc today (30 March 2010) released its preliminary statement of results for the year to 31 December 2009. Key highlights include:

 

·; Revenue of €93.3 million (2008: €105.1 million)

·; Adjusted operating profit of €18.0 million (2008: €21.2 million)

·; Operating profit of €10.2 million (2008: €16.1 million)

·; Adjusted EPS in cent per share of 20.60 (2008: 22.77)

·; EPS in cent per share of 8.81 (2008: 15.69)

·; Adjusted dividend in cent per share of 3.63 (2008: 3.63)

·; Total assets under administration and advice of circa €60 billion

 

 

Commenting on the results, Mark Bourke, CEO of IFG Group plc said,

 

"In 2009 we delivered to expectation and remained highly profitable in our core product lines of Corporate Service and Pension Administration and Advisory. We have transformed the Group through the acquisition of James Hay, the largest provider of SIPPs in the UK. The acquisition was completed in March 2010.

 

The combination of leading market positions, proven customer proposition and a strong balance sheet is our basis for continued success."

 

 

 

 

-ends-

For reference:

 

Mark Bourke Peter Mitchell

Group CEO Business Talk

IFG Group plc Tel: 087 2599814

Tel: 01 275 2800

 

 

 

 

 

 

IFG Group plc

Preliminary statement of results

For the year ended 31 December 2009

 

	Adjusted Measures 2009	Adjusted Measures 2008 Restated	Notes	Total IFRS 2009	Total IFRS 2008 Restated
	€'000	€'000		€'000	€'000
Revenue	93,287	105,087		93,287	105,087
Operating profit	17,963	21,231	1	10,236	16,098
Profit before income tax	16,368	18,332	1	8,641	13,199
Adjusted earnings per ordinary share - in cent	20.60	22.77	2	n/a	n/a
Basic earnings per ordinary share - in cent	n/a	n/a		8.81	15.69
Group net debt				43,943	46,809
Dividend per ordinary share - in cent	3.63	3.63	3

 

 

 

Notes:

1. Adjusted profit before income tax and adjusted earnings per share are stated before certain exceptional items, amortisation of intangible assets, share based payment compensation and discontinued operations. The 2008 adjusted profit comparatives have been amended to reflect the disclosure of discontinued operations.

 

2. Reconciliation of adjusted earnings per ordinary share:

 

 

	Year ended		Year ended
	31 December 2009		31 December 2008
	Per share	Earnings	Per share	Earnings
	cent	€'000	cent	€'000
Profit attributable to equity holders	8.81	6,590	15.69	11,365
Amortisation of intangible assets	6.76	5,061	4.92	3,566
Share based payment compensation	2.02	1,511	2.16	1,567
Redundancy costs	1.54	1,155	-	-
Discontinued operations	1.47	1,102	-	-
Adjusted earnings	20.60	15,419	22.77	16,498

 

 

3. Dividend per ordinary share is calculated as the sum of the interim dividend per share of 1.27 cent and the 2.36 cent per share to be proposed at the forthcoming Annual General Meeting.

 

 

Group Performance

 

IFG Group is pleased to announce results for the year ended 31 December 2009, a year in which the quality and resilience of the Group's businesses were proven in a difficult economic environment.

 

This performance again confirms our strategy of focusing on the development of core competencies in asset administration and advisory businesses while diversifying geographically.

 

Adjusted profits before income tax for the year were €16.4 million on revenues of €93.3 million (profit before income tax of €8.6 million). This compares with €18.3 million and €105.1 million respectively in the previous year (profit before income tax of €13.2 million). The reduction in revenue is largely confined to our Irish property business where revenue fell by €7.6 million. When the impact of Sterling (decrease in value) is factored in, the adjusted profitability and high margins have been maintained at close to prior year levels.

 

During the year the Group continued to develop both organically and by acquisition in its three segments. In the International segment we completed the integration of Excel-Serve Management Limited (now IFG Trust (Cyprus) Limited), and in the Ireland segment, Pensco Limited. In the UK segment we completed on 10 March 2010 the acquisition of James Hay Holdings Limited, the largest provider of Self Invested Personal Pensions (SIPPs) in the UK.

 

While making progress in the core businesses we maintained focus on cost control in the transaction based businesses. We now have achieved scale in each of our chosen markets and successfully migrated the Group to stable and long term recurring income streams. Our Balance Sheet remains strong and the business is cash generative. The Group invested €6.4 million in capital and acquisition expenditure and also reduced total net debt and commitments by €11.1 million.

