presented by christopher kelaher,advice driven scale business model the corporate segment recorded...

Presented by

Interim results

31 December 2013

Christopher Kelaher, Managing Director

David Coulter, Chief Financial Officer

25 February 2014

2

Result highlights

Financial

Operating

Strategic

• Strong fund flows across the business – FUMAS now $124.0b

• Strong platform net flows

• Flagship platform net flows $622m 75%

• Total platform net flows $412m

• Average gross margin steady at 0.43% (1H 12/13: 0.43%*)

• Increase in revenue and net flows is driving growth

• UNPAT pre-amortisation $58.0m, 14% on 1H 12/13

• Underlying EBITA 20%; revenue 12%

• Final dividend 22.5 cps^, 15% on 1H 12/13

• Brand investment is delivering organic growth and market share

• Strong balance sheet provides platform for growth

• Further rationalisation will increase efficiencies

• Strong pipeline of M&A opportunities

Regulation • Regulatory implementation milestones met

• 1H 13/14 operating costs includes the cost of regulatory change

• Encouraged by a Government that is committed to less red tape

* Gross Margin has been restated due to separately identifying Stockbroking Service Fees, see Appendix A for further details

^ Record date 18 March 2014, Payment date 9 April 2014

3

Financial highlights 1H 13/14 1H 12/13 % Change

Underlying EBITA $84.0m $69.7m +20%

Underlying NPAT (pre-

amortisation)

$58.0m $50.9m +14%

Statutory NPAT $48.2m $33.2m +45%

Gross Margin^ $193.8m $173.1m +12%

Operating Expenditure $126.4m $119.8m +5%

Cost to Income Ratio* 57.9% 60.3% -2.4%

Underlying EPS 25.0c 22.0c +14%

Interim Dividend 22.5c 19.5c +15%

Return on Equity 13.8% 12.2% +1.6%

FUMAS $124.0b $116.4b +6%

FUMA $94.1b $85.5b +10%

Average FUMA $91.6b $81.4b +13%

^ Gross Margin restated due to separately identifying Stockbroking Service Fees, see Appendix A

* Cost to Income ratio is exclusive of Ord Minnett Ltd and the benefit funds and is calculated on an underlying basis

$173.1m

$187.3m$193.8m

1H 12/13^ 2H 12/13^ 1H 13/14

Gross Margin

$69.7m$78.2m

$84.0m

1H 12/13 2H 12/13 1H 13/14

Underlying EBITA

$85.5b$87.6b

$94.1b

1H 12/13 2H 12/13 1H 13/14

FUMA

4

IOOF’s four integrated segments are underpinned by superannuation

Advice driven scale business model

The Corporate segment recorded an UNPAT pre-amortisation of ($13.0m) 1H13/14, ($10.0m*) 1H 12/13

* 1H 12/13 restated due to $0.6m reclassification of DTL unwind between Corporate and Financial Advice and Distribution

• UNPAT (pre-amortisation) $9.1m (steady*)

• Average FUA up $3.3b to $31.1b 12%

• Partnership with advisers fundamental to our success

• UNPAT (pre-amortisation) $39.5m 20%

• Average FUA up $4.7b to $29.9b 19%

• Second consecutive half of positive net flows


• Average FUM up $2.2b to $30.6b 8%

• Positive flows, reduced costs and sustained fund performance


• Average FUS up $0.3b to $31.3b 1%

• Stake in Equity Trustees provides greater exposure to the sector

Wealt

h M

an

ag

em

en

t

Financial Advice

and Distribution

Tru

ste

e

Platform

Management and

Administration

Investment

Management

Perennial Investment

Partners

IOOF Investments

Trustee Services

5

Growth in our platforms

• Integrated service offering and

strong brand awareness generate

net flows

• Platform FUA $30.9b, up

$2.4b since June 2013 and

$3.7b on pcp

• Total Platform net flows of

$412m

• Flagship net flows of $622m

• 2nd consecutive half of total

platform positive net flows

($200m)

($100m)

