10th Apr 2008 07:00
IFG Group PLC10 April 2008 IFG Group plc Preliminary Results for the year ended 31st December 2007 Highlights IFG Group plc today (April 10th 2008) released its preliminary statement for theyear to 31st December 2007. Key highlights include: • Turnover of €128.8 million, up by 20% • Adjusted operating profit of €22.0 million, up by 42% • Operating profit of €17.3 million, up by 21% • Adjusted EPS in cent per share of 24.17, up by 43% • EPS in cent per share of 17.42, up by 16% • Dividend in cent per share of 3.63, up by 10% • Total assets under administration and advice of circa €59 billion • Two substantial acquisitions in the year under review successfully integrated into the business • Strong balance sheet management with reduced debt levels Commenting on the results, Mark Bourke, CEO of IFG Group plc said, "This has been a year of exceptional growth across all of our businesses. Our strategy of building the assets under our control and expanding the advisoryservices to our client base is clearly delivering. We now estimate the value ofthese assets at circa €59 billion. We believe that even in today's challenging business environment, with ourstrategy, the geographical spread of our businesses and the repeat nature of ourincome streams, we will attain the ambitious targets we have set ourselves." For reference: Mark Bourke, Orla BensonGroup CEO Karen FerrisIFG Group plc Drury CommunicationsTel: 01 275 2800 Tel: 01 260 5000IFG GROUP PLC PRELIMINARY RESULTSFOR THE YEAR ENDED 31 DECEMBER 2007 Adjusted Adjusted Total Total measures measures IFRS IFRS 2007 2006 2007 2006 •'000 •'000 Notes •'000 •'000 Revenue n/a n/a 128,829 107,792 Operating profit 22,018 15,543 1 17,342 14,326 Profit before income tax 19,796 13,499 1 15,120 12,282 Adjusted earnings per ordinary share - in cent 24.17 16.88 2 n/a n/a Basic earnings per ordinary share - in cent n/a n/a 17.42 15.01 Group net debt 19,436 18,953 Dividend per ordinary share - in cent 3.63 3.30 Notes: 1. Adjusted profit before income tax and adjusted earnings per share are stated before exceptional items, amortisation of intangible assets and share based payment compensation. 2. Reconciliation of adjusted earnings: Year ended Year ended 31 Dec 2007 31 Dec 2006 Per share cent Earnings Per share cent Earnings •'000 •'000 Profit attributable to equity holders 17.42 12,069 15.01 9,743Exceptional adjustments (net of tax) - - (0.70) (452)Amortisation of intangible assets 2.85 1,976 0.61 394Share based payment compensation 3.90 2,700 1.96 1,275Adjusted earnings 24.17 16,745 16.88 10,960 Group Performance 2007 saw an excellent performance by the Group with strong growth in both itsbusiness segments and across all business divisions (Ireland, UK andInternational). This builds on the rapid progress seen in recent years and is a result of thestrategic direction chosen, the strong management team and a disciplinedapproach to the Group's capital resources. The Group balance sheet is now degeared, and strong cash generation is beingreinvested with three significant acquisitions in our International business inthe past 18 months. We are delivering on ambitious targets through acombination of organic growth and acquisition. Total operating Total operating profit/(loss) profit/(loss) 2007 2006 Restated •'000 •'000Trustee & Corporate ServicesInternational Trustee & Corporate Services 9,654 6,282 Financial Services & UnallocatedPensioneer Trustee - UK 3,672 3,573Financial Services - UK 3,788 1,445Mortgage and Title Insurance - Ireland 5,166 4,668Financial Services including Central Overhead - Ireland (262) (425) Adjusted operating profit 22,018 15,543 Exceptional items - Financial Services - 452Share based payment compensation - Trustee & Corporate Services (442) (96) - Financial Services (2,258) (1,179)Amortisation of intangibles - Trustee & Corporate Services (1,722) (271) - Financial Services (254) (123) Total operating profit 17,342 14,326 Operating profit - Trustee & Corporate Services 7,490 5,915 - Financial Services & Unallocated 9,852 8,411 Total operating profit 17,342 14,326 Trustee and Corporate Services We continue to deliver exceptional results in our International Division withprofits of €9.7 million (2006: €6.3 million) an increase of 54%. This reflectsan underlying organic growth of 21% when the 2006 and 2007 acquisitions ofLangtry Trust in Jersey, Northern Trust in Isle of Man, Corfiser in BVI andGestinor in Switzerland are stripped out. The International business has c. €50 billion of assets under administrationacross its five centres of operation. Although fundamentally a time charge andfee per structure business, this statistic is increasingly important both interms of the service offering and the capability of our business to grow. We continue to build the level of