2007 Interim ResultsInvestor Presentation 20 February 2007
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Today
Six months in review
Business Performance
Financial Performance
2007 outlook
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Six months in reviewCEO, Mr Ron Dewhurst
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Delivering on our promises
• Cash earnings up 33% on pcp to $27.1m
• Operating efficiency ratio of 61%, 4% improvement on pcp
• Solid growth in FUMA, up 8%* over first six months
• 25% increase in interim dividend to 15 cents per share
• Acquisition of PIPL minorities
• Launch of Pursuit range of platform offerings
* In calculating growth rates, IOOF FUMA of $30.8bn is normalised for the non-recurring rationalisation of $487m of legacy products. As a result, IOOF normalised Dec 2006 FUMA would equate to $31.3bn. Growth rates are for the six month period
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Strong growth across financial metrics
Note: Cash earnings is equivalent to Earnings before tax, depreciation and amortisation. EPS represents basic earnings per share* Excludes consolidation of benefit funds.
4%65%61%Operating efficiency*
25%12.015.0DPS (cents)
37%16.122.1EPS (cents)
38%$10.2m$14.1mNPAT (post minorities)
33%$20.4m$27.1mCash earnings*
Change (%)H1 2006H1 2007
4%65%61%Operating efficiency*
25%12.015.0DPS (cents)
37%16.122.1EPS (cents)
38%$10.2m$14.1mNPAT (post minorities)
33%$20.4m$27.1mCash earnings*
Change (%)H1 2006H1 2007
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Progress since 2004
2004/05
Setting the foundations
2005/06
Transitionary year
2006/07
Building momentum
IOOF’s brand ‘DNA’
Developing and engaging talent
Establish Perennial Real Estate Investments
Development of Consultum value proposition
Reinvigorate product range
Acquisition of PIPL minorities
Launch of ‘Pursuit’ platform
Establishment of Perennial Retail business model
More closely aligning IOOF’s business offerings to stakeholder needs
Positioned for the next ‘wave’ of growth
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Accountability and focus
Asset Management
Perennial •Value•Growth•Real Estate•Fixed Interest•International•Asia
Advisers Services
Platforms•Pursuit•Strategic alliances•Employer Sponsored Super•Multi-Investment Manager
Dealer Group Services•Consultum Financial Advisers•Strategic Alliances
Create, package and market investment performance
Understanding advisers’ needs
Making ‘Service First’
Creating greater accountability and focus
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Business PerformanceCEO, Mr Ron Dewhurst
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Normalised growth rate of 8% for the 6 months period
Sustained FUMA growth
FUMA ($bn)8%
W/Sale FUM
Retail FUMA
$3.2b
$8.8b $10.5b $12.1b
$5.4b
$10.3b
$3.9b$14.1b$13.5b
$16.7b$15.4b
$11.8b
$15.9b
$22.4b
Jun-2002 Jun-2003 Jun-2004 Jun-2005 Jun-2006 Dec-2006
Wholesale FUM
Retail FUMA
$29.0b$30.8b*
* In calculating growth rates, IOOF FUMA of $30.8bn is normalised for the non-recurring rationalisation of $487m of legacy products. As a result, IOOF normalised Dec 2006 FUMA would equate to $31.3bn. Growth rates are for the six month period
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$12.2b
$15.4b$16.7b
Dec-2005 Jun-2006 Dec-2006
$6.7b $7.1b $7.1b
$0.1b $0.5b
$7.0b$6.4b
$6.3b
Dec-2005 Jun-2006 Dec-2006
Retail FUM Rationalised Retail FUA
Growth across retail and wholesale
Retail FUMA Wholesale FUM
* Growth rates are normalised to exclude the impact of legacy product rationalisation
26%
8%
5%*7%*
IOOF retail business insulates the Group from wholesale volatility
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Understanding advisers’ needs
Adviser Services
• Launch of Pursuit range
• Core
• Select
• New distribution alliances through Consultum
• Austral
• ITCRA Super fund
• Product rationalisation
Business now streamlined and accountable
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Retail FUMA growth
Improvement in net flows emerging
• After 2 months Pursuit flows exceeding expectations
• Continued strength of IOOF / Perennial range• Currently being restructured as a result of Perennial
acquisition
• Rationalisation of legacy products improving the transparency of netflow performance
Simplifying the past, focusing on the future
$13.5b$14.1b
$0.95b($0.49b)$0.09b$0.03b
Jun-2006 FUA net FUM net Legacy* MarketGrowth
Dec-2006
