IOOF chief executive Chris Kelaher (pictured) has seen his plans to grow his adviser base pay off.
Diversified wealth management company IOOF has seen its net flows climb by 156 per cent to $4.6 billion, as its full-year profit from continuing operations dropped 16 per cent.
The strength of net flows have taken IOOF’s fund under administration and advice (FUMA) to $115 billion for the 12 months ended June 30, an increase of $10.8 billion from the previous year.
IOOF said its statutory net profit after tax from continuing operations fell 16 per cent to $116 million from the year-earlier figure of $137.9 million. Its statutory net profit after tax dropped 41 per cent to $116 million from $196.8 million in the previous year and included a $40 million noncash goodwill impairment charge relating to its holding in Perennial Value Management.
Underlying net profit after tax dipped 1 per cent to $169.4 million in fiscal 2017.
IOOF’s full-year financial results. ASX
IOOF said the addition of 33 new advisers joining to June 30 added $976 million to its net inflows.
In a results presentation on Tuesday morning, IOOF managing director Christopher Kelaher said that the wealth managers’s ability to increase adviser numbers was “against trend for the industry” and consequently ensures the net flows were the “second largest” IOOF had ever had.
In response to analyst questions about changes to the education requirements for financial advisers, Mr Kelaher insisted that “99 per cent [of IOOF advisers] were on route or currently had the requirements to meet the standards.”
“There is no risk that we will not meet the educational requirements,” he said.
By 1000 AEST the wealth manager’s shares has jumped 5.65 per cent to $10.66.
Citi analyst Nigel Pittaway said that IOOF’s full year 2017 core earnings of $169.4 million were well above its $161.6 million estimates on “significantly lower operating expenditure than expected.”
IOOF has four segments – financial advice and distribution, its platform business, investment management and trustee services.
Platform revenue margins for the second of financial year 2017 sat at 10.9 basis points, compared to 113.3 basis points for the corresponding period in the previous year, while operating margins were up 4 basis points due to “significantly reduced expenses following platform rationalisation and higher IT investment”.
For the full year financial advice and distribution UNPAT fell 2.6 per cent to $76.4 million, despite flows from new advisers.
Investment management UNPAT was up 4.1 per cent to $32.7m for the full year.
Mr Pittaway said IOOF exhibited “exceptional cost control” with cash operating expenses for full year 2017 of $317.9 million.
“[These] were well below our expected $328.8 million and were down 3 per cent on the A$326.8 million in the previous corresponding period,” he said.
IOOF proposed a fully franked dividend per share of 27c payable on September 1.
At 90 per cent, the second half payout is at the top end of the 60 per cent – 90 per cent payout ratio target range said Mr Pittaway.
“Commitment to consistent execution of our advice-led strategy means all key metrics are trending in the right direction: growing adviser numbers; extremely strong net inflows; and productivity initiatives, which are all delivering financial benefits,” said Mr Kelaher.