administrative services with the introductionof fund administration through the acquisition of Northern Trust during the yearand are expanding the competencies provided to our clients. In 2008 we plan todevelop advisory capacity in both fund administration and family office servicesfor the ultra high net worth client. Financial Services Pensioneer Trustee UK Growth of the Pensioneer Trustee business continued at a rapid pace with a 23%increase in the number of SIPPs (Self Invested Pension Plan) underadministration. With strong growth in the number of new SIPPs being maintainedthe profitability will follow in the coming periods as the Group leverages thestructures and assets under its administration. We estimate the current assetsunder administration in the business are c. €4 billion. Whilst the long awaited consolidation of this market has started, theopportunities for acquisition do not as yet match the opportunities elsewhere inthe Group in terms of return on capital. Legal & General has announced that it intends to make an offer of €80 millionfor Suffolk Life and this demonstrates that SIPPs are at the focal point of themiddle and high net worth advisory market. Our excellent reputation, technicalcompetence, service standards and market position as one of the leadingproviders of specialist SIPPs is the basis for our optimism in this market. Financial Services UK The performance of the UK Financial Services business, rising 162% to €3.8million (2006: €1.4 million) operating profit is an exceptional result. Thisrise continues an improving pattern of results from €0.9 million of operatingprofit in 2005 and an operating loss of €1.5 million in 2004. The growth in 2007 was primarily driven by the fee based advisory businessSaunderson House, which had an excellent year. The fee business is key to ourGroup strategy and proves the proposition that a high quality, purely fee basedindependent advisory service has significant potential when targeted at high networth market segments. Management believe that there is opportunity to build inaddition to and beyond the legal and accounting partners in city firms they havemainly advised to date. Siddalls (which advises UK nationals moving permanently offshore) has nowentered into the new geographies of Spain and Australia and expects to expandfurther in 2008 and 2009. IFG Financial Services produced another profitableyear. In total, assets under advice in our UK advisory business are c. €2.8billion. Financial Services - Ireland Mortgage & Title Insurance - Ireland In Ireland, the Property Service Division grew its contribution to €5.2 million(2006: €4.7 million). This 11% growth was an exceptional performance givencurrent market conditions. The prime business lender cheques issued for the yearfell by 9% from €1.55 billion to €1.41 billion. The Group's ability to maintainand grow profitability is primarily due to the contribution from our TitleInsurance (remortgage conveyancing) service. The other Irish unit, Group and Individual Advisory (where we have c. €2 billionassets under advice) and Specialist Broking also performed well. We believe the downward pressure on volume and margin in the Property businesswill continue in 2008 and in that light we are targeting to maintain ourprofitability but with a significantly different mix of products. Group Financing As at 31 December 2007 As at 31 December 2006 Core Investment Total Core Investment Total •'m •'m •'m •'m •'m •'m Total net borrowings 16.5 2.9 19.4 16.1 2.9 19.0 Contingent consideration 10.4 10.3 Total net commitment 29.8 29.3 The Group's net cash generated from operating activities was €18.1 million(2006: €14.6 million). Of this, €12.7 million was reinvested, primarily in theInternational business to fund the acquisitions of Langtry Trust, Gestinor,Corfiser and Northern Trust. As reported previously the Group banking was restructured at the beginning of2007 with the repayment of Sterling bonds and the establishment of a clubfacility attracting a margin of 1.5%. The margin will fall at the half year to0.95%. The Group has also negotiated committed lines for investment andacquisition at a margin which is on a par with the existing arrangement shouldthe opportunity arise. Dividends Your Board is recommending a final dividend of 2.47 cent per share which whenadded to the interim dividend already paid, makes a total of 3.63 cent pershare, an increase of 10% on the previous year. Subject to shareholderapproval, the final dividend will be paid on 18 July 2008 to shareholders on theRegister on 04 July 2008. Consolidated Income StatementYear Ended 31 December 2007 2007 2006 Restated Notes •'000 •'000 Revenue 3 128,829 107,792Cost of sales (4,775) (4,662) Gross profit 124,054 103,130 Administrative expenses (104,736) (88,862)Other income - 452Other