IOOF Holdings Reported 200% Growth in Statutory NPAT for 1H FY2019 – Stock Price in Green Zone


Financial services company, IOOF Holdings Limited (ASX: IFL) has released its half-year results for FY 2019. As per the release, the company has reported 200% growth in its Statutory net profit after tax (NPAT) which has reached to $135.4 million in 1H FY2019 as compared to the previous corresponding period (pcp). For the half-year period, the company has reported Underlying NPAT from continuing operations of $100.1 million which is 6% higher than pcp. Following the release of this news, the share price of the company increased by 12.264% on 19 February 2019 (AEST 1:29 PM).

The increase in the statutory net profit after tax (NPAT) was driven by the after-tax impacts of $34 Mn profit from the sale of the company’s corporate trust business as well as a $25 Mn recovery of amounts paid in settlement of litigation. Further, the statutory NPAT was also driven by a $28 million goodwill impairment of Perennial Investment Partners Limited, which occurred in the previous corresponding period. The company also reported Net platform inflows of $688 million in 1H FY2019 which was 12% higher than pcp. 

During the half year period, the company completed the acquisition of the ANZ Aligned Dealer Groups (ADG), and both the parties have also agreed to accelerate the economic completion of the transaction, with IOOF receiving 82% economic interest in the ANZ Pensions & Investments (P&I) business.

The company has received a coupon interest of $28.9 million in the first half of 2019, which equates to 82% of the profitability of the underlying P&I business. This coupon rate will continue until after the successor fund transfer has been completed to enable the separation of the ANZ businesses.

The Board has declared a fully franked dividend of 25.5 cents per share and the company has reverted to its dividend payout ratio policy of 60–90% with 25.5 cents per share at the upper end of this range.

The company is expecting to incur $20–30 million in compliance and regulatory costs commencing immediately and into FY 2020. This includes a review into advice quality as well as the strengthening of existing compliance and regulatory frameworks in-line with ASIC (Australian Securities and Investments Commission) Report 515 audit standards and remediation protocols across all IOOF licenses.

As per the company’s Acting CEO Mr. Renato Mota, the company’s review of advice till now has not highlighted any systemic issues, but it is committed to ensuring its advisers are providing high-quality advice outcomes consistently and meeting all of their obligations to clients. Therefore, the company will undertake a further review and aim to have it completed by September of 2019.

Meanwhile, in the last six months, the share price of the company decreased by 38.37% as on 18 February 2019. IFL’s shares traded at $5.950 with the market capitalization of circa $1.86 billion as on 19 February 2019. It has 52 weeks high of $11.040 and 52 weeks low of $4.195.


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