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(32.5)
146.4
(49.5)
218.5
(116.6)
(51.3)AM legacy products
Investment Bonds
IOOF / Perennial Trusts
Multi investment mgr
Retail AM FUA
IPS & ESS FUA
Retail net flows
Flagship products continue to deliver
Reduction in outflows from rationalisation of products with limited economic value. Some legacy products remain as a result of their higher margin
Developing improved alignment to IOOF’s administration offerings
Ad
min
Man
agem
ent
Managing products along ‘value’ and ‘growth’ strategies
Yet to benefit from Pursuit market impact
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Perennial Investment Partners
Highlights
• Market favours growth style investing• Perennial Growth top quartile over 3 years
• Promising performance from Real Estate
• Acquisition of equity from asset management subsidiaries• Value – 3%
• Fixed Interest – 4.5%
• Total value of approx. $9m
Note:Source: Mercer Survey as at 31 December 2006. *Performance figures represent per annum investment returns; # Based on 30 September data (not to scale)
Excess return over median 3 year investment
performance*
0.1%
(1.9%)
2.0%
(1.2%)
(6.3%)Asia#
International
Growth
FixedInterest
Value
Quartile
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2
1
4
4
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Benefits of capability diversification
Wholesale FUM Growth
Reinforces the ‘client concentration’ of wholesale asset management
$15.4b$16.7b
$1,752m$1,419m
$11m$273m($337m)
($1,861m)
Jun-2006 Value FixedInterest
Growth Int'l / Asia Real Estate MarketGrowth
Dec-2006
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Financial PerformanceCFO, Mr Mark Blackburn
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Overview
Note: EPS represents basic earnings per share * Excludes consolidation of benefit funds; ** Post outside equity interests
25%12.015.0DPS (cents)
37%16.122.1EPS (cents)
8%13.138%10.214.1Reported NPAT**
25%13.161%10.216.4Normalised NPAT**
13%24.033%20.427.1Cash earnings*
9%56.318%52.261.5Gross margin*
Change (%)H2 2006
Change (%)H1 2006H1 2007A$m
25%12.015.0DPS (cents)
37%16.122.1EPS (cents)
8%13.138%10.214.1Reported NPAT**
25%13.161%10.216.4Normalised NPAT**
13%24.033%20.427.1Cash earnings*
9%56.318%52.261.5Gross margin*
Change (%)H2 2006
Change (%)H1 2006H1 2007A$m
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Cash earnings
Continued earnings momentum
Note: Cash earnings from 2005 and beyond reflect AIFRS standards excluding the impact of Benefit fund consolidation
$8.5m$10.3m
$27.1m
$24.0m
$20.4m
$18.6m
$13.1m
H1 2004 H2 2004 H1 2005 H2 2005 H1 2006 H2 2006 H1 2007
Cash earnings (AGAAP)
Cash earnings (IFRS)
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Cash earnings (cont…)
Note: Excludes the impact of Benefit fund consolidation
13%24.033%20.427.1Cash earnings
5%(41.1)12%(38.7)(43.2)Operating expenses
-1%3.812%3.43.7Share of net profits from PVM
0%5.042%3.55.0Non operating income
9%56.318%52.261.5Gross margin
Change (%)
H2 2006
Change (%)
H1 2006
H1 2007A$m
13%24.033%20.427.1Cash earnings
5%(41.1)12%(38.7)(43.2)Operating expenses
-1%3.812%3.43.7Share of net profits from PVM
0%5.042%3.55.0Non operating income
9%56.318%52.261.5Gross margin
Change (%)
H2 2006
Change (%)
H1 2006
H1 2007A$m
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Operating expenditure
Note: Excludes the impact of Benefit fund consolidation
$2.3 $2.6
$4.8
$1.8$2.1 $2.1
$5.0
$2.3$2.1 $2.3 $2.8
$5.1
$2.7
$25.4
$24.6
$1.4
$23.0
$2.5
Salaries Marketing Occupancy Computer Professional fees Office admin
H1 2007 H2 2006 H1 2006
A$m
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Operating efficiency
Cash operating expenses to Gross Profit
Note:Gross Profit is inclusive of other operating income and the Group’s share of PVM.IFRS ratios exclude the impact of the benefit funds
96%
80%
68%
61%64% 64% 65% 63%
2003 2004 2005 2006 Dec-06 2007 (prePIPL acq)
2007e 2007 (incl.PVM)
Operating eff iciency (IFRS)
Operating eff iciency (AGAAP)
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Balance sheet
• Includes impact of PIPL acquisition
• Reduction in cash - $68.1m
• Increase debt - $22.5m
• Increased goodwill - $102.9m
• Increased deferred liability - $36.0m
• Investment subsidiary acquisitions
• Expected to be approx. $9m
Note:Corporate balance sheet excludes benefit fund consolidation and Executive Performance Share Plan Trust which accounts for the $6.5m variance relative to Statutory accounts.
