19/08/2009

Plan B Results for FY2009

Summary of Performance

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.

Comment and Outlook

Plan B’s Managing Director, Mr. Denys Pearce, said that FY2009 was a challenging year for the Company and its clients as a result of poor global investment market performance and the general uncertainty surrounding the economy.

“Importantly for Plan B, the level of client retention during this period has remained exceptionally high.

“This continues to demonstrate the benefits of Plan B’s educated and disciplined client base. Plan B’s properly structured and diversified portfolios, together with our clients’ understanding of risks associated with investing in equity markets have provided clients with long term confidence during this volatile period.

“Plan B’s acquisition of 62% of Strategic during FY2009 was an important milestone in the Company’s expansion and demonstrates the Board’s confidence in the future. The Company intends to acquire the balance of Strategic over time.

Other acquisition opportunities continue to be evaluated.”

The Board is optimistic for the future growth of the Company but naturally remains cautious in the present market. Mr. Pearce noted that the Company has enjoyed a strong start to FY2010 on the back of investment market gains and improving investor confidence.