 

We managed our business on tight gearing ratios and thus maintained our keenly priced facilities. With the year end capital raising and acquisition of James Hay, the Balance Sheet is further enhanced. On a proforma basis the Group should reduce net debt to zero in a 12 to 18 month period.

 

With what has been accomplished at an operating business level and through the James Hay acquisition we have demonstrated the robustness of the model and completed the strategic transformation of the Group which commenced in 2007.

 

		Total	Total
		Operating	Operating
		Profit	Profit
		2009	2008
			Restated
		€'000	€'000
International		12,152	12,209
UK		5,218	6,826
Ireland (including central overhead)		593	2,196
Adjusted operating profit*		17,963	21,231
*A reconciliation of adjusted operating profit to profit for the year is included in the segmental analysis in Note 4.

 

 

International

 

The International segment has delivered profits of €12.2 million (2008: €12.2 million). The business has performed well and demonstrated resilience despite difficult market conditions.

 

The Isle of Man business performed well. This was evidenced by high time charges and is attributable to an entrepreneurial and globally diverse client base which remains active even in times of depressed asset prices.

 

IFG Trust (Jersey) had a difficult year and yet delivered a good result. As stated in the half year interim results, a considerable number (circa 300) of client structures were closed in the year as they were no longer profitable. Management responded by cost cutting and redundancies (15% staff reduction). Despite this, Jersey had considerable success in bringing in new business.

 

On 30 June 2008 the Group acquired Excel-Serve Management Limited, now rebranded as IFG Trust (Cyprus), a Cyprus based corporate service provider. This acquisition was part of the ongoing execution of the business strategy of developing in the key centres of Isle of Man, Jersey, Cyprus and Switzerland. It added distribution capacity through the relationship with Deloittes in Cyprus and internationally.

 

The integration of the business including new premises fit out and system introduction took place in 2008/2009 and involved investment in the IFG Trust (Cyprus) cost base and premises. This however, coincided with a fall off in activity in 2009 and the absence of expected growth resulted in a performance below expectations. However, we remain convinced of the strategic importance of Cyprus as an onshore centre within the EU. Although there may be some short term delay, growth will resume and the return on our investment will revert to initial levels experienced in the second half of 2008.

 

Although the progress of fund administration remains hampered by low asset values, we remain committed to this business.

 

The Ireland and Switzerland business centres performed well with a final acquisition payment being made on Gestinor in March 2009.

 

We did not pursue plans to expand in Singapore. This remains on our agenda and will be pursued as the global economy picks up. The current two track global recovery process which shows Asia moving ahead in the second half of 2009 re-affirms our commitment to expand into that part of the world.

 

Although we continue to identify appropriate acquisition targets, our near term appetite for acquisitions is limited by our commitment to conservative gearing levels.

 

 

United Kingdom

		Total	Total
		Operating	Operating
		Profit	Profit
		2009	2008
		€'000	€'000
Pensioneer Trustee		2,951	3,937
Financial Services		2,267	2,889
		5,218	6,826

 

Pensioneer Trustee

In 2009 we maintained the pace of growth in our SIPP book at 16%, growing the number of SIPPs under administration from 6,900 to 8,000. The Pensioneer Trustee business profit of €3.0 million (2008: €3.9 million) represents an excellent underlying result. At an operating level the result was a decrease of €0.3 million despite continued low interest rates and compares favourably with industry peers. Management project costs in the business account for the remainder of the decrease on prior year.

 

We remain of the view that SIPPs will be the principal member directed retirement planning vehicle in the UK pensions market for the foreseeable future. The current assets under administration in the business are circa €3 billion.

 

Acquisition of James Hay

In December 2009 we concluded negotiations with Bank of Santander Private Banking UK Limited to purchase James Hay Holdings Limited. With 32,000 SIPPs under administration, the acquisition represents a transformation of the Group. The combined Group is now the largest provider of SIPPs with circa 40,000 under administration and is trading as James Hay, the leading brand in the market.

 

The acquisition price at £35.0 million (approximately €38.6 million) plus an amount for net assets of £3.9 million (approximately €4.3 million) represents a substantial opportunity. It:

 

- Is a strategically consistent and significant step.

- Makes IFG number one in the UK market.

- Offers significant efficiency gains.

 

The task of separation from Bank of Santander and absorption into the IFG Group is the principal focus for UK management in the coming year.

