Ioof In 'strategic Alliance'

The Age

Thursday August 28, 2008

Vanessa O'Shaughnessy, investment reporter

IOOF has reported a small increase in net profit despite funds under management and administration falling more than 15%.

The Melbourne-based financial services company also acquired a 13% stake in hard-hit property and funds management company MacarthurCook for $4 million.

Shares in MacarthurCook, which has lost three-quarters of its value this year, jumped 4.6% on the news, closing at 80.

But investors cut 19, or 3.1%, from IOOF's stock, even though the result was only slightly lower than analysts' expectations. It closed at $5.87.

Last financial year, IOOF had $34.8 million under management and administration. This year, it has $29.4 million.

"This movement represents a small movement in net outflows combined with an unfavourable decline in the market value of equities over this period," the IOOF full-year report noted.

Dividends also declined. Last year, the company paid a total dividend of 33. This year, the total dividend will be 30, with a 15 payment per share due on October 10.

Revenue fell 15.5% to $404.1million. But net profit actually rose 4.5% to $23.3 million, helped along by the adoption of International Financial Reporting Standards.

Goldman Sachs JBWere analysts had predicted a full-year net profit of $25.3 million.

IOOF managing director and chief executive Tony Robinson said, in what was a turbulent year, the company had been careful to manage costs in each of its asset management, superannuation and investment products divisions.

It had also conducted a strategic review of its investments, selling some and adjusting others to fair value.

"We think we have done pretty well," Mr Robinson said, labelling investment performance at the company's Perennial, Consortium and IOOF brands as "strong". "We are really well-positioned to take advantage of the current environment."

Mr Robinson was referring to opportunities such as the MacarthurCook share placement and "strategic alliance", which yesterday received support from more than 94% of shareholders who voted at the company's extraordinary meeting.

The vote means IOOF will hold 3.45 million shares in MacarthurCook, which has market capitalisation of $21.5million. Meanwhile, IOOF has held off on a planned on-market share buyback.

In February, the company said it would buy 2 million shares in the year to February 2009. But as market volatility increased, it "wasn't appropriate" to conduct a buyback, Mr Robinson said.

LINK

? www.ioof.com.au

© 2008 The Age

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