The IOOF Holdings Ltd (ASX: IFL) share price is one to watch this morning after the wealth manager reported a 67.7% fall in net profit in its full-year results.
What were the IOOF highlights?
In somewhat of a mixed bag for shareholders, IOOF reported statutory net profit after tax (NPAT) of $28.6 million for the year ended 30 June 2019 (FY19), down 67.7% on FY18 figures.
A summary of IOOF's full-year results are below:
- Underlying NPAT up 3.4% on the prior corresponding period (pcp) to $198.0 million
- Underlying NPAT from continuing operations up 5.2% on pcp to $184.9 million
- Underlying earnings per share (EPS) from continuing operations up 0.3% on pcp to 52.8 cents per share (cps)
- Total funds under management, administration and advice (FUMA) up 18.7% on pcp to $149.5 billion
- Net inflows of $1.4 billion from platforms with a further $520 million in net inflows through its advice channel
- Management announced a fully franked final dividend of 19 cps, with the full-year dividend falling 17.6% on pcp to 44.5 cps.
What were the big factors in the result?
The 2018 Royal Commission has weighed heavily on the IOOF share price over the last 12–18 months and this has also been seen in the latest result.
IOOF announced that it has undertaken an external advice review with $182.7 million subsequently set aside for remediation costs.
The lower dividend of 19 cps, which includes a special dividend of 7 cps, could be a sign of lower distributions to investors going forward, in line with lower profitability for the Aussie wealth manager.
IOOF recently completed the sale of wealth manager Ord Minnett for $115 million, which it expects to assist in its business turnaround, while the biggest highlight of the year was its $1.4 billion net inflows.
Foolish takeaway
IOOF declined to provide any substantial guidance for FY20 while acknowledging the whole industry "is in a state of flux".
While the headline numbers don't look great for IOOF, the net inflows are certainly a positive of note for investors and the sale of Ord Minnett does provide a cash injection.
However, with lower distributions and a substantial portion of that comprising a special dividend, I wouldn't be purchasing IOOF shares on the back of this result without seeing a real turnaround in operations in FY20.
