Rising equity markets, better fund inflows and merger benefits saw IOOF Holdings Ltd quadruple its annual net profit and flag that first half 2010-11 profitability should rise.
The wealth manager reported a net profit after tax of $68.4 million for the 12 months to June 30, 2010, up 432 per cent on the previous year's profit of $15.8 million.
Revenue surged 127 per cent to $655.69 million, driving underlying earnings per share up 61 per cent to 34.5 cents.
IOOF’s shares had gained 11 cents, or 1.76 per cent, to $6.36.
IOOF said its underlying after-tax profit of $97.16 million was a record result and 62 per cent higher than a year ago.
Managing director Chris Kelaher attributed the profit surge to the rising stock market, and adviser driven funds growth in IOOF's flagship platforms.
"Subject to no adverse market conditions, IOOF should report an improvement in profitability in the first half of 2010-11," he told analysts today.
Shareholders will pocket a final dividend of 18 cents per share, fully franked, if they are registered with the company by September 7.
This brings total annual dividends to 35 cents per share, double the total dividend of 17 cents for 2008-09.
Mr Kelaher said market conditions and IOOF's heavy leverage to equity markets made forecasting difficult, but the company would provide a trading update at its annual meeting on November 23.
IOOF merged with Australian Wealth Management in 2008-09 and promised $20 million in cost synergies from the deal.
On Thursday, the company said after-tax cost synergies were finalised at $22 million at June 30 and it would no longer report them separately to the market.
Mr Kelaher said IOOF would continue to focus on cost control, and adviser driven funds growth.
He said any potential acquisitions would be examined on an "opportunistic, value accretive and strategically sound basis."
Mr Kelaher characterised the result as ‘‘strong’’ and illustrative of the company’s ability to grow its business despite volatile equity markets.
Chief financial officer David Coulter noted the extent of IOOF’s profit increase was skewed because the 2008-09 reported after-tax profit accounted for just two months of earnings from Australian Wealth Management and four months of earnings from the Global One administration platform.
Funds under management and advice rose 11.3 per cent to $70.8 billion excluding the funds under supervision relating to IOOF’s corporate trust business.
Seventy per cent of the 2009-10 profit was sourced from platform administration, and IOOF’s balance sheet remained strong with distributable cash flows, Mr Coulter said.
Commenting on National Australia Bank’s proposed sale of AXA Asia Pacific Holdings’ North wealth.net platform to IOOF, Mr Kelaher said if the deal was completed, IOOF would have exclusive administration of AXA’s product for a fee.
‘‘(This) provides immediate scale with circa $1.4 billion in funds under administration,’’ he told analysts.
IOOF’s cost to income ratio fell 11 per cent during 2009-10 to 55 per cent on an underlying basis, and the company said this downward trend will continue.
IOOF cut the number of its platform administration systems from eight to six and the merger of the Global One platform resulted in $19 million in after-tax cost synergies.
The company plans to continue cutting platform numbers, with a few to having just three by December 2011.
AAP