189,022191,750198,238Equity
(1,396,388)(1,477,067)(115,940)Total Liabilities
(93,652)(146,113)(115,940)Other liabilities
(1,302,736)(1,330,954)0Member liabilities
1,585,4101,668,817314,178Total Assets
76,658178,950178,950Intangible Assets
1,508,7521,489,867135,228Tangible Assets
AIFRS Jun 2006
AIFRS Dec 2006
Corporate Dec 2006$000's
189,022191,750198,238Equity
(1,396,388)(1,477,067)(115,940)Total Liabilities
(93,652)(146,113)(115,940)Other liabilities
(1,302,736)(1,330,954)0Member liabilities
1,585,4101,668,817314,178Total Assets
76,658178,950178,950Intangible Assets
1,508,7521,489,867135,228Tangible Assets
AIFRS Jun 2006
AIFRS Dec 2006
Corporate Dec 2006$000's
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2007 OutlookCEO, Mr Ron Dewhurst
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Commitment to strategic cornerstones
Sources of competitive advantage
2007 will be focused on leveraging these areas into a competitive advantage
Best of breed asset management
Product innovationCommitment to relationships
Asset Management Perennial
Perennial Real Estate
PIPL acquisition
Adviser Services Platforms
Pursuit – IOOF’s flagship for continued innovation
Development of holistic adviser value proposition
Advisers Services Dealer Group Services
Consultum Financial Advisers
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Financial Outlook – H2 2007
Funds under Management and Admin.• Retail – Improvement in net sales on pcp
• Wholesale – Continued funds flows into Real Estate and Growth
FY07 earnings
• Impacted by Perennial Value consolidation
• On track to meet full year earnings forecast
• 15% growth in earnings
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Questions?
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Disclaimer
Issued by IOOF Holdings Ltd ABN 49 100 103 722. The information contained in this presentation is given in good faith and has been prepared from information believed to be accurate and reliable. The information presented does not take into account your individual financial circumstances and it is not designed to be a substitute for specific financial or investment advice or recommendations and should not be relied upon as such. You should consider talking to your financial adviser before making an investment decision. So far as the law allows, IOOF excludes all liability for any loss or damage whether direct, indirect or consequential.
Whole numbers have been rounded for presentation purposes. However, percentages have been calculated on numbers prior to rounding.
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Appendix ADetailed Financial Statement
Note:Based on IFRS accounting standards. Excludes impact of Benefit fund consolidation
6 months ending June 2007 H1 2007 H1 2006 %
Management fees & Commission revenue 126.9 104.9
Commissions and other direct expenses (65.4) (52.7)
Gross margin 61.5 52.2
Non operating income 5.0 3.5
Share of Net profits from PVM 3.7 3.4
Operating Expenses (43.2) (38.7)
Cash earnings 27.1 20.4 33%
Depreciation and amortisation of assets (1.4) (1.2)Amortisation of DAC (1.8) (2.8)Executive shareplan (2.1) (1.2)Profit before tax and non-recurring 21.8 15.2 43%
Non-recurring costs (2.1) 0.0Profit before tax 19.7 15.2 30%
Income tax (3.5) (3.7)NPAT 16.3 11.5 41%
OEI (2.2) (1.3)NPAT attributable to shareholders 14.1 10.2 38%
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Appendix BStatutory Accounts reconciliation
* Adjustments consists of de-consolidating entries
6 months ending June 2007Statutory
financialsBenefit
funds Adjustment*
Corporate financials
Management fees & Commission revenue 133.5 (7.0) 0.4 126.9
Commissions and other direct expenses (146.8) 81.6 (0.3) (65.4)
Gross margin (13.3) 74.7 0.1 61.5
Non operating income 98.3 (95.1) 1.8 5.0
Share of Net profits from PVM 3.7 0.0 0.0 3.7
Operating Expenses (43.5) 0.3 (0.1) (43.2)
Cash earnings 45.3 (20.1) 1.9 27.1
Depreciation and amortisation of assets (1.4) 0.0 0.0 (1.4)Amortisation of DAC (1.8) 0.0 0.0 (1.8)Executive shareplan (2.1) 0.0 0.0 (2.1)Profit before tax and non-recurring 40.0 (20.1) 1.9 21.8
Non-recurring costs (2.1) 0.0 0.0 (2.1)Profit before tax 37.9 (20.1) 1.9 19.7
Income tax (21.7) 18.2 0.0 (3.5)NPAT 16.3 (1.9) 1.9 16.3
OEI (2.2) 0.0 0.0 (2.2)NPAT attributable to shareholders 14.1 (1.9) 1.9 14.1