expenses (1,976) (394) Operating profit 3 17,342 14,326 Operating profit before exceptional items 17,342 13,874Exceptional items - 452Operating profit 17,342 14,326 Finance income 876 655Finance costs (3,347) (2,861)Share of profit of associates and joint ventures 249 162 Profit before income tax 3 15,120 12,282Income tax expense 4 (2,686) (1,367) Profit for the year 12,434 10,915 Profit for year attributable to:Equity holders of the company 12,069 9,743Minority interest 365 1,172 12,434 10,915 Earnings per ordinary share (cent) Basic 5 17.42 15.01 Diluted 5 16.46 14.27 Consolidated Balance SheetAs at 31 December 2007 2007 2006 Restated Notes •'000 •'000AssetsNon-current assetsProperty, plant & equipment 5,558 6,135Intangible assets 75,308 71,946Investments in associates and joint ventures 3 299 300Deferred income tax assets 1,178 1,481Available-for-sale financial assets 87 87Total non-current assets 82,430 79,949 Current AssetsTrade and other receivables 44,254 39,180Current income tax asset 517 62Cash and cash equivalents 25,842 26,715Total current assets 70,613 65,957 Total assets 3 153,043 145,906 LiabilitiesNon-current liabilitiesBorrowings 35,052 23,808Deferred income tax liabilities 3,172 2,425Retirement benefit obligations 407 687Provisions for other liabilities 4,015 6,698Other non-current liabilities 1,250 1,250Total non-current liabilities 43,896 34,868 Current liabilitiesTrade and other payables 40,604 40,361Current income tax liabilities 2,684 1,946Borrowings 10,226 21,860Provisions for other liabilities 8,698 6,680Total current liabilities 62,212 70,847 Total liabilities 3 106,108 105,715 Net assets 46,935 40,191 EquityCapital & reserves attributable to equity holders of thecompanyShare capital 8,360 8,239Share premium 53,032 52,300Other reserves (6,247) (2,079)Retained earnings (10,172) (19,864) 44,973 38,596Minority interest 1,962 1,595 Total equity 46,935 40,191 Consolidated Cash Flow StatementYear Ended 31 December 2007 2007 2006 Restated Notes •'000 •'000Cash flows from operating activitiesCash generated from operations 6 20,156 15,070Interest received 876 860Income taxes paid (2,928) (1,378) Net cash generated from operating activities 18,104 14,552 Cash flows from investing activitiesPurchase of property, plant and equipment (1,876) (2,739)Sale of property, plant and equipment 59 10Purchase of subsidiary undertakings net of cash acquired (5,979) (4,029)Deferred and contingent consideration on prior year (4,088) -acquisitionsPurchase of other intangibles (986) -Purchase of interest in joint venture - (118)Dividend received from associate / joint venture 174 -Sale of available-for-sale financial assets - 124Sale of interest in associates - 960 Net cash used in investing activities (12,696) (5,792) Cash flows from financing activitiesDividends paid (2,476) (1,986)Interest paid (2,576) (2,793)Dividends paid to minority interests - (851)Proceeds from issue of share capital 818 7,850Repayment of debt (5,221) (20,950)Proceeds from long-term borrowings 17,153 26,869Senior unsecured notes repaid (12,616) (5,951)Payment of finance lease liabilities (71) (115) Net cash (used) / generated in financing activities (4,989) 2,073 Net increase in cash and cash equivalents 419 10,833 Cash and cash equivalents at the beginning of the year 25,421 14,336Effect of foreign exchange rate changes (1,549) 252 Cash and cash equivalents at end of year 24,291 25,421 Cash and cash equivalents are comprised of cash and short term deposits net ofbank overdrafts that are repayable on demand. For the purpose of the cash flowstatement cash and cash equivalents include the following: 2007 2006 •'000 •'000 Cash and short term deposits 7 25,842 26,715Bank overdrafts 7 (1,551) (1,294) 24,291 25,421 Consolidated Statement of Changes in Equity Share Share Other Retained Attributable Minority Total capital premium reserves earnings to equity interest equity holders •'000 •'000 •'000 •'000 •'000 •'000 •'000At 1 January 2006 7,828 44,861 (4,048) (27,615) 21,026 1,274 22,300 Currency translation adjustments - - 928 - 928 - 928Net investment hedge - - (354) - (354) - (354)Recycling of fair value movements tothe income statement - Sale ofavailable-for-sale financial assets - - 153 - 153 - 153 Net income recognised directly in - - 727 - 727 - 727equityProfit for the year - - - 9,743 9,743 1,172 10,915 Total recognised income for 2006 - - 727 9,743 10,470 1,172 11,642 Dividends - - - (1,992) (1,992) (851) (2,843)Issue of share capital 411 7,439 - - 7,850 - 7,850Share based payment compensation: -Value of employee services-share - - 468 - 468 - 468 options -Value of employee services-LTIP - - 774 - 774 - 774 411 7,439 1,242 (1,992) 7,100 (851) 6,249 At 31 December 2006 8,239 52,300 (2,079) (19,864) 38,596 1,595 40,191 Currency translation adjustments - - (6,771) - (6,771) 2 (6,769)Net investment hedge - - (62) - (62) - (62) Net income recognised directly in - - (6,833) - (6,833) 2 (6,831)equityProfit for the year - - - 12,069 12,069 365 12,434 Total recognised income for 2007 - - (6,833) 12,069 5,236 367 5,603 Dividends - - - (2,377) (2,377) - (2,377)Issue of share capital 121 732 (35) - 818 - 818Share based payment compensation: -Value of employee services-share - - 450 - 450 - 450 options -Value of employee services-LTIP - - 2,250 - 2,250 - 2,250 121 732 2,665 (2,377) 1,141 - 1,141 At 31 December 2007 8,360 53,032 (6,247) (10,172) 44,973 1,962 46,935 Notes to the preliminary results 1. General information IFG Group plc and its subsidiaries (together the Group) are engaged in theprovision of financial advisory services and international corporate and trusteeservices. The Company is a public company, listed on the Irish Stock Exchange(ISE), and is incorporated and domiciled in the Republic of Ireland. The addressof its registered office is IFG House, Booterstown Hall, Booterstown, CountyDublin, Ireland. The financial statements have been approved for issue by theBoard of Directors on 10 April 2008. 2. Basis of preparation The consolidated financial statements of IFG Group plc are required to beprepared in accordance with EU adopted International Financial ReportingStandards (IFRS), IFRIC interpretations and parts of the Companies Acts 1963 to2006 applicable to companies reporting under IFRS. The consolidated financialstatements have been prepared under the historical cost convention, as modifiedby the revaluation of certain financial assets and liabilities. The preliminary results for the year to 31 December 2007 have been prepared inaccordance with the Listing Rules of the Irish Stock Exchange. The Group'sfinancial information has been prepared in accordance with the accountingpolicies used in the preparation of the Group financial statements. Thisrequires the use of certain critical accounting estimates. It also requiresmanagement to exercise its judgment in the process of applying the Group'saccounting policies. These assumptions affect the reported amounts of revenues,expenses, assets and liabilities, and the disclosure of contingent liabilitiesat the date of the financial statements. If in the future such estimates andassumptions, which are based on management's best judgement at the date of thefinancial statements, deviate from the actual outcome, the original estimatesand assumptions will be modified as appropriate in the year in which thecircumstances change. The financial information in this preliminary announcement is not the statutoryaccounts of the company, a copy of which is required to be annexed to thecompany's annual return to the Companies Registration Office in Ireland. A copyof the statutory accounts required to be annexed to the company's annual returnin respect of the year ended 31 December 2006 has in fact been so annexed. Acopy of the statutory accounts in respect of the year ended 31 December 2007will be annexed to the company's annual return for 2007. 3. Segment information Primary reporting format-business segments At 31 December 2007, the Group is organised on a worldwide basis into two mainbusiness segments: - Provision of financial services - Provision of trustee and corporate services incorporating back office services The segment results for the year ended 31 December 2007 are as follows: Financial Trustee & Unallocated Total corporate services services •'000 •'000 •'000 •'000 Revenue 87,864 40,965 - 128,829 Operating profit / (loss) 10,302 7,490 (450) 17,342Finance costs (net) - - - (2,471)Share of profit of associates and joint venture 249 - - 249 Profit before income tax 15,120Income tax expense (2,686) Profit for the year 12,434 The segment results for the year ended 31 December 2006 are as follows(restated): Financial Trustee & Unallocated Total services corporate services •'000 •'000 •'000 •'000 Revenue 81,353 26,439 - 107,792 Operating profit / (loss) 9,648 5,915 (1,237) 14,326Finance costs (net) - - - (2,206)Share of profit /(loss) of associates and joint 172 - (10) 162venture Profit before income tax 12,282Income tax expense (1,367) Profit for the year 10,915 Other non-cash segment items included in the income statement are as follows: 2007 2006 Financial Trustee & Unallocated Total Financial Trustee & Unallocated Total services corporate services corporate services services •'000 •'000 •'000 •'000 •'000 •'000 •'000 •'000 Depreciation 742 888 234 1,864 750 590 218 1,558 Amortisation of 210 1,722 44 1,976 63 271 60 394intangibles Impairment provision for 1,918 385 251 2,554 312 73 340 725doubtful receivables The segment assets and liabilities at 31 December 2007 and capital expenditure for the year then ended are as follows: 2007 2006 