IFG Group plc. Interim Results 2010 Investor Presentation

Transcription

1 IFG Group plc Interim Results 2010 Investor Presentation

2 Features of IFG Group plc Recurring & long term revenue streams Strong balance sheet with low debt levels Integration of largest acquisition on track Organic & acquisition-led opportunities Dividend yield of >3%

3 Forward Looking Statements This presentation contains certain forward looking statements Actual results may differ materially from those projected or implied in such forward looking statements Such forward looking information involves risks and uncertainties that could affect expected results 2

4 About IFG Group plc 3

5 IFG Group IFG provides a wide range of financial services and solutions from administration of financial assets to financial advice IFG is a broadly based group with two main business lines: Corporate & Trustee Services IFG International Financial Services: Pensions Admin /Financial Advisory IFG UK IFG Ireland Over 1150 employees Isle of Man Ireland UK Jersey France Switzerland Market capitalisation c. 145m Cyprus 4

6 IFG International Features of competitive landscape IFG International s competitive advantage Bank owned Universal Banks Focus on volume & own bank product sales Driven by standardisation & process Non-core to Group State support may prompt disposal Private Banks Independence conflicted by wealth management advice Fees usually ad valorem (% of AUM) Often non-core to primary services Non-Bank owned Private equity, local independents, large accountancy firms or other listed entities Private equity firms may lack sector experience Local independents exposed to locationdependence & concentration risk Accountancy firms exiting due to conflict of interest Non-core part of listed entity e.g. outsourcing firm Burden of compliance / regulation forcing exits Conflict-free independence Customised service driven by client relationship Flat fee augmented by time-charge activity fees Works closely with professional partners Multi-jurisdiction with global client base Operates in well-regulated centres Excellent administration 20 years track record Benefits from IFG Group Public Listing Well positioned to exploit changes in competitive landscape driven by regulation, consolidation and non-core disposals 5

7 IFG UK Market Positioning Pension Administration Financial Advisory - Fee based IFA Defined Benefit UK pensions market Defined Contribution Self-administered SIPPs & SSASs SIPP market; 60 providers; 500k SIPPs; 50bn AuA 2 large players 65k SIPPs 14bn AuA 31k SIPPs 9bn AuA Commodity SIPPs 20 medium players 110k SIPPs 15bn AuA Bespoke SIPPs Circa 180k SIPPs 18 small players 7k SIPPs 1.5bn AuA IPS (IFG) c. 8.5k SIPPs 3bn AuA 100m+ 371 individuals 10m- 100m 8,022 individuals 1m- 10m 181,320 individuals 100k- 1m 4.1m individuals UK wealth management models Mass affluent financial advisor Private client asset manager Retail bank wealth manager Private banks: boutique/universal Moving up here HNW Independent Advisor Family office wealth management 6

8 Financial Review 7

9 Interim Highlights Revenue up 16% to 57.4 million (2009 HY: 49.7 million) Adjusted* operating profit down 9% to 11.1m (2009 HY: 12.2m) Adjusted* EPS in cent of 9.62 (2009 HY:12.04) Dividend in cent per share increased 6% to 1.35 (2009 HY: 1.27) James Hay acquisition completed in March, consideration of 42.7m/ 38.9m (Adding 32,000 SIPPs under administration) Net commitment (net debt + net contingent consideration) 21.6m (2009 HY: 54.9m) Total assets under administration and advice of circa 60 billion * Excludes amortisation of intangible assets, share based payment compensation and exceptional items. 8

10 Financial Highlights m June 2010 June 2009** Change Revenue % Costs (Incl exceptionals) % Operating profit % Amortisation & SBP charges % Exceptional items Adj. operating profit* % Profit before tax % PAT & Minority Interests % Basic EPS (c) % Adjusted EPS* (c) % Revenue increase of 16% Exceptional items of 6.3m relate to James Hay restructuring Decline in adjusted operating profit due to H base effects: 2m non-recurring items in Ireland Very strong International performance due to exit fees and wind-ups of structures Adj operating profit covers interest 18x Debt to EBITDA <1 Title Insurance discontinued in 2009 still pursuing exit options *Excludes amortisation of intangible assets ( 3.8m), share based payment compensation ( 0.8m) and exceptional items ( 6.3m) ** Restated due to reclassification of Title Insurance business as Continuing Operations. 9