$0m

$100m

$200m

$300m

$400m

$500m

$600m

$700m

1H 11/12 2H 11/12 1H 12/13 2H 12/13 1H 13/14

Platform net flows

Total Platform Net Flows Flagship Net Flows

6

-

20

40

60

80

100

120

140

160

180

Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13

IFL Flagship Rolling Annual Net Flows Industry Rolling Annual Net Flows

"Be your own success" campaign launched

Introduction of nationalTV/radio advertising

Brand investment contributing to

net flows

Source: Morningstar Market Share Data at 30/09/2013, and IOOF data

7

• Approximately $5m spent on regulatory change

implementation

• Costs included in 1H 13/14 expense base

• IOOF’s MySuper fee structure has no material negative

impact on margin

• Recent government announcements on FoFA positive for

advisers and IOOF

• Potential opening of modern awards provides opportunity

• With fewer regulatory headwinds value adding activities

can increase

Regulatory environment

8

Financials

David Coulter

Chief Financial Officer

9

Statutory NPAT $48.2m $33.2m

Statutory Basic EPS (cents) 20.8cps 14.3cps

Underlying EBITA $84.0m $69.7m

Underlying NPAT (pre-amort) $58.0m $50.9m

Underlying EPS (cents) 25.0cps 22.0cps

FUMA $94.1b $85.5b

Gross Margin % * 0.43% 0.43%

Dividend per share (cents) 22.5cps 19.5cps

45%

45%

1H 13/14 1H 12/13Change on pcp

(%)

10%

15%

20%

14%

14%

Steady

Financial overview

* Gross margin has been restated due to separately identifying Stockbroking Service Fees , see Appendix A for further details

Plan B contribution $4.9m for the half ($1.5m 1H 12/13 - 3 months)

10

P&L breakdown

* Gross Margin restated due to separately identifying Stockbroking Service Fees, see Appendix A

• Strong growth in underlying EBITA reflects revenue growth and cost constraint

• Net interest reflects financing Plan B transaction and leaner balance sheet

• Variability in tax reflects timing of share based payment activity

$M 1H 13/14 1H 12/13 Change

on pcp

(%)

Gross Margin* 193.8 173.1 12%

Other Revenue 18.5 16.5 12%

Operating Expenditure (126.4) (119.8) -5%

Equity Accounted Profits 3.7 4.1 -8%

Net Non Cash (Ex. acquisition related Amortisation) (5.6) (4.1) -36%

Underlying EBITA 84.0 69.7 20%

Net Interest (0.1) 0.8 -106%

Income Tax & NCI (26.0) (19.6) -32%

Underlying NPAT (pre-amortisation) 58.0 50.9 14%

Significant Items/Amortisation (9.8) (17.7) 45%

Statutory NPAT 48.2 33.2 45%

11

Statutory NPAT reconciliation

Detailed explanation of each reconciling line item provided in Appendix K

• Deferred tax and Plan B have had a material non-cash impact on statutory NPAT

• Statutory v Underlying EPS calculations use the respective profit amounts above with

the same average number of shares

$'M 1H 13/14 1H 12/13

Statutory NPAT 48.2 33.2

Amortisation of intangible assets 12.2 11.1

Impairment - 4.6

Acquisition transition costs - 0.7

Termination and retention incentive payments 1.5 3.9

Recognition of Plan B onerous lease contracts - 3.0

Unwind of deferred tax liability on intangible assets (2.8) (2.6)

Reinstatement of Perennial non-controlling interests (0.6) (0.7)

Income tax attributable (0.5) (2.2)

Underlying NPAT (pre-amortisation) 58.0 50.9

12

Strong growth in profitability

Effective tax rate impacted by

investing activities

Record platform flows and

strong market returns driving

revenue growth $50.9

m

$66.0

m

$58.0

m

$22.0m

($1.7m)

$2.3m

($3.2m)

($3.5m)($0.9m)

($2.1m)

($5.9m)

UNPAT Pre-Amort

1H 12/13

FUMA Growth ProductMix

NetStockbroking

Opex(Ex Plan B)

Plan BOpex

Net Interest Effectivetax rate

Other incltax

UNPAT Pre-Amort

1H 13/14

13

$119.8

m

$126.4

m

$7.4m

($3.9m)

$3.4m $0.9m

($1.2m)

