annual report 2011

IOOF | annual report 2011
Understanding the data
behind our performance
The key drivers affecting the financial
performance for the financial year
ended 30 June 2011 were: increased
revenues arising from improved Funds
Under Management and Administration;
Advice and Supervision (FUMAS); and
lower operating expenditure given the
realisation of productivity gains from the
group’s business simplification program.
The major influences on FUMAS are
expanded upon below. Operating
expenditure improvements have been
achieved due to concerted efforts to
reduce the scale of the group’s product
offering thereby simplifying processes
and reducing the labour cost needed
to support them. Additionally, this has
allowed business to be conducted at
fewer geographic centres at a lower cost
from major service suppliers and lower
reliance on paper based communication
with key stakeholders.
Funds under management
and administration, advice
and supervision (FUMAS)
Influences on the growth of FUMAS
include:
Market performance
The largest contributor to the increase
in FUMAS was the performance of the
markets in which IOOF FUMAS was
invested, in particular equities, fixed
interest and property. IOOF revenue
will grow or reduce with the positive or
negative impact of market valuations on
average FUMAS for the current reporting
period relative to the average FUMAS
from the prior period.
Number of investors
The number of investors in IOOF products
affects the level of FUMAS and therefore
IOOF’s performance. Investments can
be placed into IOOF products through
superannuation funds, via independent
and aligned financial advisers or directly
with IOOF. Funds can be invested into
IOOF platforms or into external platforms
that include IOOF products.
Number of advisers
Independent and aligned financial
advisers are a key source of investment
funds as they provide a sales distribution
network for IOOF products. The number
of advisers supporting IOOF products,
therefore, influences the growth in
FUMAS.
Investment performance
Good investment performance attracts
funds. Individual fund performance is
disclosed on the IOOF website at
www.ioof.com.au
Shareholder value
Shareholder value can be measured by:
Total shareholder return
Total shareholder return (TSR) measures
the change in share value over a specified
period together with the return by way
of dividends received. IOOF’s TSR for
the year to 30 June 2011 was 17%. TSR
since the merger with Australian Wealth
Management on 30 April 2009 to 30 June
2011 is 84%.
Earnings per share
Basic earnings per share were 43.1 cents
per share compared to 33.7 cents per
share for last year. Diluted earnings per
share were 42.9 cents per share compared
to 33.6 cents per share for last year, noting
that due to a change in accounting
policies the figures for the prior year have
been restated.
On an underlying pre amortisation
earnings basis, where the impact
of certain non operational and / or
accounting adjustments is removed, basic
earnings per share were 48.4 cents per
share compared to 42.4 cents per share
for last year. This reflected increased
underlying pre amortisation earnings and
a reasonably stable weighted average
number of issued shares.
Franking credits
The balance of the franking account at
30 June 2011 of $14.0 million will support
the payment of fully franked dividends as
recommended by Directors.
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