IOOF Holdings Ltd
ABN 49 100 103 722
Level 6, 161 Collins Street
Melbourne VIC 3000
GPO Box 264
Melbourne VIC 3001
Phone 13 13 69
www.ioof.com.au
22 October 2021
IOOF Holdings Ltd - 2021 Annual Report
In accordance with the ASX Listing Rules, IOOF Holdings Ltd attaches the 2021 Annual
Report.
-ENDS-
Authorised for release by the Company Secretary of IOOF Holdings Limited Ltd.
Enquiries:
Cary Helenius
Executive Director
Market Eye
M: +61 403 125 014
E: investorrelations@ioof.com.au
Media enquiries:
Kristen Allen
GM Corporate Affairs & Reputation
IOOF
M: +61 412 759 753
E: [email protected]
About IOOF Holdings Ltd
IOOF has been helping Australians secure their financial future since 1846. During that time,
we have grown substantially to become one of the largest groups in the financial services
industry.
IOOF provides advisers and their clients with the following services:
• Financial Advice services via our extensive network of financial advisers;
• Portfolio Management and Administration for advisers, their clients and hundreds of
employers in Australia; and
• Investment Management products that are designed to suit any investor’s needs.
Further information about IOOF can be found at www.ioof.com.au
Stronger together
IOOF Annual Report 2021
IOOF Annual Report 2021
|
IOOF Holdings Ltd
At IOOF, we have been helping Australians secure their
nancial future for 175 years.
Today, IOOF is one of the largest nancial
services groups in Australia, an ASX Top
200
company and leading provider of nancial
advice, superannuation, investment and
trustee products and services.
On 31 May 2021, IOOF completed the
acquisition of MLC Wealth, bringing
together two of Australia’s longest-standing
wealth management businesses, to create
Australia’s leading wealth manager.
With more than $450 billion in funds
under management and administration,
the new IOOF proudly serves over 2million
Australians. We administer more than
$180billion of superannuation assets,
making us one of the largest super fund
providers in Australia and one of the largest
advice businesses with 1,975nancial
advisers that have an advice service
relationship with IOOF.
1
The new IOOF has greater scale and
capability, and is focused on building
efciencies that will provide clients
value, choice and accessibility.
1
All gures are at 30 June 2021. Financial adviser numbers include
1,353licensed advisers and 622 self-licensed advisers that we service
in the Alliances, Dealer Associates and Connect business models.
WelcomeWelcome
IOOF proudly acknowledges Australia’s Aboriginal
and Torres Strait Islander peoples and their
rich culture, and pays respect to their Elders
past, present and emerging.
We acknowledge Aboriginal and Torres Strait
Islander peoples as Australia’s rst peoples and as
the Traditional Owners and custodians of the land
and water on which we rely.
We recognise and value the ongoing contribution
of Aboriginal and Torres Strait Islander peoples
and communities to Australian life and how this
enriches us. We embrace the spirit of reconciliation,
working towards equality of outcomes and
ensuring an equal voice.
Contents
02 Our services
04 Chairman’s commentary
06 2021 results at a glance
08 CEO’s commentary
12 Environmental, social and
governance report
31 Directors
33 Financial report
139 Shareholder information
141 Corporate directory
IOOF Holdings Ltd ABN 49 100 103 722
02
Our services
Creating nancial wellbeing for all Australians.
We have a substantial opportunity to improve the nancial
wellbeing of all Australians.
Our broad range of wealth management products and
services means that we have an unparalleled ability
to provide solutions to help our clients achieve their
nancial goals.
Caring about people and providing quality service and
consistent performance are key to our success.
Financial advice
We believe in the value of nancial advice and the importance
of making advice more accessible, engaging and aordable.
Whether provided through the organisations we partner with
or our own extensive adviser network, we believe nancial
advisers have a strong and enduring positive impact on clients
by helping them build, maintain and protect their wealth.
Portfolio administration
We oer nancial advisers, clients and thousands of employers
around Australia leading superannuation and investment
solutions. We oer our own products as well as a selection
of external, leading solutions. This open architecture model
ensures advisers and their clients can choose the solutions
that best suit their individual needs.
Investment management
Our investment capabilities are driven by a
highly skilled team of more than 100 investment
professionals, operating out of four countries,
with a proven investment process that focuses on
delivering strong, consistent returns for our clients.
Investment options include multi-asset and direct asset
management across a range of specialist asset classes
including global and domestic equities, xed income,
private equity and property.
Today, we manage more than $232 billion worth of
assets on behalf of our clients, advisers and institutions.
Theteam also has access to world-leading investment
managers across a broad range of asset classes to assist
clients in achieving their investment goals.
Estate administration
Australian Executor Trustees is part of the IOOF
group and has been providing estate and trustee
services to Australians for more than 140years. Trustee
services include estate planning and administration,
compensation trusts, personal trustee services,
philanthropy and self-managed super fund solutions.
Our diversified model
02
Clients
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IOOF Annual Report 2021 03IOOF Annual Report 2021 03
"
We cannot begin to express
our gratitude for your
wonderful, positive decision!
The memory of my husband, and
my son’s father, will be more strongly
cherished, remembering the support and
courage he received in life and in death,
the nancial advice provided and the
positive outcomes even ten years on.
"
IOOF client
Image is stock photography.
04
Welcome to the 2021 nancial
year annual report.
Last year, I described the 2020
nancial year as one of volatility,
change and disruption. As a
nation, we had to contend with
two unprecedented crises:
catastrophic bushres and
then the COVID-19 pandemic.
Itquickly became apparent that
2020 would require a dierent
kind of resilience as the health
and community eects of the
virus, and the economic impacts
of measures taken to contain it,
reshaped our economies and
way of life.
Twelve months on, the prospects
for the world economy have
brightened. In May this year, the
Reserve Bank of Australia noted
that the Australian economy is
transitioning from recovery to the
expansion phase earlier and with
more momentum than anticipated.
2
But this is no ordinary recovery.
Thepandemic has changed the
world, and its eects will last.
Optimistically, and barring
any unexpected catastrophes,
individuals, businesses and society
alike can start to look forward to
shaping the future rather than just
grinding through the present.
In this regard, there are parallels
with the outlook for IOOF. Just as
2021 was a year of global transition,
it also heralded a major transition
for the Group. We are shaping the
future so that all Australians can
access quality nancial advice, and
experience nancial wellbeing.
Environmental, social and
governance priorities
Sustainability and environmental,
social and governance (ESG) issues
aect how all companies do
business – and this is increasingly so
in recent years. We recognise – as do
our investors – that sustainability is a
strategic priority that involves both
business risks and opportunities.
Chairman
s commentary
We are shaping the future so all Australians can access
quality nancial advice, and experience nancial wellbeing.
2
RBA, Statement on Monetary Policy – May 2021.
IOOF Annual Report 2021 05
Addressing climate change
The risks associated with a changing
climate extend across many, if
not all, sectors of the economy.
The Board and I are committed to
deeply understanding and acting
appropriately to address climate
change risk within the business.
Principally, we are guided by:
• the Paris Agreement, which
has the goal of limiting global
warming to well below two
degrees Celsius compared to
pre-industrial levels
• the recommendations of the
Task Force on Climate-related
Financial Disclosures, which were
developed to promote more
informed investment, lending
and underwriting decisions in
response to climate change
• the Hutley opinion on the
potential liability of company
directors in Australia if they
do not adequately manage
climate change risks.
You will nd more information
about IOOF's climate change related
initiatives in the environmental,
social and governance report.
As a Board, we recognise that the
tectonic shift towards sustainable
investing is accelerating. IOOF's
responsible entities are committed
to managing funds in a responsible
manner on behalf of our clients.
Identifying and managing ESG
factors, risks and opportunities
aligns with our clients’ long-term
goals of a secure nancial future.
Through MLC Asset Management,
we are now members of the
Responsible Investment Association
Australasia and the Investor Group
on Climate Change.
Social impact through the
IOOF Foundation
The IOOF Foundation continued
to support outstanding charitable
organisations and invest in our
communities. The past year has
brought great personal challenges
to many, requiring us all to adjust
and support those around us.
In the 2021 nancial year, the
IOOF Foundation contributed
over $700,000 to community
organisations, bringing the total
funds distributed since inception
to more than $16 million. Grants
were awarded in the areas of
mental health, aged care, families
and at-risk children and youth.
Our community partnerships are
numerous and include Ardoch,
the Coleman Foundation,
Ganbina, The Smith Family and
Youth Focus WA, to name a few.
On behalf of the Group, I extend our
gratitude to the Trustee Directors for
their ongoing commitment, led by
the Chair, Ms Angie Dickschen.
Governance in sharp focus
Whether governing through
steady state or signicant
upheaval, a Board’s duty is to
act in the best interests of the
corporation. The challenges that
beset this past year brought into
sharp focus the signicance of
stakeholder governance for the
Board. Stakeholder governance
requires us to identify, engage
with and understand stakeholder
perspectives on key issues,
and then reect on how these
perspectives should be considered
in decision making.
The new IOOF
Our orientation towards clients –
putting them rst, and understanding
and meeting their nancial needs
in a myriad of new, aordable and
accessible ways, and ultimately
providing a sense of nancial
wellbeing – is the essence of our
client-centric philosophy ClientFirst.
We know that Australians who have
been impacted by the COVID-19
pandemic see nancial advice and
planning as essential to wellbeing.
Whether it’s platform enhancement,
business simplication or product
development, each element of
our strategy is focused on clients
and improving the aordability
and accessibility of nancial advice
for the nancial wellbeing of all
Australians – in good times and bad.
In this sense, we are working hard
to not only change ourselves, but
to reshape our industry.
Against this backdrop, I would
like to extend my thanks to the
members of the Board for their
commitment, wisdom and
guidance. I acknowledge the work
of Chief Executive Ocer Renato
Mota and the Executive Team for
their capable management of the
organisation. I also thank all our
colleagues, who are now 5,000
strong, following the successful
acquisition of MLC. Theyhave
worked tirelessly to continue to
position the business for success
today and tomorrow.
Allan Griths
Chairman
The past year
has brought great
personal challenges
to many, requiring
us all to adjust
and support those
around us.
06
2021 results at a glance
Business highlights
2020
JUL
IOOF Community Oer
launched – provided
more than 1,000 hours
of nancial advice and
pro bono support to
over 200 individuals and
50community groups
IOOF Balanced Investor
Trust wins Multi
Asset – Balanced
category at the Money
Management Fund
Manager of the Year
2020 Awards
AUG
Acquisition of
MLC announced
SEPT
Advice 2.0
strategy launched
Wealth Central
purchased
DEC
IOOF MultiMix
Australian Shares Trust
wins Best Australian
Shares Super Product
award, and IOOF
MultiMix Balanced
Growth Trust is named
Best Multi-Sector Fund
(second year in a row) in
Money
magazine’s Best
of the Best Awards 2021
Over $1.4 billion released
to members under the
COVID-19 early release of
superannuation scheme
since April 2020
NOV
The True Value of Advice
research released
– more than 12,500
Australians surveyed
More than 150 colleagues
from ANZ Pensions
and Investments (P&I)
business welcomed
IOOF’s new
principles launched
2021
FEB
First Annual Member
Meetings held for
superannuation members
MAR
IOOF named Managed
Funds Provider of the Year
– Multi-Sector Funds
by Canstar
Another 147 colleagues
from ANZ P&I welcomed
MAY
MLC acquisition approved
by the Australian Prudential
Regulation Authority
IOOF MultiMix Balanced
Growth Fund wins Multi
Asset – Growth category
at the Money Management
Fund Manager of the Year
2021 Awards
ANZ Superannuation wins
Canstar’s Most Satised
Customer – Super Fund
award for 2021
MLC acquisition
completed
JUN
2,600 colleagues and
406 nancial advisers
from MLC welcomed
More than $450billion
FUMA
3
and $180billion
administered in
superannuation assets,
making IOOF one of
the largest wealth
managers in Australia
$5billion and more
than 38,600 accounts
migrated to new
Evolve platform
APR
Wealth Central wins
BestNew Advice Technology
Application award by
Investment Trends, based
on Investment Trends’
2020 Advice Technology
Benchmark Report
IOOF Annual Report 2021 07
Financial results
$147.8m
FUMA
3
UNDERLYING NPAT
4
SUPER
$453.4b
Up +244%
from 30 June 2020
(
$143.5m
)
Including a $200m non-cash
goodwill impairment
charge
NET INFLOWS
STATUTORY NPAT
4
ADVISERS
$3.3b
Net inows into
Evolve retail advisory
platforms
$1.4b
Released under early
access to super scheme
to assist clients
during COVID-19
1,975
Financial advisers
have an advice service
relationship with IOOF
ACQUISITIONS
ACQUIRED FUMA
DIVIDENDS
$296.3b
Additional FUMA at
completion of MLC
acquisition
23.023.0CPSCPS
55
Fully franked
dividends
per share
$55.8m
Cumulative annualised run-
rate synergies from acquiring
ANZ P&I and MLC
IOOF Annual Report 2021 07
3
Funds under management and administration
4
Net prot after tax
5
Cents per share
08
CEOs commentary
We have the strategic intent, the talent and now the scale,
to deliver our advice-led wealth management proposition
to more Australians than ever before.
6
Five-year compound annual growth of total superannuation assets to March 2021 per APRA superannuation statistics.
At the time of writing, we are
in the extraordinary situation
of having more than 16 million
Australians in lockdown as a
result of the COVID-19 pandemic.
I recognise that for many people,
prolonged periods of lockdown
have been dicult. It is against this
backdrop that I would like to start
by acknowledging the incredible
job all our people at IOOF have
done in a dicult and unsettling
environment.
Stronger together
I am pleased to report on the
successful completion of the
MLC transaction on 31 May 2021.
This acquisition positions us as
a leader in a new era of wealth
management in Australia, giving us
a strong platform for future growth.
Wehavethe strategic intent, the
talent and now the scale, to deliver
our advice-led wealth management
proposition to more Australians
than ever before.
IOOF has been transformed
through acquiring ANZ Wealth’s
Pensions and Investments (ANZ P&I)
business and MLC over the past
two years. The new IOOF has more
than 2.2million clients nationally,
$450billion in funds under
management and administration
(FUMA), a network of 1,975advisers
and over 5,000 employees.
While the industry transforms,
the wealth management sector
continues to increase in size, with
ve-year compound annual growth
in superannuation assets of 9%
per annum.
6
A bigger and better
IOOF will be positioned to take
advantage of these opportunities
by being at the forefront of the
industry transformation.
Continued overleaf
IOOF Annual Report 2021 09IOOF Annual Report 2021 09
Transformation with purpose
INNOVATIONCONDUCTCULTURE
Focus
2022–2024
2019–2021
Advice 2.0
Enhanced corporate governance
and education standards across
the adviser base.
Improved productivity and quality
of advice enabled by technology.
Improved sustainability and
protability of the self-employed
channel.
Financial wellbeing
Orient our service proposition
around member needs.
Expand the capability
of technology to shape
member experience and drive
personalisation.
Pursue opportunity to reach the
signicant unadvised segment
ofthe market.
Evolve
Transition IOOF legacy
administration platforms to
the Evolve platform – to be
completed in December.
Adoption of the successful
Evolve blueprint to underpin
further platform rationalisation.
Product simplication
Complete review of entire
product suite.
Commence a structured
consolidation of ANZ P&I and
MLC platforms to the ‘go-forward’
technology.
Continue to enhance the client
experience to remain relevant to
changing client needs.
Acquisition
Completed transformational
acquisitions of ANZ P&I and MLC.
Achieved critical mass and
breadth of oering across
all major segments of advice,
platforms and asset management.
Client engagement
and reputation
Continue review of current suite
of brands.
Focus on client needs and market
engagement.
Grow the client base and market
share, delivering sustainable
shareholder returns.
Simplify
Grow
10
We believe we have a substantial
opportunity to improve the nancial
wellbeing of all Australians. We are
focused on building a protable
and sustainable business model that
delivers accessible and aordable
advice for clients at any stage of life.
Everything we have achieved this
past year is strategically aligned to
that objective.
Importantly, we are integrating
our acquired businesses into one
wealth management business, with
one purpose. And that purpose
is centred on the needs of our
2.2million clients and members.
We want to understand them,
look after their needs and secure
their futures, and our ClientFirst
philosophy underpins all the work
we do to deliver on this purpose.
Financial performance
Our nancial performance over
the past 12 months has been
strong. The nancials highlight
an underlying net prot after tax
of $147.8 million from continuing
operations, which is up 19% on the
2020 nancial year.
After taking into account a non-cash
goodwill write-down and MLC
integration costs, we reported
a statutory net loss after tax of
$143.5million. We delivered a total
dividend for the year of 23cents
per share, with the nal dividend
made up of a 9.5cents per share
ordinary dividend and a 2cents per
share special dividend.
Technology as an enabler
of growth
We believe in owning and
developing technology to assist
our advisers, clients and members
in understanding, looking after and
securing their future.
Our Evolve platform is a state-of-
the-art administration system that
is gaining support from clients and
our advisers, and will form the core
of our oering as we consolidate
the acquired legacy administration
systems into the future.
Our$30million investment in
Wealth Central – an intuitive,
interactive technology – creates
a more ecient and dynamic
interface between the client and
the adviser around fact-nding,
data collection and cash ow
projections in real time, compared
to the previous static and
lengthy process.
This dierentiating technology,
which IOOF owns exclusively, will
benet our adviser network. Itwill
also signicantly improve and
streamline the client experience,
meaning advisers will spend less
time collecting data and more time
creating plans to help clients achieve
their nancial goals. It also reinforces
our commitment to continue to
innovate in the space and build new
advice delivery methods. We have
established an incubator business to
explore the components of nancial
wellbeing and how technology and
humanistic advice will converge to
engage more broadly with clients.
The future of advice
It was pleasing to welcome another
406MLC advisers to our licensed
advice business as we look to create
a leading advice community, for
both advisers and the communities
they support.
As part of our commitment to
delivering a step-change in the
quality and aordability of advice
and constructing a sustainable long-
term advice model, we continued
to improve the eectiveness and
eciency of nancial advice by
delivering insights supported by
newtechnologies.
I believe that for IOOF, the endgame
in nancial advice is the same as
that for the entire industry. We
are
working towards delivering advice
across a multitude of digital channels,
through human and ‘digital’ advisers,
face to face and remotely, for those
just starting out or retiring. We
remain committed to supporting
advisers and their clients by
providing unmatched technologies
and choice.
Transformation through
people and purpose
Over the past year, I have nalised
my leadership structure, ensuring
we have the right talent to take the
company forward. I’m condent we
now have a senior management
team in place that is committed
to stewardship and growth of the
business by supporting Australians
and their communities.
Looking to the future, we see a
tremendous opportunity to improve
the lives of Australians. We will
do this by focusing on nancial
wellbeing, expanding the capability
of technology to shape the member
experience, driving personalisation
and leveraging opportunities to
reach those Australians who do not
currently receive nancial advice.
IOOF has a long history in
supporting Australians and their
nancial wellbeing. Today, it is
through mobilising our talent and
resources that we will continue
to serve our communities and
deliver better outcomes for clients,
members and shareholders alike.
Renato Mota
Chief Executive Ocer
IOOF Annual Report 2021 11IOOF Annual Report 2021 11
"
I have watched your Annual
Member Meeting on the
website and I must let you
know how much I enjoyed it
and how informative I found it.
It has taken away the mystery of the
faceless people in an organisation
and made them feel more like
familyto help me.
"
IOOF client
Image is stock photography.
12
It is important we create a framework that allows us to
measure – and manage – the impact our business has
on the environment and the community.
Maintaining strong environmental, social and governance
(ESG) practices enables us to manage risks and realise
opportunities in a way that creates long-term value for
allstakeholders.
Our purpose as an organisation – Understand me. Look
after me. Secure my future – extends to our clients, our
people, our shareholders and the broader community.
We use the principle of materiality to dene the social and
environmental topics that matter most to our business
and stakeholders. The materiality assessment process is an
opportunity for us to apply a sustainability lens to business
and enterprise risk management processes.
Environmental, social and governance report
At IOOF, we acknowledge that the sustainability of our business
is intrinsically linked to the sustainability of the environment
and the communities in which we operate.
Material matters
We understand that identifying, monitoring and reporting on material ESG risk exposures is vital to IOOF’s success in building trust
and achieving our strategic vision to be Australia’s leading advice-led wealth management and nancial wellbeing provider.
In assessing IOOF’s material exposure, we engage with our stakeholders, including members, investors, employees, industry
bodies, regulators and research partners, to understand key areas of focus.
We have broken up material ESG matters into the following categories.
Our clients
•
ClientFirst
• Support during COVID -19
• Member and client
engagement
• Product simplication
• Value of advice
• Anti-bribery and
corruption
Our business
•
Accelerating governance
• Cybersecurity/privacy
• Financial Accountability
Regime
• Board eectiveness
• Advice review
• Environmental
sustainability
• Tax transparency
Our people
•
Our culture
• Employee wellbeing
• Employee engagement
• Diversity and inclusion
• Growth and development
Our community
•
IOOF Foundation
• Reconciliation Action
Plan
• Modern slavery
• Sta volunteering
/giving
• Community oer
• Responsible investing
OUR ESG PRINCIPLE CATEGORIES
12
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IOOF Annual Report 2021 13
The United Nations Sustainable Development Goals (UN SDGs) provide a shared blueprint for achieving peace and
prosperity for people and the planet, now and into the future. IOOF is committed to supporting the goals and using them
as a framework to guide our ESG principles and initiatives.
