Transcript AGM 2006 Chairman draft

Annual General Meeting 2006
Annual General Meeting 2006
Chairman’s Speech
Ian Blair
Agenda
• Chairman’s Address
• Chief Executive Officer’s Report
• Formal Resolutions
• General Business
• Questions
• Close of Meeting and Afternoon Tea
3
Chairman’s Address
• 2005/06 excellent financial year
• Delivered on commitment to shareholders
• Service First
• Community focus
• Going forward
• Board matters
4
2005/06 Excellent financial year
• Net profit after tax $23.3 million
• Cash earnings $44.4 million
• Fully franked dividends of 27 cents per share
• Total assets under management $29 billion
• Total shareholder return of 32.4%
5
Our commitment to shareholders
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Strong profit, higher dividend, solid capital position
Continued strong growth in FUMA
Delivered on strategic initiatives
Perennial Real Estate Investments
Perennial Investment Partners acquisition
A solid year in transition
6
Service First
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•
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160 years old
230,000 Australian investors
Top quartile service provider over next 3 years
Customer Care team
Constantly improve client service offering
Aim to be efficient, responsive, easy to deal with
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Community Focus
•
•
•
•
IOOF Foundation
Established 2002 to perpetuate our history
Disadvantaged families, aged care, disadvantaged
children and youth
Total grants now over $1.4 million
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Going forward
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The industry and the sharemarket
Changes to superannuation
Foundations of the last two years
Restructuring for growth
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Board matters
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Change and renewal
Governance
Strengthen industry knowledge
New director
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Annual General Meeting 2006
2006 Annual General Meeting
CEO’s Speech – Mr Ron Dewhurst
Outline
Overview
2005/06 in review
Perennial acquisition
Strategic direction
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Overview
•
•
•
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Strong growth in underlying Funds under Management and
Administration (“FUMA”)
Net profit growth of 54% for the year ending June 2006
Perennial Investment Partners Ltd (“PIPL”) acquisition
Organisational restructure geared towards improving
business accountability and transparency
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2005/06 in review
15
2005/06 in review
FUMA ($bn)
$29.0b
30%
W/Sale FUM
$22.4b
$15.4b
$15.9b
$10.3b
Wholesale FUM
$11.8b
Retail FUMA
$5.4b
$3.0b
$3.9b
$2.9b
$2.6b
$3.2b
Jun-2001
Jun-2002
Retail FUMA
$8.8b
$10.5b
Jun-2003
Jun-2004
$12.1b
$13.5b*
Jun-2005
Jun-2006
82% growth in FUMA since 2004
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2005/06 in review
FY2006
FY2005
Change
(%)
Cash earnings*
$44.4m
$31.7m
40%
NPAT (post minorities)
$23.3m
$15.1m
54%
EPS (cents)
36.7
23.9
54%
DPS (cents)
27.0
22.0
23%
Operating efficiency*
64%
71%
7%
Capitalising on operating leverage
Note: Cash earnings is equivalent to Earnings before tax, net market value excess, depreciation and amortisation
* Excludes consolidation of benefit funds
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2005/06 in review
Objectives for 2005/06
Best of breed alpha generator
Achievements
Perennial Real Estate Investments
Development of ‘Pursuit’
Best Practice Services and Solutions
Commitment to depth as well as
breadth of relationships
‘Service First’ Initiative
Consultum Financial Advisers
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2005/06 in review
Retail Funds Management Highlights
•
•
•
•
Launch of IOOF / Perennial Global Property Trust
Investment Grade rating by Morningstar
•
IOOF / Perennial International shares
Rainmaker Marketing Excellence award nomination
•
Best Website of the Year - Superannuation
Creation of Consultum Financial Advisers
•
Merger between Winchcombe Carson and Financial Partnership
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2005/06 in review
Perennial Wholesale FUM Growth
$1,788m
$919m
$66m
$422m
$1,578m
$387m
$15.4b
$10.3b
Jun-2005
Value
Fixed
Interest
Grow th
Int'l / Asia
Real Estate
Market
Grow th
Jun-2006
Diversification is successfully reducing volatility in growth
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2005/06 in review
Cash Earnings
FY2006
FY2005
Change
(%)
109.0
98.3
11%
Non operating income
8.6
5.7
50%
Share of net profits from PVM
7.1
5.1
40%
(80.3)
(77.4)
4%
44.4
31.7
40%
Year ending June
Gross margin
Operating expenses
Cash earnings
•
•
•
Continued growth in Gross Margin
Increasing economic relevance from
Perennial (including PVM)
Continued cost control
Management of both revenue and costs are contributing to growth
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2005/06 in review
Operating Efficiency
Cash operating expenses to Gross Profit*
109%
Operating efficiency (IFRS)
96%
Operating efficiency (AGAAP)
80%
71%
64%
2002
2003
Note:
Gross Profit is inclusive of other operating income and the Group’s share of PVM.
