IFG's Cork office on the South Mall.

Financial services group IFG today reported pre-tax profits of €12m for 2008, down from over €15m in 2007. Its business was impacted by the Irish housing slump and the fall in the value of sterling.

Revenues fell from €129.8m to €109m with the company forecasting that 2009 will be a very challenging year for it. IFG said the revenue fall was mainly confined to its Irish property business where revenue dropped by €18.1m.

The company said it suffered from a 16% decrease in the value of sterling, which effects 80% of its earnings.

Commenting on the results, Mark Bourke, CEO of IFG Group plc said:"2008 was a year of excellent performance given particularly difficult markets and sterling's weakness. The Group has continued to strengthen its core administration, advisory services and growing the assets under our administration and advice. 

Our strategy of building diversified and geographically spread income streams is proving resilient in adverse economic conditions and will leave us well positioned for any economic recovery. 2009 will be a very challenging year, but one in which IFG expect to deliver solid results."

Results detail

Goodbody analyst Anna Lalor comments: FY08 results ahead of expectations - - "Headline numbers: IFG's FY08 adjusted EPS came in at 22.8 cent, down 6% yoy and 8% above our 21.1 cent estimate, indicating underlying constant currency growth, given the 16% currency headwind. The difference was mainly driven by €0.625m of other income. EBITDA was down 3% yoy and 4% ahead of our estimates at €21.8m. Net debt (including deferred consideration) at €55.5m, was 2% higher than our €54.3m forecast. The dividend per share for the year was 3.63 cent (flat yoy), vs 4.0 cent anticipated.

Divisional performance: The International Trustee & Corp Svcs division, which contributed 61% of adjusted operating profit, came in 26% up yoy (vs +11% expected) with 41% constant currency growth and 14% organic growth. The UK Pensioneer Trustee (20% of profits) had 7% yoy profit growth, 25% ahead of expectations, with underlying SIPP growth of 19%. Profits in the UK IFA business (14% of Group profits) declined to €2.9m (-24% yoy and 18% below our estimates). The Irish Mortgage & Title Insurance businesses became loss making to the tune of €0.9m (+€1.0m expected) in difficult market conditions as cheques issued fell by 36% to €0.9bn. The Irish Financial Services business, which includes Group centre costs showed a profit of €2.0m (vs an expectation of €0.7m).

Outlook and estimates: IFG management commented that its "strategy of building diversified and geographically spread income streams is proving resilient in adverse economic conditions". It estimates that it now has assets under advice/administration of c€54bn (vs €58bn in 2007, although currency movements would have impacted this figure). The company also noted that although "2009 will be a very challenging year" it expects to "deliver solid results". At first glance, the core International Trustee business and UK Pensioneer Trustee have put in strong performance in 2008, however, with a weaker Sterling vs the Euro providing a headwind and deteriorating profits in some of the UK IFAs and the Irish Mortgage & Title business, we will leave our estimates unchanged until we get further detail on the outlook at the analyst meeting this morning."