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IMF exceeds expectations

IMF (Australia) Limited (ASX: IMF) reported on 22 August 2012 preliminary full year results with net profits coming in at $42m.  Dividends for the full year were declared at 10 cents per share fully franked.

In our previous articles, we set expectations for IMF to achieve an average net profit per year of at least $24m.  This has been easily met, but dividends of 10 cents fell short of our expected 15 cents per share. We also estimated that after the Centro payback, IMF’s cash would exceed $100m.  The balance sheet shows $130m in current assets, before payment of dividend.

As at 30 June 2012, IMF had a case investment portfolio of $1.2b.   This does not include the Wyvenhoe Case and the major portion of the Banks Fees Case.  Other important figures include the amount invested in cases being $66m. and book value increasing to $111m.

Foolish takeaway

The current market capitalisation of IMF at $1.65 is $200m.  The current assets less convertible notes liability is $95m, which accounts for nearly half the market capitalisation.  The implication is that the current case portfolio is worth only $105m.  IMF has already spent $66m, and based on its past track record, we expect this to generate at least $200m ($3 for every $1 spent) over the next 3 years.

In summary, IMF’s financial performance has easily exceeded our expectations, and the balance sheet has improved.

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Motley Fool contributor Peter Phan owns shares in IMF. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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