While we support all 17 UN SDGs, we have prioritised six goals, given their relevance to our business.
Goal Aims to achieve Our responses
Ensure healthy
lives and promote
wellbeing for all
at all ages
• Extending our nancial wellbeing education program to improve the
lives of Australians
• Investing in and promoting initiatives to support employee mental
and physical health
• Implemented ‘low trac days’ across IOOF to help employees
‘digitally detox’
• Launched ‘Your mind matters’ employee educational program to
manage mental wellness
Ensure inclusive
and equitable
quality education
and promote
lifelong learning
opportunities for all
• Engaged 10,000 members and clients through 1:1 general advice assistance,
nancial wellbeing and education programs
• Delivered over 1,000 hours of pro bono practical nancial guidance and
support to more than 200 individuals and 50 community groups
• Created a community section on the IOOF website as a resource for all
Australians to access educational material or request pro bono support
Achieve gender
equality and
empower all
women and girls
• Improved female representation at Executive and management levels, reaching
our 40% target across Senior Manager and Other Manager levels
• Formed a partnership with Financial Executive Women (FEW)
• Provided nancial sponsorship of the FEW Positive Progression of WomenAwards
Reduce inequality
within and
among countries
• Implemented our Group Modern Slavery policy and action plan
• Developing a new Innovate Reconciliation Action Plan (RAP)
• Noted an increase in positive sentiment around diversity and inclusion in our
engagement survey:
– +9 points: ‘I feel like I belong at IOOF’
– +10 points: ‘Our leaders champion the importance of diversity and inclusion’
Ensure sustainable
consumption and
production patterns
• Changed our printer paper supplier to 100% recycled nationally
• Had nearly 1 tonne of oce equipment collected from Melbourne Head Oce
by Green Collect, to be recycled/removed from landll in the nancial year
• Running a pilot campaign to encourage clients to move to electronic
statements and communications
Take urgent action
to combat climate
change and
its impacts
• Integrated climate change risks into our new Responsible Investment
Statement, available at www.ioof.com.au/about-us/responsible-investment
• Calculating the carbon footprints of investment portfolios every six months
IOOF Annual Report 2021 13
14
Our clients
We exist to deliver what matters to clients.
Our ClientFirst strategy focuses on client
experiences that make a difference in the
lives of more than 2.2 million Australians.
ClientFirst – delivering what matters
By using customer research, data and analytics, we identify insights that
help us improve the client experience. Because many Australians entrust
their futures with us, our ClientFirst approach continues to transform the
way we serve our clients.
Leveraging technology from recently acquired businesses has improved
the way we identify our clients, providing a more seamless experience with
our Contact Centre. We use speech analytics to identify key issues that
matter to our clients, and to improve simpler interactions. We have also
extended automation capabilities to scalable processes, completing more
than 200,000 client transactions over the past year.
As outlined in the following ‘Product simplication’ section, we are evolving
the use of our investment and administration platforms through consolidation.
We have moved more than 38,600 clients onto our leading platform
solutions, and plan to move around 58,000 more clients before the end of
2021. Consistently strong customer satisfaction scores indicate that we have
managed the platform migration without compromising the quality of our
service or causing disruption to clients.
The COVID-19 pandemic
continues to aect the lives
of many in profound ways.
COVID-19 support
Digitisation and accessible advice have
continued to be important themes
throughout the year. Investing in the
mobility of our workforce over the past
year has enabled us to leverage technology
to keep our people safe by working from
home and oered our clients exibility in
how they access our services.
The Australian Government’s early
superannuation release scheme
commenced on 20 April 2020 and
closed to new applications after
31December 2020. The speed and
agility of our people, systems and
processes was important to ensure we
enabled members to eciently access
their retirement savings. In the year
ended 30 June 2021, IOOF released
82,833 early superannuation payments,
totalling $699 million.
IOOF Annual Report 2021 15
Member and client
engagement
Giving our superannuation members
and investment clients access
to relevant nancial wellbeing
information – including factual,
general, scaled and comprehensive
advice – is essential for delivering on
our strategy to improve the nancial
wellbeing of all Australians.
While enabling clients to physically
access education and advice
services has been challenging
throughout the pandemic, we
have provided one-to-one general
advice, and nancial wellbeing and
educations programs, to 10,000
members and clients.
Through the MLC business, we
are working on harmonising and
extending nancial education and
wellbeing programs that benet
our clients and all Australians. Our
current investment in technology
enhancements and applications will
give us the ability to signicantly
extend our reach with these
programs in the 2022 nancial year.
Product simplication –
delivering client value
In the 2021 nancial year, we
continued to focus on consolidating
and simplifying our broad range
of products and services to deliver
greater value for our clients well
into the future. We believe that
scale, coupled with a simpler
operating environment, will allow
us to drive down the cost to serve
while ensuring that we direct our
marginal investment to innovation
and eciently deliver greater value.
Key highlights during 2021 included
the completion of Phase 1 of Project
Evolve21, our initiative to simplify
our platform administration. This
led to the retirement of more than
30superannuation and investment
administration products and six
databases. Clients using these
products were smoothly transitioned
to contemporary and more
administratively ecient oers, with
over 16,000 clients also benetting
from reduced fees in addition to
enhanced features.
As further evidence of the potential
for our scale to enhance value
for clients, two of our largest
superannuation funds completed
a review of the Group insurance
benets oered to members
through competitive tender
processes. Despite a market
environment generally characterised
by substantial insurance premium
rate increases, we successfully
negotiated insurance premium
reductions and a range of improved
insurance terms for a large
proportion of members. In total,
more than 180,000 members will
benet from premium reductions
over the coming years.
We believe that
scale, coupled with
a simpler operating
environment, will
allow us to drive
down the cost
to serve while
ensuring that we
direct our marginal
investment to
innovation and
efciently deliver
greater value.
The True Value of
Advice research
In July 2020, IOOF worked with
global market research agency
CoreData to conduct research for
‘The True Value of Advice’ study.
The research, involving 12,643
Australians, assessed evidence
that nancial advice makes a
meaningful dierence in the lives
of many Australians.
Advised clients reported
the following.
88%
Sound nancial
advice has
reduced their worry
and stress
50%
Sound nancial advice
has improved their
mental health
90%
Accessing nancial advice
has placed them in a better

41%
Sound nancial advice
has improved their
relationships with family
and friends
Our clients
161416
Overwhelmingly, the results show
that advice improves the financial
wellbeing of people who receive
it. Moreover, better financial
wellbeing flows onto better overall
wellbeing, including improved
mental and physical health, and
healthier relationships.
The True Value of Advice
research, July 2020
Our clients
IOOF Annual Report 2021 17
To improve outcomes for our
clients in an environment where
returns on cash were continually
declining, we changed the
underlying investments of the Cash
Account on many of our platform
products, improving net interest
rates for more than 180,000 clients.
Anti-bribery and
anti-corruption
IOOF has zero appetite for bribery,
corruption and facilitation payments.
Honesty, integrity and fairness are
integral to how we operate.
The IOOF Anti-Bribery and
Anti-Corruption Policy prohibits
employees from engaging in any
activity that constitutes bribery
or corruption, and provides a
framework to ensure that related
risks within IOOF’s businesses
are properly identied, mitigated
and managed.
The Policy seeks fair client
outcomes, promotes nancial market
integrity, raises credibility with key
stakeholders (including our clients
)
and supports IOOF’s commitment to
corporate responsibility TheBoard
reviewed and approved the Policy
in April 2021.
Honesty, integrity
and fairness are
integral to how
we operate.
Our unique advice-led financial wellbeing strategy
dierentiates us from our peers and focuses on
delivering quality financial advice to all Australians.
Advocating for quality nancial advice
for all Australians
As one of Australia’s leading wealth management
businesses, we are pleased to be investing in
making nancial advice aordable and accessible
for everyone.
In July 2016, we launched the IOOF Advice
Academy, which is the pre-eminent training and
coaching resource for the nancial planning
industry. Our vision is to create an environment
in which ongoing nancial planning relationships
continue to deliver mutual value and enable
our clients to experience nancial wellbeing at
all stages of life.
Five years on from its inception, the IOOF Advice
Academy continues to lead the way in specialist
coaching for nancial advice businesses. Through
bespoke workshops, in-practice specialist coaching and
implementation, we address the challenges of providing
quality advice through ever-changing technology,
regulations and consumer expectations.
Our clients
18
Our community
IOOF has a rich history of helping Australians secure their nancial
future. The impact of the COVID-19 pandemic on the community
brought into sharp focus the importance of nancial wellbeing.
The IOOF Community Offer
As an advice-led company, we
helped those in need by providing
free and accessible nancial
guidance and support through
theIOOF Community Oer.
In response to the pandemic, IOOF
launched the Community Oer as a
resource for all Australians to access
educational material or pro bono
nancial wellbeing support. Across
our national footprint, 426 nancial
advisers oered to provide guidance
and support to those who need it
most within their communities, from
1 July 2020 to 30 September 2020.
Since then, many of our advisers
have continued to provide pro bono
advice as part of their standard value
proposition for their community.
Through the IOOF Community Oer,
we helped everyday Australians by
providing the following support
and guidance:
• Pro bono support – over
100registered practices of
IOOF-aligned advisers provided
more than 1,000 hours of
pro bono practical nancial
guidance and support to over
200 individuals and more than
50community groups.
• Educational videos and content
– IOOF provided educational
videos and support material
on accessing super early,
the JobSeeker Payment, and
looking after mental health
andwellbeing.
• Wealth Report – more than
300people accessed the Wealth
Report site and used the tools
to produce an online personal
snapshot report.
Crew Training at Reach
not only prepares us to
work with young people,
it positions us to be
better equipped at facing
challenges in our own lives.
In workshops, we walk
alongside young people as
they experience the magic
of Reach’s work. We, as
crew, undergo that same
process of experiencing ‘the
work’ during training.

Photo credit:
Reach Foundation
Location: Collingwood, Victoria
IOOF Annual Report 2021 19
Reconciliation with our
First Nations peoples
Supporting reconciliation means
working to overcome divisions
and inequality between Aboriginal
and Torres Strait Islander people
and non-Indigenous people.
AtIOOF, we focus on how we can
make a dierence in the areas
of inequality in nancial literacy,
access to superannuation and
retirement outcomes.
We are taking our learnings from
our current Innovate RAP with
Shadforth and Australian Executor
Trustees and applying them as we
develop a new Innovate RAP for
the IOOF Group.
Our actions focus on building
awareness and respect for
Aboriginal and Torres Strait Islander
cultures, protocols and languages,
and building relationships with
Aboriginal and Torres Strait Islander
groups within our networks.
Modern slavery
IOOF is committed to combating
modern slavery. By proactively
addressing this issue, IOOF will
raise awareness in the community
that supporting modern slavery
practices (directly or indirectly)
does not align with our business
values or culture.
In response to the Modern
Slavery Act 2018 (Cth) reporting
requirements, IOOF has
established a Modern Slavery
Team to understand and identify
possible modern slavery risks
within our operations and key
supply chain. IOOF conducted
a detailed modern slavery risk
assessment. A small number of
suppliers were unable to provide
appropriate evidence that this risk
was managed and these suppliers
have been placed on IOOF’s
Modern Slavery Watchlist.
IOOF developed a Modern Slavery
Policy, which the Board approved in
May 2021. ThePolicy outlines IOOF’s
approach to reducing the risk of
modern slavery practices within
our operations and supply chain.
We also submitted our Modern
Slavery Statement to the Australian
Border Force via the public online
register in March 2021 after
receiving IOOFBoard approval.
We have developed and
deployed a modern slavery
general awareness training
module. AllIOOF employees must
complete the training, which
incorporates the Modern Slavery
Policy and provides directions to
follow if a suspected or actual case
of modern slavery is observed.
IOOF is committed to improving
response rates from our suppliers
over the next ve years, as well
as enhancing our education
regarding our operations and
supply chains.
Our people raised
more than $100,000
for a range of charities
through our Workplace
Giving Program, Disaster
Relief Appeal and other
fundraising activities.
Employee volunteer,
donate and participate
program
Throughout the year, our people
organised fundraising and
community volunteering activities.
In addition to annual leave,
employees were entitled to take
up to two days’ paid community
service leave per year to perform
duties for specic charities or
community organisations, or an
eligible voluntary emergency
management activity.
Our people raised more than
$100,000 for a range of charities
through our Workplace Giving
Program, Disaster Relief Appeal
and other fundraising activities.
Our matched giving allows
our people to contribute to
causes they care about. These
programs demonstrate that one
of our values, Supporting Our
Communities, extends throughout
the organisation.
In response to the
pandemic IOOF
launched the
Community Offer
as a resource for
all Australians to
access educational
material or access
pro bono nancial
wellbeing support.
Our community
20
Our mission
The Foundation’s mission is to reduce obstacles
people face to help them meaningfully participate
in the community and improve their quality of life.
This past year has been one of the most challenging
for our community since the Foundation began.
The unprecedented impact of the COVID-19 global
pandemic compelled us to reimagine how we
can maintain the highest level of support to those
most in need.
When the pandemic was announced, we reached
out and extended our support to many of our
partners needing to pivot their operations. The
Foundation supported them to transition their
operations to provide services safely via digital
platforms and to develop long-term ‘COVID-normal’
operating models. The implications of the pandemic
are not yet fully known, but we do know that we
need to keep adapting all aspects of how we support
our partners to continue delivering quality outcomes
for our community.
The IOOF Foundation
The IOOF Foundation was established in 2002, when IOOF demutualised,
to recognise the origins of IOOF and the important role it has played in the
Australian community since 1846.
Programs
The Foundation continued to support
outstanding charitable organisations and to
invest in our community.
The past year has brought great challenges, requiring
us all to adapt and change, to support those around
us at home and in the wider community. In the
nancial year 2021, the IOOF Foundation contributed
more than $700,000 to community organisations,
bringing the total funds distributed since its inception
to more than $16 million.
Our grants program oers long-term grants (up to three
years) in areas that have been historically important
to IOOF and also to the wider Australian community.
To date, we have focused on:
• Mental health – we support mental health
prevention programs that deliver evidence-based
initiatives targeted at today’s youth. Prevention
early in life is important since a large proportion
of mental health conditions begin in childhood,
adolescence or early adult life.
• Aged care – we prioritise programs that provide
quality of life for individuals with progressive
neurological and physical diseases and their families.
• Families – our basic needs program supports
community groups assisting families struggling
tobe self-sucient, including by providing
long-term solutions that help families move out
of poverty or avoid a crisis.
• Children and youth – we support education
projects that help break the cycle of disadvantage
and empower young Australians to reach their
potential. We prioritise programs addressing
prevention and early intervention and education,
employment and training for young people.
20
Photo credit:
Aboriginal Literacy
Foundation. Location: Melbourne
Learning Centre, Victoria
Our community
IOOF Annual Report 2021 21
Governance
The Foundation is governed by the IOOF
Holdings Trustee Pty Ltd (Trustee). The role
of the Board of Directors is to determine
the strategic direction of the Foundation.
The Board has two broad purposes:
• Governance – conform to the
Foundation’s legal and nancial
requirements
• Performance – assist the Foundation
to perform to its highest potential.
2021 community partners
The grants that were approved are
innovative, yet sustainable, and will
provide value to the community.
Thishelps ensure that grants have a real
impact and achieve a meaningful result.
The grant recipients were:
• Alithia Learning
• Ardoch
• Coleman Foundation
• Ganbina
• Girls from Oz
• Gotcha4Life
• Lets Talk
• Live4Life
• Mama Lana’s Community Foundation
• Ngarrimili
• Reach Foundation
• Red Dust Role Models
• Righteous Pups Australia
• Rural Aid
• Spinal Research Institute
• The Funding Network
• The Smith Family
• Youth Focus WA
IOOF Annual Report 2021 21
What a year! We were really confident moving
into 2021, knowing that whatever may come,
we can be innovative in the ways we support
our young people. We are so grateful to IOOF
for their funding support in making this year
possible. We also anticipate 2021 will see an
unexpected growth in numbers as young people
recover from the trauma, anxiety and totally
disrupted education year that was 2020.
Righteous Pups Australia
Photo credit: Joanne Baker. Location: Castlemaine, Victoria
Our community
22
Responsible investment
IOOF is committed to managing funds
in a responsible manner on behalf of
our clients. Identifying and managing
ESG factors, risks and opportunities is
very important to us because it aligns
with helping our clients’ achieve their
long-term goals of securing their
nancial future.
Our Responsible Investment
Statement describes the role
responsible investment plays in
assessing, selecting and monitoring
externally appointed managers for
our multi-manager funds. Our asset
consultants support our ESG function,
working together to continually
improve and strengthen our
responsible investment disclosures
and processes.
Additionally, we are enhancing our
engagement with our investment
managers on ESG and climate
change matters. Every six months,
ESG scores and carbon-intensity
footprints are calculated on our
underlying portfolios and the results
are reported to the Investment
Management Committee.
Further, as members of the Responsible
Investment Association Australasia and
the Investor Group on Climate Change,
we contribute to enhancing the ESG
impacts on investing.
7
IOOF Advice Research and ESG
IOOF Advice Research considers ESG
principles and enables advisers and
clients to express their investment
preference. This is done by oering
guidance through an ESG Investment
Philosophy, ESG model portfolios,
and research with an ESG overlay and
assessment of investment products.
Our approach to ESG considers
exclusion strategies, impact strategies
and, in some cases, non-ESG
strategies (for diversication). We
believe that ESG integration should
not necessarily mean that an investor
is prohibited from investing in specic
sectors, countries and companies, or
that portfolio returns are sacriced to
incorporate ESG principles. By taking
this approach, we hope to meet
our clients’ investment objectives
while enabling advisers to align their
investment portfolios with clients’
broad or specic ESG requirements.
Two key approaches we incorporate
in ESG portfolios are:
• Exclusion strategies – these
include funds that negatively
screen investments associated
with specic industries such
as tobacco, alcohol, weapons,
pornography, gambling, animal
testing, genetic engineering,
deforestation, oil and gas,
nuclear power, mining and
climate change.
• Impact investing – this includes
investments that look to generate
positive returns while measuring
an investment’s environmental and
social impact alongside its nancial
return. Funds in this category tend
to be more active when voting
and advising companies. They seek
to positively reward companies
that take a proactive approach to
improving their ESG footprint.
The IOOF Advice Research team
covers ESG investing from three
key angles:
• ESG Investment Philosophy –
this was written for advisers, to
help them give ESG investment
support to clients and build on
clients’ objectives, beyond simply
‘investing in ESG’. Increasingly,
clients are aware of ESG as an
investment approach, but often
have limited understanding of
the issues and available options.
The Investment Philosophy and
other IOOF research collateral
assists advisers to clarify each
client’s personal ESG preferences
and objectives, noting that it is
a space in which values vary in
importance and by issue.
• ESG research – this incorporates
an ESG overlay in the review
of investments (primarily on
managed funds at this stage),
including an ESG sector review
and summary matrix outlining
various exclusions that dierent
investments may incorporate.
• ESG model portfolios – these
provide advisers and clients with
either an implemented solution
(via managed accounts) or an
investment framework (via the
model portfolio), allowing advisers
and their clients to either invest in
an ESG-aware portfolio or tailor a
portfolio in line with their nancial
objectives and specic needs.
An important observation from the
past 12 months is that advisers and
clients are increasingly aware of and
demand that ESG considerations
be incorporated in investment
portfolios. As such, IOOF Advice
Research expects that the advice
oering in relation to ESG research
will continue to grow and evolve in
line with the investment universe
and client requirements.
We are enhancing
our engagement
with our investment
managers on ESG
and climate change
matters.
7
Membership of the Responsible Investment Association Australasia and the Investor Group on Climate Change is via MLC Asset Management.
MLCAsset Management is part of the IOOF Group of companies, comprising IOOF Holdings Ltd and its related bodies corporate.
Our community
IOOF Annual Report 2021 23
Our culture
Our ClientFirst culture means
we put our clients at the centre
of everything we do. It’s why
our purpose is written in the
first person. We strive to create
an environment where all our
people feel connected to this
purpose and empowered to
deliver it every day.
In November 2020, we launched our ‘culture
story’, which has been instrumental in creating
strong alignment among our employees on
the role IOOF plays for our clients. This has also
been vital in dening our ClientFirst culture.
Everyone deserves to
feel confident about
their nancial
future
Be human
Deliver what
matters
Stronger together
Do what’s right,
not what’s easy
We look after
every client
like they’re our
only client
Create
financial
well-being for
every Australian
OUR PURPOSE
Understand me
Look after me
Secure my future
W
h
a
t
w
e
b
e
l
i
e
v
e
W
h
a
t
w
e
d
o
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h
a
t
w
e
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a
n
t
t
o
a
c
h
i
e
v
e
H
o
w
w
e
g
e
t
t
h
e
r
e
Keep it simple
Everyone deserves
to feel confident about
their financial
future
Be human
Deliver what
matters
Stronger together
Do what’s right,
not what’s easy
We look after
every client like
they’re our
only client
Create financial
wellbeing for
every Australian
OUR PURPOSE
Understand me
Look after me
Secure my future
W
h
a
t
w
e
b
e
l
i
e
v
e
W
h
a
t
w
e
d
o
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a
t
w
e
w
a
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t
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c
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i
e
v
e
H
o
w
w
e
g
e
t
t
h
e
r
e
Keep it simple
Our people
At IOOF, we strive to create an environment where our employees
are engaged, inspired and motivated to grow with us.
