25/02/2008

Plan B Growth Continues

Summary of Performance

Boutique wealth management company Plan B Group Holdings Limited (“Plan B” or the “Company”) is pleased to announce a net profit after tax of $2.67 million for the half-year ended 31 December 2007. This represents an impressive 46% increase over the previous corresponding period and equates to earnings per share of 3.57 cents based on weighted average issued capital in the period. 

The half-year result was achieved on a 20.2% increase in revenue over the corresponding period last year from $15.4 million to $18.5 million.
 
Funds under Management, Administration and Advice (“FUMA”), a key earnings driver, amounted to $1.95 billion as at 31 December 2007. This represented an 11.4% increase over the FUMA balance as at 30 June 2007. In excess of 10% of total FUMA is now attributable to the PFS Affinity Partner business. It is expected that the PFS Affinity Partner program will continue to be a major source of growth in future FUMA.

Overall, earnings before interest, tax, depreciation and amortisation (“EBITDA”) grew from the prior six month comparative period by approximately 29%, off the back of the Company’s increased revenues. The improvement in EBITDA margin from approximately 20.9% to 22.4% was a highlight of the result. It reflects the benefits of a growing volume of FUMA being administered on existing platforms, notwithstanding the increase in PFS sourced FUMA on which revenue is typically generated at a lower rate compared with Plan B’s owned wealth management operations.

Cash flow from operations in the December 2007 half was a healthy $2.42 million, up 36.6% from last year. The Company had a net cash balance of $12.6 million as at 31 December 2007 which puts it in a strong financial position to fund growth opportunities.

The Board of Plan B has declared a fully franked interim dividend of 2.0 cents per share, slightly more than the prospectus forecast. The Record Date for determining entitlements to the final dividend is 14 March 2008 with the dividend to be paid to shareholders on 4 April 2008.

Comment and Outlook

Plan B’s Managing Director, Mr Denys Pearce, said the result for the first half was ahead of management expectations and represented a strong start across all of the Company’s operations.

“Strong FUMA growth and healthy new business inflows resulted in higher than expected revenue and profit for the first half,” said Mr Pearce. 

Nevertheless, Mr Pearce was cautious for the remainder of the 2008 financial year in light of the performance of global investment markets in January and February 2008.

“Approximately 90% of our revenues are directly derived from the client FUMA with which we are entrusted and accordingly such market downturns obviously have an impact on our monthly revenues and profit. However, underlying business performance has remained sound and Plan B has achieved positive net funds inflows in each month of the current financial year, including January and February 2008.

“It is important to remember that volatility is intrinsic to investment markets. We educate our clients about volatility, credit risk and other risks so that they understand the benefits of diversification and are able to ride through such periods with relative comfort and ease. The reinforcement of Plan B’s investment philosophies to its clients and the relative performance of our funds during such times strengthens our long term relationships, based on previous experience.

“Unfortunately no-one can predict the future course of the world’s investment markets, but we are confident that the benefits of soundly diversified portfolios, together with the investments we are making in future growth initiatives, will ensure we remain on track to achieve our long term growth objectives,” he said.

Most recently Plan B established a mortgage broking operation in its Perth office to supplement its wealth management activities and provide in-house advice in relation to the debt side of client affairs.  Mr Pearce said, “We look forward to providing our clients with a further value added service and expanding our capabilities in this regard through the rest of the Company’s locations in due course.”

Mr Pearce said Plan B will maintain its aggressive growth stance and is continuing to evaluate a number of highly prospective opportunities to build the business and FUMA in Australia and internationally.