 

We will maintain the James Hay platform in Salisbury with new business flowing to IFG's platform. This mitigates the risks of standard integration. The opportunity to reinvigorate and bring the James Hay brand back to its core IFA market and the synergy opportunities are highly significant for the UK and the Group as a whole.

 

Financial Services

In 2009 profit from Financial Services was €2.3 million (2008: €2.9 million). The UK Financial Services business is dominated by our fee based advisory business Saunderson House Limited which has delivered in extremely challenging markets. The model in Saunderson House is to give conflict free advice on a fee per hour charging structure. The business succeeded in growing revenue and profits in 2008 and 2009, an achievement probably without equal within the sector.

 

Last year we said "This performance is a result of the strong proposition, business model, market position and top quality management. We believe that we will continue to attract clients in a market materially impacted by the performance of opaque, complex and sometimes leveraged products, frequently sold in situations with inherent conflicts. We are optimistic that even in a market which is more distressed than 2008, Saunderson House Limited will continue to thrive." Our view has been confirmed and the statement is equally relevant as we look to 2010.

 

Our non fee based business Siddalls which deals with UK citizens retiring overseas incurred material losses of circa €0.9 million. In response we have scaled back operations in the UK and France and ceased operations in Spain.

 

Ireland

		Total	Total
		Operating	Operating
		Profit	Profit
		2009	2008
			Restated
		€'000	€'000
Property		91	236
Financial Services including central overhead		502	1,960
		593	2,196

 

Property

 

Mortgage lending in Ireland reduced to circa 20% of 2007 volumes. On the mortgage side the income is now mainly related to the sale of life assurance. This business contributes positively on a marginal accounting basis to central overhead but is, and will remain, loss making in the current environment. During the year management decided to discontinue the title insurance business.

 

 

 

 

Financial Services including central overhead

 

Individual and group pensions were profitable and in total exceed prior year by 47%. We have integrated the Pensco acquisition which was completed in October 2008. While the economic backdrop remains difficult we are confident there is an opportunity to grow the core business of administration and advice.

 

 

 

Group Financing

 

	As at 31 December 2009			As at 31 December 2008
	Core	Investment	Total	Core	Investment	Total
	€'m	€'m	€'m	€'m	€'m	€'m
Total Group net debt	41.0	2.9	43.9	43.9	2.9	46.8
Contingent consideration			7.2			20.9
Less restricted cash - held in escrow			(6.7)			(12.2)
Total net commitment			44.4			55.5

 

The Group's net cash generated from continuing operations was €18.0 million (2008: €14.7 million). During 2009 the Group utilised €8.8 million (2008: €40.3 million) in respect of investing activities.

 

 

 

 

Consolidated Income Statement

 

Year Ended 31 December 2009

	Notes	2009	2008
			Restated
		€'000	€'000
Continuing operations
Revenue	4	93,287	105,087
Cost of sales		(75,405)	(85,658)
Gross profit		17,882	19,429
Administrative expenses		(7,646)	(3,956)
Other income		-	625
Operating profit		10,236	16,098
Analysed as:
Operating profit before exceptional items		11,391	16,098
Exceptional redundancy costs	6	(1,155)	-
Operating profit		10,236	16,098
Finance income		713	1,027
Finance cost		(2,229)	(3,926)
Share of loss of associate		(79)	-
Profit before income tax		8,641	13,199
Income tax expense	7	(1,131)	(1,675)
Profit for the year from continuing operations		7,510	11,524
Discontinued operations
Loss for the year from discontinued operations (net of income tax)	5	(1,102)	(1,100)
Profit for the year	4	6,408	10,424
Profit for year attributable to:
Owners of the parent company		6,590	11,365
Minority interest		(182)	(941)
		6,408	10,424
Earnings per share from continuing and discontinued operations attributable to the equity owners of the company during the year:
		2009	2008
Basic earnings per ordinary share (cent)
From continuing operations		10.28	17.21
From discontinued operations		(1.47)	(1.52)
Total	8	8.81	15.69
Diluted earnings per ordinary share (cent)
From continuing operations		10.05	16.51
From discontinued operations		(1.44)	(1.46)
Total	8	8.61	15.05

 

 

Consolidated Statement of Comprehensive Income

 

