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Interim Results Commentary 2001
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The Directors are pleased to report another period of continuing strong growth for the six months ended 30th June 2001. Profits before tax and goodwill amortisation were up over 100% at €6.99 million (2000 €3.45 million) on turnover of €38.37 million (2000 €18.61 million). Adjusted earnings per share of 9.81 cents were up 42% from 6.92 cents for the comparative period in 2000.
Recurring income credited, that is income such as insurance renewals, trustee fees, actuarial fees and fund management fees all of which recur over a long period were €7.75 million, an increase of 113% on the 2000 comparative figure of €3.64 million.
These very satisfactory results continue the trend whereby the Group has achieved a compound annual growth rate in earnings per share of in excess of 30% over the past nine years.
The Board has decided to pay an interim dividend of 0.73 cents subject to withholding tax at 20%. This represents an increase of 15% on the previous year and is covered 13 times by earnings before goodwill amortisation. The Board's view is that whilst the Group continues to generate high returns on capital employed, it is in the best interest of shareholders that a high retention of profit should be maintained. The dividend will be paid to qualifying shareholders on the Register at the close of business on 23 November 2001. Dividend warrants will be posted on 7 December 2001.
The financial services division achieved operating profits of€7.07 million, an increase of 115.4% on the previous year. The activities in both the UK and Ireland contributed to this growth. In the UK the introduction of 'Stakeholder Pensions' has created a much greater awareness of pension obligations in the corporate sector and the Group's specialist pension advisory teams were very active in the half year and continue to be so. In Ireland the Group put together one of the strongest pension advisory teams in the country and has won a considerable amount of new business in recent months. IFG Investment Managers is now well established to manage self administered pension schemes and personal portfolios. Whilst there has undoubtedly been a slowdown in the housing market in Ireland, cheques issued to clients arranged by the mortgage division have nevertheless increased by 4 % to €144 million.
The International Trustee and Corporate Services division achieved a 66.8% increase in operating profit to €1.004 million helped by the performance of the newly acquired corporate trust business in Jersey and Geneva as well as a first time contribution from the recently formed Timeshare Finance Company. Exciting opportunities with good growth prospects continue to present themselves in this specialist sector and a new management structure is being implemented to enable the Group to best take advantage of these.
It is pleasing to report that the Internet Technology business made a small operating profit in the period for the first time on sales up from €528,000 to
€589,000, with the prospect of continuing improvement going forward. Following on from the losses incurred last year and against a difficult market background, this is a significant achievement. The majority of Ireland's legal practices and many accountancy practices are now clients of this division.
Operating profits for the Investment division were €1.96 million, up from
€971,000 for the comparative period in 2000. As capital employed in this division has been increased significantly, it is more meaningful to look at the performance after related interest costs. After charging interest of €1.22 million on capital employed in the investment division, profits were ¤744,000 as compared with
€372,000 in the comparative period, after interest of €599,000.
The Group's strategy is to grow the recurring income base by building a nationwide independent financial advisory business in the UK and Ireland. During the period Goldstone Financial Services in Manchester, D.K. Wild & Co in Norwich, Pensions Associates in London and Fair Isle Investments in Hampshire were acquired for a combined total initial consideration of Stg£4.6 million (€7.33 million) and potential deferred consideration of Stg£4.54 million (€7.23 million). The recurring income credited from these acquisitions in the half year was €1.37 million.
As a result of the rapidly increasing scale of the UK business, it has been decided to implement a new management structure with the appointment of a UK Chief Executive expected shortly.
Outlook
On average to date in 2001, the Group has transacted business each week which gives rise to future annual recurring income to be credited in 2002 and beyond of in excess of €50,000. In other words it can be expected that in excess of €2.5 million will be added to the recurring income to be credited in 2002 as a result of business written in 2001. In addition many acquisition opportunities are presenting themselves which fit the stringent criteria which the Group applies. Against this background the Board is confident of maintaining the growth performance of the past number of years and it is expected that the year will be the ninth successive year of strong growth in both profits and earnings per share.
Registered in the Republic of Ireland No. 21010
Registered Office: IFG House, Booterstown Hall, Booterstown, Co. Dublin
Tel: + 353 (0)1 2752800 | Fax: + 353 (0)1 2752801
Email: group@ifg.ie