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2008 Interim Results. Investor Presentation CEO, Tony Robinson 20 February 2008. Agenda. CEO Overview Business Unit Performance Strategic Outlook. Operational Overview. Strong operational performance Building funds flow capabilities Costs controlled.
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2008 Interim Results Investor Presentation CEO, Tony Robinson 20 February 2008
Agenda • CEO Overview • Business Unit Performance • Strategic Outlook
Operational Overview • Strong operational performance • Building funds flow capabilities • Costs controlled A solid business with strong foundations
Financial Overview • $34.6b in closing FUMA – small increase from net flows offset by fall in equity and property markets • Underlying* EBITA of $22.7m – up 21% from 2H 06/07 • Underlying* Net Profit after Tax of $15.7m – up 22% from 2H 06/07 • Reported Net Profit after Tax of $5.7m – down on 2H 06/07 reflecting balance sheet revaluations (largely AIFRS) • Interim dividend of 15 cents per share fully franked (stable) • Strong balance sheet A sound financial performance * Underlying results exclude the impact of investment value write downs, PIPL acquisition and share agreement liability revaluations – see Appendix E
Financial Overview Underlying profits restored whilst investing in growth EBITA equates to profits before interest, tax, amortisation and asset sales * Underlying results exclude the impact of investment value write downs, PIPL acquisition, share agreement liability revaluations and PIPL restructuring costs – see Appendix E
Funds growth – half on half Positive net flows performance offset by market
Gross Margin – half on half Margin pressure offset by FUM growth and diversification Gross margin includes equity accounted contribution from PVM. Acquisition of an additional 2.3% PVM equity in March 2007 has no material impact
Operating Costs – by category Investment in capability increases salary costs * Other includes a component of shareholder liability revaluation which is not considered a significant item 1H 2007/08 $1.3m; 2H 2006/07 $2.2m; 1H 2006/07 nil
Business units and funds Financial Advice Administration Services Structured Products Asset Management Investor Assets Consultum Financial Advisers Perennial Investment Partners IOOF Portfolio Solutions IOOF Investor Solutions Business unit • Financial Advice • Dealer Group Support Services Pursuit / IPS Lifetrack Multi-Investment manager Investment bonds Private Clients Aust Value Aust Fixed Int Aust Growth International Asia Real Estate Funds / Services • Contribution not recorded in IOOF Group FUMA • Retail FUA $7.5b • Retail FUM $4.7b Retail FUM $3.2b Wholesale FUM $19.2b FUMA contribution Exposure across the value chain
Funds by business 16% compounding annual growth in FUMA since 2005
Net Flows Funds growth by business Positive net flows offset by market
Funds by Asset Class $34.6b $34.8b $34.6b Other 1% Other 2% Portfolio Solutions 12% 13% Property Int’l Equities 6% 6% Investor Solutions 29% 29% Fixed interest Perennial Retail Perennial Wholesale 51% 51% Aus Equities Stable exposure across a range of asset classes
Business Contribution Underlying earnings across the value chain EBITA equates to profits before interest, tax, amortisation and asset sales * Underlying results exclude the impact of investment value write downs, PIPL acquisition, share agreement liability revaluations and PIPL restructuring costs – see Appendix E
Corporate Consultum Investor Solutions Portfolio Solutions Perennial Operating Costs by business $51.3m $51.4m Central costs curbed to allow business investment
Perennial • Highlights • Continuing to develop products and distribution AustraliaOverseas • Product Small Cap Global High Alpha • Distribution Retail Irish Trust USA • Continued high levels of achievement as recognised within the industry…..
Awards for Perennial • Best Fund Manager in Money Magazine's Best of the Best 2008 Awards • First for Fixed Interest in the Best Australian Fixed Interest Funds category • Second for our Balanced Funds the Best Growth Funds category • Second for the Value boutique in the Best Australian Shares Funds category • Third for the Growth boutique in the Best Australian Shares Funds category The Australian Financial Review Smart Investor Blue Ribbon Award for Global Listed Property • Perennial Value Shares Wholesale Trust: Highly Recommended • Perennial Global Property Wholesale Trust: Highly Recommended • Perennial Growth Shares Wholesale Trust: Recommended Perennial Value Shares Wholesale Trust Highly Recommended Perennial Global Property Wholesale Trust Highly Recommended Perennial Growth Shares Wholesale Trust Recommended Perennial Value Shares Wholesale Trust Highly Recommended Perennial Global Property Wholesale Trust Highly Recommended Perennial Growth Shares Wholesale Trust Recommended • Perennial Value Shares Wholesale Trust: Highly Recommended • Perennial Global Property Wholesale Trust: Highly Recommended • Perennial Growth Shares Wholesale Trust: Recommended
Perennial Funds performance Median outperformance Quartile • Perennial Real Estate performing well against other global listed property competitors • Perennial Value performing well against other value manager competitors 1 year performance* 5 year performance* 1 1 1 2 2 3 3 2 3 4 4 4 4 *Source: Mercer MPA Surveys (returns are excess over median Survey manager to 31 December 2007 ^ Perennial Value is above median over both periods against similar value managers
Portfolio Solutions • Highlights • Pursuit net inflows $241m for the half year - up $60m on second half of prior year and $228m on pcp • 9 new dealer groups signed up • Reinvigorated relationship with key distribution partners (e.g.Bendigo Bank) • Projects and initiatives underway to gain efficiencies and improve service levels
Investor Solutions • Highlights • Strategic review of all existing product sets • Reinvigorating investment bond capabilities • Improved marketing and distribution of Multi Manager capabilities
Consultum • Highlights • Developed a market leading software offering through XPLAN • New adviser focussed "business to business" value proposition has been well received • Increased media presence and market exposure • On track to reach 120+ advisers by year end * Not included in IOOF Group aggregate FUMA
Progress Summary 2007/08 • Sound underlying result - reported profitability distorted by AIFRS driven volatility • Restores profitability following the impact of 2H 2007 PIPL acquisition and 1H 2008 adverse market conditions • Costs kept to 2H 2007 levels whilst maintaining an investment in the future • Encouraging trends in Portfolio Solutions and Perennial Retail net flows
Strategic Outlook – 2008/09 • Businesses will continue to develop capability and products • IOOF will use its operating capability and strong balance sheet to pursue acquisition opportunities
Appendix A - Underlying Cash Earnings & EBITA EBITA equates to profits before interest, tax, amortisation and asset sales * Underlying results exclude the impact of investment value write downs, PIPL acquisition, share agreement liability revaluations and PIPL restructuring costs – see Appendix E
Appendix B - Statutory Accounts reconciliation *Adjustments consist of de-consolidating entries
Appendix E - Significant items excluded from calculation of underlying results • PIPL option holders – value of options previously held by certain key PIPL executives • PIPL acquisition costs – recognises the movement in present value of the probable future settlement liability upon finalisation of the acquisition of PIPL minorities in 2009 • PIPL share agreements liability - relates to IOOF's commitment to provide liquidity, under certain circumstances, in the vested shares held by parties previously classified as minority interests in two Perennial subsidiaries • PIPL restructuring – costs incurred realigning retail activities within PIPL following full ownership • Investment sale/revaluation losses – disposal or write down on alliance investments which are no longer strategically congruent