Pre-tax profits more than doubled to €3.27 million (£2.58 million) at the Sherry FitzGerald Group in 1999, boosted by a booming property market and the expansion of its operations. And growth has remained strong in the current quarter.
Executive chairman Mr Mark FitzGerald described the group as "well positioned to take advantage of profitable new opportunities". It has been transformed from a Dublin property operation to a national one, he said. This has differentiated it from its competitors and has provided a strategic advantage for future growth, he said.
With the introduction of its new mortgage advisory operation the group planned to become a property and financial services group, he said. In time, he forecast that its mortgage service could replace bank and building society branches in rural areas and small towns.
While Sherry FitzGerald will earn fee income from financial institutions for business placed with them, Mr FitzGerald insisted that the service will be independent and customer focused. He said the new mortgage service should be able to take about 10 per cent of the mortgage intermediary market quickly, given the group's strong client base.
Group pre-tax profits jumped by 108 per cent when an exceptional gain in the previous year is stripped out. When the exceptional gain is included, profit growth was a slower 44 per cent. Group turnover, or fee income, was 51 per cent ahead at €17.36 million (£13.67 million), while costs before goodwill amortisation rose by 41 per cent to €14 million (£11.03 million). Group operating margins improved to 18.93 per cent from 14.0 per cent.
Earnings per share rose by 83 per cent to 15.91 cents. Shareholders of the group which floated in April 1999 are to get a final dividend of 3.81 cents per share.
During its first year as a public company, Sherry FitzGerald broadened its distribution network from 16 to 48 locations through a combination of new branches and franchised offices, and acquired 80 per cent of the Ross McParland estate agency in Dublin for €5.71 million (£4.5 million).
Operating profits from continuing operations jumped 75 per cent to €2.82 million, while acquisitions chipped in profits of €0.461 million to bring operating profits for the year to €3.28 million. The 1999 outcome was boosted by a profit of €0.083 million on the disposal of fixed assets.
Fee income rose in all business areas. Fees from residential property sales - second-hand houses - were up to €9.2 million from €7.1 million. This area accounted for 52 per cent of fees. Mr FitzGerald said the average price per house had risen by 12 per cent, indicating that its profits were based more on increasing the volume of sales than on house price inflation.
The group claimed a 27 per cent share of the Dublin house auction market, up one percentage point. With the addition of Ross McParland and the franchise operations for a full year, the group expects to sell 8,000 new and second-hand houses this year, up from 5,500. The group plans to double its market share to 20 per cent within five years.
In 1999, the group sold 1,559 new houses, up from 601 in 1998, in 72 developments generating fees of €2 million, compared with €0.7 million. Mr FitzGerald said this was an important area for future development.
Two new regional offices were opened in Limerick and Cork in the second half of 1999, while 30 of the 32 new outlets are franchise offices. The group aims to have 60 estate agents operating on franchise throughout the state within five years through its subsidiary Sherry FitzGerald Countrywide.
Fee income from commercial property deals was 37 per cent ahead at €5.13 million. DTZ Sherry FitzGerald, its strategic alliance in the commercial property advisory market with the UK group DTZ, is expanding, providing good access to international clients who need to rent or buy in the Irish market.
Mr FitzGerald said that expansion through franchising local estate agents and auctioneers delivered a national low cost technological retail distribution network which was "fundamental for the future positioning of the business".
