Category: Stock Market

Medibank Private Ltd (ASX: MPL) shares are under pressure today following the release of the insurer’s half-yearly results for FY21.

At the time of writing, the Medibank share price has dipped to $2.83, down 2.08%.

What did Medibank announce today?

The private health insurance provider announced a net profit after tax of $226.4 million for the 6 months ending 31 December 2020 – a 27.3% increase compared to the prior corresponding period (pcp).

The company attributed the increased profit primarily to a net gain of 49,000 policy holders over the period. 17,600 of these new customers signed up for Medibank-branded insurance itself.

“This is the first time we have grown the Medibank brand in any 6-month period since 2013 and this trend has continued into February,” the company said in a media release today.

Medibank’s results stand in stark contrast to the private health insurance industry at large. According to the Australian Prudential Regulatory Authority, industry profitability was down by 2 percentage points on the pcp — driven largely by the COVID-19 pandemic.

The pandemic led many private health insurance providers, including Medibank, to postpone premium increases for 6 months. Medibank stated the postponement cost the company $109 million in revenue. Despite this, revenue from premiums did rise 0.3% to $3.3 billion.

In further good news for shareholders, net claims expenses also decreased by 0.8% compared to the pcp, or $24.1 million. Gross claims fell by 1.8%, including a $99 million COVID-related reduction in claims and risk equalisation payable for the period. Underlying claims, adjusted for COVID impacts and provision movements, rose by 2.6%.

The company announced a dividend of 5.8 cents per share fully franked.

Medibank CEO to retire

Along with today’s financial announcements, Medibank Private CEO Craig Drummond announced he is retiring from the position come 30 June.

Mr Drummond made the following comments about the results release and his impending retirement.

“Pleasingly Medibank is on a clear strategic path to grow the private health insurance business at a faster rate and continue its transformation into a broader healthcare company.”

“Leading Medibank through this transition has been incredibly rewarding.”

The Medibank share price during Mr Drummond’s tenure saw a modest decline – starting around $3 when he first started while opening this morning at $2.89. During his time, Medibank shares hit a high of $3.65 and a low of $2.33.

Future outlook

Medibank is continuing its investment in healthcare. The company also announcing an expansion of its no gap joint replacement pilot into 6 regions. The pilot is a part of the company’s investment into a ‘short-stay model of care’ program – a long-term venture aiming to reduce hospital-related expenses for both customer and company.

As of 15 February, Medibank Private is still the leading private health insurance company in Australia with a 26.9% market share and 3.7 million customers, according to comparison site ComparingExpert.

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• Here’s why the Medibank (ASX:MPL) share price is edging higher today

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Monash IVF Group Ltd (ASX: MVF) share price is bucking the market downtrend after it posted its profit results and restarted its dividend payouts.

The Monash IVF share price jumped 2% to 79 cents when the S&P/ASX 200 Index (Index:^AXJO) fell 0.3%.

The pleasing profit result may also be lifting sentiment towards its rival. The Virtus Health Ltd (ASX: VRT) share price increased by a similar amount to $6.25 at the time of writing.

The Healius Ltd (ASX: HLS) share price gained 0.9% to $3.94 too. Healius offers In vitro fertilisation (IVF) treatments, although its results announcement this morning may be driving the gains.

Monash IVF share price profit growth injection

Coming back to Monash IVF, the group posted a first half adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 24.4% to $24.7 million. It’s adjusted interim net profit jumped by 32% to $12 million while revenue advanced 17.8% to $90.8 million.

The strong recovery from the COVID-19 impact prompted management to declare a 2.1 cents a share interim dividend. The group did not pay a final dividend in 2020 as the disruption from the pandemic forced clinics to shut.

That created pent-up demand for IVF services. The group reporting stimulated cycle growth of 27.4% in the six months to end December 2020.

Winning market share

The bounce in cycles (treatments) accelerated in the second quarter of FY21 for Monash IVF. Cycle growth in the December quarter came in at 33.1% compared with the national average of 20.6%.

Management said it won market share in Victoria, New South Wales, Queensland and the Northern Territory in that quarter.

Monash IVF share price on the right cycle

Further, Monash IVF’s ultrasound business, which remained opened during the pandemic, recorded growth of 11.7%.