Year Ended 31 December 2009

		2009 €'000	2008 €'000
Profit for the year		6,408	10,424
Other comprehensive income
Currency translation difference		4,107	(17,963)
Net investment hedge		(2,639)	-
Total comprehensive income for the year		7,876	(7,539)
Total comprehensive income attributable to:
- Owners of the parent company		8,061	(6,607)
- Minority interest		(185)	(932)
		7,876	(7,539)

 

  

 

Consolidated Balance Sheet

 

As at 31 December 2009

	Notes	2009	2008
		€'000	€'000
ASSETS
Non - current assets
Property plant & equipment		4,977	4,507
Intangible assets		89,930	95,699
Retirement benefit surplus		68	-
Deferred income tax assets		1,003	1,315
Available-for-sale financial assets		113	105
Other non-current assets		2,360	-
Total non-current assets		98,451	101,626
Current assets
Trade and other receivables		40,710	38,884
Current income tax asset		-	147
Restricted cash - held in escrow		6,662	12,211
Cash and cash equivalents		22,310	22,540
Total current assets		69,682	73,782
Assets of disposal group classified as held for sale	5	357	-
		70,039	73,782
Total assets	4	168,490	175,408
LIABILITIES
Non-current liabilities
Borrowings		54,723	56,619
Deferred income tax liabilities		4,393	4,992
Retirement benefit obligations		-	231
Provisions for other liabilities		860	10,314
Total non-current liabilities		59,976	72,156
Current liabilities
Trade and other payables		35,741	29,371
Current income tax liabilities		1,252	1,440
Borrowings		11,691	12,730
Provisions for other liabilities		8,627	14,061
Total current liabilities		57,311	57,602
Liabilities of disposal group classified as held for sale	5	262	-
		57,573	57,602
Total liabilities	4	117,549	129,758
Net assets		50,941	45,650
EQUITY
Share capital		9,009	8,909
Share premium		57,668	60,025
Other reserves		(19,822)	(22,735)
Retained earnings		3,241	(1,579)
		50,096	44,620
Minority interest		845	1,030
Total equity		50,941	45,650

 

Consolidated Cash Flow Statement

 

Year Ended 31 December 2009

	Notes	2009 €'000	2008 €'000
Cash flows from operating activities
Cash generated from operations	9	17,112	14,740
Interest received		697	738
Income taxes paid		(1,453)	(2,912)
Net cash generated from operating activities		16,356	12,566
Cash flows from investing activities
Purchase of property, plant and equipment		(1,953)	(1,169)
Sale of property, plant and equipment		2	3
Purchase of subsidiary undertakings net of cash acquired		-	(30,288)
Deferred and contingent consideration on prior year acquisitions		(3,499)	(6,509)
Purchase of intangibles		(976)	(2,579)
Dividend received from associate		-	241
Sale of available-for-sale financial assets		-	100
Movement on other non-current assets		(2,343)	(127)
Net cash used in investing activities		(8,769)	(40,328)
Cash flows from financing activities
Dividends paid		(1,770)	(2,772)
Interest paid		(1,796)	(3,165)
Proceeds from issue of share capital		145	7,459
Proceeds from long-term borrowings		4,600	33,300
Repayment of debt		(9,145)	(5,690)
Payment of finance lease liabilities		(46)	(44)
Net cash (used)/generated in financing activities		(8,012)	29,088
Net (decrease)/increase in cash and cash equivalents		(425)	1,326
Cash and cash equivalents at the beginning of the year		21,284	24,291
Effect of foreign exchange rate changes		1,089	(4,333)
Cash and cash equivalents at end of year	10	21,948	21,284
Cash and cash equivalents for the purpose of the statement of cash flows are comprised of cash and short term deposits net of bank overdrafts that are repayable on demand. For the purpose of the cash flow statement cash and cash equivalents include the following:
		2009 €'000	2008 €'000
Cash and short term deposits
- as disclosed on the balance sheet		22,310	22,540
- included in the assets of disposal group held for sale		165	-
Bank overdrafts		(527)	(1,256)
	10	21,948	21,284

 

 