Base Opex 1H 12/13 Synergies realised Plan B

FTE IT Marketing/Other Opex 1H 13/14

~$5m

Strong cost control

• Mandatory investment in regulatory compliance

• Benefiting from extraction of Plan B synergies

• Labour cost increase in line with wage inflation

Extra 3 months Plan B without IOOF

efficiencies, i.e normalised 6 months Approximate cost of regulatory

change implementation

14

Strong cash flows to shareholders

$9

8.3

m

$154.3

m

$1

54

.3m

$138.7

m

$8

2.5

m

$75.3m$4.7m

($8.9m)

($15.0m)

($19.7m)

($52.1m)

June 13Corp Cash

Operating cashflows

Net BorrowingsDrawn

Other Investingand Finance

Tax payments Cash preAcq'n/Div

EQTinvestment

Dividends Paid December 13Corp Cash

15

Strong growth in funds

1H 13/14 1H 12/13 % Change

Opening FUMA $87,557m $76,691m

Flagship Platform net flows $622m $356m +75%

Platform (Transition) net flows ($58m) ($192m) +70%

IOOF Global One net flows ($152m) ($188m) +19%

Total Platform net flows $412m ($24m) Large

Investment Management net flows $406m ($1,291m) Large

Funds Under Advice net flows $249m $189m +32%

Acquired FUMA - $3,720m^ -

Investment returns / Other $5,462m $6,258m -13%

Closing FUMA $94,087m $85,542m +10%

Average FUMA $91,644m $81,431m +13%

^ 1H 12/13 acquired FUMA: Plan B $3,244m, Avenue $477m

16

Australian Equities

39% (PCP: 38%)

InternationalEquities

15% (PCP: 14%)

Property5% (PCP: 6%)

Fixed Interest/Cash

36% (PCP: 38%)

Other4% (PCP: 4%)

Segment performance - Platform

• 68% contribution to Group

UNPAT

• Over 2,500 IFAs actively

choosing IOOF platforms and

products

• Margin steady

1H 13/14 1H 12/13 CHANGEGross Margin ($'M) 103.3 91.0 14%

Gross Margin % 0.69% 0.72% (3bps)

UNPAT ($'M) 39.5 33.0 20%

Reported NPBT ($'M) 50.5 41.3 22%

AVG FUA ($'B) 29.9 25.2 19%

$27.4m

$33.0m

$38.4m $39.5m

0.69%0.72% 0.71% 0.69%

2H 11/12 1H 12/13 2H 12/13 1H 13/14

UNPAT Gross Margin %

17

Australian Equities

42% (PCP: 44%)

International Equities

7% (PCP: 7%)Property

5% (PCP: 5%)

FixedInterest/Cash

44% (PCP: 42%)

Other2% (PCP: 2%)

Segment performance – Investment

Management

^ Chant West - December 2013


Gross Margin % 0.26% 0.26% 0bps

UNPAT ($'M) 18.8 16.1 17%

Reported NPBT ($'M) 25.1 16.3 54%

AVG FUM ($'B) 30.6 28.4 8%

$18.1m$16.1m

$17.6m$18.8m

0.28%0.26% 0.26% 0.26%

2H 11/12 1H 12/13 2H 12/13 1H 13/14


• Positive flows in the half

• 92% Multimix FUM ranked

above median over 2

years^

• Perennial a finalist again in

Fixed Interest category of Fund

Manager of the Year Awards

18

Segment performance – Financial

Advice & Distribution

• Over 900 aligned advisers

partnering with IOOF

• Stockbroking bolstered by

IPOs and increased brokerage

volumes

*Gross margin has been restated due to separately identifying Stockbroking Service Fees , see Appendix A for more details.

^ 1H12/13 UNPAT restated due to $0.6m reclassification of DTL unwind between Corporate and Financial Advice and Distribution

Australian Equities

49% (PCP: 47%)

International Equities

10% (PCP: 7%)

Property3% (PCP: 2%)

Fixed Interest/Cash

37% (PCP: 43%)

Other1% (PCP: 1%)

1H 13/14 1H 12/13 CHANGEGross Margin ($'M)* 36.5 33.2 10%

Gross Margin % * 0.23% 0.24% (1bps)

UNPAT ($'M)^ 9.1 9.2 (0%)