Given its operating leverage, the group’s bottom line should continue to expand more quickly than its top-line as the recovery unfolds.

Management’s upbeat outlook gives investors a reason to think the good times will continue.

Feelin’ clucky about 2021

“The desire for patients to seek assistance when trying to conceive has increased despite the ongoing pandemic,” said the group.

“The Company’s reported NPAT for the year ending 30 June 2021 is expected to be approximately $23.7m to $25.7m, as compared to $11.8m in the prior comparative period.

“The Company’s NPAT before certain non-regular items for the year ending 30 June 2021 is expected to be approximately $21m to $23m, as compared to $14.4m in the prior comparative period.”

But it isn’t all good news. Its Malaysian operations are recovering more slowly due to ongoing COVID social restrictions. The group’s Tasmanian business is also slipping backwards.

However, the negatives won’t take the glow off the Monash IVF share price. If the interim dividend is replicated in August, the stock is sitting on a yield of over 7% if franking is included.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Virtus Health Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The IDP Education Ltd (ASX: IEL) share price has been an exceptionally strong performer on Wednesday.

In morning trade the student placement and language testing company’s shares are up over 17% to a record high of $29.22.

Today’s impressive gain means the IDP Education share price is now up a remarkable 42% since the start of 2021.

Why is the IDP Education share price rocketing higher today?

Investors have been fighting to get hold of IDP Education shares today despite it posting a sizeable decline in first half revenue and earnings.

For the six months ended 31 December, the company reported total revenue of $269 million and earnings before interest and tax (EBIT) of $47.3 million. This represents a 29% and 46% decline on the prior corresponding period.

This was driven by declines across all segments due to COVID impacts. The key English Language Testing segment reported a 36% decline in revenue to $158.3 million, whereas the Student Placement segment posted a 36% decline to $78.3 million.

Elsewhere, the English Language Teach segment experienced a 39% decline in revenue and the Digital Marketing segment recorded a 7% decline.

This ultimately led to IDP Education posting a 49% reduction in half year net profit after tax to $29.7 million. Earnings per share fell 53% to 10.9 cents.

In light of this profit decline, the IDP Education Board has cut its unfranked interim dividend by over 50% to 8 cents per share.

At the end of the period, the company reported a cash balance of $293 million. Management notes that this reflects its strong cash flow, aided by disciplined cost management.

Outlook

IDP Education hasn’t provided any guidance for the second half and full year.

However, it has noted that IELTS volumes rebounded to pre-pandemic levels during the half.

And CEO, Andrew Barkla, advised that its global teams are at full strength and it has successfully accelerated its digital transformation program.

So why is the IDP Education share price rising?

Given its poor financial result compared to the prior period, investors may be wondering why the IDP Education share price has hit a record high today.

Well, as poor as it might look on paper, it was actually well ahead of expectations.

According to a note out of Goldman Sachs, IDP Education’s revenue was 15% ahead of its expectations and its earnings per share of 10.9 cents was a whopping 156% ahead of its estimates.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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DroneShield Ltd (ASX: DRO) shares are taking off today after the company announced a new agreement with the United States Government. In morning trade, the DroneShield share price has lifted 6.06% to 17.5 cents. 

Let’s take a look at what the company reported. 

What did DroneShield announce?

The DroneShield share price is on the rise today following the company’s announcement it has entered into a new cooperative research and development agreement with the US Department of Homeland Security Science and Technology Directorate.

The company said its multi-sensor unmanned aerial system (or drone, to the uninitiated) detection and mitigation capabilities will be at the centre of the research. Its DroneSentry and DroneSentry-C2 solutions for fixed and semi-fixed site applications will be the primary focus.

The DroneSentry system uses a range of sensors to identify and track drones, including radiofrequency, radar, EO/IR camera, and acoustics. The system uses DroneShield’s AI-based “RF detection, long-range sensing, and expanded multi-sensor data fusion capabilities”.

DroneSentry-C2 enables operators to deploy a complete drone detection and threat assessment capability to protect their fixed bases and critical infrastructure.

