The state's only listed financial planning firm, Plan B Group Holdings, suffered a tough year as falling equity markets eroded profits right across the financial services sector.
The state's only listed financial planning firm, Plan B Group Holdings, suffered a tough year as falling equity markets eroded profits right across the financial services sector.
Underlying net profit after tax - excluding goodwill impairment relating to Plan B's New Zealand operations - was $2.87 million, down 40 per cent for the fiscal year.
Managing director Denys Pearce said the result was commendable under the circumstances and that there were signs of improvement for both the stockmarket and business itself.
"We are pleased the markets are showing some resilience and investor confidence is coming back," Mr Pearce told WA Business News.
Plan B relies on asset based fees for the vast bulk of its revenue. With client portfolios impacted by falling stocks - the average Plan B client has 65 per cent of their portfolios exposed to equities - the company's income streams dried up.
Mr Pearce said the lodgment of results after the market closed yesterday had nothing to do with the results, but was caused by a hold-up of having one director currently in Europe.
Summary of Performance announcement below
Wealth management company, Plan B Group Holdings Limited ("Plan B" or the
"Company"), wishes to announce underlying net profit after tax (i.e. excluding
impairment of goodwill) of $2.87 million for the year ended 30 June 2009. This was
above the underlying earnings guidance range previously provided by the Company of
between $2.6 million and $2.8 million. The result compares with a net profit after tax of
$4.81 million in the previous corresponding period. Including the non-cash impact of
goodwill impairment relating to Plan B's New Zealand operations, the Company's
statutory net profit after tax attributable to equity holders of the Company for the year
was $0.98 million.
During the second half, the Company completed its acquisition of a 62% interest in
Strategic Financial Management Pty Ltd ("Strategic"), a Melbourne-based wealth
management business. The total funds under advice of this business are included in
the Funds under Management, Administration and Advice ("FUMA") of the Company
as from the date of acquisition. The inclusion of these funds has offset the decline in
other FUMA during the year resulting mainly from the severe decline in global
investment markets during the first three quarters of the year. Consequently, FUMA
has increased by 3.0% over the balance at 30 June 2008.
Weighted average FUMA for the year on Plan B's platforms, a key earnings driver,
declined by 18.0% compared with FY2008. The impact of this decline is reflected in the
16.2% reduction in total revenue compared with FY2008. Strong growth in other
revenue items occurred. Cost containment has been a priority for management during the year in response to the market conditions. As a result operating expenses before impairment, depreciation and amortisation have decreased by 11.1% over the prior comparative period.
Plan B's cost containment focus has protected the profitability of the Company over the past financial year and positions the Company well to take advantage of improvements in market conditions which are already apparent early in FY2010.
The Company undertook a further review of the carrying value of its New Zealand
business as at 30 June 2009. The business recorded net new inflows over FY2009 and
further business development initiatives were undertaken. However, considering the
impact of the reduced level of FUMA and after applying a significantly higher pre-tax
discount rate and lower terminal growth factor in the calculations, the Board believes
that it is appropriate to recognise an impairment adjustment of $1.5 million. This
adjustment is a non-cash item and is in addition to the impairment amount of $377,000
previously brought to account at 31 December 2008. The Company's New Zealand
operations continue to make a positive contribution to Group profit and remain an
important component of Plan B's overall growth strategy.
Underlying earnings before interest, tax, depreciation and amortisation ("EBITDA")
declined by 34.4% against FY2008. Notwithstanding the positive impact of the
Company's cost reduction measures, the underlying EBITDA margin before impairment
has dropped from 21.0% to 16.5%, reflecting the impact of the decline in average
FUMA on revenue.
The Group's financial position at 30 June 2009 remains sound and it continues to
generate solid net operating cash flows. The Board of Plan B has determined a fully franked dividend of 1.2 cents per share. In determining the dividend, the Board has made reference to the level of earnings excluding the non-cash impairment loss recognised during the year. The record date for determining entitlement to the final dividend is 30 September 2009 with the dividend to be paid to shareholders on 16 October 2009.
The Company has introduced a dividend reinvestment plan which will apply to the final
2009 dividend. The plan offers eligible shareholders the opportunity to reinvest all or
part of their dividends in additional shares in the Company at a 5% discount to the
weighted average market price of shares sold on the ASX during the 5 trading day
period up to and including the record date. The rules of the plan and related forms will
be mailed to shareholders shortly.