24
Employee wellbeing
We continue to focus on our
employees’ safety, health and
wellbeing, providing diverse support
and educational opportunities to
ensure they thrive. Examples of new
wellbeing initiatives we provided
over the past 12 months include:
• Your mind matters – an eight-
week educational program
focused on supporting
our people to proactively
manage their mental wellness
through topics such as staying
connected with others,
mindfulness and giving back
to the broader community.
• ‘Move, munch, money, mind’ hub
– a self-service information hub
our employees can access at any
time to support their holistic
wellbeing. It includes thousands
of curated articles, activities,
workouts, recipes and e-learning
resources to support their health
and wellbeing.
We have established the ‘Our
Work Life’ program to support
new ways of working. Most of our
employees continue to enjoy a
hybrid work environment, working
from home and the oce, which
we support and enable – 91%
of our employees feel genuinely
supported to work exibly.
Our employees, licensees and
their families all have access to
one-on-one counselling and
coaching through our employee
assistance program (EAP). Our EAP
provides personalised sessions
on a range of topics, including
nancial and mental wellbeing
and nutrition.
We recently implemented low trac
days across IOOF, encouraging
our people to ‘digitally detox’.
Thisinspires them to minimise
their digital trac and focus on
making progress against strategic
goals and innovation projects, or
take annual leave. We will continue
to focus on integrating time to
reect and genuine downtime
into our wellbeing approach,
acknowledging that these play a
pivotal role in our productivity and
growth as an organisation.
During financial year
2021, we increased
our focus on building
connection and
engagement with
employees, given the
challenges of COVID-19
and integration of
employees from our
acquired businesses.
Employee
engagement
We have fully supported
remote and hybrid working and
have adapted our engagement
approach to cater for this.
We conducted our detailed
annual engagement survey
and three supplementary
‘pulse’ surveys over the course
of the year. These enable our
employee listening strategy,
ensuring we remain connected
to our people and understand
how they are feeling, so we
can support them.
In our annual engagement
survey, we received feedback
from 84% of our people.
Our engagement scores
remained stable year on year,
with nearly three-quarters
of our people ‘engaged’ and
likely to recommend us as
an employer. This score put
us in the top quartile of the
external Insync benchmark for
organisations in the nancial
services industry.
Pleasingly, all governance
and risk indicators measured
through the survey also
increased or remained stable,
reecting our commitment
to embedding a strong
governance and risk culture.
We will continue
to focus on
integrating time to
reect and genuine
downtime into our
wellbeing approach.
Our people
IOOF Annual Report 2021 25
Diversity and inclusion
In August 2020, we initiated a
program to develop a deep
understanding of our culture, taking
a data-based approach. Our in-depth
analysis uncovered that at IOOF
our primary culture motivation is
belonging – creating structures,
processes and an environment in
which our people and clients belong.
This type of culture encourages
people, through behaviour and
ways of working, to be themselves.
It recognises and celebrates the
value of individual dierence.
This applies to employees and
clients alike.
We believe that by creating an
environment that allows people to
bring their whole selves to work,
they will feel more connected to the
organisation and operate at their best,
personally and professionally.
This is a key enabler to sustainable
business success, ensuring we
attract and retain the best people.
All our people are equal at IOOF
and this is reected in our culture
and operations.
Our Diversity and Inclusion Plan
details our vision and the strategy
we will follow to achieve this. The
plan was developed in consultation
with the IOOF Executive Team,
Directors and the IOOF Diversity and
Inclusion Advisory Committee.
Itfocuses on four key pillars:
1 gender balance
2 inclusion and belonging
3 culture, leadership and
environment
4 supporting recruitment
practices.
Key achievements in the diversity and
inclusion space during nancial year
2021 include:
• improving female representation
at Executive, Senior Manager
and Other Manager levels,
reaching our 40% target across
Senior Manager and Other
Manager levels
• making a nancial wellbeing
program accessible to all our
people, including providing funds
for nancial advice
• partnering with FEW, which
provides education and support,
and is accessible to all our employees
• providing nancial sponsorship
for the Positive Progression of
Women Awards
• launching ‘Our leading women’
female talent development program
Continued overleaf
IOOF Annual Report 2021 25
Our new organisational
principles act as the roadmap to
achieve a truly ClientFirst culture
and deliver on our ambition to
‘Create financial wellbeing for
every Australian’.
Our organisational pillars represent our
culture and illustrate the ways our people can
positively contribute through the behaviours
expected of them.
We have embedded our culture story and
principles through activities, including holding
face-to-face roadshows across the country. These
full-day events focus on helping employees feel
connected to IOOF’s purpose and ambition, and
to better understand how they can contribute to
this in their everyday work.
Be
human
Keep it
simple
Stronger
together
Our organisational
principles
Do what’s right,
not what’s easy
Deliver what
matters
Our people
26
• scaling the Diversity and Inclusion
Committee, which represents all
employees and acts as a sounding
board for matters related to the
Diversity and Inclusion Action Plan,
and supports delivery of the plan
• rolling out a compulsory diversity
and inclusion learning module,
supported by Executive-
led webinars
• partnering with Pride in Diversity,
which provides education and
support to all of our people
• conducting detailed gender
pay analysis and implementing
an action plan to address the
gender pay gap
• delivering company-wide
webinars on the Diversity and
Inclusion Plan, reconciliation
with Aboriginal and Torres
Strait Islander peoples and
International Women’s Day
• recording an increase in the
positive sentiment around
diversity and inclusion in our
engagement survey:
– +9 points: ‘I feel like I belong
at IOOF’
– +10 points: ‘Our leaders
champion the importance of
diversity and inclusion’.
The following table displays the
number of women on the Board
and in Executive and senior
management positions across
the whole workforce.
26
Our in-depth analysis
uncovered that at
IOOF our primary
culture motivation is
̀belonginǵ.
Women in Board,
Executive and senior
management positions,
and across the whole
workforce
Category Female
representation
July 2020 (%)
Female
representation
July 2021 (%)
Board (excluding CEO) 40.00 40.00
Executives (including CEO) 27.27 35.70
Senior managers
1
36.27 45.10
Other managers
2
40.53 41.30
Total workforce 49.12 49.50
1. Senior managers includes all roles reporting to an Executive, excluding administrative support roles.
2. Other managers includes all other managers.
Note. This data set includes leaders who transferred from MLC to IOOF in June 2021.
Our people
IOOF Annual Report 2021 27
Three lines of defence
We apply a ‘three lines of defence’
model to identify and manage risk
and compliance issues.
Our rst line of defence is the
operational areas of the business
that are responsible for identifying,
assessing, mitigating, monitoring
and reporting on risks within their
area. This includes developing and
operating internal controls.
The second line of defence is the
Enterprise Risk and Compliance Team,
which oversees and challenges risk
management and practices by the
rst line. It also provides advice and
support on implementing risk and
compliance frameworks.
Our third line of defence provides
independent assurance on the
eectiveness of our governance
and risk management practices
and control environment across the
whole organisation. We continue
to invest in resources dedicated
to our three lines of defence and
see a maturing of our risk and
compliance culture.
IOOF has adopted ASX Listing Rule
4.10.3, which allows companies to
publish their corporate governance
statement on their website rather
than in their annual report. The
Directors of IOOF have reviewed and
approved the statement. For more
information, visit our website:
www.ioof.com.au/about-us/about-
ioof/corporate-governance.
Our business
Accelerating corporate governance IOOF remains committed
to uplifting and strengthening our governance framework.
We are pleased
to be investing in
making nancial
advice affordable
and accessible for
the benet of all
Australians.
28
Cybersecurity
Cyber risk is one of the top
operational risks faced by the IOOF
Group. In line with our organisational
purpose, we are committed to
keeping our clients’ personal data
secure, by ensuring we have robust
and evolving cybersecurity and
privacy controls in place.
Our cybersecurity strategy,
policies, tactical initiatives and
operational controls are based
on the National Institute of
Standards and Technology security
framework and adhere to APRA
guidelines on information and
cybersecurity. Our Cybersecurity
Team reports to the Board on cyber
incidents, events, readiness and
improvement projects.
Like all business operations,
cybersecurity relies on people,
processes and technologies. Our
people are our rst line of defence
and IOOF has a considerable focus
on enabling and embedding a
‘cybersecurity culture’ throughout
the business. Our people undergo
various levels of awareness training,
including at induction and in
mandatory annual online training,
as well as personal one-on-one
training sessions where there is a
high cybersecurity risk.
All third-party relationships are
established only after a rigorous
due diligence process governed
by our Vendor Management
Policy. Security risk assessments
are conducted at the start of a
contract, and regularly throughout
the course of the contract. This
ensures that IOOF has adequate
assurance over the conduct and
controls third parties have in place
to protect information they hold.
IOOF collaborates with government
bodies and the industry to keep
abreast of cyber trends, and
emerging cybersecurity threats and
controls, and to discuss, collaborate
and share new cybersecurity
strategies and tactics.
IOOF is
an active member of the Joint
Cybersecurity Centre and partners
with Australia’s national Computer
Emergency Response Team and
the Financial Services Information
Sharing and Analysis Center. IOOF
is a founding member of the
Australian chapter of the Global
Cybersecurity Alliance, which is an
international, cross-sector eort
to confront, address and prevent
malicious cyber activity.
The Cybersecurity Team at IOOF is
also a member of industry groups
such as CISO Lens, the Information
Systems Audit and Control
Association and the Australian
Information Security Association.
This ensures the team receives
updates on relevant knowledge
and intelligence into the latest
trends and threats impacting
the Australian and global cyber
landscape.
With the onset of the COVID-19
pandemic in early 2020, we enacted
our Business Continuity Plan and
the workforce switched to working
from home. Appropriate policy,
procedural and technical controls
were implemented to mitigate
the risks introduced by working
from home.
The IOOF Cybersecurity Team is
currently involved in ensuring
security controls are carefully
considered and implemented as the
IOOF and MLC integration continues.
Privacy
Our clients trust us to look after
them by ensuring their personal
information is safe and secure.
The personal information we
collect is handled in accordance
with the IOOF Group Privacy
Policy, which outlines how we
manage personal information.
We have a robust program in
place to ensure privacy awareness
remains at the forefront of our
employees’ minds. Online privacy
awareness training is provided to all
employees annually and targeted
training is delivered several times a
year. We support a strong culture
of privacy compliance, where
reporting and responding to
privacy breaches is second nature.
We are continually looking for ways
to enhance our capabilities, to
ensure our controls remain eective,
and to build privacy awareness.
In May, we entered our seventh
year as an active participant
in the Oce of the Australian
Information Commissioner’s
annual Privacy Awareness Week
(PAW). This year’s theme was to
make privacy a priority and to
engage employees in initiatives
and activities to reinforce the
importance of protecting client
information.
With most of our employees
working online from home at least
part of the time, we have reinforced
that safeguarding information is
more vital than ever. Prioritising
privacy helps us to maintain our
clients’ condence that we securely
handle the personal information
they entrust us with.
Financial Accountability
Regime
The Financial Accountability
Regime (FAR) is the Australian
Government’s response to
recommendations made by the
Royal Commission into Misconduct
in the Banking, Superannuation
and Financial Services Industry. The
FAR extends the current Banking
Executive Accountability Regime
to strengthen the responsibility
and accountability of directors
and most senior and inuential
executives of nancial institutions.
Our business
IOOF Annual Report 2021 29
We continue to hold ourselves to
higher standards, ensuring that
our client obligations are met.
Advice review
IOOF continues to make progress in relation
to the voluntary advice review of our heritage
advice licensees (Bridges Financial Services,
Consultum, Lonsdale Financial Group and
Shadforth). We are identifying any systemic
issues relating to inappropriate advice and
reviewing ongoing advice to customers
of those businesses. We are undertaking
associated remediation activity and have
started processing customer remediation
payments. IOOF has arrangements with ANZ
with regard to remediation relating to former
ANZ Wealth Management advice licensees.
After releasing an initial consultation
paper in February 2020, Treasury
released a detailed consultation
package in July 2021 for implementing
the FAR. IOOF made a submission
regarding the content and scope of
the FAR legislation as outlined in the
consultation paper in mid-August
2021. The legislation is expected
to be introduced and passed by
Parliament in the 2021 Spring sitting.
The proposed implementation
date for insurers and registrable
superannuation entity licensees
is from the later of 1 July 2023 or
18months after commencement
ofthe FAR following Royal Assent.
IOOF established a FAR Steering
Committee in November 2020 and
engaged PwC as consultants in March
2021. Work completed to date includes
Executive and Director workshops,
drafting Executive accountability
statements and beginning a
‘reasonable steps’ assessment. The
intention of the legislation is to build
on organisations’ existing governance
and risk management frameworks.
Organisations will have to ensure
that accountable persons under the
legislation are taking ‘reasonable steps’
to full their responsibilities and meet
their obligations. With a scheduled
commencement date of July 2023, the
project is on schedule.
Board effectiveness
IOOF remains committed to uplifting
and strengthening our governance
framework. The key objectives of our
corporate governance initiatives are to:
• consolidate and simplify the
structure of the IOOF Group
• improve the eectiveness of our
business and people
• provide the foundation for
simplifying future products and
entities, to deliver more eective
and ecient governance
processes, communication
andcoordination.
Programs have included:
• standardising and uplifting Board
and Committee foundation
documents, frameworks and
processes to improve business
eectiveness
• launching initiatives to improve
Directors’ eectiveness and
enhance Board decision making
• uplifting the capability and
eciency of Board support
functions.
Our business
30
2021 tax contribution
by type
Environmental
sustainability
It is vital that IOOF identies,
assesses and mitigates the risks
associated with climate change.
This will ensure the sustainability of
our business for the benet of our
clients, people, shareholders and
broader community.
In acknowledgement of the rapid
growth and associated impact
of our organisation, this year we
created the IOOF Environmental
Sustainability working group with
representatives from across the
organisation. This group will drive
strategy and initiatives to assess
and improve our environmental
impact from a corporate
operational perspective.
Through our updated Responsible
Investment Statement, IOOF has
outlined how climate risk factors are
assessed when investing our clients’
money. This document is publicly
available on our website, along with
our ‘Proxy Voting Standard’.
In addition, IOOF is working with
our investment consultants to
provide input to identify and
manage climate change risk factors
and opportunities. As part of this,
regular carbon intensity footprints
are calculated on our underlying
portfolios and the results are
reported to the Investment
Management Committee.
From an operational perspective,
IOOF has implemented a number
of waste reduction initiatives across
our oce locations, including:
• recycling oce hardware
– nearly 1 tonne of oce
equipment was recycled or
prevented from landll in our
Melbourne oce, and we
are extending this initiative
nationally
• moving to 100% recycled
printing paper nationally
• providing battery recycling
bins in key oce locations.
To further reduce paper waste,
we ran a pilot campaign to
encourage members to move
to electronic statements and
email communications.
We contacted 16,722 clients via
SMS and email and achieved a 24%
response rate. Due to the success
of this pilot, we are expanding this
campaign across the broader IOOF
superannuation membership base.
IOOF is committed to providing
further, enhanced publicly available
reporting on our environmental
sustainability initiatives and
aspirations in the coming year.
Tax contribution analysis
We are committed to tax transparency
and integrity. IOOF has been a
signatory to the Board of Taxation’s
Voluntary Tax Transparency Code
since January 2017.
The IOOF Group contributed
a total of $141million in taxes
to Commonwealth and state
governments in the 2021 tax year.
The following chart provides an
analysis of the types of taxes the
IOOF Group is liable for.
Income tax
$65m
GST
$57m
Fringe benets tax
$1m
Payroll tax
$18m
Other
$0.1m
Total
$141m
Our business
IOOF Annual Report 2021 31
Information regarding Directors of the Company
for the period to 30 June 2021.
Directors
Mr Allan Grifths
Independent Non-Executive
Director and Chairman
B.Bus, DipLI.
Director since 14 July 2014
Chairman since 4 April 2019
More than 40 years' experience with
a deep understanding of the nancial
services industry. Mr Griths has
held a number of executive positions
within the industry most notably
as Chief Executive Ocer Aviva
Australia and later, Managing Director
South Asia, Aviva Asia Pte Ltd based
in Singapore. Prior to joining Aviva
MrGriths held executive positions
with Colonial Ltd and Norwich
Union. Mr Griths is Chairman of the
Westpac/BT Insurance Boards and the
Chairman of Metrics Credit Partners.
Mr Griths is also Chair of the Group
Nominations Committee and a
member of the Group Audit, Group
Risk and Compliance and Group
People & Remuneration Committees.
Mr Renato Mota
Chief Executive Ocer and
Managing Director
BComm (Hons), B.Bus
Director since 25 June 2020
With more than 20 years’ experience
in nancial services, prior to being
appointed CEO in June 2019,
MrMota held a number of senior
executive roles within IOOF. In
December 2018, MrMota was
appointed Acting CEO and prior to
that was Group General Manager
- Wealth Management since
January 2016. During this time he
was instrumental in leading IOOF
through a series of forward-thinking,
strategic initiatives including
IOOF’s advice-led strategy, the
group’s ClientFirst transformation
and establishing the IOOF Advice
Academy. Previously, he held
numerous executive roles as General
Manager of Distribution, Investor
Solutions and Corporate Strategy
and Communications. Before joining
IOOF in 2003, MrMota worked for
Rothschild and NAB in corporate
nance roles with a focus on
mergers and acquisitions where he
was involved in wealth management
transactions including the demerger
of Henderson Group plc from AMP
in 2003 and NAB’s acquisition of MLC
and Deutsche Financial Planning.
Mr Andrew Bloore
Independent Non-Executive Director
Director since 2 September 2019
Mr Bloore is an experienced Non-Executive
Director, entrepreneur and farmer. He
has designed, built and sold a number of
businesses, focussed on the development
of key disruptive technologies and
distribution services in traditional markets,
to create business eciencies. Mr
Bloore
has been actively involved in, both as
an Executive and/or as a Director and
in the capacity of investment funding,
development and leadership, include
Smartsuper, SuperIQ, and Class Super.
Mr Bloore has worked on a range of
Senate and Treasury Committees, and
with the Australian Taxation Oce (ATO)
Regulations Committee on regulation
for the superannuation industry. In
2016, Mr
Bloore sold his superannuation
administration business to AMP, stepped
down from the Senate and Treasury
Committees and is now focussed on
contributing to organisations as a
Non-Executive Director. MrBloore was
a non-executive director of FBRLtd
until November 2019.
Mr Bloore is a Board Member and
a Member of the Group Audit,
Group Nominations, Group People
& Remuneration and Group Risk and
Compliance Committees.
Continued overleaf
IOOF Annual Report 2021 31
32
Ms Elizabeth Flynn
Independent Non-Executive Director
LLB, Grad Dip App Corp Gov, FAICD,
FFin, FGIA, FCG.
Director since 15 September 2015
Ms Flynn has more than 35 years'
experience in the nancial services
industry, including roles within law
and corporate governance as well as
executive responsibilities. From 1998
to 2010, Ms Flynn was the Chief Legal
Counsel, Group Compliance Manager
and Group Company Secretary of
nancial services group Aviva Australia,
and a director of Aviva Australia's
superannuation trustee company. Prior
to her time at Aviva, Ms Flynn spent
18 years as a commercial lawyer with
Minter Ellison, including eight years
as a Partner, specialising
in managed
funds, banking, securitisation and
superannuation.
Ms Flynn was a
non-executive director of Bennelong
Funds Management from 2010 to 2015
and The Colonial Mutual Life Assurance
Society Limited from November 2019
until April 2021 and is a non-executive
director of AIA Australia Limited.
Ms Flynn is Chair of the Group Risk
and Compliance Committee, and a
member of the Group Audit, Group
People & Remuneration and Group
Nominations Committees.
Mr John Selak
Independent Non-Executive Director
Dip Acc, FCA, FAICD
Director since 14 October 2016
Mr Selak has over 40 years'
experience in the nancial and
advisory services industry. From2000
to 2016 Mr Selak was a Partner in
the Corporate Finance Practice
of Ernst & Young serving on their
Global Corporate Finance Executive.
From 2014 to 2017 Mr Selak was
an advisory board member of
Quest Apartment Hotels. From
2016 to 2020 Mr Selak was a
non
-
executive director of National
Tiles and was Chair of Corsair
Capital until April 2021. Mr Selak is
currently a non
-
executive director
of Turosi Food Solutions and the
IOOFFoundation.
Mr Selak is Chair of the Group People
& Remuneration Committee and a
member of the Group Audit, Group
Nominations and Group Risk and
Compliance Committees.
Ms Michelle Somerville
Independent Non-Executive Director
B Bus (Accounting), FCA, GAICD,
Master Applied Finance
Director since 1 October 2019
Ms Somerville is an experienced
Non-Executive Director, bringing
deep and relevant nance, risk
and governance experience to
the Board, having worked in the
nancial services industry in both
her executive and non
-
executive
roles. Previously she was an audit
partner with KPMG Australia for
nearly 14 years, with a focus on the
nancial services industry in both
Australia and overseas. Ms Somerville
is currently a non
-
executive director
of The GPT Group (since 2015).
Ms Somerville is the Chair of the
Group Audit Committee and a
member of the Group Nominations,
Group People & Remuneration
and Group Risk and Compliance
Committees.
