IOOF Holdings Limited (ASX: IFL) recently announced that it has entered into an agreement with Australia and New Zealand Banking Group Limited (ANZ) to acquire its Pensions and Investments business and Aligned Dealer Groups (ADGs).
On 31 October 2018, Australia and New Zealand Banking Group Limited announced the results of its divested businesses which are going to acquire by IFL. ANZ reported that the pro forma NPAT of Pensions and Investments business(P&I) and Aligned Dealer Groups (ADG) increased from $63 million in FY 2017 to $82 million in FY 2018 driven by the increase of $10 million in income and $9 million in expenses. ANZ reported that P&I business’s FUM increased from $47.4 billion in the second half of FY 2017 to $49 billion in the second half of FY 2018 which is an increase of 3 percent. Following the release of these results, the share price of the company decreased by 1.453 percent.
The gross profit of P&I business increased from $154 million in the second half of FY 2017 to $164 million in the second half of FY 2018. The gross profit of ADG business increased from $15 million in the second half of FY 2017 to $19 million in the second half of FY 2018. The overall gross margin decreased to 67.3% in the second half FY 2018 which was 75.8% in the corresponding period of last year.
In the month of August, when IFL appeared at the royal commission, IFL was accused of giving more preference to its own interests than to the interests of the members of Australia and New Zealand Banking Group Limited (ANZ) and questions were raised whether IFL is the suitable entity to take over ANZ’s wealth business as The Australian Prudential Regulation Authority has raised concerns about IFL’s governance and Structure.
In FY 2018, the revenue of the company increased to $919.14 Mn in FY18 from $907.52 Mn in FY17. However, due to increased expenses, the total profit of the company decreased from $119.85 Mn in FY17 to $93.63 Mn in FY18. Due to improved market conditions of new issue and traded volumes, the other revenues of the company increased by $3.9 Mn in FY18. The EPS of the company is reduced from 38.7 cents in FY17 to 26.4 cents in FY18. The net cash provided by the operating activities increased from $179.28 Mn in FY17 to $215.87 Mn in FY18. The cash and cash equivalent decreased from $208.2 Mn in FY17 to $121.44 Mn in FY 2018. 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.
In the past six months, the share price of the company decreased by 23.30 percent as on 30 October 2018, traded at a PE level of 26.060x. IFL’s shares traded at $6.780 with a market capitalization of circa $2.42 billion as on 31 October 2018 (AEST 2:28 PM).
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