Commenting on the new agreement, DroneShield CEO Oleg Vornik said:

We are excited to work closely with DHS S&T [Department of Homeland Security Science and Technology Directorate] under this cooperative agreement to support end users throughout their agency and sub-agency partners. Our DroneSentry solution is at the forefront of fixed-site counter-UAS and partnerships like this one allow us to make further advancements that are most relevant to the end users and mission we serve.

DroneShield said it could not make revenue projections until the total value of the rolling agreement is known. Stay tuned for updates.

DroneShield share price snapshot

There have been plenty of ups and downs for shareholders over the past 12 months, with today’s lift in the DroneShield share price bringing the one-year losses down to 7.9%. By comparison, the All Ordinaries Index (ASX: XAO) is up 0.4% over that same period.

Year to date, the DroneShield share price is down 2.8%.

More reading

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Bigtincan Holdings Ltd (ASX: BTH) share price has plunged this morning despite the company posting growth in its half-year results.

In morning trade, the sales enablement automation platform providers’ shares are down 6.12% at 92 cents a share.

Metrics point to continued growth

Bigtincan’s first-half results for FY21 showed top-line revenue growth of 33% compared to 1H FY20. This equated to $18.4 million in revenue for the half. Notably, 95% of the company’s revenue is now subscription-based. Additionally, annualised recurring revenue (ARR) hit $48.4 million at the end of December. This indicates a 50% increase over the prior half-year’s result.

Furthermore, the lifetime value of the company’s subscriptions expanded by 44% to $363 million. Bigtincan indicated that the company’s customers continue to be diverse by vertical, with life sciences customers contributing the most towards ARR at 20%.

Operating expenses grew by 38% to $22.37 million for the half, as the company continues to invest heavily in its expansion through multiple acquisitions. During the first half, the company acquired Agnitio and Clearslide.

The land-and-expand strategy abroad has demonstrated progress, with 21% of Bigtincan’s total active customer base increasing their use of the platform during the first half. This is in contrast to 16% in the prior corresponding period.

Outlook and guidance

Bigtincan outlined its expectation to be towards the top end of FY21 ARR guidance of $49 million to $53 million; and revenue of $41 million to $43 million. This forecast is on the basis of a stable exchange rate, given the company operates internationally.

The company also noted it foresees continued market tailwinds that will help grow the total addressable market. This larger market comes with larger opportunities, and Bigtincan expects potential for further accretive mergers and acquisitions to accelerate.

At the end of the period, Bigtincan remained well capitalised with $65 million in cash on the balance sheet to facilitate any further acquisitions.

Bigtincan CEO and co-founder David Keane commented:

1H FY21 again demonstrated the success of the Bigtincan growth strategy, with strong organic growth, smart acquisitions and growing industry recognition. The Bigtincan teams around the world continued to show their ability to build our technology innovation pipeline, and help some of the world’s leading companies to solve their challenges for their customer facing teams in an increasingly digital and remote economy.

Bigtincan share price snapshot

The Bigtincan share price has outperformed the S&P/ASX 200 Index (ASX: XJO) over the past 12 months, with a return of 10.7%. The index on the other hand has lost 0.7% during the same period.

Bigtincan’s market capitalisation is now roughly $405 million.

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Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Sydney Airport (ASX: SYD) share price is on the rise today, up 3.37% in morning trade. At the time of writing, the Sydney Airport share price is at $6.13. 

We take a look at Sydney Airport’s full-year results below.

What full-year financial results did Sydney Airport report?

ASX investors have driven up the Sydney Airport share price in early morning trading.

This comes after the company reported a huge drop in traffic, with 11.2 million passengers in 2020.  Altogether, this figure represents a 74.7% decline year-on-year.

Passenger numbers closely tracked the onset of the global pandemic, with total passengers in the first quarter of 2020 down only 18% on the prior corresponding quarter (pcp). Then, as international and domestic travel locked down during the rest of the year, Sydney’s total passenger numbers plummeted. Overall, down 93.4% in the second quarter to the fourth quarter, compared to the same 9 months of 2019.

International passenger numbers fell slightly more than domestic traffic, down 77.5% and 72.9% respectively.

Sydney Airport reported a $107.5 million full-year loss after income tax expense. Earnings before interest, tax, depreciation, and amortisation (EBITDA) declined 45% year-on-year to $627.8 million.