Consolidated Statement of Changes in Equity

					Attributable
	Share	Share	Other	Retained	to equity	Minority	Total
	capital	premium	reserves	earnings	holders	interest	equity
	€'000	€'000	€'000	€'000	€'000	€'000	€'000
At 1 January 2008	8,360	53,032	(6,247)	(10,172)	44,973	1,962	46,935
Total comprehensive income for 2008	-	-	(17,972)	11,365	(6,607)	(932)	(7,539)
Dividends	-	-	-	(2,772)	(2,772)	-	(2,772)
Issue of share capital	549	6,993	(83)	-	7,459	-	7,459
Share based payment compensation
- Value of employee services - share options	-	-	317	-	317	-	317
- Value of employee services - LTIP	-	-	1,250	-	1,250	-	1,250
At 31 December 2008	8,909	60,025	(22,735)	(1,579)	44,620	1,030	45,650
Total comprehensive income for 2009	-	-	1,468	6,590	8,058	(185)	7,873
Dividends	-	-	-	(1,770)	(1,770)	-	(1,770)
Issue of share capital	100	127	(82)	-	145	-	145
Write off of expenses relating to share placement post year end	-	(2,484)	-	-	(2,484)	-	(2,484)
Share based payment compensation
- Value of employee services - share options - continuing	-	-	261	-	261	-	261
- Value of employee services - share options - discontinued	-	-	16	-	16	-	16
- Value of employee services - LTIP	-	-	1,250	-	1,250	-	1,250
At 31 December 2009	9,009	57,668	(19,822)	3,241	50,096	845	50,941

 

Notes to the preliminary statement of results

 

1. General information

 

IFG Group plc and its subsidiaries (together the Group) are engaged in the provision of financial services and corporate and trustee services. The Company is a public company, listed on the Irish Stock Exchange (ISE), and is incorporated and domiciled in the Republic of Ireland. The address of its registered office is IFG House, Booterstown Hall, Booterstown, County Dublin, Ireland.

 

 

2. Basis of preparation

 

The consolidated financial statements of IFG Group plc have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (IFRS), IFRIC interpretations and those parts of the Companies Acts 1963 to 2009 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the application of fair value accounting for certain available-for-sale financial assets.

 

This financial information for the year to 31 December 2009 has been prepared in accordance with the Listing Rules of the Irish Stock Exchange. The Group's financial information has been prepared in accordance with the accounting policies used in the preparation of the Group financial statements. This requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. These assumptions affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. If in the future such estimates and assumptions, which are based on management's best judgement at the date of the financial statements, deviate from the actual outcome, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change.

 

The financial information in this preliminary statement of results is not the statutory accounts of the company, a copy of which is required to be annexed to the company's annual return to the Companies Registration Office in Ireland. A copy of the statutory accounts required to be annexed to the company's annual return in respect of the year ended 31 December 2008 has in fact been so annexed. A copy of the statutory accounts in respect of the year ended 31 December 2009 will be annexed to the company's annual return for 2009.

 

The Group adopted the following new and amended IFRSs as of 1 January 2009, which had a significant effect on the presentation of the Group's results:

 

·; IFRS 8 'Operating Segments', which is effective for annual periods beginning on or after 1 January 2009, sets out the requirements for disclosure of financial and descriptive information about an entity's operating segments in the Group financial statements, its products and services, the geographical areas in which it operates, and its major customers and has replaced IAS 14 Segment Reporting. The adoption of this standard has resulted in a change in the segments disclosed to be consistent with the way in which the Chief Operating Decision Maker monitors performance in order to allocate resources. See note 4.

 

·; IAS 1 (Revised), 'Presentation of financial statements' (effective for financial periods beginning on or after 1 January 2009). The revised standard prohibits the presentation of items of income and expenses (that is, 'non-owner changes in equity') in the statement of changes in equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity in a statement of comprehensive income. As a result the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. Comparative information has been re-presented so that it is also in conformity with the revised standard. As the changes in accounting policy only impacts presentation aspects, there is no impact on earnings per share.

 

·; IFRS 5 (Amendment), "Measurement of non-current assets (or disposal groups) classified as held-for-sale". The amendment is part of the IASB's annual improvements project published in April 2009. The amendment provides clarification that IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations. It also clarifies that the general requirement of IAS 1 still apply, particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (amendment) from 1 January 2010. This did not have any effect on the result for the year as it relates to disclosures.

