20/08/2008 - 11:41

Plan B posts 11% lift in earnings

20/08/2008 - 11:41


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Perth-based wealth management company Plan B Group Holdings Ltd has posted an 11 per cent increase in net profit after tax to nearly $5 million for the 2008 financial year.

Plan B posts 11% lift in earnings

Perth-based wealth management company Plan B Group Holdings Ltd has posted an 11 per cent increase in net profit after tax to nearly $5 million for the 2008 financial year.

The full announcement is pasted below:

Summary of Performance

Boutique wealth management company, Plan B Group Holdings Limited wishes to announce a net profit after tax of $4.81 million for the year ended 30 June 2008 ("FY2008").

The result represents an 11% increase over the previous corresponding period and equates to earnings per share of 6.42 cents based on the weighted average issued capital in the period.

The profit result is at the upper end of the earnings guidance provided by the Company to shareholders in April 2008 which the Directors regard as pleasing in the current operating environment.

The profit improvement was achieved on the back of an 8.4% increase in total revenue over the prior year.

Funds under Management, Administration or Advice ("FUMA"), a key source of earnings for the Company, amounted to $1.77 billion as at 30 June 2008, an increase of 1.1% over the prior year notwithstanding the difficult investment market conditions facing the wealth management industry. Importantly, the Company enjoyed positive net inflows of funds in every quarter of the 2008 financial year.

The Directors have declared a fully franked final dividend of 2.4 cents per share. This brings total dividends for FY2008 to 4.4 cents per share fully franked which exceeds the level anticipated in the Company's IPO prospectus. The Record Date for determining entitlements to the final dividend is 12 September 2008, with the dividend to be paid to shareholders on 3 October 2008.

The sudden revenue pressures arising in the second half of the financial year, attributable to the declining Australian and global equity markets which reduced the average FUMA balance over the period, resulted in earnings before interest, tax, depreciation and amortisation ("EBITDA") growing only marginally from the prior year. Management responded promptly by controlling expenditure and costs in the second half, without compromising the Company's overall capacity to achieve growth in the future.

The Company is resourced for further expansion and management has remained focused on achieving the growth strategies and aspirations set out in its IPO prospectus, including both organic and acquisition opportunities.

The PFS Affinity Partner business has grown successfully during the course of the year such that it represented 13.7% of year end FUMA. It is expected that the PFS Affinity Partner program will continue to be a major contributor to the growth in FUMA over the long term. Cash flow from operations was a healthy $6.2 million, compared with $5.9 million in the previous corresponding period. The Company maintained a strong net cash balance of $14.3 million as at 30 June 2008 which puts it in an excellent financial position to capitalise on future growth opportunities.

Comment and Outlook

Plan B's Managing Director, Mr. Denys Pearce, said that the Company's overall performance in FY2008 was solid, notwithstanding the difficult economic conditions. The sharp downturn in Australian and global equity markets in the second half of the financial year was disappointing as it had affected the Company's strong first half results, which had been ahead of management expectations.

"Despite the challenging equity market conditions, Plan B achieved a positive net new inflow of funds to its platforms during each quarter of the 2008 financial year.

"Furthermore, client withdrawals remained at similar levels to the prior year, showing the benefits of a properly educated and disciplined client base. Volatility is intrinsic to investment markets. Accordingly, we educate and advise our clients about volatility, credit and other risks so that they understand the benefits of properly structured and diversified portfolios and are therefore able to ride through such periods with relative comfort and ease.

"The buoyant Western Australian economy that assists greatly with the success of our organic growth initiatives, such as the Executive Advisory Service, also brings cost pressures which have reflected in Plan B's employee and property costs lines.

"Unfortunately no-one can predict the course of the world's investment markets in the short term. However, we are confident that the benefits of soundly diversified portfolios, together with the investments we are making in operating systems and future growth initiatives, will ensure we remain on track to achieve our long term growth objectives. These position the Company well for when equity markets improve," he said.

Mr. Pearce further noted the Company's strong cash position and said Plan B will maintain its aggressive growth stance. The Company continues to evaluate a number of highly prospective opportunities to build Plan B's business and FUMA in Australia and internationally.


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