Reported NPBT ($'M) 10.7 8.3 30%

AVG FUA ($'B) 31.1 27.8 12%

$8.8m $9.2m

$7.6m

$9.1m

0.23% 0.24% 0.24% 0.23%

2H 11/12 1H 12/13 2H 12/13 1H 13/14


19

Segment performance –Trustee

Services

• Strategic investment in EQT

• Well positioned to capitalise

on sector dynamics


Gross Margin % 0.08% 0.07% 1bps

UNPAT ($'M) 3.6 2.6 39%

Reported NPBT ($'M) 5.1 3.5 47%

AVG FUS ($'B) 31.3 31.0 1%

$2.1m

$2.6m

$3.0m

$3.6m

0.07% 0.07%0.08% 0.08%

2H 11/12 1H 12/13 2H 12/13 1H 13/14


20

Asset allocation on Group basis

42%43% 42%

44%

44%

41% 41%

39%

$31.5b

5%

5%5%

5%

$31.7b

8%

9%10%

11%

$30.9b1%

2%

2%

2%

$29.9b $29.9b

Asset Allocation 11/12 Asset Allocation 1H 12/13 Asset Allocation 12/13 Asset Allocation 1H 13/14 FUMAS by Segment 31/12/13

Australian Equities Fixed Interest / Cash Property International Equities Other

Funds Under Supervision

Financial Advice and Distribution

Investment Management

Platform Management and Administration

FUMA $85.5b

FUMA $94.1b

FUMA $76.7b

FUMA $87.6b

21

Strategy & outlook

Christopher Kelaher

Managing Director

22

IOOF strategic focus

ORGANIC GROWTH

• Investment in IOOF brand

• Focus on client service a differentiator

• Partnering with quality advisers

PRODUCTIVITY

• Disciplined cost control

• Efficiencies through scale, synergies and

continuing technology developments &

enhancements

GROWTH BY ACQUISITION

• Look for growth and valued based

acquisitions across the value chain

• Consistent delivery of timely value accretion

Organic growth continues

Brand investment delivers market

share growth

Total Platform net flows increased

significantly to $412m

Underlying OPEX constrained

Regulatory requirements met

Product rationalisation

opportunities underway

Strategic investment in EQT

Strong balance sheet with low net

debt – maximises flexibility and

future opportunities

2013/14 progress

23

Operating conditions improving

• Investors are more confident and re-entering the market

• Share market performance

• Interest rates remain at historical lows

• Buoyant IPO market

• Integrated service offering and brand investment is delivering

• Organic growth is driving net flows

• Targeted advertising spend

• Clearer regulatory outlook provides opportunities

• Further product rationalisation

• Potential removal of modern awards barriers

24

Outlook

• IOOF’s strong partnership with quality advisers is paramount

to delivering client and shareholder outcomes

• Attractive trading conditions with global macro landscape

improving

• With fewer regulatory headwinds value adding activities can

increase

• Strong balance sheet and experienced team has us well

positioned as industry consolidation continues

• Higher FUMA starting base provides a solid platform for

continued growth

25

Questions?

26

Appendices

27

Appendix A: Stockbroking

Service Fees reclassification

• Due to further reclassifications of expenses the isolation of stockbroking service fees expense shown above for the interim

periods ended 31 December 2013 and 2012 is not consistent with that published for the year ended 30 June 2013 ($24.2m).

The comparable stockbroking service fees expense for the year ended 30 June 2013 is $38.3m.

• Financial Advice & Distribution 1H12/13 UNPAT restated due to $0.6m reclassification of DTL unwind between that segment

and Corporate and Other.

IOOF Group Financial Advice & Distribution

$'M 1H 12/13

pre-adj

Adj 1H 12/13

restated

2H 12/13

pre-adj

Adj 2H 12/13

restated

1H 12/13

pre-adj

Adj 1H 12/13

restated

2H 12/13

pre-adj

Adj 2H 12/13

restated

Revenue 295.0 - 295.0 315.5 - 315.5 83.9 - 83.9 92.8 - 92.8

Direct Costs (140.6) 18.7 (121.9) (147.8) 19.5 (128.2) (69.4) 18.7 (50.7) (75.9) 19.5 (56.3)

Gross Margin (GM) 154.4 18.7 173.1 167.8 19.5 187.3 14.5 18.7 33.2 16.9 19.5 36.5

