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Interim Results Commentary 2005
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The directors report that operating profit for the six months ended 30 June 2005 was €5.6 million compared with €7.1 million in the previous period. Profit before taxation was €4.4 million compared with a profit before taxation of €4.9 million in the previous period. Basic earnings per share were 5.13 cent (2004HY 6.21 cent).
The Group has performed to expectations in the first half. This reflects an improvement in the underlying performance of the business when adjustment is made for certain non recurring trading profits in the first half of 2004.
Renewal income credited, a key measurement of the future of the company, was €13.7 million, an increase of 14% on the 2004 comparative figure of €12.0 million. Renewal income includes insurance renewals, trustee fees, actuarial fees and fund management fees which recur over a long period.
The Board has decided to pay an interim dividend of 0.95 cent (2004HY 0.76 cent) per share subject to withholding tax at 20%. The dividend which represents an increase of 25% on the previous period will be paid to qualifying shareholders on the Register at the close of business on 18 November 2005. Dividends warrants will be posted on 2 December 2005.
Debt
Group Banking and deferred consideration commitments are summarised and compared to the previous half year and year-end in the tables below.
Core Debt
| As at 30 June 2005 | As at 31 Dec 2004 | As at 30 June 2004 | |
| Net debt per balance sheet | 34.7 | 30.2 | 30.1 |
| Bank guaranteed deferred consideration | - | - | 4.5 |
| Total bank commitment | 34.7 | 30.2 | 34.6 |
Investment Debt
| As at 30 June 2005 | As at 31 Dec 2004 | As at 30 June 2004 | |
| Net debt per balance sheet | 3.8 | 3.8 | 3.8 |
| Total bank commitment | 3.8 | 3.8 | 3.8 |
Total Debt
| As at 30 June 2005 | As at 31 Dec 2004 | As at 30 June 2004 | |
| Net debt per balance sheet | 38.5 | 34.0 | 33.9 |
| Bank guaranteed deferred consideration | - | - | 4.5 |
| Total bank commitment | 38.5 | 34.0 | 38.4 |
| Contingent Deferred Consideration | - | 2.7 | 2.8 |
| Total Commitment | 38.5 | 36.7 | 41.2 |
The overall net debt position is slightly higher than at the start of the year. This is largely a function of the timing of significant cash payments and receipts in both our International and Mortgage Intermediary businesses (the comparable figure on 31 st August 2005 is €29.0 million). The long term record of debt reduction is expected to be maintained through the second half of the year and to be reflected in the debt levels at the end of year.
Net debt now consists of a mix of secured lending and unsecured borrowing facilities, with maturity and amortisation profiles over the next four years.
Group Performance
The performance of the Group in the first half year, split between its main activities, was as follows:
| Total operating profit/(loss) 6 months ended 30 June 2005 |
Total operating profit/(loss) 6 months ended 30 June 2004 |
|
| €'000 | €'000 | |
| International Trustee & Corporate Services | 2,954 | 2,765 |
| Financial Services | ||
| Actuarial & Pensioneer Services | 1,622 | 1,575 |
| Financial Services - UK | 309 | (5) |
| Mortgage and Title Insurance | 1,865 | 1,518 |
| Financial Services including Central Overhead | (447) | 1,083 |
| Employee leasing | - | 32 |
| Operating Profit before non recurring items | 6,303 | 6,968 |
| IFRS adjustments | (200) | 308 |
| Exceptional items | (285) | (109) |
| Share option charges | (217) | (79) |
| Operating Profit | 5,601 | 7,088 |
In the first half financing costs have been reduced to €1.3 million against €2.2 million in the same period last year. This has been achieved by repayment of 8% STG£4 million loan note coupled with increased interest earned through business activity.
The profits from the three core activities of scale, International Trustee and Corporate Services, Actuarial and Pensioneer Trustee and Mortgage and Title Insurance amounting to €6.4 million (2004 €5.9m) less the interest paid of €1.3 million (2004 €2.2 million) have grown by 42%.
The International Trustee and Corporate Services division continues to deliver across all business lines. The business exceeded corresponding 2004 profits by 7% and this must be viewed in the context of a first half in the previous year which was unexpectedly good. In August, the Group announced that the division has entered into a three year contract with one of its existing clients for the provision of management and secretarial services under which it has received an upfront payment of £7.5 million (€10.9 million).
UK Actuarial and Pensioneer Trustee was marginally up on the prior period and has recovered from a poor second half in 2004. This reflects a stabilising of the Manchester business. While pension reform legislation is not expected to affect the business until next year, it is expected to offer new and attractive opportunities in due course.
The UK fee based IFA business remains firm, and the market opportunity around advising people emigrating from the UK is attractive, but the traditional IFA operation generally remains weak. We are undertaking a review of the business structure. The closure of Berkeley Jacobs has positively impacted the results.
In Ireland, the Mortgage Intermediary business continues to deliver in prime lending. Cheques issued by lenders to clients of the Group amounted to €644m (2004HY €503m), an increase of 28%. Our non conforming operation is delivering to conservative targets with
cheques issued at €34m compared to €12m for the same period in the previous year. The Title Insurance business is now delivering
on the Group's second half investment in 2004, with requests for insurance up by 37%.
There was a broadly good performance from the remaining Irish Financial Services business which has been adversely affected by poor performance from our Investment Management and Policy Trading units.
Outlook
The business continues to narrow towards a set of core competencies which the Board believes will deliver growth. The Group remain focused on debt reduction and remain confident of achieving expectations for the full year.
- Full Interim Report (PDF 240kb)
- Restatement of Financial Information under International Financial Reporting Standards (IFRS) (PDF 255kb)
- Interim Report Presentation (PowerPoint 317kb)
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