Financial Services company IOOF Holdings Ltd has reported a 5.2% rise for 1H20 in funds under management, advice and administration (FUMA) on 1H19, while 1H20 statutory net profit after tax was down 15% to $115m.
IOOF said the financial, cultural and operational impact of buying ANZ’s One Path Pensions & Investments business at a renegotiated $125m lower sale price of $850m would be “transformative”.
CEO Renato Mota said: “[This] heralds a new era for IOOF with the acquisition of P&I providing scale, economic diversification and business strength to deliver better long-term outcomes for our clients, members, advisers and shareholders.”
He said 1H20 earnings had been affected by divestments; the reduced economic interest from the ANZ P&I coupon; rising costs associated with governance; and continued competitive pricing pressure.
IOOF’s had continued its organic growth with strong $1.4bn inflows, driven by 2Q20 net inflows that were the highest since the 4Q18 quarter.
Adding to IOOF’s extended scale and reach, 11 new advice practices had joined the advice business in 2Q20, which increased the channel’s FUMA by $985m to $76.6billion.
IOOF was now Australia’s second biggest advice business with 1,443 advisers and the fifth biggest platform provider by funds under administration (FUAdmin).
Mota said: “This recognises the value advisers see in partnering with a well-resourced, advice-led organisation, in support of their own business needs.”
He said the ANZ P&I buy was “a step-change in scale” with $48.2bn in FUAdmin. “This increased size and scale improves our ability to invest in and deliver market leading solutions, delivering more value to clients,” he said.
Cost synergies from the buy had been revised upward to $68m pre-tax a year from previously stated $65m.
Cost synergies were expected to be realised in full from July 1, 2023. The buy was anticipated to deliver significant earnings per share accretion above what was initally expected.