GM % 0.39% 0.04% 0.43% 0.38% 0.05% 0.43% 0.10% 0.14% 0.24% 0.11% 0.13% 0.24%

Other Revenue 35.3 (18.7) 16.5 35.1 (19.5) 15.6 33.6 (18.7) 14.9 33.8 (19.5) 14.2

Share of Equity profit/loss 4.1 - 4.1 3.6 - 3.6 0.6 - 0.6 0.4 - 0.4

Operating Expenditure (119.8) - (119.8) (122.4) - (122.4) (34.7) - (34.7) (36.6) - (36.6)

Net Non Cash (Ex. acquisition

related Amortisation)(4.1) - (4.1) (6.0) - (6.0) (1.5) - (1.5) (2.9) - (2.9)

Net Interest 0.8 - 0.8 0.0 - 0.0 0.7 - 0.7 0.5 - 0.5

Income Tax Expense/N.C.I (19.6) - (19.6) (20.3) - (20.3) (3.5) (0.6) (4.1) (4.6) - (4.6)

UNPAT pre-amortisation 50.9 - 50.9 57.9 - 57.9 9.8 (0.6) 9.2 7.5 - 7.5

Significant Items/Amortisation (17.7) - (17.7) (11.3) - (11.3) (5.1) - (5.1) (2.7) - (2.7)

Reported NPAT 33.2 - 33.2 46.6 - 46.6 4.7 (0.6) 4.1 4.8 - 4.8

28

Appendix B: Plan B Contribution

$M IFL

(ex-Plan B)

Financing

Costs

Plan B 1H 13/14 1H 12/13 Change

on pcp

(%)

Gross Margin* 177.0 - 16.8 193.8 173.1 12%

Other Revenue 18.5 - 0.0 18.5 16.5 12%

Operating Expenditure (116.1) (0.2) (10.0) (126.4) (119.8) -5%

Equity Accounted Profits 3.7 - - 3.7 4.1 -8%

Net Non Cash (Ex. acquisition related Amortisation) (5.4) - (0.1) (5.6) (4.1) -36%

Underlying EBITA 77.6 (0.2) 6.6 84.0 69.7 20%

Net Interest 0.7 (0.9) 0.1 (0.1) 0.8 -106%

Income Tax & NCI (24.4) 0.3 (1.9) (26.0) (19.6) -32%

Underlying NPAT (pre-amortisation) 53.9 (0.8) 4.9 58.0 50.9 14%

Significant Items/Amortisation (9.8) (17.7) 45%

Statutory NPAT 48.2 33.2 45%



29

Appendix C: Platform

Management and Administration

$'M 1H 13/14 1H 12/13Change on pcp

(%)

Revenue 193.1 172.0 12%

Direct Costs (89.7) (81.0) -11%

Gross Margin (GM) 103.3 91.0 14%

GM % 0.69% 0.72%

Other Revenue 0.0 (0.0) -

Share of Equity profit/loss 0.1 (0.0) -



Net Interest - - -

Income Tax Expense/N.C.I (17.5) (14.3) -23%

UNPAT pre-amortisation 39.5 33.0 20%

Significant Items (0.2) (0.1)

Amortisation (6.3) (6.0)

Income Tax Expense/N.C.I 17.5 14.3

Reported NPBT 50.5 41.3

Average FUA ($'b) 29.9 25.2

30

Appendix D: Investment

Management


(%)

Revenue 66.6 63.7 5%

Direct Costs (26.1) (26.1) 0%


GM % 0.26% 0.26%

Other Revenue 1.0 1.0 -3%

Share of Equity profit/loss 3.1 3.5 -12%

Operating Expenditure (17.7) (18.8) 6%

Net Non Cash (Ex. acquisition related Amortisation) (0.5) (0.7) 34%

Net Interest 0.1 0.2 -38%







Average FUM ($'b) 30.6 28.4

31

Appendix E: Financial Advice

and Distribution




(%)

Revenue 86.5 83.9 3%

Direct Costs * (50.0) (50.7) 1%

Gross Margin (GM) * 36.5 33.2 10%

GM % * 0.23% 0.24%

Other Revenue * 17.0 14.9 14%

Share of Equity profit/loss 0.6 0.6 -3%



Net Interest 0.5 0.7 -30%

Income Tax Expense/N.C.I ^ (5.8) (4.1) -43%






Average FUA ($'b) 31.1 27.8

32

Appendix F: Trustee Services


(%)