Directors
32
Contents
Operating and nancial review 34
Directors’ report 45
Remuneration report 49
Directors’ declaration 65
Lead Auditor’s Independence
Declaration 66
Independent Auditor’s Report 67
Consoli dated state me nt
of comprehensive income 75
Consolidated statement
of nancial position 76
Consolidated statement
of changes in equity 77
Consolidated statement of cash ows 79
Notes to the nancial statements 80
Shareholder information 139
Financial report
for the year ended 30 June 2021
IOOF Annual Report 2021 33
Operating and nancial review
About IOOF
IOOF Holdings Ltd (the Company or Parent) is listed in the
top 200 on the Australian Securities Exchange (ASX: IFL).
TheIOOF Group consists of the Company and its subsidiaries
and the consolidated Group’s interest in its associates. The
Group has oces in Melbourne, Sydney, Adelaide, Brisbane,
Perth and Hobart.
At 30 June 2021, funds under management, administration
and advice (FUMA) (ex-MLC) were $213.3 billion compared
with FUMA of $202.3 billion at 30 June 2020. This reects
strong uplift due to market performance ($26.1 billion).
Market movements were partly oset by net outows of
$8.6 billion, pension payments of $2.0 billion and combined
one-o movements of $4.5 billion net outow, including
changes to external platform arrangements and early release
of super. MLCassets under management and funds under
administration (AUM/FUA) acquired were $301.2 billion.
In the opinion of the Directors, aside from matters as disclosed
in this nancial report, no signicant changes in the state of
aairs of the Group occurred during the nancial year.
Underlying net prot after tax (UNPAT) for the year ended
30 June 2021 was up $19.0 million or 14.8% to $147.8 million
relative to the prior corresponding period (pcp).
Principal activities
The principal continuing activities of the IOOF Group during
the nancial year consisted of:
• Financial advice – IOOF believes in the value of quality
nancial advice and that it should be more accessible,
more aordable and more engaging for Australians. The
nancial advisers that we partner with are experienced
professionals who help their clients identify, prioritise and
achieve their nancial and personal goals by building long-
term trusted relationships, implementing tailored nancial
plans that are reviewed regularly and updated as the client’s
circumstances change. This is achieved through helping
clients navigate their way through a range of nancial
products and services and educating clients to improve
their nancial literacy. Post MLC completion on 31 May 2021,
the nancial advice segment includes the advice operations
acquired as part of the MLC Wealth transaction.
• Portfolio and estate administration – at IOOF, we recognise
individuals have dierent needs, goals and ways of
engaging with their superannuation and investments.
Toenable this, we oer a wide range of solutions to support
our clients, including investors, members, employers and
advisers. Employer solutions currently service more than
15,000 employers and 300,000 members through IOOF
Employer Super and ANZ Smart Choice Super. Adviser
solutions provide advisers a broad selection of platform
solutions – both wrap and master trust structures – to
cater forindividuals with simple or complex needs. Direct
solutions allow clients to take control of their nancial
future through products such as ANZ Smart Choice Super
and Pension and IOOF WealthBuilder.
• Investment management – our highly skilled investment
team has a proven investment process that focuses
on delivering strong and consistent returns. The team
accesses world-leading investment managers across
abroad range of highly-rated single and multi-manager
funds, combining them with other attractive investment
opportunities, to oer an easy and eective way for our
clients to achieve their investment goals. Principle products
include IOOF MultiMix, IOOF MultiSeries, OptiMix and
OnePath Diversied.
• MLC Wealth – the MLC Wealth businesses were acquired
from National Australia Bank (NAB) on 31 May 2021,
including platform and asset management businesses
across retail and corporate. These activities are similar
to the activities described above in Portfolio and estate
administration and Investment management. MLC platform
and asset management will be integrated into the existing
IOOF business segments during the 2022 nancial year.
Key strategic initiatives
The IOOF Group remains focused on the delivery of Advice 2.0,
Evolve21 and Transformation as the key strategic initiatives and
progress against these priorities is set out below.
Advice 2.0
The key strategic priority is to make advice more aordable,
accessible and engaging for Australians while helping
businesses become more sustainable and protable. It consists
of three pillars.
Client engagement includes goals-based advice that is
accessible, aordable and engaging to Australians, supported
by clear and relevant client value propositions.
Adviser eciency includes market-leading, next-generation
best-practice advice models that streamline advice generation,
servicing and governance, making advisers more ecient
while uplifting advice quality.
Australian Financial Services Licence (AFSL) sustainability
involves oering compelling discrete value propositions across
each advice channel, providing advisers with choice reecting
value and risk, and that are protable without the need for
cross subsidisation.
34
The 2021 nancial year progress is:
• The AFSL model has been reshaped to optimise and
streamline the management of the self-employed AFSLs
and IOOF Alliances into two like-minded groups, based on
alignment of value proposition and operating models. The
new model reinforces our commitment to a multi-brand
strategy, as we continue to recognise the value of our
distinct advice brands and communities.
• Bridges Financial Services Group has been transitioned to
a wholly employed network and Financial Service Partners
(FSP) AFSL, which was operating at sub-scale, has been
closed. This process included anumber of FSP and Bridges
self-employed advisers joiningother IOOF AFSLs.
• The acquisition of Wealth Central will play a key role in
helping improve both client engagement and adviser
eciency. Wealth Central is a digital engagement platform
that will help advisers deliver advice in a more ecient
and engaging way, making it a unique dierentiator and
advantage for our adviser network.
Evolve21
Evolve21 is a cross-functional program of work delivering
one integrated platform – known as Evolve – to consolidate
all heritage IOOF proprietary platforms into a single
contemporary platform by the end of calendar year 2021.
IOOF is on track to meet this target, having completed the
Phase 1 product migration in June 2021, migrating over
38,600 member accounts. Phase 2 is expected to be complete
in December 2021.
Evolve21 will enable simplication of the business, support
the ClientFirst methodology and deliver for our people by
reducing waste and complexity, allowing greater focus on
service excellence. Evolve21 is critical to IOOF’s ability to deliver
improved client outcomes through eciency, sustainability
and our ability to innovate.
Further platform projects will commence at the completion
ofEvolve21, to continue the rationalisation process and
include the ANZ Wealth Pensions & Investments (ANZ P&I)
andMLC platforms.
Transformation
IOOF is bringing together the IOOF ex-ANZ P&I and MLC
businesses to ensure client outcomes are paramount while
synergy targets are reached via improved scale and eciency.
In May 2021 and in line with stated timelines, IOOF completed
the purchase of NAB’s MLC business. IOOF is continuing work
on the separation of the ANZ P&I business acquired in January
2020 from ANZ. IOOF has moved into the next phase of
nalising remaining separation work on both ANZ P&I and MLC
and realising the expected benets via meaningful operating
cost synergies.
The separation from ANZ is primarily reliant on system
separation, which is currently forecast to be delivered in late
2022. Until this time, ANZ is supporting IOOF by providing
transitional services under a Transitional Services Agreement
(TSA). The MLC business was substantially more progressed
in separation at the time of acquisition and as a result, IOOF’s
reliance upon NAB for similar TSA services is shorter in duration.
Key areas of focus include rationalisation of products and
services, optimisation of organisational structure, elimination
ofduplicate back oce functions and leveraging the benets
of increased scale. Key functions and sta under the ANZ
TSA will be progressively transitioned on an ‘as ready’ basis.
This willensure functions are both bedded down as early
aspossible and IOOF’s reliance on the TSA services is reduced
as soon as possible. In parallel, IOOF is working towards
realising the benets of joining the three businesses.
Governance and executive oversight is maintained through key
forums including the Executive Transformation and Integration
Steering Committee and the Design Integration Group.
Delivery teams have been mobilised to ensure execution of key
milestones such as system separation, organisational redesign,
product and platform integration and entity rationalisation.
Underlying this is ensuring that IOOF’s ClientFirst strategy
isembedded in all aspects of integration.
The IOOF Group has a long-term strategy of pursuing growth
through acquisitions and has completed several acquisitions
in recent years. Acquisitions have been pursued where
they present a logical strategic t with existing operations
and are priced reasonably for the expected value accretion
to shareholders.
Key performance indicators
Underlying net prot after tax
The table on the next page, which has not been audited,
provides a reconciliation between the reported results of the
IOOF Group and pre-amortisation UNPAT, with the results
of the benet funds excluded. UNPAT is a non-GAAP metric
that is used by management to monitor the performance of
the Group. In calculating UNPAT, the IOOF Group reverses the
impact on prot of certain, predominantly non-recurring, items
to enable a better understanding of its underlying operational
result. It isthe UNPAT result that will be analysed in detail in this
section of the Directors’ Report. The year ended 30 June 2020
is denoted as the pcp.
Shareholders can review the more detailed results presentation
by visiting the Company website at www.ioof.com.au
IOOF Annual Report 2021 35
Operating and nancial review (cont’d)
Note 2021 2020
$m $m
(Loss)/Prot attributable to owners of the Company (143.5) 141.2
Prot from discontinued operations attributable to owners of the Company 2-2 – (88.2)
(Loss)/Prot from continuing operations attributable to owners of the Company (143.5) 53.0
Pre-amortisation UNPAT adjustments:
Amortisation of intangible assets 2-4 58.9 44.8
Unwind of deferred tax liability recorded on intangible assets (15.4) (12.1)
Transformation and integration costs 2-4 50.2 19.7
Impairment of goodwill 2-4 199.9 4.3
Project Evolve costs 2-4 12.6 11. 4
Advice 2.0 costs 2-4 1.3 –
BT settlement income 2-3 (58.8) –
Governance uplift costs 2-4 1.2 4.5
Legal provision 2-4 24.3 –
Remediation costs 2-4 28.2 1.5
Non-recurring professional fees paid 2-4 10.0 6.4
Termination payments 2-4 1.1 2.9
Unrealised loss on revaluation of embedded derivative 2-4 5.0 –
Other 2-3, 2-4 (2.5) (0.1)
Income tax attributable 2-4 (24.7) (12.3)
UNPAT from continuing operations 147.8 124.0
UNPAT from discontinued operations – 4.8
UNPAT 147.8 128.8
UNPAT adjustments
Amortisation of intangible assets: Non-cash entry reective
of declining intangible asset values over their useful lives.
Intangible assets are recognised upon acquisition. Intangible
assets (other than goodwill) are amortised over the expected
useful life of the asset. The amortisation of software
development costs is not reversed in calculating UNPAT.
Unwind of deferred tax liability recorded on intangible
assets: Acquired intangible asset valuations for accounting
are higher than the tax cost base. A deferred tax liability
(DTL) is required to be recognised as there is an embedded
capital gain should the assets be divested, which represents
the dierence between accounting values and tax bases at
30%. The recognition of DTL and subsequent reductions are
not reective of conventional recurring operations and are
regarded as highly unlikely to be realised due to the IOOF
Group’s intention to hold these assets long term.
Transformation and integration costs: As IOOF implements
its transformation agenda post completion of the MLC and
ANZ P&I acquisitions, this category includes transaction costs
associated with external advisers, upfront costs of securing
nance, and internal sta and specialist contractor costs
relating to integration. Costs include project labour costs,
redundancy and termination costs, IT and other consultancy
fees, outsourced hosting services and adviser recognition
program costs, which are notreective ofrecurring operations.
Impairment of goodwill: Non-cash impairment related
to goodwill associated with Shadforth Financial Group,
DKN Financial Group and Bridges Financial Services Group.
This primarily reects the termination of the platform
relationship with BT Portfolio Services Ltd and the cessation
ofgrandfathered commission revenue in the advice business.
Project Evolve costs: Project labour costs and IT consultancy
fees associated with the Group’s proprietary Evolve platform
project. This is a one-o cost to bring multiple heritage
IOOF platforms together in preparation for integration
andsimplication of acquisitions.
Advice 2.0 costs: One-o costs, including legal
fees and consultancy fees in connection with the
implementation of Advice 2.0.
BT settlement income: One-o settlement income in
connection with the termination of the platform relationship
with BT Portfolio Services Ltd.
Governance uplift costs: Costs incurred in undertaking
projects that are outside the ordinary course of business.
Costs predominantly relate to project labour costs and
consultancy fees.
36
Legal provision: Expenditure predominantly in connection with settlement of the judgement in the Kerr v Australia Executor Trustees
(SA) Ltd proceedings in excess of amounts covered by the Group’s insurance.
Remediation costs: Movements in remediation provisions relating to IOOF’s various structured remediation programs other than
payments to clients or advisers, which are recorded directly against the provision.
Non-recurring professional fees paid: Payment of specic legal costs that are not reective of conventional recurring operations.
Includes costs associated with assistance for matters relating to the Australian Prudential Regulation Authority (APRA) and the
Australian Securities and Investments Commission (ASIC).
Termination payments: Represents termination payments to sta due to restructuring activities that deliver long-term
eciency gains.
Unrealised loss on revaluation of embedded derivative: Movements in the valuation of an embedded derivative that forms part
of the Subordinated Loan Notes. Gains and losses will be recognised as IOOF’s share price moves with reference to the initial reference
price on valuation. Refer to note 3-2.
Other: Losses on divestment of non-current assets and impairment of customer-related intangibles.
Income tax attributable: This represents the income tax applicable to certain adjustment items outlined above.
Analysis of nancial results – IOOF Group ex-MLC
On a continuing operations basis ex-MLC, the IOOF Group’s UNPAT of $132.3 million represented an $8.3 million (6.7%) increase on the
prior year. Inclusive of discontinued operations, UNPAT increased (2.7%) to $132.3 million. The variances below compare the continuing
operations ofthe IOOF Group and include ANZ P&I operations from 1 February 2020.
IOOF Group – ex-MLC 2021 2020 Movement
$m $m $m %
Gross margin 695.3 577.2 118 .1 20.5%
Net operating revenue 697.6 579.3 118.3 20.4%
Other revenue (incl share of prots of associates) 2.4 7.4 (5.0) (67.6%)
Operating expenditure (479.3) (384.2) (95.1) 24.8%
Net nancing (6.9) (1.7) (5.2) 305.9%
Net non-cash items (31.3) (26.9) (4.4) 16.4%
Income tax expense and non-controlling interest (50.2) (49.9) (0.3) 0.6%
Underlying Prot after Tax from continuing operations ex-MLC 132.3 124.0 8.3 6.7%
Underlying Prot after Tax from MLC 15.5 – 15.5 n/a
Underlying Prot after Tax from continuing operations 147.8 124.0 23.8 19.2%
Net operating revenue increased by $118.3 million
ANZ P&I contributed an additional $168.0 million in net operating revenue for the full year of operations as compared to the ve
months in the pcp. This results in an approximately 10% increase in net operating revenue on a run-rate basis for the ANZ P&I
segment, driven by strong market performance in the 2021 nancial year with FUMA market growth of $10.7 billion osetting net
outows and one-o adjustments of $4.4 billion.
The increase in net operating revenue is partly oset by decreases in revenue in the following segments:
• $29.3 million reduction in net operating revenue generated by the nancial advice segment, primarily driven by the cessation
ofgrandfathered commissions and the cessation of the BT contract;
• margin contraction in the platform segment of $11.4 million due to clients moving between products;
• $7.3 million reduction in net operating revenue generated by the ex-ANZ wealth management segment, driven by regulatory
changes with the cessation of grandfathered commissions and volume rebates from fund managers; and
• investment management net operating revenue was $1.9 million lower than the prior year due to a slight reduction in margin,
compounded by a reduction in funds under management (FUM).
IOOF Annual Report 2021 37
Operating and nancial review (cont’d)
Other revenue decreased by $5.0 million
The reduction in other revenue relates predominantly
tolower adviser conference revenue received as a result
of the cancellation of advice/adviser conferences due
toCOVID-19 restrictions.
Operating expenditure increased by $95.1 million
ANZ P&I contributed an additional $86.6 million in operating
expenditure for the full year of operations as compared to
the ve months in the pcp. This results in an approximately
2% reduction in operating expenditure on a run-rate basis for
the ANZ P&I segment. After adjusting for the annualisation
ofthe ANZ P&I impact, there is an increase of 2% in operating
expenditure (excludes the impact of expenditure items
reversed when calculating UNPAT).
Labour costs are the IOOF Group’s most material cost item
at79% of operating expenditure. These costs have increased
by $7.0 million (adjusted for annualised ANZ P&I impact),
primarily due toincreased bonus provisions in the current
year after bonuses were signicantly reduced in the pcp
duetoCOVID-19 nancial impacts.
Other net movements in operating expenditure relate
predominantly to an increase in computer licence fees
and consultancy costs, partially oset by a reduction
in travel and entertainment costs as a result of reduced
traveldue to COVID-19.
Net nancing costs increased by $5.2 million
Net nancing costs have increased, predominantly due to
lower interest income generated through lower interest rates
on deposits. This is partially oset by lower interest expense,
driven by repayment of debt post the MLC capital raise. Debt
wasredrawn to facilitate MLC completion on 31 May 2021.
Net non-cash items decreased UNPAT by
$3.6million
Depreciation expense has increased $6.0 million,
predominantly reecting the additional seven months of ANZ
P&I costs included in the current nancial year, partially oset
by an $0.8million lower share-based payments expense due
tonon-vesting of previously expensed grants.
Financial position
The IOOF Group held cash and cash equivalents of
$670.7 million at 30 June 2021 (30 June 2020: $374.7 million).
Cash is held to satisfy regulatory net asset requirements and
also to ensure adequate liquidity given management fee
receipts are less frequent than payroll and service fee cash
outows. With the acquisition of MLC, some reserves held
tosatisfy regulatory net asset requirements are designated
as nancial assets. An Operational Risk Financial Requirement
(ORFR) reserve of $402.7 million (comprising cash and nancial
assets) and $4.6 million cash held by the Group’s statutory
benet funds at 30 June 2021 (30 June 2020: $145.6 million and
$3.7 million, respectively) are not available to shareholders.
Shareholder returns
The IOOF Group dividend is calibrated to provide shareholders
with a benet that reects performance and oers an
attractive yield when assessed against a range of other
investment options. The Board also understands that dividend
payments should not hinder future organisational plans. The
Board has therefore determined that a pay-out ratio range of
60%–90% of UNPAT is generally appropriate, but not binding.
The Board has determined that a dividend of 11.5 cents per
share, comprising an ordinary dividend of 9.5 cents per share
and a special dividend of 2.0 cents per share, resulting in a total
ordinary dividend payout ratio of 75.8%, is appropriate. Current
year prots support the payout.
Total Shareholder Return (TSR) measures the change in
share value over a specied period and dividends received.
The IOOFGroup’s TSR for the year ended 30 June 2021 was
negative 8.5%, reecting a share price decline of 13.2% and
partially oset by a dividend yield of 4.7% (based on the
nancial year volume-weighted average price). TSR in the
ve-year period from 1 July 2016 was negative 19.7% and
negative 6.9% on a compounding annualised basis. The
IOOFGroup is in a strong nancial position with signicant
free cash, borrowings within covenants and a low interest rate
environment, which reduces borrowing costs. All TSR gures
quoted above include the nal 2021 dividend but no other
dividends that have been declared to be paid.
38
2021 2020 2019 2018 2017
(Loss)/Prot attributable to owners of the
Company($m)
(1)
(143.5) 141.2 28.6 88.3 116.0
(Loss)/Prot for the year for continuing operations ($m) (143.5) 52.8 (30.0) 105.4 119.9
Basic Earnings per Share (EPS) (cents per share) (24.4) 40.3 8.1 26.4 38.7
Diluted EPS (cents per share) (24.4) 40.2 8.1 26.4 38.6
Basic EPS (continuing operations) (cents per share) (24.4) 15.1 (8.5) 31.6 38.7
UNPAT ($m) 147.8 128.8 198.0 191.4 169.4
UNPAT EPS (cents per share) 25.1 36.8 56.5 57.3 56.5
UNPAT EPS (continuing operations) (cents per share) 25.1 35.4 56.3 52.6 56.5
Dividends declared ($m)
(2)
149.3 121.2 131.7 189.6 159.1
Dividends per share (cents per share)
(2)
23.0 34.5 37.5 54.0 53.0
Opening share price $4.92 $5.17 $8.99 $9.80 $7. 83
Closing share price at 30 June $4.27 $4.92 $5.17 $8.99 $9.80
Return on equity (non-statutory measure)
(3)
5.92% 7.59 % 10.90% 11.30% 12.10%
(1) Prot attributable to owners of the Company has been calculated in accordance with Australian Accounting Standards.
(2) Dividends declared and dividends per share are on an accruals basis.
(3) Return on equity is calculated by dividing UNPAT by average equity during the year.
Dividends for 2021 and prior years were fully franked.
Capital and liquidity management
In September 2020, the IOOF Group completed a capital
raising for the purpose of acquiring MLC Wealth. The capital
raising consisted of a fully underwritten institutional placement
and accelerated non-renounceable entitlement oer and a
non-underwritten share purchase plan. Under these oers, the
Group raised additional capital of $1,043.9 million, representing
298,248,329 ordinary shares and incurred transaction costs
of $20.4 million.
On 27 November 2020, the IOOF group entered into an
additional accommodation agreement to provide an
additional $250 million cash advance under the Syndicated
Facility Agreement (SFA) for the acquisition of MLC Wealth. This
facility has a ve-year repayment term from the SFA eective
date. Theamended SFA consists of the following facilities:
• $240 million revolving cash advance facility with a four-year
repayment term from the SFA eective date;
• $625 million revolving cash advance facility with a ve-year
repayment term from the SFA eective date; and
• multi-option facility with a three-year repayment term
from the SFA eective date, comprising a contingent
liability facility.
On 31 May 2021, the IOOF Group issued $200 million SLNs
tofund the acquisition of MLC Wealth. Key terms are:
• subordinated loan notes (SLNs) are unsecured subordinated
debt obligations of IOOF;
• 1% per annum coupon payable semi-annually. Step up
to 4% per annum if the noteholders request redemption
more than 42 months after the issue date and IOOF
does not redeem;
• ve-year term with an early redemption start period
of42months from completion (31 May 2021);
• equity-linked redemption linked to any uplift in notional
securities over a reference price (being a 15% premium
to the theoretical ex rights price for the equity oer) and
subject to adjustment; and
• IOOF permitted to accelerate redemption after three years
if the volume-weighted average price is at least 150%
of the reference price or in case of certain tax changes.
The holder is permitted to accelerate redemption at
any time, commencing 42 months after the issue date,
subject toissuer consent, or upon change in control
(acquisition by a person of benecial ownership of 50% or
more oftheordinary voting power of outstanding voting
sharesor delisting or 15 trading day suspension).
The net debt to equity ratio stood at 18.9% at 30 June 2021
(30 June 2020: 24.8%), reecting net borrowings of
$469.7 million (30 June 2020: $430.9 million), principally
$476.0 million under the SFA (30June 2020: $460.0 million).
Cash ow forecasting is conducted monthly, principally
toensure sucient liquidity for future needs and to monitor
adherence to licence conditions. Stress testing of lending
covenants is conducted when assessing funding options
foracquisition opportunities.
IOOF Annual Report 2021 39
Operating and nancial review (cont’d)
Segment analysis
Financial advice – incl MLC 2021 2020 Movement
$m $m $m %
Net operating revenue 155.1 179.5 (24.4) (13.6%)
Other revenue (incl share of prots of associates) 0.3 2.9 (2.6) (89.7%)
Operating expenditure (116. 2) (103.5) (12.7) 12.3%
Net nancing (0.4) (0.6) 0.2 (33.3%)
Net non-cash items (8.8) (9.7) 0.9 (9.3%)
Income tax expense and non-controlling interest (9.9) (20.2) 10.3 (51.0%)
Underlying Prot after Tax from continuing operations 20.1 48.4 (28.3) (58.5%)
• The reduction in net operating revenue is due to the loss of the BT contract and cessation of grandfathered commissions.
• MLC advisers transitioned into existing IOOF licensees on completion (31 May 2021). The 2021 nancial year net operating revenue
includes the results of one month ($5.2 million) of revenue generated by MLC advisers, which is incorporated into the advice
segment result.
• The reduction in other revenue is due to lower adviser conference revenue as a result of conferences not returning to the pre-
COVID-19 series of events.
• The increase in operating expenditure relates to one month of costs associated with MLC advisers ($12.7 million). Excluding the
MLC adviser costs, operating expenditure has remained consistent year on year.
Portfolio and estate administration 2021 2020 Movement
$m $m $m %
Net operating revenue 200.0 211. 3 (11. 3) (5.3%)
Other revenue (incl share of prots of associates) – – – n/a
Operating expenditure (123.8) (115.0) (8.8) 7.7%
Net nancing – – – n/a
Net non-cash items (11.0) (11.4) 0.4 (3.5%)
Income tax expense and non-controlling interest (20.1) (26.9) 6.8 (25.3%)
Underlying Prot after Tax from continuing operations 45.1 58.0 (12.9) (22.2%)
• Net operating revenue decreased as a result of a gross margin reduction as clients moved between products.
• Increased operating expenditure resulted primarily from increased computer licences, administration fees and employee bonuses
in the current year, after bonuses were signicantly reduced in the pcp as a result of COVID-19 nancial impacts.
Investment management 2021 2020 Movement
$m $m $m %
Net operating revenue 64.5 66.4 (1.9) (2.9%)
Other revenue (incl share of prots of associates) – – – n/a
Operating expenditure (13.5) (10.5) (3.0) 28.6%
Net nancing – – – n/a
Net non-cash items (1.6) (1.9) 0.3 (15.8%)
Income tax expense and non-controlling interest (14.9) (16.4) 1.5 (9.1%)
Underlying Prot after Tax from continuing operations 34.5 37.6 (3.1) (8.2%)
• Net operating revenue decreased from the prior year due to a slight reduction in margin and a reduction in FUM. This was a direct
result of the liquidation of the Platform cash management funds, which were then invested in a Retail look-through agreement
with an external party, in the best interest of members.
• The increase in operating expenditure is due to increased governance driven by the implementation of the Oce of the
Responsible Entity in the middle of the 2020 nancial year and employee bonuses in the current year, after bonuses were
signicantly reduced in the pcp as a result ofCOVID-19 nancial impacts.
40
Ex-ANZ Advice licensees 2021 2020 Movement
$m $m $m %
Net operating revenue 13.2 20.4 (7. 2) (35.3%)
Other revenue (incl share of prots of associates) 1.9 2.9 (1.0) (34.5%)
Operating expenditure (41.0) (49.9) 8.9 (17. 8%)
Net nancing – 0.2 (0.2) (100.0%)
Net non-cash items (1.5) (1.1) (0.4) 36.4%
Income tax benet and non-controlling interest 8.2 8.4 (0.2) (2.4%)
Underlying Prot after Tax from continuing operations (19.2) (19.1) (0.1) 0.5%
• The reduction in revenue was driven by regulatory changes including the cessation of grandfathered commissions and volume
rebates from fund managers.
• The reduction in other revenue is due to lower conference revenue as a result of conferences not returning to the pre-COVID-19
series of events.
• The reduction in operating expenditure is a result of a focus towards achieving break-even within this business. Cost reductions are
seen across most areas of operating expenditure, especially salaries, consultants, conference expenses, travel and entertainment.
Ex-ANZ P&I 2021 2020 Movement
$m $m $m %
Net operating revenue 268.9 100.8 168.1 166.8%
Other revenue (incl share of prots of associates) – 0.6 (0.6) (100.0%)
Operating expenditure (150.6) (64.0) (86.6) 135.3%
Net nancing 0.5 9.9 (9.4) (94.9%)
Net non-cash items (7.9) (2.7) (5.2) 192.6%
Income tax expense and non-controlling interest (33.3) (13.4) (19.9) 148.5%
Underlying Prot after Tax from continuing operations 77.6 31.2 46.4 148.7%
• ANZ P&I contributed an additional $168.1 million in net operating revenue for the full year of operations as compared to the ve
months in the pcp. This results in approximately a 10% increase in net operating revenue on a run-rate basis for the ANZ P&I
segment, driven by strong market performance in the 2021 nancial year.
• Operating expenditure has increased by $86.6 million, representing a full year of operations. Operating expenditure is favourable
tothe pcp by 2% on a run-rate basis as a result of lower project spend and savings in property costs.
MLC Wealth 2021 2020 Movement
$m $m $m %
Net operating revenue 62.3 – 62.3 n/a
Other revenue (incl share of prots of associates) 1.5 – 1.5 n/a
Operating expenditure (34.5) – (34.5) n/a
Net nancing 0.6 – 0.6 n/a
Net non-cash items (0.8) – (0.8) n/a
Income tax expense and non-controlling interest (8.6) – (8.6) n/a
Underlying Prot after Tax from continuing operations 20.5 – 20.5 n/a
• The table above shows the contribution of the MLC Asset Management and Retirement & Investment Solutions businesses for the
one month post completion (June 2021).
• The IOOF Group completed the acquisition of the MLC Wealth businesses on 31 May 2021. Note 6-4 shows a proforma view
ofMLC’s expected annualised contribution.
IOOF Annual Report 2021 41
Operating and nancial review (cont’d)
Risk management
The Board is responsible for establishing and overseeing the IOOF Risk Management Framework (RMF) and has delegated authority
for the oversight and monitoring of the Framework to the Group Risk and Compliance Committee and the Executive team. Thekey
pillars of the IOOF RMF include:
• the IOOF Risk Management Policy (RMP). The RMP provides direction to ensure material risks, which are further dened in the
RiskManagement Strategies of the controlled entities, are being consistently identied, assessed and managed. The RMP includes
a description of each material risk, including key roles and responsibilities for managing the risk, outlines the risk governance
structure and promotes a proactive risk culture, with reference to the relevant policies, standards and procedures;
• the Risk Appetite Statement (RAS), which sets out the Board’s expectations regarding the degree of risk that IOOF is prepared
toaccept in pursuing its business objectives. Each regulated entity Board within the Group has its own RAS; and
• a three lines of defence governance model to govern risk management and compliance activities across the Group. The three lines
of defence model is the foundation for eective risk management. The overarching principle is that risk management capability
must be embedded into the business to be eective.
During the 2021 nancial year, IOOF has maintained its focus on the governance uplift across the Group, which includes the
integration of the newly acquired businesses. Eort continues post MLC acquisition to identify opportunities to improve eciency
andensure risk management resource adequacy across the organisation.
Emerging risks
The risk environment is continually changing and we are therefore assessing key emerging risks to consider their impact on the
IOOFGroup. Some emerging risks include the following.
Emerging risk Our response to manage this risk
Integration of ANZ P&I and MLC businesses –
successful integration of the ANZ P&I and MLC
businesses to realise the synergies and create
an ecient business for the future. Failure to
successfully integrate could give rise to unnecessary
costs, increased complexity and regulatory burden,
and higher risks.
The Chief Transformation Ocer role has been created as a direct report
of the CEO, and the integrations will be managed as one joint program
ofwork, with appropriate governance structures.
A detailed Integration plan with sucient resourcing assigned to all
business functions.
Volume and complexity of regulatory change – IOOF
Group is required to implement large volumes of
complex regulatory changes, at times within relative
short time frames.
Appointment of a Chief Transformation Ocer and dedicated team within
Enterprise Risk and Compliance to oversee all regulatory change activities.
COVID-19
The COVID-19 pandemic has continued throughout the period. There is still uncertainty about the likely duration of the pandemic as
well as the impact on the economy. For the IOOF Group, the impact is about being able to maintain our service standards to clients,
while also supporting our employees during the various lockdowns in each state. While there was a gradual return to the oce during
thesecond half of the 2021 nancial year, working from home remains a key part of our new way of working at IOOF.
The IOOF Group manages exposure to risks in the course of conducting our everyday operations and implementing our strategy.
Thekey risk categories below outline the material risks faced by the IOOF Group. These include, but may not be limited to the following:
Key risk categories Our response to manage this risk
Strategic and tactical
(i) Competition
The risk that IOOF does not keep pace with developments in the markets in
which we operate may result in competitive conditions adversely impacting
the level of assets managed and earnings available to us.
Continuously investing in client service, product
design and stakeholder relationships, among other
improvements.
(ii) Dependence on key personnel
The risk that IOOF’s continued ability to compete eectively is impacted
by our capacity to attract, retain and motivate our people. The loss of key
personnel without suitable replacements could disrupt our operations
intheshort term.
Undertake succession planning and oer
competitive employment conditions and benets
tomanage this risk.
42
Key risk categories Our response to manage this risk
(iii) Dependence on nancial advisers
The success of IOOF’s advice and platform business is dependent on the
quality of our relationships with nancial advisers and, in turn, the quality
oftheir relationships with their clients.
Monitor and, where necessary, enhance our service
levels, technological capability, product oerings and
professional training.
(iv) Acquisitions
The risk that any acquired business is not eectively managed, which may
negatively impact the potential benets of the new business and adversely
aect the IOOF Group’s nancial position.
We have a signicant complement of people
experienced in acquisitions and specialist advisers
to support the assessment and management of the
acquisition and implementation risks.
(v) Environmental, social and governance (ESG)
ESG risks can have a material impact on our ability to deliver sustainable
long-term outcomes for our clients, investors and the community.
To ensure we full our purpose, we consider a
broad range of ESG risks and opportunities. Our
ESGactivities are discussed in the ESG section
oftheannual report.
Governance
(vi) Governance
The risk that the governance framework is not adequate to manage conicts
of interest, member interests or our legal and regulatory obligations in line
with regulatory and community expectations.
IOOF continues to strengthen the quality of its
governance frameworks. This is supported by
corporate structures with independent Boards
and Committees aligned with their regulatory
obligations. The Oce of the Superannuation
Trustee and Oce of the Responsible Entity aligned
with IOOF’s RMF’s three lines of defence model
govern risk management and compliance activities
across the Group.
Reputation
(vii) Brand and reputation
Actions that damage the IOOF Group’s brand and reputation may
impact our ability to attract and retain the support of clients, our people,
nancial advisers and employers, as well as our future protability and
nancialposition.
We have controls, processes and procedures in
place to mitigate this risk. In particular, we have a
Complaints Policy and procedure in place for our
clients, and a Whistleblower Policy to protect our
people. We also proactively promote the value of
our services, products and community initiatives,
andfocus on building a ClientFirst culture.
Conduct
(viii) Misconduct
The risk of our conduct intentionally or unintentionally delivering poor
outcomes for stakeholders (including clients, our people and shareholders).
Itis about how we treat our stakeholders (including fairness of outcomes)
and whether our products and services meet our stakeholders’ needs and
expectations.
Our management of conduct risk is supported by
the IOOF Group Code of Conduct, which sets out
the values of professional and personal conduct that
apply to all our people. These include acting within
the law and in the best interests of our members,
clients, shareholders and the IOOF Group at all times.
(ix) Provision of investment advice
The IOOF Group’s nancial advisers and authorised representatives provide
advice to clients and may be exposed to regulatory action or litigation if the
advice is judged to be incorrect, if the authorised representative otherwise
becomes liable for client losses, and in certain other circumstances.
This risk is managed by having high professional,
educational, compliance, assurance and training
standards for our advisers and authorised
representatives. The potential nancial impact
is mitigated by appropriate levels of insurance
cover. IOOF also undertakes a rolling program
ofcompliance reviews of advisers.
Financial and liquidity
(x) Interest rate and cash ow
This is the risk to the IOOF Group’s earnings and capital arising from changes
in market interest rates. Financial instruments that may be impacted by
interest rate risk include cash and cash equivalents, certicates of deposit,
loans and borrowings. Short- and long-term investment mixes and loans
torelated entities are inuenced by liquidity policy requirements.
Interest rates (both charged and received) are
based on market rates and are closely monitored
by management. They are primarily at variable rates
of interest and may expose the Group to cash ow
interest rate risk.
(xi) Liquidity
Liquidity risk relates to the IOOF Group having insucient liquid assets
tocover cash ow requirements.
We manage liquidity risk by maintaining sucient
liquid assets and an ability to access a committed
line of credit. The liquidity requirements of our
licensed entities are regularly reviewed and
carefully monitored in accordance with their
licencerequirements.
IOOF Annual Report 2021 43
Operating and nancial review (cont’d)
Key risk categories Our response to manage this risk
(xii) Financing
Financing risk refers to the IOOF Group’s inability to renance debt
facilitiesor to secure new nancing on satisfactory terms, which could
adversely aect our nancial performance and prospects. To the extent
that this occurs, we may not be able to take advantage of acquisition and
other growth opportunities, develop new ideas or respond to competitive
pressures, which may have an adverse impact on our nancial position
andperformance.
This risk is minimised through oversight by a
dedicated Treasury function, with established
policies and procedures that are subject to
continuous monitoring and review. Banking
covenants are regularly reviewed to ensure any
potential issues areidentied and mitigated
totheextent necessary well in advance.
Investment governance
(xiii) Changes in investment markets
The IOOF Group derives a signicant proportion of its earnings from fees
andcharges based on the level of FUMA. Among other factors, the level
ofFUMA reects the performance of investment markets. Changes in
domestic or global investment market conditions could lead to a decline
inFUMA, adversely impacting the amount we earn in fees and charges,
aswell as reduced clientinterest in our nancial products and services.
To manage this risk, we oer a range of products and
services suitable for dierent investment markets and
establish comprehensive investment governance
committees, policies and procedures that are subject
to continuous monitoring and oversight.
Operational
(xiv) Operational
Operational risks may arise in the daily functioning of the IOOF Group’s
businesses in connection with investment management, tax and nancial
advice, legal and regulatory compliance, product commitments, process
error, system failure, failure of security and unit pricing errors, among other
functions.
This is managed through IOOF’s Risk Management
Framework, which includes systems, structures,
policies, procedures and people, to identify, measure,
evaluate, monitor, report, control and mitigate
internal and external risks.
(xv) Remediation activities
Remediation activities across various areas of the business – references
thetimely, eective and accurate execution of these remediation activities
to ensure client detriment is resolved, meet the requirements of regulators
andmitigate the risk of reputational damage.
To manage this risk, remediation exercises are
adequately resourced. Governance structures are
in place to consider and manage the issues and
risks ofremediation delivery. Regular updates are
provided to regulators.
(xvi) Information technology
The IOOF Group relies heavily on information technology (IT). A signicant
orsustained failure in the core technology systems could materially
aect our operations, which could impact our future protability and
nancialposition.
We have implemented a next-generation rewall,
and pursue continuous improvements to protect
user devices and impose segregation of duties
between technology environments. More
broadly, we apply controls (including disaster
recovery testing) and procedures that are subject
to continuous monitoring and oversight, while
ensuring there are experienced people and
specialistITadvisers.
(xvii) Cybersecurity
There is a risk of signicant failure in the IOOF Group’s operations
ormaterialnancial loss as a result of cyberattacks.
We have implemented measures and controls
thatidentify, detect, monitor and respond to cyber
threats. Cybersecurity controls are aligned with those
employed tominimise IT risks.
Dividends
In respect of the nancial year ended 30 June 2021, the Directors declared the payment of a nal dividend of 9.5 cents per share and a
special dividend of 2.0 cents per share, both franked to 100% at the 30% corporate income tax rate to the holders of fully paid ordinary
shares, to be paid on 22 September 2021. This dividend will be paid to all shareholders recorded on the Register of Members on
8 September 2021.
The Directors declared the payment of an interim dividend of 8.0 cents per ordinary share and a special dividend of 3.5 cents per
ordinary share franked to 100% at the 30% corporate income tax rate to the holders of fully paid ordinary shares, which was paid
on 18 March 2021.
In respect of the nancial year ended 30 June 2020, the Directors declared the payment of a nal dividend of 11.5 cents per
share franked to 100% at the 30% corporate income tax rate to the holders of fully paid ordinary shares, which was paid on
22 September 2020.
44
Directors’ report
The Directors present their report together with the nancial report of IOOF Holdings Ltd (the Company or Parent) and of the
IOOFGroup, being the Company and its subsidiaries and the consolidated Group’s interest in associates for the nancial year
ended30 June 2021 and the auditor’s report thereon.
Directors
The following were the Directors of the Company during or since the end of the nancial year.
Name, qualications and
independence status
Experience, special responsibilities, listed and other signicant directorships
Mr Allan Griths
BBus, DipLI
Independent Non-Executive
Director and Chairman
Director since 14 July 2014
Chairman since 4 April 2019
More than 40 years’ experience in the nancial services industry has given Mr Griths a deep
understanding of the sector. He has held a number of executive positions, most notably as Chief
Executive Ocer of Aviva Australia, followed by Managing Director South Asia of Aviva Asia Pte
Ltd, based in Singapore. Prior to joining Aviva Mr Griths held executive positions with Colonial
Ltd and Norwich Union. He is Chairman of the Westpac and BT boards and Chairman ofMetrics
Credit Partners.
Mr Griths is Chair of the Group Nominations Committee and a member of the Group Audit,
Group Risk and Compliance, and Group People & Remuneration Committees.
Mr Renato Mota
BComm(Hons), BBus
Chief Executive Ocer and
Managing Director
Director since 25 June 2020
Mr Mota has more than 20 years’ experience in nancial services. Prior to being appointed
CEO in June 2019, Mr Mota held a number of senior executive roles within IOOF. In December
2018, Mr Mota was appointed Acting CEO and prior to that was Group General Manager –
Wealth Management from January 2016. During this time, he was instrumental in leading IOOF
through aseries of forward-thinking, strategic initiatives including IOOF’s advice-led strategy,
the ClientFirst transformation and establishment of the IOOF Advice Academy. Previously, he
held numerous executive roles, including as General Manager of Distribution, and in Investor
Solutions, and Corporate Strategy and Communications. Before joining IOOF in 2003, Mr Mota
worked in corporate nance roles at Rothschild and NAB, focusing on mergers and acquisitions.
At Rothschild, he was involved in wealth management transactions, including the demerger
of Henderson Group plc from AMP in 2003. At NAB, he worked on the acquisition of MLC and
Deutsche FinancialPlanning.
Mr Andrew Bloore
Independent Non-Executive
Director
Director since
2 September 2019
Mr Bloore is an experienced Non-Executive Director, entrepreneur and farmer. He has designed,
built and sold a number of businesses that focus on developing key disruptive technologies
and distribution services in traditional markets, to create business eciencies. Mr Bloore
has been actively involved as an executive and/or a director – and in the area of investment
funding, development and leadership – at Smartsuper, SuperIQ and Class Super. He has worked
on a range of Senate and Treasury committees, and with the Australian Taxation Oce (ATO)
Regulations Committee on regulation for the superannuation industry. In 2016, Mr Bloore sold
his superannuation administration business to AMP, stepped down from the Senate and Treasury
Committees and is now focuses on contributing to organisations as a Non-Executive Director.
MrBloore was a Non-Executive Director of FBR Ltd until November 2019.
He is a Board Member and a Member of the Group Audit, Group Nominations, Group People &
Remuneration, and Group Risk and Compliance Committees.
Ms Elizabeth Flynn
LLB, Grad Dip App Corp Gov,
FAICD, FFin, FGIA, FCG
Independent Non-Executive
Director
Director since
15 September 2015
Ms Flynn has more than 35 years’ experience in the nancial services industry, including roles
within law and corporate governance as well as executive responsibilities. From 1998 to 2010,
MsFlynn was the Chief Legal Counsel, Group Compliance Manager and Group Company Secretary
ofnancial services group Aviva Australia, and a director of Aviva Australia’s superannuation trustee
company. Prior to her time at Aviva, Ms Flynn spent 18 years as a commercial lawyer with Minter
Ellison, including eight years as a Partner, specialising in managed funds, banking, securitisation
and superannuation. Ms Flynn was a non-executive director of Bennelong Funds Management
from 2010 to 2015 and The Colonial Mutual Life Assurance Society Limited from November 2019
until April 2021. She is a non-executive director of AIA Australia Limited.
She is Chair of the Group Risk and Compliance Committee, and a member of the Group Audit,
Group People & Remuneration, and Group Nominations Committees.
Mr John Selak
Dip Acc, FCA, FAICD
Independent Non-Executive
Director
Director since
14 October 2016
Mr Selak has more than 40 years’ experience in the nancial and advisory services industry. From
2000 to 2016, Mr Selak was a Partner in the Corporate Finance Practice of Ernst & Young, serving
on its Global Corporate Finance Executive. From 2014 to 2017, he was an advisory board member
of Quest Apartment Hotels. From 2016 to 2020, Mr Selak was a Non-Executive Director of National
Tiles and was Chair of Corsair Capital until April 2021. Mr Selak is currently a Non-Executive Director
of Turosi Food Solutions and the IOOF Foundation.
Mr Selak is Chair of the Group People & Remuneration Committee and a member of the Group
Audit, Group Nominations, and Group Risk and Compliance Committees.
IOOF Annual Report 2021 45
Directors’ report
Name, qualications and
independence status
Experience, special responsibilities, listed and other signicant directorships
Ms Michelle Somerville
BBus (Accounting), FCA,
GAICD, Master Applied
Finance
Independent Non-Executive
Director
Director since 1 October 2019
Ms Somervilleis an experienced Non-Executive Director, bringing deep and relevant nance,
risk and governance experience to the Board, having worked in the nancial services industry in
both executive and non-executive roles. Previously, she was an audit partner with KPMG Australia
for nearly 14 years, with a focus on the nancial services industry in both Australia and overseas.
MsSomerville has been a Non-Executive Director of The GPT Group since 2015.
Ms Somerville is Chair of the Group Audit Committee and a member of the Group Nominations,
Group People & Remuneration, and Group Risk and Compliance Committees.
All Directors held oce during and since the end of the
nancial year, unless otherwise noted.
The Group People & Remuneration and the Nominations
Committees review the balance of skills, experience,
independence, knowledge and diversity ofDirectors. This
involves the creation of a board skills matrix, setting out
the mix of skills and diversity that the Board currently has
orislooking to achieve in its membership.
During the year, each Board member completed a skills
matrix. The Board was satised that the skills matrix results
demonstrate that the Board has the appropriate skills
and experience necessary to oversee the operations and
governance of the IOOF Group. The Board skills matrix is
available as part of our Corporate Governance Statement,
which is available on the IOOF website.
Company secretary
The Company Secretary is Ms Adrianna Bisogni LLB (Hons),
BA, GAICD. Ms Bisogni was appointed to the position in
November 2019. She is a lawyer with over 25 years’ experience
incorporatelaw.
Additionally, Mr Bill Linehan LLB, BCom, FGIA is a Chartered
Accountant, lawyer and Fellow of the Governance
Institute ofAustralia with over 20 years’ experience in
corporate law. Hewas appointed to the role of Company
Secretary in May 2021.
Directors’ meetings
The number of Directors’ meetings (including meetings of
committees of Directors) and number of meetings attended
by each of the Directors of the Company during thenancial
year are shown in the following tables.
Director Directors’ meetings
Status Meetings
attended
Meetings
held
A Griths Chair 24 24
R Mota CEO & Managing
Director
24 24
A Bloore Director 24 24
E Flynn Director 24 24
J Selak Director 24 24
M Somerville Director 24 24
Director Committee meetings
Group Audit Committee
Status Meetings
attended
Meetings
held
M Somerville Chair 7 7
A Bloore Member 7 7
E Flynn Member 7 7
A Griths Member 7 7
J Selak Member 7 7
Director Committee meetings
Risk and Compliance Committee
Status Meetings
attended
Meetings
held
E Flynn Chair 8 8
A Bloore Member 8 8
A Griths Member 8 8
J Selak Member 8 8
M Somerville Member 8 8
46
Director Committee meetings
Nominations Committee
Status Meetings
attended
Meetings
held
A Griths Chair 5 5
E Flynn Member 5 5
J Selak Member 5 5
A Bloore Member from
12 May 2021
1 1
M Somerville Member from
12 May 2021
1 1
Director Committee meetings
People & Remuneration Committee
Status Meetings
attended
Meetings
held
J Selak Chair 6 6
A Bloore Member 6 6
E Flynn Member 6 6
A Griths Member 6 6
M Somerville Member from
12 May 2021
1 1
Meetings held represents the number of meetings held during
the time the Director held oce.
The Directors’ meetings are those held for IOOF Holdings
Ltd. This does not include the meetings held and attended
by Directors for the various subsidiary companies. Major
subsidiaries averaged a further eight meetings each
during the year.
In addition to the meetings attended during the year, a
number of matters were considered and addressed separately
via circular resolution.
Shares issued on exercise of options
During the nancial year, the IOOF Group did not issue any
ordinary shares of the Company as a result of the exercise of
options. All plans were satised from the purchase of shares.
Unexercised options over shares,
performance rights and deferred
shares
At the date of this report, performance rights on issue are
shown in the following tables.
Performance rights
Performance period end date Number of
rights
30-Jun-21 343,271
30-Jun-22 349,800
30-Jun-23 340,560
30-Jun-24 886,512
1,920,143
Deferred shares
Vesting date Number of
shares
8-Apr-20 57, 592
57,592
Shares allocated on vesting will rank equally with all other
ordinary shares on issue.
These performance rights do not entitle the holder
to participate in any share issue or receive dividends
of the Company.
Indemnication and insurance
Rule 84 of the IOOF Holdings Ltd Constitution requires the
Company to indemnify to the extent permitted by law, each
Director and Secretary against liability incurred in, or arising
out of the conduct of, the business of the Company or the
discharge of the duties of the Director or Secretary. The
Directors and Secretary named in this Directors’ Report have
the benet of this requirement, as do individuals who formerly
held one of those positions.
In accordance with this requirement, the Company has entered
into Deeds of Access, Indemnity and Insurance (Deeds of
Indemnity) with each Director and Secretary. During the
nancial year, the IOOF Group paid insurance premiums to
insure against amounts that the IOOF Group may be liable
to pay the Directors and Secretary pursuant to Rule 84. The
insurance policy also insures the Directors and Secretary of
the Company and its controlled entities, and the general
ocers of each of the companies in the IOOF Group. Details
ofthe amount of the premium paid in respect of the insurance
contract have not been disclosed as such disclosure is
prohibited under the terms of the contract.
IOOF Annual Report 2021 47
Directors’ report (cont’d)
The liabilities insured are legal costs that may be incurred
indefending civil or criminal proceedings that may be
broughtagainst the ocers in their capacity as ocers
ofentities in the IOOF Group and any other payments arising
from liabilities incurred by the ocers in connection with
such proceedings, other than where such liabilities arise out
ofconduct involving a wilful breach of duty by the ocers
or the improper use by the ocers of their position or of
information to gain advantage to themselves or someone
elseor to cause detriment to the Company.
Environmental regulation
The IOOF Group is not subject to signicant
environmental regulation.
Events occurring after balance date
The Directors have declared the payment of a nal dividend
of 9.5 cents per share and a special dividend of 2.0 cents per
share, both franked to 100% at the 30% corporate income tax
rate to the holders of fully paid ordinary shares, to be paid
on22September 2021.
The Directors are not aware of any other matter or
circumstance not otherwise dealt with in this report, or the
accompanying nancial statements and notes thereto, that has
arisen since 30 June 2021 that has signicantly aected, or may
signicantly aect:
• the IOOF Group’s operations in future nancial years; or
• the results of those operations in future nancial years; or
• the IOOF Group’s state of aairs in future nancial years.
Lead auditor’s independence
declaration
The lead auditor’s independence declaration is included on
page 66 of the annual nancial report and forms part of the
Directors’ Report for the year ended 30 June 2021.
Rounding o of amounts
The Company is a company of the kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, dated 24 March 2016, and in accordance with that
instrument amounts in the nancial report are rounded
o to the nearest one hundred thousand dollars, unless
otherwise stated.
Non-audit services
The Directors are satised that the provision of non-audit
services during the year of $1,291,431 by the auditor is
compliant with the general standard of independence for
auditors imposed by the Corporations Act 2001. Non-audit
services are managed as follows:
• fees earned from non-audit work undertaken by KPMG
arecapped at 0.5 times the total audit fee;
• services have been reviewed and approved to ensure
that they do not impact the integrity and objectivity
ofthe auditor; and
• services do not undermine the general principles relating
to auditor independence as set out in the Code of Conduct
APES 110 Code of Ethics for Professional Accountants issued
by the Accounting Professional & Ethical Standards Board,
including reviewing or auditing the auditor’s own work,
acting in a management or decision-making capacity for
the IOOF Group, acting as advocate for the IOOF Group
orjointly sharing economic risks and rewards.
Further information regarding remuneration of auditors
isincluded in section 6-5 of the nancial report.
Proceedings on behalf of the
Company
• No person has applied to the Court under section 237 of
the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings
to which the Company is a party, for the purpose of taking
responsibility on behalf of the Company for all or part of
those proceedings.
• No proceedings have been brought or intervened in
onbehalf of the Company with leave of the Court under
section 237 of the Corporations Act 2001.
48
Remuneration report
Letter from the People &
Remuneration Committee Chair
Dear Shareholder
IOOF is pleased to present our Remuneration Report for
2021. The report is designed to provide shareholders with
an understanding of the Group’s remuneration principles,
policiesand programs, and their link with the Group’s strategy
and nancial performance.
The 2021 nancial year has been truly transformational for
IOOF with the successful completion on 31 May of the MLC
acquisition.This acquisition provides a step-change inscale
andreach across our organisation. The business also continued to
implement signicant changes across the advice and platforms
businesses, and consolidation of the ANZ P&I acquisition.
Through the integration with MLC, we have seen additions
tothe Executive Team: Garry Mulcahy, Chief Asset
Management Ocer, who joined with MLC at completion
andChris Weldon, Chief Transformation Ocer, who stepped
into this newly created role from within IOOF. We also
welcomed our Chief Corporate Aairs and Marketing Ocer,
Sawsan Howard, who joined as an important member of the
Executive Team in August. The additions to the Executive Team
and changes in Board composition across the Group provide
strong business and cultural foundations and the impetus for
the organisation to move forward.
The impacts of the COVID-19 pandemic continued to
permeate through the year, requiring periods of remote
working and the continuing need to support our clients
and people through challenging times. I am proud of how
our teams haveseamlessly adapted and responded to the
challenging and disruptive environment, and in fact, found
some new andbetter ways to work.
In response to COVID-19, the Chairman and CEO took a 20%
reduction in base pay for six months from 1 August 2020. All
other IOOF Holdings Directors, along with the Chief Financial
Ocer, took a 10% reduction in base pay for the same period.
Evolving our remuneration framework
In 2021, we implemented our new executive incentive
framework, the Executive Equity Plan (EEP). The plan, which
delivers incentives wholly in equity vesting over four years,
closely aligns executives with shareholders and encourages long-
term sustainable decision making in the interests of shareholders.
The incentive framework balances nancial and non-nancial
priorities, aligned with key strategic value drivers of the business,
both short and long term, to enable enduring performance.
The new executive framework has been successful in
driving strong alignment within the Executive Team and
supporting the cultural and remuneration principles
itwasdesigned to address:
• supporting IOOF’s strategic, cultural and talent agendas
including the ‘advice-led’ strategy and ClientFirst culture;
• aligning with best practice and stakeholder
expectations; and
• considering pending regulatory developments.
Remuneration governance
Our remuneration governance structures also evolved and
strengthened through 2021. The Board, Committees and
Management all recognise the need for strong governance
and linkages to risk in our remuneration structures. We
have taken steps this nancial year to ensure these factors
are more meaningfully embedded in our practices and
frameworks, which is outlined in detail in Section 2 of this
report. This will continue to be a signicant area of focus for
IOOF to ensure we are proactively adapting our remuneration
approach to best practices and in preparation for the Financial
Accountability Regime (FAR).
Executive remuneration outcomes
With the redesign of the executive framework completed,
thenew EEP took eect from 1 July 2020 for the 2021 nancial
year. Performance against the measures established as part
ofthe plan reect the signicant year for the business in terms
of its transformation. This is outlined in Section 1 of this report.
Executive performance against the EEP follows two years of
short-term incentives (STIs) not being awarded for the current
Executive Team, with the exception of the Chief Investment
Ocer who maintained a portion of his remuneration as STI, and
the Chief Asset Management Ocer (as explained in Section 3
of this Report). The EEP is a prospective plan, with equity applied
at the commencement of the four-year performance period,
meaning the current 2020/21 plan will not vest until 2024.
In relation to Non-Executive Director (NED) remuneration,
noincreases were made to NED fees for the fth year in a row.
Areview of the NED remuneration framework is underway
fornancial year 2022.
A key strength of IOOF is our culture and our people, who
are the centrepiece of this across all levels, including key
management personnel. Their dedication, commitment and
talent are reected in the operational and nancial achievements
in 2021 nancial year, and the foundations that have been laid
for future sustainable growth in shareholder value. On behalf
of the Board, I thank you for your support and feedback, and
commend this report to you.
Yours sincerely
John Selak
People & Remuneration Committee Chair
26 August 2021
IOOF Annual Report 2021 49
Remuneration report (cont’d)
Contents
1. Executive remuneration outcomes for the 2021
nancial year 51
The new 2021 remuneration framework 51
2021 nancial year performance outcomes 52
2. Remuneration governance 53
Reshaping the People & Remuneration Committee 53
Strengthening risk in performance and
remuneration governance 53
IOOF’s remuneration governance framework 53
Risk and remuneration 54
People & Remuneration Committee 54
3. Key Management Personnel (KMP) 57
Remuneration received by current ExecutiveKMPs 57
Prior year LTI 58
4. Non-Executive Director remuneration 59
NED fees 59
2021 statutory remuneration – NEDs 59
Equity holdings of NEDs 60
Terms of appointment 60
5. Company performance and remuneration impacts 60
Five-year Group performance 60
6. Key Management Personnel remuneration –
Additional statutory disclosure 61
Additional statutory disclosure 61
7. Other information 62
Equity holdings 62
Contract terms 64
Payments to persons before taking oce 64
50
1. Executive remuneration outcomes for the 2021 nancial year
The new 2021 remuneration framework
As outlined in last year’s report, a full review of the remuneration framework by the Group People & Remuneration Committee was
undertaken last nancial year, with independent recommendations provided by KPMG 3dc (executive remuneration and performance
advisory). The People & Remuneration Committee approved a redesign of the executive remuneration framework, with the new
incentive framework, the EEP, fully implemented for rst time for the 2021 nancial year.
The EEP framework has replaced the long-term incentive (LTI) and STI programs for the CEO, Key Management Personnel (KMP) and
the remaining members of the Executive Team. The STI is removed under the framework except in relation to the Chief Investment
Ocer and the Chief Asset Management Ocer, who retain STIs that will closely tie a portion of variable remuneration to the
performance of IOOF’s investment and asset management portfolios.
The EEP is delivered wholly in equity to closely align Executives with shareholders and encourage long-term sustainable decision
making in the interests of shareholders.
The EEP framework encompasses nancial and non-nancial measures. The EEP comprises:
• a four-year performance measure (40%)
This will be based on Relative Total Shareholder Return (TSR), assessed at the end ofthe four-year performance period.
• annual performance measures amounts not released until the end of the four-year performance period (60%)
Targets are set and assessed annually against ve key areas, one of which is nancial and four non-nancial metrics.
Theareasassessed, which align with the key strategic drivers of the business, are:
– nancial (10%)
– non-nancial measures (50%) comprised of:
– environmental, social and governance (ESG) (10%)
– client (10%)
– our people (10%)
– individual, role-specic measures (20%).
The rst allocation of EEP rights relating to the 2021 nancial year was granted post the release of IOOF’s full-year results in 2020.
Theannual performance measures set for the 2021 nancial year for the CEO and Executives were assessed at the end of the
nancialyear (as outlined in the table on the following page), but will not be eligible for release until 30 June 2024.
IOOF Annual Report 2021 51
Remuneration report (cont’d)
2021 nancial year performance outcomes
The table below highlights the performance outcomes for each of the measures set in the EEP.
Area Measure and description FY21 performance
achievement
Getaways
Risk and compliance Executives are required to meet all training and core risk requirements All KMP achieved
thisgateway
Culture principles Executives must demonstrate the IOOF principles consistently in the
way theywork
All KMP achieved
thisgateway
EXECUTIVE EQUITY PLAN
Annual performance measures
Set and assessed annually
– released after 4 years
Financial (40%) Delivering to shareholders
Long-term shareholder return as measured by TSR percentile
ranking>50%
Assessed in 2024
Financial (10%)
Achieving the Annual Financial Plan
Measured by achievement of an annual UNPAT target
10%
Achieved
Non-nancial performance measures
ESG (10%) Strengthening sustainability
Delivery against Board-endorsed ESG scorecard
10%
Achieved
Client (10%)
Delivering what matters to clients
Improving service delivery to members and advisers as measured
through adviser and member Net Promoter Scores (NPS)
10%
Achieved
People (10%)
Connecting with employees
Uplift in employee engagement and experience to achieve top quartile
engagement score
10%
Achieved
Individual (20%)
Transforming the organisation
Measures to be set on an individual basis. Will predominantly link
to the successful delivery of key transformation programs against
2021 nancial year milestones, namely: Evolve 21, P&I integration
andAdvice 2.0.
20%
Achieved
52
2. Remuneration governance
Reshaping the People & Remuneration Committee
From 4 May 2021, the Remuneration Committee was renamed the People & Remuneration Committee to reect its role in broader
people-related matters such as talent and succession, and diversity and inclusion, in addition to remuneration. The Group People
& Remuneration Committee is the governing body for developing, monitoring and assessing the remuneration strategy, policies
and practices across IOOF, and ensuring overall pay equity. The role of the Group People & Remuneration Committee is to review,
challenge, assess and as appropriate, endorse the recommendations made by management for Board approval. It oversees the IOOF
remuneration framework and assists the Board to ensure that IOOF’s remuneration strategy and policy are appropriate and eective.
The People & Remuneration Committee met formally six times during the 2021 nancial year, with the following members (as at
30 June 2021): John Selak (Chair), Allan Griths, Elizabeth Flynn, Andrew Bloore and Michelle Somerville. This included a joint meeting
with the Risk & Compliance and Audit committees as outlined below.
Strengthening Risk in Performance & Remuneration Governance
To continue our uplifting governance around our performance and remuneration practices, this year we introduced a joint meeting
of the People & Remuneration, Risk and Compliance and Audit committees in May 2021. This meeting was initiated as part of the
end-of-year performance and remuneration assessment process to ensure a heightened focus on risk in outcomes for the CEO, Senior
Executives, Responsible Persons and Responsible Managers. This meeting provided the opportunity for the Committees to review
and discuss relevant risk and audit matters that may warrant consideration in the People & Remuneration Committee’s determination
of remuneration outcomes, including any in-year malus adjustments. Feedback from across subsidiary boards and committees was
sought as input into the assessment of these key people.
IOOF’s remuneration governance framework
IOOF Holdings Ltd Board
Risk and Compliance and Audit Committees
Details regulatory and legal matters, signicant compliance
and operational incidence, internal audit issues and other
nancial and non-nancial matters.
People & Remuneration Committee
Establishes and maintains the IOOF Group's remuneration
framework, including determination of KMP
remuneration arrangements, ongoing review of incentive
schemes, and assessment of performance against key
performanceindicators.
Joint Group People & Remuneration,
Risk & Compliance and Audit Committees
The Board forum that is advised by the Group Chief
Risk Ocer on material risk matters that may impact
remuneration outcomes for Senior Executives and below.
Independent remuneration consultants
The People & Remuneration Committee may engage
external advisers to provide information to assist the
Committee in making remuneration decisions.
Risk and Remuneration governance
Incidents, breaches of policy and misconduct issues are regularly reported to Senior Executives. The Chief Risk Ocer annually
reports to the Joint People & Remuneration, Risk & Compliance and Audit Committees on the outcomes from the consequence
management process and conrms that these matters have been considered in determining performance and remuneration
outcomes where appropriate.
IOOF Annual Report 2021 53
Remuneration report (cont’d)
Risk and remuneration
Our remuneration framework has continued to evolve over the past year, enabling us to achieve better alignment between risk,
performance and remuneration, and ensure we are aligned with regulator and market expectations.
The Board continues to oversee enhancements to IOOF’s management of risk and remuneration, reinforcing the expectations of risk
outcomes and behaviours in support of a positive risk culture through IOOF’s practices and frameworks. This year, this included the
introduction of the Exercise of Discretion in Remuneration Decision Making Policy, to guide the Board in the application of discretion
to variable remuneration and the Shareholding Policy (Minimum Shareholding Requirement (MSR)), which outlines shareholding
expectations of Executives.
Risk also plays a key role in performance and remuneration for our broader employee workforce, with nancial year outcomes
and rewards being subject to meeting compliance expectations. Less than 1% of the total workforce failed tomeet these risk and
compliance gateways and as a result, no variable reward was awarded to these individuals.
Embedding risk in our Performance and Reward Framework
Risk culture
The IOOF risk culture is a key business driver and seeks
to create an environment where employees have a clear
understanding of their responsibilities and accountabilities
for managing risk. Employees are empowered to ask
questions, report concerns, seek relevant information,
challenge assumptions and take action when issues are
identied as part of everyday work activities.
Risk culture is underpinned by the new cultural principles,
which are embedded in our business processes, including
the Performance and Reward framework.
Alignment of risk to remuneration outcomes
The IOOF Group People & Remuneration Policy is designed
to encourage and incentivise employees to act responsibly
and with integrity in a manner consistent with the Policy.
Reporting is provided to the Board to support oversight of
remuneration and risk consequences, to assist in informing
performance and remuneration reviews.
Risk in the performance review process
Risk assessments are increasingly a key consideration for the
annual performance assessment process for the CEO and
Senior Executives. As well as the commencement of a joint
committee made up of the People & Remuneration, Risk
& Compliance and Audit committees to ensure a clear link
between risk, performance and remuneration outcomes,
itis also supported by reporting and governance structures
toensure a holistic view of risk.
Malus/clawback
Malus is the ability to reduce (including to zero) a variable
remuneration award, or lapse or postpone vesting of variable
remuneration awards granted but not vested.
Guidance and enhanced processes to support the
application of malus have been implemented across
IOOFduring the 2021 nancial year.
Clawback will also apply to all CEO and Senior Executives’
variable remuneration from the 2021 nancial year.
People & Remuneration Committee
The Committee reviews and makes recommendations to the Board on the remuneration structure and policies applicable to the
KMPand NEDs of the IOOF Group, as well as the wider IOOF employee population.
The Committee is comprised solely of NEDs, all of whom are independent. The members of the Committee for the year
ended 30 June 2021 were J Selak – Chair (full year), A Griths (full year), E Flynn (full year), A Bloore (full year) and M Somerville
(12 May 2021 – present).
The Board considers that the members of the Committee provide an appropriate mix of skills to undertake its terms of reference,
having regard to their qualications, knowledge of the nancial services industry and experience in business management.
People & Remuneration Committee Charter
The responsibilities of the People & Remuneration Committee are outlined in its Charter and reviewed annually. The Charter
isavailable on the Corporate Governance page of the Company’s website at www.ioof.com.au
54
The table below shows IOOF’s remuneration objectives and principles.
IOOF purpose
Understand me Look after me Secure my future
Remuneration objectives
Objectives of IOOF’s remuneration framework:
Attraction and
retention of the best
talent
Strategy-led and
supporting IOOF’s
purpose
Promote a sound risk
management culture
Shareholder
alignment
Meet regulatory
and governance
expectations
and impacts on
remuneration
• Attract, motivate
and retain key
talent to drive the
performance of the
Company.
• Support our advice-
led approach to
delivering customer
outcomes
• Emphasise delivering
quality advice
• Support IOOF’s
ClientFirst
philosophy to
deliver a sustainable
competitive
advantage.
• Sound management
of non-nancial
and nancial risk
and individual
and collective
accountability
• Meet the
expectations of
stakeholders in a
fast-paced regulatory
environment
and uphold the
highest governance
standards.
• Align outcomes
with the shareholder
experience through
allocation of equity
and delivery of
shareholder returns
• Facilitate an
‘ownership mindset’
and long-term focus
among participants.
• Consider the
draft Financial
Accountability
Regime (FAR)
proposals and
APRA’sdraft
Prudential Standards
CPS 511 Remuneration
and their potential
impact on
remuneration.
Remuneration principles
These objectives are achieved by:
• Being market
competitive and
reecting our
broader employee
value proposition.
• Creating a culture
that underpins
our principles –
recognising what is
achieved and the
way in which it is
achieved.
• Supporting the
Risk Management
framework
and culture,
byencouraging
appropriate
risk behaviours,
setting clear
performance and
risk accountabilities
and enabling
consequences
through forfeiture
ofremuneration.
• Delivering on
shareholder value
through short-term
performance that
builds into long-term
performance.
• Determining an
individual’s variable
remuneration
based on a range
ofnancial and non-
nancial factors that
include risk factors.
IOOF Annual Report 2021 55
Remuneration report (cont’d)
The remuneration framework for the KMP are outlined below.
Executive remuneration framework
Total xed remuneration (TFR) Short-term variable reward Executive Equity Plan
(long-term variable reward)
Participants
All Senior Executives Chief Asset Management Ocer and
Chief Investment Ocer
All Senior Executives except Chief
Asset Management Ocer
Rationale
• Provides market competitive
remuneration to attract and retain
high-quality talent while reecting
role size and accountabilities
• Aligned to specic individual, role-
specic targets associated with the
Investment and Asset Management
portfolios
• Relative TFR against ASX 200 (40%)
assessed over four years
• Financial measure (10% measured
by achieving annual UNPAT target
(released after four years)
• Non-nancial component (50%) –
set and assessed annually (released
after four years) with one measure
in each category being (1) ESG, (2)
client, (3) people and (4) individual
Structure
Base remuneration and
superannuation
50%
Paid as cash
50%
Deferred equity
for one to two
years
Performance rights to shares with no
dividend equivalent payments, with
vesting subject to performance over
a four-year period
Approach
• TFR is determined by taking
into consideration expertise,
responsibility, knowledge,
experience and market
competitiveness
• Reviewed annually against relevant
comparator group remuneration
benchmarks
• Primary comparator group is
other wealth management and
superannuation organisations
• Adjustments only made for
changes in role or promotion,
internal relativities and signicant
marketchanges
Quantum (% of TFR)
Maximum of 100%–130%
Business performance measures
STIs are discretionary and determined
for each individual KMP, based on a
balanced scorecard which includes:
Risk and governance assessment
(gate/modier)
Outcomes subject to Board
consideration of conduct, and risk
andreputation matters
Quantum (% of TFR)
Maximum face value allocation
of133% (100% for Group CEO)
Business performance measures
• Relative TSR against ASX 200 (40%)
assessed over four years
• Financial measure (10% measured
by achieving annual UNPAT target
(released after four years)
• Non-nancial component (50%) –
set and assessed annually (released
after four years) with one measure
in each category being (1) ESG, (2)
client, (3) people and (4) individual
Risk and governance assessment
(gate/modier)
Outcomes subject to Board
consideration of conduct, and risk
andreputation matters
56
3. Key Management Personnel
The Key Management Personnel (KMP) are dened as persons having authority and responsibility for planning, directing and
controlling the activities of an entity, directly or indirectly, including any Director (whether Executive or otherwise) of that entity.
The table below outlines the Group’s KMP for the nancial year ended 30 June 2021. It also shows each individual’s shareholding
andcorresponding progress against their MSR as at 30 June 2021.
Name Role Term as KMP Current
shareholding
Progress
against
MSR
(1)
Chairperson
A Griths
Independent Non-Executive Director and Chairman Full year 100,000 n/a
Non-Executive Directors
E Flynn
Independent Non-Executive Director Full year 49,021 n/a
J Selak
Independent Non-Executive Director Full year 145,000 n/a
A Bloore
Independent Non-Executive Director Full year 17,19 0 n/a
M Somerville
Independent Non-Executive Director Full year 10,840 n/a
CEO and Managing Director
R Mota
Chief Executive Ocer (CEO) and Managing Director Full year 347,328 100.0%
Current KMP
D Chalmers
Chief Financial Ocer Full year – 0.0%
F Lombardo
Chief Operating Ocer Full year 45,576 80.7%
D Whereat
Chief Advice Ocer Full year 10,000 15.5%
M Oliver
Chief Distribution Ocer Full year – 0.0%
L Stewart
Chief Risk Ocer Full year – 0.0%
G Mulcahy
Chief Asset Management Ocer 1 June 2021
to present
– n/a
Former KMP
D Farmer
Chief Investment Ocer 1 July 2020 to
31 May 2021
21,022 56.0%
(1) The MSR is required to be in place by 2024 or four years after commencing in the EEP. The share price is calculated based on the higher of the price atdate of
purchase/vesting and the current price. The MSR applies to executives only.
Disclosures of remuneration and other transactions with KMP who were appointed or ceased during the year are limited to those
transactions occurring in the period of appointment as KMP.
Executive KMP appointment arrangements
The Executive Team adjustments following the MLC acquisition
completed on 31 May 2021 has resulted in the following
changes to KMP.
G Mulcahy
Chief Asset Management Ocer
Appointed 1 June 2021
Executive KMP exit arrangements
The following ceased to be KMP during 2021:
D Farmer
Chief Investment Ocer
Ceased as KMP 31 May 2021
Remuneration received by current
ExecutiveKMPs
The remuneration outcomes table below provides a summary
of the remuneration that was received by the current
executives in their KMP roles during the nancial year ended
30 June 2021. We believe that presenting this information
provides shareholders with greater clarity and transparency
ofexecutive remuneration. This table diers from the statutory
remuneration table included in Note 6-6, which presents
remuneration in accordance with accounting standards
(i.e.onan accrual basis). All remuneration presented in this
report isin Australian dollars.
IOOF Annual Report 2021 57
Remuneration report (cont’d)
Total xed
remuneration
(1)
STI
(2)
LTI
(3)
EEP
(4)
Total value of
remuneration
received
Name 2021
$
2020
$
2021
$
2020
$
2021
$
2020
$
2021
$
2021
$
2020
$
CEO and Managing Director
R Mota 1,080,676 1,206,778 54,103 68,969 68,801 83,625 1,200,000 2,403,579 1,359,372
Current KMP
D Chalmers
(5)
761,702 215,385 – – – – 600,000 1,361,702 215,385
F Lombardo 551,620 550,000 47,608 60,690 68,801 41,813 412,000 1,080,029 652,502
D Whereat
(5)
553,599 211,541 – – – – 275,000 828,599 211, 5 41
M Oliver
(5)
503,594 219,286 – – – – 250,000 753,594 219,286
L Stewart
(5)
620,000 23,846 – – – – 186,000 806,000 23,846
G Mulcahy
(6)
47,659 – 92,158 – – – – 139,817 –
Former KMP
D Farmer
(7)
389,583 433,218 359,773 208,599 – 54,600 212,500 961,856 696,417
D Coulter
(8)
– 320,773 – 102, 011 – 83,625 – – 506,409
G Riordan
(8)
– 336,565 – 139,761 – 83,625 – – 559,951
A Noble
(9)
– 143,147 – – – – – – 143,147
Total 4,508,433 3, 517, 392 553,642 580,030 137,601 347,28 8 3,135,500 8,335,176 4, 587, 856
(1) Includes base salary, non-monetary and superannuation.
(2) Deferred STI awarded in a prior year calculated using the closing share price at the date of transfer of shares. STI for G Mulcahy and D Farmer represent cash STI
accrued during the year.
(3) Tenure-based LTI value calculated using closing share price at date of transfer of shares.
(4) EEP value represents the total amount that the KMP was granted at the commencement of the plan, subject to a four-year performance period as described
inSection1 of Remuneration report.
(5) Appointed as KMP during the prior nancial year.
(6) Appointed as KMP from 1 June 2021.
(7) Ceased as KMP 31 May 2021.
(8) Ceased as KMP 28 February 2020.
(9) Appointed as KMP from 26 July 2019 to 12 November 2019.
Prior year LTI
For performance rights plans pre-dating the EEP, vesting of 50% of performance rights is subject to serving a three-year employment
period commencing on the date of grant. 50% of the grant is subject to a TSR progressive vesting scale over three years. TSR was
chosen as the most appropriate comparative measure as it focuses on the delivery of shareholder value. TSR represents the change
inthe value of a share plus the value of dividends paid.
Year Performance
period
Grant date IOOF TSR for
the period
(%)
Ranking
relative to
ASX 200
Vesting
status at
30 June 2021
Performance
period
end date
2020 LTI performance rights
2020-2022 17 Dec 19 Performance period not complete 30 Jun 22
2019 LTI performance rights
2019-2021 17 Aug 18 -37.40% 154th 0% vested 30 Jun 21
The performance period for the 2019 LTI performance rights was completed in 2021. With a TSR ranking of 154th relative to
the ASX 200, no performance rights vested under the TSR performance hurdle for any KMP. R Mota, F Lombardo and D Farmer
remained employed during the three-year period. G Riordan is considered a ‘good leaver’ and remained eligible for the 2019 LTI
performance rights.
Accordingly, the following shares vested for KMP under the 2019 LTI performance rights:
Name Type of instrument Employment
condition –
50%
TSR
Performance
hurdle – 50%
% vested
in year
% forfeited
in year
Number of shares vested
R Mota
2019 LTI performance rights 25,000 – 50.0% 50.0%
F Lombardo
2019 LTI performance rights 22,000 – 50.0% 50.0%
Former KMP
D Farmer
2019 LTI performance rights 12,500 – 50.0% 50.0%
G Riordan
2019 LTI performance rights 15,000 – 50.0% 50.0%
58
4. Non-Executive Director remuneration
NEDs receive a xed fee, including superannuation, for being a Director of the Board, with an additional fee for the Chairman
oftheBoard. No additional fees are paid for service on Board Committees or subsidiary company Boards.
In setting fees, the Board considers general industry practice; best principles of corporate governance; the responsibilities and
risks attached to the NED role; the time commitment expected of NEDs on Group and Company matters; and fees paid to NEDs
ofcomparable companies.
In order to ensure NED independence and impartiality, fees are not linked to Company performance and NEDs are not eligible
toparticipate in any of the Group’s incentive arrangements.
The Board has reviewed NED fees for 2021 and, for the fth year, has determined not to increase their fees. A review of NED fees
isbeing undertaken in the 2022 nancial year.
NED fees
Elements Details
NED fees
(no change to 2020)
2020/21 fees per annum were:
IOOF Holdings Ltd Board Chair fee $285,000
IOOF Holdings Ltd Board NED fee $170,000
Post-employment benets
Superannuation contributions are made at a rate of 9.5% (up to the Government’s prescribed
maximum contributions limit) and are included in the NED fee.
The current aggregate fee pool for NEDs of $1.25 million was approved by shareholders at the 2013 Annual General Meeting.
Theannual total of NEDs’ fees, including superannuation contributions, is within this agreed limit.
2021 statutory remuneration – NEDs
NED Short-term benets Post employment
Total
$
Directors’ fees
(4)
$
Superannuation
$
A Griths
(3)
2021 256,500 – 256,500
2020 274,499 10,501 285,000
E Flynn
(3)
2021 161,500 – 161,500
2020 162,626 7,374 170,000
J Selak
2021 147,4 89 14,011 161,500
2020 155,251 14,749 170,000
A Bloore
2021 147,4 89 14,011 161,500
2020 152,185 14,458 166,643
M Somerville
2021 147, 542 13,958 161,500
2020 113,453 10,778 124,231
G Vernados
(1)
2020 65,086 7, 597 72,683
J Harvey
(2)
2020 99,259 9,430 108,689
Total 2021 860,520 41,980 902,500
2020 1,022,359 74,887 1, 0 97, 24 6
(1) Resigned as a NED on 28 November 2019.
(2) Resigned as a NED on 19 February 2020.
(3) Directors’ fees include any fees sacriced into superannuation funds.
(4) Directors took a reduction in fees for six months in acknowledgement of the impact of COVID-19.
IOOF Annual Report 2021 59
Remuneration report (cont’d)
Equity holdings of NEDs
Name Balance
as at
1 July 2020
Changes
during
the year
Balance
as at
30 June 2021
Balance as
at report
sign-o date
A Griths
41,428 58,572 100,000 100,000
E Flynn
33,157 15,86 4 49,021 49,021
J Selak
55,000 90,000 145,000 145,000
A Bloore
5,830 11,360 17,19 0 17,19 0
M Somerville
– 10,840 10,840 10,840
Terms of appointment
All NEDs have letters of appointment detailing the terms under which they are engaged. The term of appointment for each is open-
ended, subject to the provisions of the Corporations Act and the Company’s Constitution. Under the Constitution, one-third of
Directors must retire from oce each year and may seek re-election by shareholders at the Annual General Meeting of the Company.
5. Company performance and remuneration impacts
In considering the IOOF Group’s nancial performance and impacts on shareholder wealth for the residual LTI (excluding for the 2020
nancial year as no LTI was awarded in respect of the year ended 30 June 2020), and for the new EEP determination, the Committee
has regard to the following nancial metrics in respect of the current nancial year and the previous four nancial years.
Five-year Group performance
2021 2020 2019 2018 2017
Protability measures
Prot attributable to owners of the Company ($m) (143.5) 141.2 28.6 88.3 116.0
UNPAT ($m)
(1)
147.8 128.8 198.0 191.4 169.4
UNPAT EPS (cents per share) 25.1 36.8 56.5 57. 3 56.5
Share information
Basic EPS (cents per share) (24.4) 40.3 8.1 26.4 38.7
Basic EPS (continuing operations) (cents per share) (24.4) 15.1 (8.5) 31.6 38.7
Share price at start of year 4.92 5.17 8.99 9.80 7.83
Share price at end of year 4.27 4.92 5.17 8.99 9.80
Change in share price (0.65) (0.25) (3.82) (0.81) 1.97
Dividends per share (cents per share) 23.0 34.5 37.5 54.0 53.0
Ratios
Return on equity (non-statutory measure)
(2)
5.92% 7.59 % 10.89% 11.30% 12.10%
Total shareholder return
(8. 5) % 1.8% (36.8)% (2.8)% 31.9%
STIs paid to KMP
Total STIs paid to KMP ($’000s) 434 173 143 2,046 1,900
(1) UNPAT is reconciled to prot attributable to owners of the Company in the Operating and Financial Review at page 36 of the Directors' Report.
(2) RoE is calculated by dividing UNPAT by average capital on issue during the year.
60
6. Key Management Personnel remuneration – Additional statutory disclosure
Additional statutory disclosure
The following table sets out the remuneration received by KMP for the year ended 30 June 2021. The share-based payments
shown below are not amounts actually received by KMP during the year, as in accordance with accounting standards, they include
accounting values for unvested share awards. Actual share-based payment amounts received are shown as cash remuneration.
Element of
Remuneration
Short-term benets Post-
employ-
ment
Share-based
payments
(2)
Termin-
ation
benets Total
Component
as a % of
total
remuneration
Salary Bonus –
cash
Non-
mone-
tary
(1)
Super-
annu-
ation
Perform-
ance
rights
Component of
Remuneration
Fixed Variable Fixed Fixed Variable Fixed Fixed Variable
(3)
$ $ $ $ $ $ $ % %
R Mota
(6)
2021 1,058,306 – 676 21,694 417,433 – 1,498,109 72 28
2020 1,182,459 – 3,316 21,003 280,677 – 1,487,455 81 19
D Chalmers
(4)(6)
2021 738,306 – 1,702 21,694 68,451 – 830,153 92 8
2020 209,730 – – 5,655 – – 215,385 100 –
F Lombardo
2021 528,306 – 1,620 21,694 237,769 – 789,389 70 30
2020 528,997 – – 21,003 227, 4 8 4 – 777,484 71 29
D Whereat
(4)
2021 528,306 – 3,599 21,694 74,729 – 628,328 88 12
2020 203,461 – 2 8,078 17,936 –
229,477 92 8
M Oliver
(4)
2021 478,306 – 3,594 21,694 71,877 – 575,471 88 12
2020 209,392 – 1,008 8,886 17,93 6 – 237,222 92 8
L Stewart
(4)
2021 598,306 – – 21,694 21,220 – 641,220 97 3
2020 23,038 – – 808 – – 23,846 100 –
KMP appointed during 2021
G Mulcahy
(4)(5)
2021 47,659 92,158 – – – – 139,817 34 66
Former KMP
D Farmer
(4)
2021 369,697 331,876 – 19,886 121,726 – 843,185 46 54
2020 403,997 173,036 8,218 21,003 93,908 – 700,162 62 38
D Coulter
(4)
2020 303,321 – 3,316 14,136 (8,783) 472,165 784,155 101 (1)
G Riordan
(4)
2020 322,025 75,000 – 14,540 75,121 438,312 924,998 84 16
A Noble
(4)
2020 132,076 – – 11,071 – 57, 212 200,359 100 –
Total 2021 4,347,192 424,034 11,191 150,050 1,013,205 – 5,945,672
2020 3,518,496 248,036 15, 860 126,183 704,279
967,689 5,580,543
(1) Non-monetary benets include company-funded benets and fringe benets tax payable on those benets, typically car parking.
(2) Share-based payments include accruals in relation to the Executive Performance Share Plan and accruals in relation to other grants of performance rights over shares
in the Company. The value of the number of shares and options expected to vest has been apportioned over the term from grant date to vesting date.
(3) As payment of the variable component is at the discretion of the Board, the minimum value is nil and the maximum is the total amount paid.
(4) Amounts represent payments relating to the period during which the individuals were identied as KMP.