With revenues down, the company pursued cost savings, cutting operating costs 32.3% compared to the prior corresponding period and reducing capital investment. It had $3.5 billion of liquidity as at 31 December 2020.

Sydney airport will not pay a dividend for 2020.

“A crisis of unprecedented magnitude “

Commenting on the year gone by, Sydney Airport CEO, Geoff Culbert said:

The COVID-19 pandemic delivered a crisis of unprecedented magnitude to the global aviation industry, and Sydney Airport has been right on the frontline, both operationally and financially…

We moved quickly to control the things that were in our control and put ourselves in a position to manage the unpredictability and volatility that became our ‘new normal’. The actions we took, combined with the COVID-19 vaccines rolling out, mean we have laid the foundation for our recovery through 2021 and beyond.

Looking ahead, Culbert added, “The recovery won’t be linear, but our experience shows that when restrictions are eased and borders come down, people are keen to travel. With the vaccine rolling out, we are cautiously optimistic that 2021 will see the industry begin to recover.”

Sydney Airport share price snapshot

The Sydney Airport share price has fallen and risen alongside the spread of the pandemic and subsequent announcements of effective vaccines.

Shares plunged more than 43% from late February 2020 into late March as travel restrictions took hold. When multiple promising vaccines were announced, shares surged 27% from 30 October through to 17 November.

Year-to-date the Sydney Airport share price is down 5%. That compares to a 2% gain on the S&P/ASX 200 Index (ASX: XJO).

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It wasn’t long ago that Nanosonics Ltd (ASX: NAN) was being called the next CSL Limited (ASX: CSL). 

But as far as February reporting season goes, CSL is still the consistent stock we all know and love. While the Nanosonics share price is not only 12% lower at the time of writing but down more than 35% for the year. 

The infection prevention company, known for its industry-leading trophon EPR disinfection system for ultrasound probes, released its financial results today for the first half of FY21.

Nanosonics share price lower on weak revenues

In today’s release, Nanosonics reported that its global installed base increased 12% in the last 12 months and was up 6% in the last 6 months to 25,100 units. More importantly, the number of new units installed in Q2 FY21 was up 38% compared to Q1 FY21, signalling that a recovery is taking place. 

However, due to mid-teens growth in the installed base, the company’s half-year revenue was down 11% to $43.1 million. This was driven by a foreshadowed reduction in purchases by GE Healthcare as a result of the impacts of COVID-19 and the stronger Australian dollar. 

Operating profit before tax took a hit after delivering just $0.2 million in the half, compared to $6.7 million in the prior corresponding period. This reflects the impacts of COVID-19, particularly on first-quarter revenue and the ongoing investment in the company’s growth strategy. 

Revenue breakdown 

Nanosonics revenue can be divided into capital revenue, or the sale of trophon units, and consumable and service revenue. 

Capital revenue was down 35% to $9.4 million due to reduced trophon unit sales to GE Healthcare and limited access to hospitals. As GE resumed capital purchases in the second quarter, coupled with increasing capital sales by Nanosonics’ direct operations and other distributor partners, capital revenue grew by 148% compared with Q1. 

Half-year consumables and service revenues for its installed base were down 1% to $33.7 million. Revenues for this segment were resilient due to a 29% increase in Q2 Fy21 compared with Q1 FY21. The growth reflects a recovery in ultrasound procedure volumes experienced in the half. 

Outlook

Looking ahead, the company anticipates ongoing growth in total revenue and profitability into the second half, driven by increasing installed base growth and increased usage of consumables across all regions.

The company is optimistic about the rollout of the COVID-19 vaccination and eager for improved overall market conditions and access to hospitals. 

However, it appears that the market so far today has put aside the company’s forward-looking statements about recovery and improving Q2 revenues.

The Nanosonics share price opened at $5.50 but has continued to face selling pressure falling to an intraday low of $5.13. At the time of writing, its shares are trading down 12.4% at $5.30.

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Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The market may be tumbling lower today but that hasn’t stopped the Bega Cheese Ltd (ASX: BGA) share price from charging higher.