11 Revenue Revenue movement m June James Hay Saunderson House +1.5 International -1.7 Property/Ireland -3.4 June

12 Exceptional Items and Adjustments Exceptional items James Hay restructuring Reconciliation of adjusted earnings June m 2010 June 2009 Dec 2009 Redundancy costs Integration costs June 2010 June 2009 Cent per Cent per share m share m Profit attrib. to owners Acquisition transaction costs Exceptional items Employee benefits of employees laid off Total Amortisation of intangibles Share based payment Exceptional costs (after tax) Employee benefits of employees laid off Adj. earnings Exceptional costs relate to the acquisition, integration and restructuring of James Hay Employee benefits of those employees laid off are disclosed as they were incurred in the period but are non-recurring Amortisation of Intangibles acquisition approach maximises Intangibles which are amortised through P&L in order to avoid goodwill impairment Share based payment compensation charged over 5 year programme; no grants awarded in current period non-cash item, impact reflected through share dilution 11

13 Cashflow m June 2010 June 2009 Dec 2009 Profit before tax Depreciation & amortisation Working capital Share based payment & other Cashflow from operating activities* Interest Tax Capital expenditure Acquisitions/disposals Dividends Share issue Borrowings Net increase in cash Cash at beginning of period Foreign currency effects Cash at end of period Equity raising of 51.2m Underwriting expenses 2.4m Acquisition of James Hay for 38.9m ( 42.7m) Advisory expenses 1.5m Cash acquired on acquisition of 18.5m (net of Cater Allen 10m loan) Cash absorbed in James Hay of c. 4m * Includes discontinued operations 12

14 Debt Management m June 2010 Dec 2009 June 2009 Net cash Loans due <1 year Loans due >1 year Net debt (core) Deferred consideration Restricted escrow cash Net acquisition related deferred consideration Total net commitment Significant reduction in debt from December Net debt: EBITDA <1 0.7x for banking purposes Debt to continue to decline steadily through H2 and 2011 On current forecasts Group would be net debt-free by maturity of existing bank facilities in 2011 Refinancing negotiations underway with banks 5 year term Margins at lower end of expectations Access to credit e.g. acquisition lines 13

15 Balance Sheet Strength June 2010 Dec 2009 June 2009 Strong financial position Fixed Assets Cash* Other Current Assets Total Assets Borrowings* Other Liabilities Equity / Net Assets Net debt halved to 21.0m Gearing ratios transformed Net Debt Commitment 21.6m Proforma EBITDA c. 30m Proforma Debt:EBITDA 0.7x H interest cover 18x Firepower for future growth opportunities in International and SIPP sectors Dividend increase reflects position of strength and returns shareholders value * Borrowings include a 10m loan to Cater Allen which is netted by a 10m deposit 14

16 Acquisitions Update / Capex James Hay acquisition completed in March 2010 Consideration of 38.9m (approx. 42.7m) was paid in cash Successful equity fund-raising amidst volatile market conditions Execution of acquisition plan on track Gross equity raised Fees Net proceeds 51.2m 3.9m 47.3m Final payment for Excel-Serve (c. 6m) Scheduled H2 final payment for 2008 Cypriot acquisition Payment contingent on set targets which have been achieved Capex of 1.3m broadly in line with depreciation of 0.8m 15

17 Divisional Review 16

18 Divisional overview m June 2010 June 2009 Change International % UK % Ireland* (1.4) 1.5 Group % 56% Operating profit by division June % 44% Operating profit by division June 2009 International UK Ireland International * H performance of Irish mortgage business helped by a number of non-recurring revenue items totalling circa 2m 26% 58% UK Ireland 17

19 IFG International Operating profit ( m) H107 H207 H108 H208 H109 H209 H110 Solid performance given tough market conditions Exceptionally strong H blurs YoY comparison due to exit fees and structure wind-ups 15 % profit growth on H Activity levels starting to pick up although credit crunch constraining clients New business ahead of last year Stable margins despite fee pressure Attrition rates in line with expectations and historic experience (c. 5% p.a) 18

20 IFG International Isle of Man Changes in competitive landscape will present organic and acquisitionled growth opportunities Ireland Multi-jurisdictional Multi-offering Diversification Ability to match client needs across our network Jersey Operating now in UK and BVI Imminent opening of office in Malta Medium term expansion plans in South East Asia Build up Swiss, Cyprus and Jersey businesses Switzerland Cyprus Expect full year profit in line with prior year 19