* Excludes the impact of Benefit fund consolidation
2004
2005
2006
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Acquisition of PIPL minorities
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Acquisition of PIPL minorities
IOOF has announced the acquisition of PIPL minorities shareholding
•
This will make PIPL a wholly-owned subsidiary of IOOF
100% ownership significantly improves the growth potential of
IOOF’s investment in PIPL
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Increases IOOF’s exposure to one of its core businesses
More closely aligns Perennial’s growth opportunities with IOOF’s
access to capital
Improved clarity and understanding of Perennial’s value proposition
PIPL’s relationship with underlying boutiques remains unchanged
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Acquisition of PIPL minorities
Perennial success factors
Operational independence
Alignment of interests with investment professionals
Best of breed talent, both front and back office
Scalable business model
Cultural fit
IOOF seeks to support these fundamental principles
25
Acquisition of PIPL minorities
Minority shareholders to receive an initial payment of $67.9m
• Based on 100% valuation of PIPL of $320m (“Initial Valuation”)
IOOF will compensate certain other key PIPL executives in exchange
for them relinquishing their claims to PIPL equity ($9.4m)
Both shareholders and key executives eligible for a potential deferred
payment based on PIPL’s 2008/09 audited financial performance
Represents a final acquisition multiple of 25 times NPAT with an
initial payment based on a PIPL valuation of $320m
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Acquisition of PIPL minorities
Voting on Resolutions 4 and 5
Details outlined in Explanatory Memorandum
•
Independent Expert considers the terms of the transaction ‘fair and
reasonable’
Amendment to original terms of the transaction
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•
•
As a result of unintended accounting implications
Payment based on actual 2008/09 NPAT if Michael Crivelli or Anthony
Patterson resign in the intervening period
Significant incentives exist for continued involvement in the business
Independent Directors unanimously recommend that shareholders
vote in favour of the resolutions
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Strategic direction
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Strategic direction
Strategic Cornerstones
Best of breed
asset management
Expand scope of asset management
capabilities
Re-invigorate client-centric culture
Product innovation
Commitment to relationships
Focused approach to platforms
Deeper more meaningful relationships
Client Segmentation
Creator of value…not simply gatherer of assets
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Strategic direction
Progress since 2004…
2006/07
Building momentum
2005/06
Transitionary year
2004/05
Setting the
foundations
Acquisition of PIPL minorities
Establish Perennial Real
Estate Investments
IOOF’s brand ‘DNA’
Communicating and
decision-making
framework
Developing and engaging
talent
Development of
Consultum value
proposition
Reinvigorate product
range
Launch of ‘Pursuit’ platform
Establishment of Perennial
Retail business model
More closely aligning IOOF’s
business offerings to
stakeholder needs
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Strategic direction
Transforming IOOF - Creating end-to-end accountability
Asset Management
Adviser Services
Perennial
Platforms
•Value
•Growth
•Real Estate
•Fixed Interest
•International
•Asia
•Pursuit
•Strategic alliances
•Employer Sponsored Superannuation
•Multi-Investment Manager Solutions
Create, package and
market investment
performance
Dealer Group Services
•Consultum Financial Advisers
•Strategic Alliances
Understanding advisers’
needs
Making ‘Service First’
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Guidance on 2006/07
Adviser Services - Re-energising IOOF’s offerings to advisers
•
•
‘Pursuit’ – A flexible approach to investment administration
Consultum – Maximising the value of adviser’s practices
Asset Management
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•
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Best of breed asset management
Intellectual property and cultural fit
Capability gaps
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Guidance on 2006/07
Financial outlook
Funds under Management and Administration
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$30bn in FUMA at the end of September 2006
FY07 earnings
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15% growth in normalised earnings (after minorities)
Assuming modest investment market returns
Excludes acquisition and restructuring related costs (after tax)
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PIPL acquisition - $3.5m
Organisational restructure – up to $3.0m
On track to meet earnings guidance on a normalised basis
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Annual General Meeting 2006
Annual General Meeting 2006
Resolutions
IOOF Holdings Ltd - 2006 AGM
Resolution 2a - To re-elect Ian Blair to the Board
FOR
AGAINST
DISCRETIONARY*
Votes
%
10,839,545
52.77%
100,701
.49%
9,599,649
46.74%
*The number of the Chairman’s discretionary proxy votes are 43.12%
Note: These figures relate to the proxies lodged 48 hours prior to the meeting
36
Annual General Meeting 2006
Resolutions
IOOF Holdings Ltd - 2006 AGM
Resolution 2b - To re-elect Michael Crivelli to the Board
Votes
FOR
AGAINST
DISCRETIONARY*
%
10,748,949
52.35%
171,518
.84%
9,611,691
46.81%
*The number of the Chairman’s discretionary proxy votes are 43.21%
Note: These figures relate to the proxies lodged 48 hours prior to the meeting
38
Annual General Meeting 2006
Resolutions
IOOF Holdings Ltd - 2006 AGM
Resolution 2c - To re-elect Roger Sexton to the Board
FOR
AGAINST
DISCRETIONARY*
Votes
%
10,810,556
52.62%
119,547
.58%
9,614,081
46.80%
*The number of the Chairman’s discretionary proxy votes are 43.19%
Note: These figures relate to the proxies lodged 48 hours prior to the meeting
40
Annual General Meeting 2006
Resolutions
Remuneration Report
What is covered in the Remuneration Report?