In morning trade the diversified food company’s shares are up almost 4% to a 52-week high of $6.01.

This latest gain means the Bega Cheese share price is up over 15% since the start of the year.

Why is the Bega Cheese share price at a 52-week high?

Investors have been buying Bega Cheese shares today following the release of a strong half year profit result.

For the six months ended 31 December, the company reported a 5% decline in revenue but a 98% increase in normalised profit after tax to $29.7 million.

In respect to its revenue, management advised that the decline relates to a number of factors. This includes the conclusion of the milk supply guarantee arrangements at Koroit, ongoing competition for milk resulting in decreased volumes, a reduction in global commodity prices, currency headwinds, and the exiting of lower value contract manufacturing agreements for cheese.

Positively, Bega Cheese continues to grow its Australian and international branded business, high value nutritional powders, and lactoferrin sales. This has led to a more profitable sales mix and an increase in its margins compared to the prior corresponding period.

However, despite the profit growth, the Bega Cheese Board opted to only maintain its interim fully franked dividend at 5 cents per share. It advised that this reflects prudent cash management as it integrates the Lion Dairy and Drinks acquisition, which completed on 25 January.

Outlook

No guidance has been provided for the full year but the company’s performance is expected to be boosted by the aforementioned Lion Dairy and Drinks business.

Executive Chairman Barry Irvin commented: “The acquisition delivers important industry consolidation and value creation with synergies across the entire supply chain. The expanded product range, manufacturing and distribution infrastructure and brand portfolio realises our ambition of creating a truly great Australian food company.”

“Bega Cheese has continued to invest in the development of new products across the spreads, snacking and dairy portfolio, and the acquisition of market leading iconic Australian brands in LD&D provides further opportunities to extend the product range. The international branded food business has continued to grow, despite the impact of COVID-19 on the foodservice channel in some key export markets. The LD&D acquisition provides a platform for further growth in international markets and provides a market presence to support innovation and a closer connection to customers and consumers.”

One slight disappointment is the Bulk segment, which has been impacted by COVID-19, particularly in the infant formula category. The company notes that customers have been impacted by trading conditions in key markets and the effects of COVID-19 on international travel and the Daigou channel.

The outlook for this category remains challenging and Bega Cheese continues to respond through diversification in its revenue streams, through product innovation, and new customer and channel development.

But judging by the Bega Cheese share price performance today, investors are happy to look beyond this short term weakness and focus on the long term.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Appen Ltd (ASX: APX) shares are sinking in early morning trade following the release of the company’s full-year results for the period ending 31 December 2020. At the time of writing, the Appen share price is down 6.77% to $18.88.

Let’s take a look and see how the artificial intelligence company performed for the period.

What’s impacting the Appen share price?

The Appen share price is being hit hard today despite the company delivering revenue of $599.9 million, up 12% on the prior corresponding period. Most of the earnings came from its ‘Relevance’ segment, which contributed $538.2 million – a lift of 15% over FY19. ‘Speech and Image’ followed with $61.2 million in earnings for the 2020 full year, down 10% from the comparative period. The fall was blamed upon cyclical timings and the COVID-19 pandemic.

The group saw its customer base expand over the period with the addition of 136 new clients. Many of the customers represented a variety of sectors such as payments tech, autonomous trucking, financial banking, and more. Appen noted that while many of these wins were small, they provide a foundation for growth in the coming years.

Notably, the company’s top five customers increased their number of projects by 34%, supporting new product development.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) lifted to $108.6 million, an increase of 8% on the same time the year prior. However, in other results impacting the Appen share price, the company reported that the underlying EBITDA margin stood at 18.1% for the period compared to 18.8% in FY19. Appen stated that the lower EBITDA margin was a result of $12.7 million invested in sales and marketing in China.

Underlying net profit after tax (NPAT) also eased to $64.4 million, down 1% on FY19’s result. This was mostly affected by growth investment (net of tax) and increased amortisation.

Appen closed the year with a strong balance sheet of $78 million in cash and no debt.

The board declared a 50% franked dividend of 5.5 cents per share to be paid on 19 March 2021.