Revenue 13.2 11.2 18%

Direct Costs (0.0) 0.1 131%


GM % 0.08% 0.07%

Other Revenue 0.0 - -

Share of Equity profit/loss - - -


Net Non Cash (Ex. acquisition related Amortisation) (0.1) 0.0 -

Net Interest - - -



Significant Items - (0.2)

Amortisation - -



Average FUS ($'b) 31.3 31.0

33

Appendix G: Corporate and other



(%)

Revenue 0.2 0.2 4%

Direct Costs (0.0) (0.2) 86%

Gross Margin (GM) 0.2 0.0 -

Other Revenue 0.6 0.4 61%

Share of Equity profit/loss - - -


Net Non Cash (Ex. acquisition related Amortisation) (0.5) (0.7) 22%

Net Interest (0.7) 0.1 LARGE

Income Tax Expense/N.C.I ^ 6.6 6.5 2%

UNPAT pre-amortisation (13.0) (10.0) 30%


Amortisation (0.9) -

Income Tax Expense/N.C.I (6.6) (6.5)

Reported NPBT (21.1) (22.2)

34

Appendix H: Segment UNPAT

reconciliation to statutory note 6

$'M

Platform

Management and

Administration

Investment

Management

Financial

Advice and

Distribution

Trustee

Services

Corporate

and other

Revenue 193.1 66.6 86.5 13.2 0.2

Direct Costs (89.7) (26.1) (50.0) (0.0) (0.0)

Gross Margin (GM) 103.3 40.6 36.5 13.2 0.2

Other Revenue 0.0 1.0 17.0 0.0 0.6

Share of Equity profit/loss 0.1 3.1 0.6 - -

Operating Expenditure (44.5) (17.7) (37.1) (8.0) (19.2)

Net Non Cash (Ex. acquisition related Amortisation) (1.9) (0.5) (2.6) (0.1) (0.5)

Net Interest - 0.1 0.5 - (0.7)

Income Tax Expense/N.C.I (17.5) (7.7) (5.8) (1.5) 6.6

UNPAT pre-amortisation 39.5 18.8 9.1 3.6 (13.0)

Significant Items

Termination and retention incentive payments (0.2) (0.4) (0.4) - (0.6)

Amortisation (6.3) (1.1) (3.9) - (0.9)

Reverse out:

Income Tax Expense/Non Controlling Interests 17.5 7.7 5.8 1.5 (6.6)

Reported segment profit before income tax 50.5 25.1 10.7 5.1 (21.1)

APPENDIX I

RECONCILIATION OF SEGMENTS TO STATUTORY FINANCIALS

STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 DECEMBER 2013

1H 13/14 1H 12/13

Statutory

Note Ref. Platform

Investment

Management

Trustee

Services

Corporate and

other

$'m $'m $'m $'m $'m $'m $'m

Gross Margin

Management and Service fees revenue 7 187.8 65.8 80.0 11.6 - 311.3 278.4

Other Fee Revenue 7 5.3 0.9 6.5 1.6 0.2 14.4 16.5

Service and Marketing fees expense 8 (85.8) (22.6) (49.7) (0.0) 0.0 (124.3) (112.6)

Other Direct Costs 8 (2.7) (3.5) (0.2) (0.0) (0.0) (6.4) (6.4)

Amortisation of deferred acquisition costs 8 (1.2) - (0.1) - - (1.2) (2.8)

Total Gross Margin 103.3 40.6 36.5 13.2 0.2 193.8 173.1

Other Revenue

Stockbroking revenue 7 - - 37.7 - - 37.7 31.6

Stockbroking service fees expense 8 - - (22.5) - - (22.5) (18.7)