3.  Principal risks and uncertainties

 

In accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the directors note the principal risks and uncertainties facing the Group continue to include adverse developments in the following areas:

 

- the regulatory, taxation or legislative environment applicable to the Group's operations;

- the intensity of competition in the markets in which the Group operates and the changing demand for products;

- the economic, technological and other macro factors affecting demand for the Group's services;

- the ability to arrange financing in the future having regard to the prevailing capital market conditions, as well as

conditions within the businesses and/or operating results;

- the Group's ability to successfully manage its costs and to maintain its profit margins during periods of declining income;

- the ability to attract and retain highly skilled employees and executives;

- the ability of the Group to avoid disruption to its key information technology systems;

- the significant adverse movement in foreign currencies particularly Sterling pounds;

- the maintenance of satisfactory relationships with key customers and intermediaries and the ability to attract and retain customers;

- the ability to contain the level of loss arising from complaints from customers who have allegedly suffered losses as a result of mis-selling of financial products;

- the risks associated with integrating acquisitions into the business and in successfully realising the growth expected from such acquisitions.

 

 

 

 

 

 

4. Segmental information

 

In line with the requirements of IFRS 8, "Operating Segments", the Group has identified its Chief Operating Decision Maker (CODM). The Group has identified the Chief Executive Officer (CEO) of the company as its CODM. The CEO reviews the Group's internal reporting in order to assess the performance of the Group and allocates resources. The operating segments have been identified based on these reports.

 

The CEO considers the business from a largely geographic perspective based on 3 reporting segments: International, UK and Ireland. He assesses the performance of the segments based on a measure of adjusted earnings before interest, amortisation, tax and share based payment charges. The CEO reviews working capital and overall balance sheet performance on a Group wide basis.

 

The Group earns its revenues in these segments from two sources:

 

·; Fees from the provision of services including Trustee & Corporate Services and Pensioneer Trustee Services ("Trustee & Corporate services")

·; Commissions earned in the intermediation of financial services products ("Financial Services")

 

Goodwill is allocated by management to cash-generating units on a reporting segment level. There has been no change to the allocation of goodwill relating to prior period combinations. The implementation of IFRS 8 has not resulted in any additional goodwill impairment.

 

Comparatives have been restated.

 

 

The segment information provided to the CEO for the reportable segments for the year ended 31 December 2009 is as follows:

 

	International	UK	Ireland	Total
	€'000	€'000	€'000	€'000
Revenue	39,826	34,602	18,859	93,287
Adjusted earnings before interest, amortisation, tax, share based payments charges	12,152	5,218	593	17,963
Share based payment charges				(1,511)
Amortisation of intangibles				(5,061)
Redundancy costs				(1,155)
Finance income				713
Finance costs				(2,229)
Share of loss of associate				(79)
Profit before income tax				8,641
Income tax expense				(1,131)
				7,510
Loss for the year from discontinued operations (net of income tax)				(1,102)
Profit for the year				6,408

 

 

 

 

 

 

 

 

 

 

The 2008 comparatives which have been restated are as follows:

 

	International	UK	Ireland	Total
	€'000	€'000	€'000	€'000
Revenue	43,271	37,495	24,321	105,087
Adjusted earnings before interest, amortisation, tax, share based payments charges	12,209	6,826	2,196	21,231
Share based payment charges				(1,567)
Amortisation of intangibles				(3,566)
Finance income				1,027
Finance costs				(3,926)
Profit before Income tax				13,199
Income tax expense				(1,675)
				11,524
Loss for the year from discontinued operations (net of income tax)				(1,100)
Profit for the year				10,424

 

 

The total non-current assets at 31 December 2009 split by geographic region for the year then ended are as follows:

 

			Non current assets
			€'000
Ireland			17,485
UK			31,933
IOM			4,646
Jersey			19,059
Cyprus			19,280
Other countries			2,504
			94,907

 

The total non-current assets at 31 December 2008 split by geographic region for the year then ended are as follows:

 

			Non current assets
			€'000
Ireland			21,826
UK			31,508
IOM			3,498
Jersey			19,549
Cyprus			19,105
Other countries			4,720
			100,206

 

The non-current assets above exclude financial instruments, deferred tax assets and employee defined benefit surplus. The Group has no rights arising under insurance contracts.

 

 

 

 

 

 

Breakdown of revenue by country of operation is as follows:

The home country of IFG Group plc is Ireland. The Group's revenues are derived from the following countries:

 

	2009	2008
	€'000	€'000
Ireland	20,140	25,081
United Kingdom	34,574	37,659
Isle of Man	17,522	20,639
Jersey	9,278	10,672
Cyprus	6,489	4,704
Other	5,284	6,332
Total	93,287	105,087

 

Revenue in the table above has been allocated based on the country where the customer is located.

 

Analysis of revenue by category:

	2009	2008
	€'000	€'000
Trustee & Corporate services	65,299	70,871
Financial Services	27,988	34,216
Total	93,287	105,087

 

During the year there were no revenues derived from a single customer that represent 10% or more of total revenues.