Management commentary

Appen CEO Mark Brayan briefly touched on company’s result, saying:

2020 was a breakout year for new sales, new projects, committed revenue and our entry into China, but it was not without its challenges. I am extremely proud of our team’s efforts to support our customers and growth strategy, and deliver for our shareholders, in such a difficult year.

Outlook

Appen’s performance for the full year was hit hard by COVID-19 which led to fewer B2B sales and reduced online advertising spend. However, the company saw a bounce back in the fourth quarter. It believes that most of the projects that have been deferred will recommence this year.

The company’s year-to-date revenues including the orders on hand for delivery amount to $240 million in February so far.

As a result, underlying EBITA for the year ending FY21 is expected to be in the range of $120 million to $130 million. 

Appen share price snapshot

Over the last 12 months, the Appen share price is down more than 20%. Appen shares hit a low of $15.70 last March, before accelerating up until August, reaching a high of $43.66. Since then, the company’s shares have tumbled back towards their COVID-19 lows. 

Based on the current Appen share price, the company has a market capitalisation of around $2.5 billion.

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Aaron Teboneras owns shares of Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The IOOF Holdings Ltd (ASX: IFL) share price is up 7% after the diversified financial advice business released its FY21 half-year result.

What did IOOF report in HY21?

It reported that its closing funds under management, administration and advice (FUMA) grew by 39% to $202.4 billion, whilst average FUMA rose 43% to $204.3 billion.

IOOF announced that its gross margin rose by 41% to $349.3 million, with a six-month Pensions and Investments (P&I) gross margin contribution of $125.3 million.

It reported that statutory net profit after tax (NPAT) from continuing operations increased by 96% to $54.4 million. Underlying profit from continuing operations increased by 17% to $65.9 million despite the impacts from early access to superannuation withdrawals and the continued effects of the COVID-19 pandemic on the economy and client sentiment.

During the period, IOOF restructured its proprietary Evolve platforms, ceased its relationship with BT and launched new arrangements with Hub24 Ltd (ASX: HUB) and simplified its investment management through outsourcing the cash management trust administration.

The transformation initiatives were the primary contributors to the $4.1 billion in net outflows.

IOOF special dividend and ordinary dividend

The IOOF board decided to declare a fully franked interim dividend of 11.5 cents per share, with an ordinary dividend of 8 cents per share, which is within the dividend payout ratio target range of 60% to 90%.

IOOF has also decided to declare a 3.5 cents per share special dividend.

‘Advice 2.0’

IOOF explained it’s implementing a new strategy to change the quality and affordability of advice and construct a sustainable long-term advice model for the business.

It said that it’s on track to deliver its synergy targets and key milestones.

In the second half of FY21, it’s expecting to deliver annualised savings of $10 million. It has projected that self-employed advice will be breakeven by FY23.

Acquisition integrations

A big part of IOOF’s new strategy includes the acquisitions of the businesses called P&I and MLC. IOOF said that it has significantly progressed its integration activities delivering an additional $5.9 million in synergies, which is $20 million on an annualised basis. This brings the total annualised synergies to date to $38 million. It’s on track to achieve its goal of an annualised $43 million of costs by 30 June 2021.

The MLC acquisition is expected to complete before 30 June 2021.

IOOF CEO Renato Mota said:

We are confident the combination of IOOF and MLC will contribute to the creation of a bigger and better IOOF that brings scale, diversity and growth opportunities through the wide-ranging capabilities and technical expertise that offer unmatched choice, accessibility, affordability and improved client outcomes.

IOOF share price

The IOOF share price is still 42% compared to where it was a year ago before the COVID-19 pandemic occurred and all of the associated impacts hit the Australian economy. 

FY21 outlook

IOOF is expecting a robust business outlook for the wealth management sector off the back of returning economic growth and fiscally-induced economic resilience. 

It’s looking to commence work on achieving $65 million to $80 million of synergies from the MLC acquisition in the first 12 months after the deal is completed.

Mr Mota said:

Longer-term, we continue to see significant changes in the market as the ageing population increasingly looks for wealth management advice, and retirement and post retirement solutions to address their complex needs.

This combined with increasing per capita wealth and ongoing disruption in the industry to meet emerging societal and technological needs, offers good opportunities for IOOF.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia has recommended Hub24 Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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