Financial Trustee & Unallocated Total Financial Trustee & Unallocated Total services corporate services corporate services services •'000 •'000 •'000 •'000 •'000 •'000 •'000 •'000 Assets 85,290 59,974 7,480 152,744 81,845 49,762 13,999 145,606Investment in equity 299 - - 299 291 - 9 300method associates 85,589 59,974 7,480 153,043 82,136 49,762 14,008 145,906 Liabilities (17,491) (31,582) (57,035) (106,108) (13,180) (31,864) (60,671) (105,715) Capital expenditure 1,429 12,952 165 14,546 2,444 17,409 60 19,913 Segment assets consist primarily of property, plant & equipment, intangibleassets, trade receivables and cash. They exclude income tax, deferred tax andinvestments. Segment liabilities comprise operating liabilities. They excludeitems such as taxation and corporate borrowings. Capital expenditure comprised additions to property, plant and equipment andintangible assets, including additions resulting from acquisitions throughbusiness combinations Secondary reporting format-geographical segments The Group's two main business segments operate in three main geographical areas. The home country of the company is Ireland. Revenue 2007 2006 Restated •'000 •'000 Ireland 47,416 45,594UK 41,017 34,838IOM & Jersey 35,509 25,395Other countries 4,887 1,965 128,829 107,792Revenue is allocated based on the country where the customer is located. Total assets 2007 2006 •'000 •'000 Ireland 34,431 35,548UK 60,533 58,498IOM & Jersey 46,576 49,292Other countries 11,204 2,268 152,744 145,606Associates and joint ventures 299 300 153,043 145,906Total assets are allocated based on where the assets are located. Capital Expenditure 2007 2006 •'000 •'000 Ireland 1,642 1,091UK 969 1,258IOM & Jersey 3,138 17,404Other countries 8,797 160 14,546 19,913 Capital expenditure is allocated based on where the assets are located. 4. Income tax expense 2007 2006 •'000 •'000Current taxIrish (at 12.5%):- current year 561 587- prior year 47 79 UK and other (primarily at 30%):- current year 2,582 1,524- prior year (471) (642) 2,719 1,548 Deferred taxIrish:- current year 60 (164) UK and other:- current year (93) (17) 2,686 1,367 5. Earnings per ordinary share 2007 2006 BasicProfit after income tax and minority interest (•'000) 12,069 9,743 Weighted average number of ordinary shares in issue for the calculation of earnings per 69,268,010 64,895,171share Basic earnings per share (cent) 17.42 15.01 DilutedProfit after income tax and minority interest (•'000) 12,069 9,743 Weighted average number of ordinary shares in issue for the calculation of earnings per 69,268,010 64,895,171shareDilutive effect of share options and warrants 2,314,029 2,616,837Dilutive effect of long term incentive plan 1,720,833 750,000 Weighted average number of ordinary shares for the calculation of diluted earnings per 73,302,872 68,262,008share Diluted earnings per share (cent) 16.46 14.27 The number of shares used in the calculation of basic earnings per share anddiluted earnings per share has been calculated in accordance with InternationalAccounting Standard No.33. Diluted earnings per share are based on the weighted average number of ordinaryshares used in the basic earnings per share calculation, with an adjustment toreflect: • 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 2007 shares earned by some Directors, under the LTIP, approved bythe shareholders on 28 September 2006 but not yet issued amount to 1,720,833shares (2006:750,000). 6. Cash generated from operations 2007 2006 •'000 •'000 Profit before income tax 15,120 12,282Depreciation and amortisation 3,850 2,132(Gain)/loss on sale of property, plant and equipment (1) 8Finance costs 3,347 2,861Finance income (876) (655)Group share of profit of associates and joint venture (249) (162)Foreign exchange loss/(gain) 205 (51)Non-cash share based payment compensation charges 2,700 1,275Increase in trade & other receivables (4,887) (2,499)Profit on sale of investment in associates - (452)Loss on sale of available-for-sale financial assets - 24Loan from associates and joint venture 31 34Increase in trade & other payables 916 273 Cash generated from operations 20,156 15,070 7. Analysis of net debt Opening Cash flow Acquisitions Other Closing balance non cash balance changes •'000 •'000 •'000 •'000 •'000 Cash and short term deposits 26,715 6,589 (5,979) (1,483) 25,842Overdrafts (1,294) (191) - (66) (1,551) 25,421 6,398 (5,979) (1,549) 24,291 Loans due within one year (7,936) - - - (7,936)Loans due after one year (22,093) (11,932) - (47) (34,072)Senior unsecured notes due < 1 yr (12,553) 11,926 - (63) (690)Senior unsecured notes due > 1 yr (1,601) 690 - (9) (920)Finance leases (191) 71 - 11 (109) Total (18,953) 7,153 (5,979) (1,657) (19,436) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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