 

 

Segment assets for the year are as follows:

 

	International	UK	Ireland	Other	Held for sale	Total
	€'000	€'000	€'000	€'000	€'000	€'000
31 December 2009	80,940	53,695	24,690	8,808	357	168,490
31 December 2008	89,461	49,601	28,848	7,498	-	175,408

 

 

Segment assets consist primarily of property, plant & equipment, intangible assets, trade receivables and cash. They exclude income tax, deferred tax, investments and assets held for sale.

 

The other assets above include income tax, deferred tax, investments, available-for-sale financial assets and assets held centrally including some bank balances.

 

The segment liabilities for the year are as follows:

 

	International	UK	Ireland	Other	Held for sale	Total
	€'000	€'000	€'000	€'000	€'000	€'000
31 December 2009	(21,430)	(12,350)	(3,876)	(79,631)	(262)	(117,549)
31 December 2008	(32,110)	(9,491)	(4,243)	(83,914)	-	(129,758)

 

Segment liabilities comprise operating liabilities. They exclude items such as taxation and corporate borrowings.

 

 

 

 

5. Discontinued operations and disposal groups classified as held for sale

 

In June 2009 the directors approved the plan to sell a subsidiary, Title Underwriting Ireland Limited which forms part of the Ireland reporting segment. The Group has an active programme in place to obtain a buyer and expects the sale of this subsidiary to be completed within the next year. The results of this business are presented in this financial information as discontinued operations. Financial information relating to this discontinued operation is set out below. The income statement distinguishes discontinued operations from continuing operations. Comparatives in the income statement have been restated.

 

Income Statement
	2009	2008
	€'000	€'000
Revenue	1,063	4,200
Cost of sales	(2,047)	(5,244)
Gross loss	(984)	(1,044)
Administrative expenses	(115)	(53)
Operating loss	(1,099)	(1,097)
Finance income	-	1
Finance costs	(3)	(4)
Loss before income tax	(1,102)	(1,100)
Income tax expense	-	-
Loss after income tax	(1,102)	(1,100)

 

 

Balance Sheet
		2009
		€'000
Assets
Property, plant & equipment		29
Intangible assets		17
Deferred income tax asset		20
Trade and other receivables		126
Cash & cash equivalents		165
Total assets held for sale		357
Liabilities
Trade and other payables		(258)
Finance lease		(4)
Total liabilities held for sale		(262)
Net assets held for sale		95

 

 

Total cash flows
	2009	2008
	€'000	€'000
Operating cash flows	(843)	36
Investing cash flows	-	(31)
Financing cash flows	(4)	(3)
	(847)	2

 

 

 

6. Exceptional Items

 

The Group's accounting policy defines exceptional items as those items of income and expense that the Group considers to be material and/or of such a nature that their separate disclosure is relevant to a better understanding of the Group's financial performance.

 

Disclosed on face of Income Statement
			2009	2008
			€'000	€'000
Exceptional redundancy costs			1,155	-

 

In 2009, the Group undertook a cost reduction programme with the objective of reducing operating costs by realigning the cost structure to the current sales volumes base and streamlining the Group's organisational structure thereby improving cost competitiveness. This involved a head count reduction in the region of 50 people. The redundancy costs comprising severance and termination benefits resulted in an exceptional charge before taxation of €1,155,000.

 

Other

		2009	2008
		€'000	€'000
Losses/(gains)
UK		1,185	(22)
Ireland		570	(729)
Gains
Ireland		(725)	-
		1,030	(751)

 

During the year the Group incurred losses of €1,030,000 in respect of some of its non-core businesses. These businesses do not meet the definition of discontinued operations, however the Group is currently assessing the future business plans for these businesses. The exceptional losses incurred, offset by an exceptional gain in respect of the termination of a customer agreement, are disclosed to provide further information about the performance of the Group.