Dividends and distributions received 7 - - - - 0.3 0.3 0.3

Net fair value gains/(losses) on other financial assets at fair

value through profit or loss7 - (0.1) - - 0.0 (0.1) 0.2

Profit on sale of financial assets 7 - - 0.6 - 0.1 0.7 0.2

Other revenue 7 0.0 1.1 1.2 0.0 0.2 2.4 2.9

Total Other Revenue 0.0 1.0 17.0 0.0 0.6 18.5 16.5

Equity Accounted Profits

Share of profits of associates and jointly controlled entities

accounted for using the equity method SOCI*0.1 3.1 0.6 - - 3.7 4.1

Total Equity Accounted Profits 0.1 3.1 0.6 - - 3.7 4.1

Operating Expenditure

Salaries and related employee expenses 8 (7.0) (8.8) (19.2) (4.9) (35.7) (75.6) (70.2)

Employee defined contribution plan expense 8 (0.5) (0.5) (1.3) (0.4) (2.7) (5.4) (5.0)

Information technology costs 8 (0.3) (0.7) (6.0) (0.1) (12.3) (19.5) (18.0)

Professional fees 8 (0.1) (0.3) (1.0) (0.0) (1.8) (3.1) (4.0)

Marketing 8 (0.6) (0.5) (2.1) (0.1) (1.2) (4.3) (4.0)

Office support and administration 8 (0.0) (0.2) (2.5) (0.2) (4.3) (7.2) (7.5)

Occupancy related expenses 8 - (0.6) (3.0) (0.1) (4.4) (8.1) (7.8)

Travel and entertainment 8 (0.5) (0.6) (0.7) (0.2) (1.0) (3.0) (3.2)

Corporate recharge N/A (35.5) (5.4) (1.2) (2.0) 44.1 - -

Other 8 - (0.0) - - (0.0) (0.0) (0.0)

Total Operating Expenditure (44.5) (17.7) (37.0) (8.0) (19.2) (126.3) (119.8)

Loss on disposal of non-current assets 8 - - (0.1) - - (0.1) (0.1)

Total Operating Expenditure (44.5) (17.7) (37.1) (8.0) (19.2) (126.4) (119.8)

Net non cash (Ex. Amortisation from acquisitions)

Share based payments expense 8 (0.5) (0.1) (1.6) (0.0) (0.5) (2.8) (1.9)

Depreciation of property, plant and equipment 8 (0.7) (0.3) (1.0) (0.1) - (2.1) (2.2)

Amortisation of intangible assets - IT development 8 (0.7) - - - - (0.7) -

Total Net non cash (Ex. Amortisation from acquisitions) (1.9) (0.5) (2.6) (0.1) (0.5) (5.6) (4.1)

Net Interest

Interest income on loans to directors of controlled and

associated entities 7- 0.2 0.0 - 0.0 0.2 0.2

Interest income from non-related entities 7 - 0.1 0.5 - 0.9 1.5 2.3

Finance Costs 9 - (0.2) (0.0) - (1.6) (1.7) (1.8)

Total Net Interest - 0.1 0.5 - (0.7) (0.1) 0.8

Income Tax & NCI

Non-controlling Interest SOCI* - - (1.0) - 0.0 (0.9) (0.3)

Income tax expense SOCI* (17.5) (6.9) (4.1) (1.5) 8.9 (21.2) (13.7)

Income tax expense/NCI adjustments Below (0.1) (0.8) (0.7) - (2.3) (3.9) (5.6)

Total Income Tax & NCI (17.5) (7.7) (5.8) (1.5) 6.6 (26.0) (19.6)

39.5 18.8 9.1 3.6 (13.0) 58.0 50.9

Significant Items .

Impairment 8 - - - - - - (4.6)

Acquisition transition costs 8 - - - - - - (0.7)

Termination and retention incentive payments 8 (0.2) (0.4) (0.4) - (0.6) (1.5) (3.9)

Recognition of Plan B onerous lease contracts 8 - - - - - - (3.0)

Income tax expense/NCI adjustments

Unwind of deferred taxes on intangible assets N/A - - 0.6 - 2.1 2.8 2.6

Reinstatement of Perennial non-controlling interests N/A - 0.6 - - - 0.6 0.7

Income tax attributable N/A 0.1 0.1 0.1 - 0.2 0.5 2.2

Total Significant Items - Net of Tax (0.1) 0.3 0.4 - 1.7 2.3 (6.6)

Amortisation of intangible assets 8 (6.3) (1.1) (3.9) - (0.9) (12.2) (11.1)

Reported Profit/(Loss) per financial statements 33.0 18.1 5.6 3.6 (12.2) 48.2 33.2