21 IFG UK Operating profit m June 2010 June 2009 Change Pensioneer trustee % Financial services % IFG - UK % IFG UK operating profit 24% 76% Pensioneer Trustee Financial Services IFG UK transformed through acquisition of James Hay Stable IPS performance New business replacing lost margin on cash balances SIPP market robust against backdrop of 2009 regulatory restrictions on pension relief, however most recent changes towards simplifying relief will support growth New business IPS James Hay Total SSAS SIPP SIPP SIPP Opening number 1/1/10 1,501 8,034 32,221 40,255 Additions Attrition Closing number 30/1/10 1,474 8,586 31,145 39,731 20

22 James Hay integration on track IT Infrastructure - on schedule Migration from Bank of Santander - completed Two weeks ahead of 6 month timeframe Cost Base ahead of schedule Yr 1 headcount reduction of 172 from 522 to 350 with cost savings of 5.2m p.a. Currently 420 (down 102), 60 further voluntary applications accepted, remainder to follow Capex reduction of 1.5m p.a. expected from 2011 Restructuring costs on track ( 7m over 2010 and 2011) Marketing, Sales & Brand on schedule James Hay sales and marketing team restructured New nationwide sales team selling both IPS and James Hay product New SIPP product due for launch in Q4 Post restructuring profit for combined business Year 1 7m; Year 2 12m; Year 3 16m 21

23 UK Financial Services Strong profit growth in advisory business driven by Saunderson House Positive new clients wins and time charges Conflict-free and high quality advice proposition gaining ground with clients Well-positioned in light of Retail Distribution Review Exploring roll-out of successful fee-based financial advisory business both within UK and Internationally 22

24 IFG Ireland Operating profit m June 2010 June 2009* Property (0.9) 0.6 Financial Services (0.5) 0.9 IFG - Ireland (1.4) 1.5 Minority Interests 0.4 (0.5) IFG Ireland (1.0) 1.0 H included 2m of non-recurring items related to property business Individual (private clients) and Group pensions generated 1.2 m operating profit Well on way to replicate UK business Carry 1.5m excess lease cost to 2014 (1/3) and 2017 (2/3) * Restated as Title Insurance business no longer classified as Held for Sale or Discontinued 23

25 Management changes Changes to the Board of Directors Victor Quigley stepped down Frank Ryan stepped down Peter Priestly (Fiordland representative) joined New appointments: Aidan Comerford - Finance Director Paul McDermott - Chief Financial Officer & Head of Treasury Conleth O Reilly - Company Secretary Donal Lynch retired as Company Secretary 24

26 Summary & Outlook Management priorities and outlook: Consolidator in SIPP sector and building up of International businesses Implementation of James Hay acquisition plan on track Debt refinancing process underway New Board member & Executive appointments Sterling reporting scheduled for 2011 Expect to meet full year expectations of 18-20c adjusted EPS 25

27 Appendices 26

28 IFG International What is a trust? a legal relationship where the settlor transfers his assets to another individual/company (the trustee ) who holds and manages these assets for the beneficiaries What are the benefits? Tax planning Asset/Wealth protection, consolidation and management Privacy Succession planning What do we do? IFG International is a leading fiduciary company which establishes, manages & administers a wide range of structures e.g. trusts, companies, foundations How does it work? SETTLOR Sets up TRUST Trustees Trustees are legal owners of trust assets & manage the assets in interest of beneficiaries, in accordance with trust deed and principles of law Holding Company Holds assets Assets may include cash, equities property, IP, trading subsidiaries Income/Capital Gains BENEFICIARIES Paid to trust Re-invested 27

29 Group Financial Record Revenue ( m) Adjusted EPS (cent) Adjusted Profit ( m) Dividend per share (cent)

30 Shareholder Base 7% 23% 17% 53% Institutions Retail Directors Fiordland 29

31 IFG Management Group CEO - Mark Bourke IFG International CEO Declan Kenny IFG UK CEO Mark Bogard IFG Ireland CEO Gary Owens Finance Director Aidan Comerford Chairman Patrick Joseph Moran Group Finance Director Partner PwC US (International Tax) IFG Group Finance Director IFG International Chase de Vere (BOI) Schroders/Barclays Slaughter & May CEO Hibernian General Insurance (Aviva Ireland) Group Sales Director Hibernian Sales / Operations Director Prudential Insurance Head of Risk & Internal Audit IFG Group Chartered Accountant PwC (Dublin) Senior Non Executives - Colm Barrington Aer Lingus / Babcock & Brown - John Lawrie Scottish Provident Ireland (Retired) - John A Rowan 30

32 Contact Details For further information, please contact: Mark Bourke Group CEO Niamh Hore Investor Relations Manager IFG Group plc Booterstown Hall Booterstown, Co. Dublin Ireland Tel: