Ann: ANZ Wealth Management updated financial information, page-3

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01/05/18

16:46

Post #: 32806381
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Originally posted by madamswer ↑

So, ANZ's wealth management business - which IOOF is buying for $975m - made NPAT of $39m in the 6 months to March, 2018.

Annualising that figure suggests that IOOF is buying the business for a P/E multiple of 12.5x.

And that is even before IOOF gets hold of it and pulls synergies out of it: in that vein, it warrants noting that IOOF operates on a Cost-to-Income (CTI) ratio of 54%, compared to the 70% CTI of the ANZ Wealth business.

With a cost base of around $260m, by my estimates, for the ANZ Wealth business, that represents a lot of fat that can be cut out by the new owners.

For context, at IOOF's current CTI of ~54% (and IOOF should ultimately be able to at least match that level with the ANZ Wealth business, given the natural scale-ability of these sorts of businesses), it would mean that NPAT for the ANZ Wealth business would end up closer to $120m [* Refer to rough , pro forma calculations below]

This would mean that IOOF will end up paying just 8.2x P/E for the acquired business.

And, it bears noting that $120m of acquired NPAT is very material in the context of IOOF's current level of after-tax earnings of around $180m pa.

[*]
ANZ Wealth Management Business Abridged, Pro Forma P&L

1. Based on ANZ's latest interim result, annualised:

Revenue = $370m
Operating Costs = -$260m (reflecting CTI of 70%)
Pre-Tax Profit = $110m (assuming 30% tax rate)
NPAT = $78m

2. Assuming IOOF's CTI of 54%

Revenue = $370m
Operating Costs = -$200m (reflecting CTI of 54%)
Pre-Tax Profit = $170m
NPAT = $120m

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Thanks for the positive post M as I'm currently down 13% on my 31 Oct 17 $10.85 buy.

IFL Price at posting: $9.39 Sentiment: Buy Disclosure: Held
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Last $4.44		Change 0.510(13.0%)		Mkt cap ! $2.984B

Open	High	Low	Value	Volume
$4.51	$4.56	$4.41	$38.68M	8.640M

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No.	Vol.	Price($)
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Price($)	Vol.	No.
$4.45	47427	28

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No.	Vol.	Price($)
26	54763	4.430
15	78148	4.420
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10	35977	4.400
4	26870	4.390

Price($)	Vol.	No.
4.450	48543	26
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