18/02/2009

Plan B Results for H1 FY2009

Summary of Performance

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.