* SOCI = Statement of Comprehensive Income

Note: Segment results include inter-segment revenues and expenses eliminated on consolidation

Financial

Advice &

Distribution

Underlying NPAT (pre-amortisation of intangible assets)

35

36

Appendix J

19.5c

10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

26.0

Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13

(ce

nts

)

Underlying EPS (cents) DPS (cents) ASX200 (RHS Base 100) IFL (RHS Base 100)

TSR = 169% April 2009 - December 2013 (23% annualised)

21.0c

22.5c

20.6c

19c

21.8c21.8c

21.0c

24.7c

21.0c

17c

22.0c

21c

18c

18c

22c

20.5c

21.8c

24.7c

20.6c

24.9c

24.7c

23.7c

25.0c

22.5c

37

Appendix K: Explanation of

items removed from UNPAT

Appendix to be inserted manually from PDF –

Justification of each significant item

In calculating its Underlying Net Profit After Tax (UNPAT) pre-amortisation, the Group reverses the impact on profit of certain, predominantly non cash, items to enable a

better understanding of its operational result. A detailed explanation for all such items is provided below.

Unwind of deferred tax liability recorded on intangible assets: Acquired intangible asset valuations for AASB 3 Business Combinations accounting are

higher than the required cost base as set under newly legislated tax consolidation rules implemented during 2012. A deferred tax liability ("DTL") is required to be

recognised as there is an embedded capital gain should the assets be disposed of at their accounting values. This DTL reduces in future periods at 30% of the

amortisation applicable to those assets which have different accounting values and tax cost bases. The recognition of DTL and subsequent period reductions are

not reflective of conventional recurring operations and are regarded as highly unlikely to be realised due to the IOOF Group's intention to hold these assets long

term.

Termination and retention incentive payments: Facilitation of restructuring to ensure long term efficiency gains which are not reflective of conventional

recurring operations. The prior comparative period was largely due to the Plan B acquisition.

Recognition of Plan B onerous lease contracts: Non-cash entry in the prior comparative period to record the estimated present value of expected costs of

meeting the obligations under contracts where the costs exceed the economic benefits expected to be received pursuant to the contracts.

Amortisation of intangible assets: Non-cash entry reflective of declining intangible asset values over their useful lives. Intangible assets are continuously

generated within the IOOF Group, but are only able to be recognised when acquired. The absence of a corresponding entry for intangible asset creation results in

a conservative one sided decrement to profit only. It is reversed to ensure the operational result is not impacted. The reversal of amortisation of intangibles is

routinely employed when performing company valuations. The amortisation of software development costs is not reversed in this manner however.

Impairment: Non-cash entry which reflects a point in time valuation of assets which is unable to be reversed to profit in future periods should the original value

prove to be restored. The entry is not related to the conventional recurring operations of the IOOF Group.

Acquisition transition costs: One off payments in the prior comparative period to external advisers by both Plan B Group Holdings Limited (Plan B) and the

IOOF Group in pursuit of a successful acquisition which were not reflective of conventional recurring operations.

Income tax attributable: This represents the income tax applicable to certain of the adjustment items outlined above.

Reinstatement of Perennial non-controlling interests: Embedded derivatives exist given the IOOF Group’s obligation to buy-back shareholdings in certain

Perennial subsidiaries if put under the terms of their shareholders’ agreements. IFRS deems the interests of these non-controlling holders to have been acquired.

Those interests must therefore be held on balance sheet as a liability to be revalued to a reserve each reporting period. In calculating UNPAT, the non-controlling

interest holders share of the profit of these subsidiaries is subtracted from the IOOF Group result as though there were no embedded derivatives to better reflect

the current economic interests of Company shareholders in the activities of these subsidiaries.

38

Important notice

This presentation does not take into consideration the investment objectives, financial situation or particular needs of any particular investor. Certain statements in the presentation relate to the future. Such statements involve known and unknown risks and uncertainties and other important factors that could cause the actual results, performance or achievements to be materially different from expected future results, performance or achievements expressed or implied by those statements. IOOF does not give any representation, assurance or guarantee that the events expressed or implied in any forward looking statements in this presentation will actually occur and you are cautioned not to place undue reliance on such forward looking statements.

This presentation has not been subject to auditor review.

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