• The board’s philosophy and approach to rewarding our
employees, executives and directors
• Largely set by the Corporations law, accounting
standards and ASX Corporate Governance Guidelines
42
Remuneration Report
Why have a Remuneration Report?
To make it as clear as possible to shareholders:
• how senior members of the company are paid
• and on what basis
43
Remuneration Report
What is our approach to rewarding people at IOOF?
• an approach to attract, recruit, motivate and keep high
quality people
• to give the desired performance outcome for
shareholders
44
Remuneration Report
For executives
• a fixed amount, a short term incentive amount and a
long term incentive amount
• conditional on the executives meeting a series of
performance hurdles
45
Sample scorecard
Objectives
Category: Team Financial
Achievement of Cash Earnings per share objective ("on-plan")
Achievement of Growth in shareholder value objective ("on-plan")
Category: Personal Financial
Ensure that the Strategy, Investment & Property cost centres are managed efficiently and within budget & forecast
Category: Personal Strategic
Strategy
· Develop and maintain an agreed corporate strategy for the IOOF Group.
· Pursue & deliver a significant business opportunity for the IOOF Group (eg alliance, acquisition).
· Develop and maintain an appropriate and agreed defence manual and strategy.
Major Relationships
· Identify & develop significant alliances and relationships which can materially enhance IOOF’s
business base, either through product, market or client extension.
Investor Relations
Maintain a high standard of shareholder presentations to support the offices of CEO & CFO
MIM Investment Performance
Maintain above average investment perfromance and achieve 'investment' grade status
Category: People and Governance
Retention & development of direct reports
Maintain a high standard of conduct as an executive director of IOOF companies, particularly prudentially
regulated entities, IIML, IOOF Ltd & IOOF Life Ltd.
Total:
Weighting
20%
20%
10%
20%
10%
5%
5%
5%
5%
100%
46
Remuneration Report
For non executive directors
• A single fee
47
Remuneration Report
Regular independent reviews ….
to understand the marketplace
48
Remuneration Report
A few changes ….
• a more scaled method for rewarding performance in
excess of the hurdle rates
• increased focus on achieving the total operating cost
target for executives
• a simple, single fee, for all non executive directors
49
Remuneration Report
So what about the vote?
The IOOF Board takes notice of what our shareholders tell us
50
Remuneration Report
Some have voted against the report ….
and we should understand why
51
Remuneration Report
So let me put this in context ….
• the ASX Guidelines
• flexible not prescriptive
52
Remuneration Report
We recommend the Remuneration Report to you
53
IOOF Holdings Ltd - 2006 AGM
Resolution 3 – Adoption of Director’s Remuneration Report for the
financial year ended 30 June 2006
Votes
%
FOR
8,157,158
40.45%
AGAINST
2,324,837
11.53%
DISCRETIONARY*
9,685,390
48.03%
*The number of the Chairman’s discretionary proxy votes are 43.64%
Note: These figures relate to the proxies lodged 48 hours prior to the meeting
54
Annual General Meeting 2006
Resolutions
IOOF Holdings Ltd - 2006 AGM
Resolution 4 – Approval of the acquisition of shares in PIPL from
entities associated with Michael Crivelli and Anthony Patterson
FOR
AGAINST
DISCRETIONARY*
Votes
%
10,444,369
51.11%
488,531
2.39%
9,501,333
46.50%
*The number of the Chairman’s discretionary proxy votes are 42.56%
Note: These figures relate to the proxies lodged 48 hours prior to the meeting
56
Annual General Meeting 2006
Resolutions
IOOF Holdings Ltd - 2006 AGM
Resolution 5 – Approval of Accelerated Deferred Payment Provisions
FOR
AGAINST
DISCRETIONARY*
Votes
%
10,130,234
49.88%
622,572
3.07%
9,557,443
47.06%
*The number of the Chairman’s discretionary proxy votes are 42.89%
Note: These figures relate to the proxies lodged 48 hours prior to the meeting
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Questions?
Disclaimer
Issued by IOOF Holdings Ltd ABN 49 100 103 722. The information contained in
this presentation is given in good faith and has been prepared from information
believed to be accurate and reliable. The information presented does not take into
account your individual financial circumstances and it is not designed to be a
substitute for specific financial or investment advice or recommendations and
should not be relied upon as such. You should consider talking to your financial
adviser before making an investment decision. So far as the law allows, IOOF
excludes all liability for any loss or damage whether direct, indirect or
consequential.
Whole numbers have been rounded for presentation purposes. However,
percentages have been calculated on numbers prior to rounding.
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Annual General Meeting 2006