An impairment charge to its New Zealand business and reduced levels in funds under management, administration or advice has impacted Plan B Group's earnings, which fell 52 per cent.
An impairment charge to its New Zealand business and reduced levels in funds under management, administration or advice has impacted Plan B Group's earnings, which fell 52 per cent.
In the six months to the end of December 2008, Plan B's net profit reached $1.29 million, which was at the high end of the earnings guidance provided earlier.
The net profit compares with the previous corresponding period's $2.7 million.
The Perth-based company said the profit included a non-cash impairment loss of $377,000 for the New Zealand business and a 25 per cent decrease in FUMA.
FUMA at the end of the reporting period was $1.46 billion, down from $1.95 billion in the prior corresponding period.
Revenue reached $15.5 million while earnings before interest, tax, depreciation and amortisation was down from $4.1 million to $2.7 million.
At the end of the period, the company had over $12.3 million in cash holdings.
The board has declared a fully franked interim dividend of 1.1 cents per share.
The announcement is below:
Boutique wealth management company, Plan B Group Holdings Limited ("Plan B" or the
"Company"), wishes to announce a net profit after tax (excluding impairment of goodwill) of
$1.67 million for the half-year ended 31 December 2008. This was at the high end of the
earnings guidance range previously provided by the Company and compares with a net profit
after tax of $2.67 million in the previous corresponding period. Including the impact of some
goodwill impairment relating to Plan B's New Zealand operations, the Company's net profit after
tax was $1.29 million for the half year period.
Funds under Management, Administration and Advice ("FUMA"), a key earnings driver,
amounted to $1.46 billion as at 31 December 2008. This represents a 17.7% decrease over the
FUMA balance as at 30 June 2008, with the movement directly related to the severe decline in
global investment markets during the half-year and over the past 12 months.
The impact of the decline in FUMA is reflected in a decrease in revenue of 16.3% compared
with the prior corresponding period and of 11.0% compared with the second half of FY2008.
The Company has been quick to introduce various cost saving initiatives in response to the
market conditions. As a result of these measures, operating expenses excluding depreciation
and the impairment loss, declined by 11.2% compared with the first half of FY2008. Plan B's
cost containment focus positions the Company well to take full advantage of improvements in
market conditions.
As previously advised in January 2009, the Company undertook a review of the carrying value
of its New Zealand business. Accordingly, the Board believes that it is appropriate to recognise
a non-cash impairment loss of $0.377 million for the half-year, being around 5% of the total
goodwill of this business. This adjustment reflects the impact of reduced FUMA levels on the
short-term revenue and growth of the business. It is, however, expected that the New Zealand
business will continue to deliver a positive contribution to the Group and forms an important
component of its organic growth strategy.
Overall, earnings before interest, tax, depreciation and amortisation ("EBITDA") and before
impairment for the half-year declined against the previous corresponding period by 33.9%
(43.0% after impairment). The EBITDA margin before impairment has dropped from
approximately 22.4% in the December 2007 half-year to 17.7% (15.3% after impairment)
notwithstanding the significant reduction in costs overall, mainly due to the high proportion of
non-staff costs that are largely fixed.
The Group's financial position as at 31 December 2008 remains strong with cash holdings in
excess of $12.3 million and insignificant interest bearing debt of approximately $80,000. The
Group continues to generate positive operating cash flows.
The Board of Plan B has declared a fully franked interim dividend of 1.1 cents per share. The
Record Date for determining entitlements to the final dividend is 13 March 2009 with the
dividend to be paid to shareholders on 3 April 2009.
Comment and Outlook
Plan B's Managing Director, Mr Denys Pearce, said that whilst the result for the first half was
disappointing, the Company remains well-positioned to take advantage of any improvement in
market conditions.
"The impact of global investment markets on FUMA levels and revenue has been significant
during the half-year. The inflow of new funds to the group's platforms has also declined as a
result of the uncertain economic outlook and investor reluctance to commit new funds."
"Importantly however, the level of outflows has also declined relative to the prior financial year.
This reflects the benefits of a well-educated and disciplined, and consequently loyal client base,"
said Mr. Pearce.
Nevertheless, Mr. Pearce was cautious for the remainder of the 2009 financial year in light of
the performance of global investment markets in the period since 31 December 2008.
"The Company remains vigilant with its cost base and the saving initiatives already undertaken
by the Company will continue to provide benefits during the second half of the year.
Unfortunately, the future course of the world's investment markets and their impact on the
Group's revenues is uncertain. We remain confident that the benefits of soundly diversified
portfolios, together with the measures we have put in place to manage the short-term
performance of the Group, will ensure we remain on track to achieve our long term growth
objectives," he said.
Mr. Pearce said Plan B remains very active in identifying and evaluating a number of expansion
opportunities to build the business and FUMA in Australia and internationally.
