What: In an increasingly competitive funds management environment, IOOF Holdings Limited (ASX:IFL) successfully grew revenue, earnings, dividends and total funds under management (FUM) while maintaining a strong financial position.
Highlights:
- Revenue rose 8% to $740 million
- Underlying Net Profit After Tax (excluding amortisation benefits) up 13% to $123 million
- Total dividend of 47.5 cents per share for the year (up from 45c previously)
- Funds Under Management, Administration, Advice, and Supervision (FUMAS) grew 1.3% to $121.9 billion
- Total cash and cash equivalents of $109.5 million at June 30 (up from $98.3m previously)
- Total debt to equity ratio of 12% at June 30 (down from 13% previously)
So What?
IOOF is a respected fund manager which seeks to grow its FUMAS both organically and opportunistically through acquisitions, and thus deliver revenue increases off a relatively fixed cost base.
The company has a long record of achievement in this sector, and enjoys significant long-term tailwinds in its superannuation businesses thanks to bi-partisan support for increasing super contributions and engaging more people in active wealth management.
Going forward IOOF expects to continue growth by increasing brand and product awareness and enhancing its technological, analytical and staffing capabilities. It is also looking at making its processes more cost-effective.
The company will also grow opportunistically by acquisition, however only where the businesses are likely to deliver value and fit alongside existing operations.
Now What?
One of IOOF's most recent acquisitions, SFGA Australia Ltd, joined the group on 6 August and its full-range wealth management services for high-end clients are expected to contribute immediately to earnings in FY2015.
As mentioned above, IOOF enjoys long-term conditions favourable to the growth of its business which, when combined with its size and experience, should provide ample growth to shareholders over the long term.
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