IFL Shares Declined After Completing The Sale Of Its Corporate Trust Business

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On 2 November 2018, the leading financial services company IOOF Holdings Limited (ASX: IFL) and its fully owned subsidiary Australian Executor Trustees Limited (AET), announced that they have completed the sale of their Corporate Trust business to Sargon Capital Pty Ltd for a total amount of $51.6m. All the conditions associated with the sales agreement have been met and the initial 80% of the consideration which is approximately $41.3 million has been received by IFL. Following this news, the share price of the company decreased by 1.133 percent as on 2 November 2018.

IFL is going to retain its AET Private Trust business which is a core part of IFL’s diversified business model as it is going to help IFL to focus on its retail and private client business by offering them a full suite of financial solutions.  

In FY18, the revenue of IOOF Holdings climbed up from $907.52m in FY17 to $919.14m. However, due to a significant rise in the expenses of the company the total profit of the company plunged from $119.85m in FY17 to $93.63m in FY18. Driven by the improved market conditions of new issue and traded volumes, the other revenues of the company climbed up by $3.9 million. The earning per share of the company decreased from 38.7 cents in FY17 to 26.4 cents in FY18.  The net cash provided by the operating activities uplifted from $179.28m in FY17 to $215.87m in FY18. The cash and cash equivalent reduced from $208.2m in FY17 to $121.4m in FY18. Due to the issue of new capital to fund the planned ANZ wealth management acquisition and repayment of debt, the overall debt to equity ratio of the company was zero in FY18. During FY 2018, the average Funds Under Management, Administration and Advice (FUMA) were $118.9 billion which is an increase of 8.6% on last year. This increase was driven by the equity market performance in the FY18 augmented by organic growth in advice and platform funds. Financial advice flows of $4.4 billion were 48.3 percent higher than last prior year.

In the month of October 2018, IFL obtained full legal ownership of the ANZ Aligned Dealer Groups and also securing 82 percent of the economic benefit of the Pensions & Investments business. It is expected that the company will take the full ownership of that part of ANZ’s business by the end of March 2019. The company also announced that it is planning to enter into a twenty-year partnership with ANZ to offer its wealth management products to ANZ’s customers.

In the last six months, the share price of the company decreased by 24.81 percent as on 1 November 2018, traded at a PE level of 26.740x. IFL shares traded at $6.980 with a market capitalization of $2.48 billion as on 2 November 2018 (AEST 2:52 PM).


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