 

 

7. Income tax expense

	2009	2008
	€'000	€'000
Current tax
Irish (at 12.5%)
- current year	-	164
- prior year	30	(217)
UK and other (primarily at 28%):
- current year	1,699	2,670
- prior year	(324)	(528)
	1,405	2,089
Deferred tax
Irish:
- current year	33	57
UK and other:
- current year	(307)	(471)
	1,131	1,675

 

 

 

 

 

 

 

8. Earnings per ordinary share

 

	2009	2008
Basic
Profit after income tax and minority interest (€'000)	6,590	11,365
Weighted average number of ordinary shares in issue for the calculation of earnings per share	74,824,467	72,447,944
Basic earnings per share (cent)	8.81	15.69
Diluted
Profit after income tax and minority interest (€'000)	6,590	11,365
Weighted average number of ordinary shares in issue for the calculation of earnings per share	74,824,467	72,447,944
Dilutive effect of share options and warrants	36,571	738,203
Dilutive effect of long term incentive plan	1,645,832	2,333,333
Weighted average number of ordinary shares for the calculation of diluted earnings per share	76,506,870	75,519,480
Diluted earnings per share (cent)	8.61	15.05

 

 

The number of shares used in the calculation of basic earnings per share and diluted earnings per share has been calculated in accordance with International Accounting Standard No.33.

 

Diluted earnings per share are based on the weighted average number of ordinary shares used in the basic earnings per share calculation, with an adjustment to reflect:

 

·; the bonus element of the average number of options and warrants outstanding during the year. The bonus element arises when the exercise price is lower than the average market price during the year;

·; the number of shares earned under the Long Term Incentive Plan ('LTIP') which have not been issued.

 

At 31 December 2009, shares earned by participants under the LTIP, approved by the shareholders on 28 September 2006 but not yet issued amount to 1,645,832 shares (31 December 2008: 2,333,333 shares).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9. Cash generated from operations

 

	2009	2008
		Restated
	€'000	€'000
Continuing operations
Profit before income tax	8,641	13,199
Depreciation and amortisation	6,622	5,142
Loss on sale of property, plant and equipment	6	14
Finance costs	2,229	3,926
Finance income	(713)	(1,027)
Group share of loss of associates	79	-
Foreign exchange gain	(277)	(3,543)
Non-cash share based payment compensation charges	1,511	1,527
(Increase)/decrease in trade & other receivables	(77)	2,290
Loan to associates	(11)	(16)
Decrease in trade & other payables	(55)	(6,810)
Cash generated from continuing operations	17,955	14,702
Discontinued operations
Loss before income tax	(1,102)	(1,100)
Depreciation and amortisation	92	96
Finance income	-	(1)
Finance costs	3	4
Non cash share based payments compensation charges	16	40
Decrease in trade & other receivables	249	1,886
Decrease in trade & other payables	(101)	(887)
Cash flow from discontinued operations	(843)	38
Cash generated from operations - net	17,112	14,740

 

 

10. Analysis of net debt

 

	Opening balance   €'000	Cash flow     €'000	Other non cash changes €'000	Closing balance   €'000
Cash and short term deposits	22,540	(1,302)	1,237	22,475
Overdrafts	(1,256)	877	(148)	(527)
	21,284	(425)	1,089	21,948
Loans due within one year	(10,511)	7,575	(8,225)	(11,161)
Loans due after one year	(56,610)	(3,950)	5,837	(54,723)
Senior unsecured notes due within one year	(920)	920	-	-
Finance leases	(52)	46	(1)	(7)
Total	(46,809)	4,166	(1,300)	(43,943)

 

 

Significant non-cash movements

Included in the non-cash movements of €1,300,000 are exchange rate movements of €1,182,000 and amortisation of capitalised debt facility costs of €118,000.

11. Events since the year end

 

On 9 December 2009, the company announced that it had signed an agreement to acquire James Hay Holdings Limited (James Hay), a UK incorporated company. The transaction was finalised on 10 March 2010 and payment of £35,000,000 (approximately €38,600,000) in cash plus additional adjustable payment for the net assets of £3,900,000 (approximately €4,300,000) was made at that date. The Financial Services Authority approved the transaction on the same date.

 

To fund the acquisition, the Group has raised €51,500,000 (before expenses) through a Placing and Open Offer of 48,263,932 new ordinary shares and the allotment of a further 451,627 new ordinary shares. Such shares were admitted to trading in March 2010.

 

 

12. Contingencies

 

Given the nature of the business the Group has a number of claims against it. The Group has procedures in place to assess the veracity of the claims and provision has been made to cover its best estimate of the exposure in respect of these matters.

 

 

 

Forward-looking statements

Certain statements in this report are forward-looking. Although the Group believes that the expectations reflected in these forward looking statements are reasonable, it can give no guarantee that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. The Group undertakes no commitment to update any forward-looking statements whether as a result of new information, future events or otherwise.

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