(5) Short-term incentive paid to G Mulcahy post 30 June 2021 of $503,180. Short-term incentive deferred for three years of $335,453. A liability of $746,477 for this incentive
was assumed upon the acquisition of MLC Wealth on 31 May 2021, and the amount of $92,158 represents the expense relating to the period 1 June 2021 to 30 June
2021. No superannuation was paid in respect of G Mulcahy as he is a member of a dened benet plan, which is in a payment holiday. Disclosure of the dened
benet plan is made at note 6-8.
(6) Individual took a reduction in salary for six months in acknowledgement of the impact of COVID-19.
IOOF Annual Report 2021 61
Remuneration report (cont’d)
7. Other information
Equity holdings
The table below sets out details of deferred shares and rights that were granted to KMP during the 2021 nancial year or in prior years
and that then vested, were exercised/sold or which lapsed/were forfeited during the 2021 nancial year.
Name Type of instrument Grant
date
Fair value per right
at grant date
Number granted
(1)
Balance at
1 July 2020
Granted as
compensation
Exercised/
vested
Forfeited/
lapsed
Balance at
30 June 2021
Financial year
of performance
period end
CEO & Managing Director
R Mota 2018 deferred shares
(2)
30-Jun-18 $8.58 13,112 13,112 – (13,112) – – 2021
2021 Executive Equity Plan 18-Dec-20 $2.29 239,597 – 239,597 – – 239,597 2024
2020 LTI performance rights 17-Dec-19 $5.90 75,000 75,000 – 75,000 2022
2019 LTI performance rights 26-Sep-18 $4.93 50,000 50,000 – – – 50,000 2021
Total R Mota 138 ,112 239,597 (13,112) – 364,597
Current KMP
D Chalmers 2021 Executive Equity Plan 18-Dec-20 $2.29 119,79 9 – 119,79 9 – – 119,79 9 2024
Total D Chalmers – 119,799 – – 119,799
F Lombardo 2018 deferred shares
(2)
30-Jun-18 $8.58 11,538 11, 538 – (11,538) – – 2021
2021 Executive Equity Plan 18-Dec-20 $2.29 82,262 – 82,262 – – 82,262 2024
2020 LTI performance rights 17-Dec-19 $5.90 44,000 44,000 – – – 44,000 2022
2019 LTI performance rights 26-Sep-18 $4.93 44,000 44,000 – – – 44,000 2021
Total F Lombardo 99,538 82,262 (11,538) – 170,262
D Whereat 2021 Executive Equity Plan 18-Dec-20 $2.29 54,908 – 54,908 – – 54,908 2024
2020 LTI performance rights 17-Dec-19 $5.90 10,000 10,000 – – – 10,000 2022
2019 LTI performance rights 26-Sep-18 $4.93 10,000 10,000 – – – 10,000 2021
Total D Whereat 20,000 54,908 – – 74,908
M Oliver 2021 Executive Equity Plan 18-Dec-20 $2.29 49,916 – 49,916 – – 49,916 2024
2020 LTI performance rights 17-Dec-19 $5.90 10,000 10,000 – – – 10,000 2022
2019 LTI performance rights 26-Sep-18 $4.93 10,000 10,000 – – – 10,000 2021
Total M Oliver 20,000 49,916 – – 69,916
L Stewart 2021 Executive Equity Plan 18-Dec-20 $2.29 37,13 8 – 37,138 – – 37,138 2024
Total L Stewart – 37,138 – – 37,13 8
Former KMP
D Farmer 2018 deferred shares
(2)
30-Jun-18 $8.58 6,761 6,761 – (6,761) – – 2021
2021 Executive Equity Plan 18-Dec-20 $2.29 42,429 – 42,429 – – 42,429 2024
2020 LTI performance rights 17-Dec-19 $5.90 25,000 25,000 – – – 25,000 2022
2019 LTI performance rights 26-Sep-18 $4.93 25,000 25,000 – – – 25,000 2021
Total D Farmer 56,761 42,429 (6,761) – 92,429
Total KMP 334,411 626,049 (31,411) – 929,049
(1) Exercise price at grant date is $nil.
(2) In August 2018, KMP were awarded STIs for the 2018 nancial year, of which one half was settled in cash and the remaining half in the form of deferred shares.
Half of the deferred shares vested in July 2019 with the remaining half in July 2020 subject to Board ‘look back’ provisions.
Note: G Mulcahy has not been awarded any performance rights since his appointment as KMP. Therefore, this individual is not included in the above table.
62
7. Other information
Equity holdings
The table below sets out details of deferred shares and rights that were granted to KMP during the 2021 nancial year or in prior years
and that then vested, were exercised/sold or which lapsed/were forfeited during the 2021 nancial year.
Name Type of instrument Grant
date
Fair value per right
at grant date
Number granted
(1)
Balance at
1 July 2020
Granted as
compensation
Exercised/
vested
Forfeited/
lapsed
Balance at
30 June 2021
Financial year
of performance
period end
CEO & Managing Director
R Mota 2018 deferred shares
(2)
30-Jun-18 $8.58 13,112 13,112 – (13,112) – – 2021
2021 Executive Equity Plan 18-Dec-20 $2.29 239,597 – 239,597 – – 239,597 2024
2020 LTI performance rights 17-Dec-19 $5.90 75,000 75,000 – 75,000 2022
2019 LTI performance rights 26-Sep-18 $4.93 50,000 50,000 – – – 50,000 2021
Total R Mota 138 ,112 239,597 (13,112) – 364,597
Current KMP
D Chalmers 2021 Executive Equity Plan 18-Dec-20 $2.29 119,79 9 – 119,79 9 – – 119,79 9 2024
Total D Chalmers – 119,799 – – 119,799
F Lombardo 2018 deferred shares
(2)
30-Jun-18 $8.58 11,538 11, 538 – (11,538) – – 2021
2021 Executive Equity Plan 18-Dec-20 $2.29 82,262 – 82,262 – – 82,262 2024
2020 LTI performance rights 17-Dec-19 $5.90 44,000 44,000 – – – 44,000 2022
2019 LTI performance rights 26-Sep-18 $4.93 44,000 44,000 – – – 44,000 2021
Total F Lombardo 99,538 82,262 (11,538) – 170,262
D Whereat 2021 Executive Equity Plan 18-Dec-20 $2.29 54,908 – 54,908 – – 54,908 2024
2020 LTI performance rights 17-Dec-19 $5.90 10,000 10,000 – – – 10,000 2022
2019 LTI performance rights 26-Sep-18 $4.93 10,000 10,000 – – – 10,000 2021
Total D Whereat 20,000 54,908 – – 74,908
M Oliver 2021 Executive Equity Plan 18-Dec-20 $2.29 49,916 – 49,916 – – 49,916 2024
2020 LTI performance rights 17-Dec-19 $5.90 10,000 10,000 – – – 10,000 2022
2019 LTI performance rights 26-Sep-18 $4.93 10,000 10,000 – – – 10,000 2021
Total M Oliver 20,000 49,916 – – 69,916
L Stewart 2021 Executive Equity Plan 18-Dec-20 $2.29 37,13 8 – 37,138 – – 37,138 2024
Total L Stewart – 37,138 – – 37,13 8
Former KMP
D Farmer 2018 deferred shares
(2)
30-Jun-18 $8.58 6,761 6,761 – (6,761) – – 2021
2021 Executive Equity Plan 18-Dec-20 $2.29 42,429 – 42,429 – – 42,429 2024
2020 LTI performance rights 17-Dec-19 $5.90 25,000 25,000 – – – 25,000 2022
2019 LTI performance rights 26-Sep-18 $4.93 25,000 25,000 – – – 25,000 2021
Total D Farmer 56,761 42,429 (6,761) – 92,429
Total KMP 334,411 626,049 (31,411) – 929,049
(1) Exercise price at grant date is $nil.
(2) In August 2018, KMP were awarded STIs for the 2018 nancial year, of which one half was settled in cash and the remaining half in the form of deferred shares.
Half of the deferred shares vested in July 2019 with the remaining half in July 2020 subject to Board ‘look back’ provisions.
Note: G Mulcahy has not been awarded any performance rights since his appointment as KMP. Therefore, this individual is not included in the above table.
IOOF Annual Report 2021 63
Remuneration report (cont’d)
The relevant interest of KMP in the shares issued by the Company, is as follows.
Ordinary shares
(1)
Balance at
1 July 2020
Received on
vesting of
performance
rights
Net other
change
Balance at
30 June 2021
No. No. No. No.
CEO and Managing Director
R Mota 2021 204,227 28,112 114,989 3 47, 328
2020 12 2,115 28,112 54,000 204,227
Current KMP
D Chalmers
(2)
2021 – – – –
2020 – – – –
F Lombardo
2021 19,038 26,538 – 45,576
2020 – 19,038 – 19,038
D Whereat
(2)
2021 – – 10,000 10,000
2020 – – – –
M Oliver
(2)
2021 – – – –
2020 – – – –
L Stewart
(2)
2021 – – – –
2020 – – – –
G Mulcahy
(2)
2021 – – – –
Former KMP
D Farmer
(3)
2021 14,261 6,761 – 21,022
2020 – 14,261 – 14,261
D Coulter
(3)
2020 300,971 28 ,112 – 329,083
G Riordan
(3)
2020 72,500 23,324 – 95,824
A Noble
(2)(3)
2020 – – – –
(1) The equity holding for the above individuals is inclusive of both direct and indirect shareholdings.
(2) Opening balance is number of shares held at the time of appointment as KMP.
(3) Closing balance is number of shares held at the time of cessation as KMP.
Contract terms
The term of each KMP’s contract is ongoing. Either IOOF or the individual KMP (excluding the CEO) can terminate their contract
onsixmonths’ notice. In the case of the CEO, either IOOF or the CEO can terminate his contract on 12 months’ notice.
In the case of termination of employment, the IOOF Group may elect to make a payment in lieu of part or all of the notice periods,
incorporating unpaid leave entitlements and pro-rated entitlement to EEP (if applicable). The Board has discretion regarding treatment
of unvested short- and long-term incentives received under the previous remuneration framework.
Payments to persons before taking oce
No Director or member of senior management appointed during the year received a payment as part of his or her consideration
foragreeing to hold the position.
This report is signed in accordance with a resolution of the Directors made pursuant to section 298(2) of the Corporations Act 2001.
The Remuneration Report is prepared, and audited, in accordance with the requirements of the Corporations Act 2001. It forms
partofthe Directors’ Report.
John Selak
People & Remuneration Committee Chair
26 August 2021
64
Directors’ declaration
For the year ended 30 June 2021
1 In the opinion of the Directors of the Company:
a the consolidated nancial statements and notes set out on pages 75 to 138 and the Remuneration Report, set out on pages
49 to 64 in the Directors’ Report, are in accordance with the Corporations Act 2001 including:
i giving a true and fair view of the IOOF Group’s nancial position as at 30 June 2021 and its performance for the nancial
yearended on that date; and
ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2 The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive
Ocer and Chief Financial Ocer for the nancial year ended 30 June 2021.
3 The Directors draw attention to section 7-2 to the consolidated nancial statements, which includes a statement of compliance
with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
Mr Allan Griths
Chairman
Melbourne
26 August 2021
IOOF Annual Report 2021 65
43
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG
International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used
under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under
Professional Standards Legislation.
Lead Auditor’s Independence
Declaration under
Section 307C of the Corporations Act
2001
To the Directors of IOOF Holdings Ltd
I declare that, to the best of my knowledge and belief, in relation to the audit of IOOF Holdings Ltd for the financial
year ended 30 June 2021 there have been:
i. no contraventions of the auditor independence requirements as set out in the Corporations Act
2001 in relation to the audit; and
ii. no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Chris Wooden
Partner
Melbourne
26 August 2021
66
44
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG
International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used
under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under
Professional Standards Legislation.
Independent Auditor’s Report
To the shareholders of IOOF Holdings Ltd
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of IOOF
Holdings Ltd (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance with
the Corporations Act 2001, including:
•
giving a true and fair view of the Group’s
financial position as at 30 June 2021 and
of its financial performance for the year
ended on that date; and
•
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises
:
•
Consolidated
Statement of financial position as at 30
June 2021
•
Consolidated Statement of comprehensive income,
Consolidated Statement of changes in equity, and
Consolidated Statement of cash flows for the year then
ended
•
Notes including a summary of significant accounting
policies
•
Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements
of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial
Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
IOOF Annual Report 2021 67
45
Key Audit Matters
The Key Audit Matters we identified are:
•
Valuation of Goodwill and Indefinite life
intangible assets
•
Provision for client remediation and
related costs
•
Information technology related controls
•
Accounting for business combinations
Key Audit Matters are those matters that, in our professional
judgement, were of most significance in our audit of the
Financial Report of the current period.
These matters were addressed in the context of our audit of
the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Valuation of Goodwill and Indefinite life Intangible Assets - $2,137.9 million and $51.5 million
Refer to Note 4-3 Goodwill and 4-2 Intangible Assets to the Financial Report
The key audit matter
How the matter was addressed in our audit
A key audit matter for us was the Group’s annual
testing of goodwill and indefinite life intangible
assets for impairment, given the size and judgement
of the balance (being 37% and 0.9% of total assets
respectively). We focused on the significant
forward-looking assumptions the Group applied in
their value in use models, including:
• Forecast operating cash flows, growth rates and
terminal growth rates – the Group has
experienced reduced revenue in the current
year, as a result of the termination of a third
platform relationship and the cessation of
grandfathered revenue. These conditions
increase the possibility of goodwill and
indefinite life intangible assets being impaired,
plus the risk of inaccurate forecasts or a wider
range of possible outcomes for us to consider.
• Discount rate – this is complicated in nature
and varies according to the conditions and
environment the specific Cash Generating Unit
(CGU)/intangible is subject to from time to time
as well as the approach to incorporating risks
into the cash flows or discount rates.
The Group uses complex models to perform their
annual testing of goodwill and indefinite life
intangibles for impairment. The models are largely
manually developed, adjusted for historical
performance, and use a range of internal and
external sources as inputs to the assumptions.
Complex modelling, using forward-looking
Working with our valuation specialists, our procedures
included:
•
We considered the appropriateness of the value in
use method applied by the Group to perform the
test of goodwill and indefinite life intangibles
impairment against the requirements of the
accounting standards.
•
We assessed the integrity of the value in use
models used, including the accuracy of the
underlying calculation formulas.
•
We compared forecast cash flows contained in
value in use models to approved forecasts.
•
We assessed the accuracy of previous Group
forecasts to inform our evaluation of forecasts
incorporated in the models.
•
We used our knowledge of the Group, its past
performance, business and customers, and our
industry experience to challenge the Group’s
forecast cash flows. We compared key events to
the approved plan and strategy. We compared
forecast growth rates and terminal growth rates to
published studies of industry trends and
expectations and evaluated differences for the
Group’s operations.
•
We assessed the Group’s determination of CGU
assets for consistency with the assumptions used
in the forecast cash flows and the requirements of
the accounting standards.
68
45
Key Audit Matters
The Key Audit Matters we identified are:
•
Valuation of Goodwill and Indefinite life
intangible assets
•
Provision for client remediation and
related costs
•
Information technology related controls
•
Accounting for business combinations
Key Audit Matters are those matters that, in our professional
judgement, were of most significance in our audit of the
Financial Report of the current period.
These matters were addressed in the context of our audit of
the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Valuation of Goodwill and Indefinite life Intangible Assets - $2,137.9 million and $51.5 million
Refer to Note 4-3 Goodwill and 4-2 Intangible Assets to the Financial Report
The key audit matter
How the matter was addressed in our audit
A key audit matter for us was the Group’s annual
testing of goodwill and indefinite life intangible
assets for impairment, given the size and judgement
of the balance (being 37% and 0.9% of total assets
respectively). We focused on the significant
forward-looking assumptions the Group applied in
their value in use models, including:
• Forecast operating cash flows, growth rates and
terminal growth rates – the Group has
experienced reduced revenue in the current
year, as a result of the termination of a third
platform relationship and the cessation of
grandfathered revenue. These conditions
increase the possibility of goodwill and
indefinite life intangible assets being impaired,
plus the risk of inaccurate forecasts or a wider
range of possible outcomes for us to consider.
• Discount rate – this is complicated in nature
and varies according to the conditions and
environment the specific Cash Generating Unit
(CGU)/intangible is subject to from time to time
as well as the approach to incorporating risks
into the cash flows or discount rates.
The Group uses complex models to perform their
annual testing of goodwill and indefinite life
intangibles for impairment. The models are largely
manually developed, adjusted for historical
performance, and use a range of internal and
external sources as inputs to the assumptions.
Complex modelling, using forward-looking
Working with our valuation specialists, our procedures
included:
• We considered the appropriateness of the value in
use method applied by the Group to perform the
test of goodwill and indefinite life intangibles
impairment against the requirements of the
accounting standards.
• We assessed the integrity of the value in use
models used, including the accuracy of the
underlying calculation formulas.
• We compared forecast cash flows contained in
value in use models to approved forecasts.
• We assessed the accuracy of previous Group
forecasts to inform our evaluation of forecasts
incorporated in the models.
• We used our knowledge of the Group, its past
performance, business and customers, and our
industry experience to challenge the Group’s
forecast cash flows. We compared key events to
the approved plan and strategy. We compared
forecast growth rates and terminal growth rates to
published studies of industry trends and
expectations and evaluated differences for the
Group’s operations.
• We assessed the Group’s determination of CGU
assets for consistency with the assumptions used
in the forecast cash flows and the requirements of
the accounting standards.
46
assumptions, tends to be prone to greater risk for
potential bias, error and inconsistent application.
These conditions necessitate additional scrutiny by
us, in particular to address the objectivity of sources
used for assumptions, and their consistent
application.
We involved valuation specialists to supplement our
senior audit team members in assessing this key
audit matter.
In addition to the above, the Group recorded an
impairment charge of $199.9 million against
goodwill. This further increased our audit effort in
this key audit area.
•
We assessed the Group’s allocation of corporate
assets and costs to CGUs for reasonableness and
consistency based on the requirements of the
accounting standards.
•
We independently developed a discount rate range
using publicly available data for comparable
entities, adjusted by risk factors specific to the
Group’s CGUs and the industry they operate in.
•
We considered the sensitivity of the models by
varying key assumptions, such as forecast growth
rates and discount rates, within a reasonably
possible range. We considered key assumptions
when performing the sensitivity analysis and what
the Group consider to be reasonably possible. We
did this to identify those CGUs at higher risk of
impairment and to focus our further procedures.
•
We recalculated the impairment charge against the
recorded amount disclosed.
• We assessed the disclosures in the financial report
using our understanding obtained from our testing,
discussions with management and the Board and
against the requirements of the accounting
standards.
Provisions for client remediation and related costs - $658.9 million
Refer to Note 4-4 Provisions to the Financial Report
The key audit matter
How the matter was addressed in our audit
The provisions for client remediation and related
costs is a Key Audit Matter due to the judgments
required by us in assessing the Group’s
determination of:
• The existence of a present legal or constructive
obligation as a basis for recognition of a
provision against the criteria in the accounting
standards.
• Reliable estimates of amounts which may be
paid arising from the present obligation,
including estimates of the number of affected
customers, expected average remediation
payments and related costs.
Working with our regulatory specialists, our procedures
included:
•
We obtained an understanding of the Group’s
process for identifying and assessing the potential
impact of the ongoing reviews into client
remediation activities.
• We assessed the integrity of the model used,
including the accuracy of the underlying
calculation formulas.
• We inquired with the Group regarding ongoing
reviews into other remediation activities.
• We read the minutes and other relevant
documentation of the Company’s Board of
Directors, Board Committees, various management
IOOF Annual Report 2021 69
47
•
The potential for legal proceedings and external
reviews leading to a wider range of estimation
outcomes for us to consider.
The Group uses a complex model to estimate the
amount which may be paid in future periods. The
model is manually developed and uses a range of
internal and external sources as inputs to the
assumptions. Complex modelling, using forward-
looking assumptions, tends to be prone to greater
risk for potential bias, error and inconsistent
application. These conditions necessitate additional
scrutiny by us, to address the objectivity of sources
used for assumptions, and their consistent
application.
We involved regulatory specialists to supplement
our senior audit team members in assessing this key
audit matter.
committees, and attended the Company’s Audit
Committee and Risk and Compliance Committee
meetings.
• We inspected correspondence with regulatory
bodies and reports from management’s experts to
the Group.
• We assessed the scope, objectivity and
competency of management’s experts engaged by
the Group.
• We challenged the Group’s basis for recognition of
a provision and associated costs against the
requirements of the accounting standards. We did
this by understanding the provisioning
methodologies and challenging underlying
assumptions including expected average
remediation payments and related costs.
• We tested a sample of customer files to assess the
accuracy of the Group’s expected number of
affected customers included in the provisions and
where required detriment calculations.
• We assessed the appropriateness of the Group’s
conclusions against the requirements of the
accounting standards where estimates were
unable to be reliably made for a provision to be
recognised.
• We assessed the disclosures in the financial report
using our understanding obtained from our testing,
discussions with management and the Board and
against the requirements of the accounting
standards.
Information Technology related controls
The key audit matter
How the matter was addressed in our audit
The Information Technology (IT) related controls are
a key audit matter as the Group’s key financial
accounting and reporting processes are highly
dependent on the automated controls over the
Group’s IT systems. There is a risk that gaps in the
change management, segregation of duties or user
access management controls (in relation to key
financial accounting and reporting systems) may
undermine our ability to place some reliance
thereon in our audit. Our audit approach could
significantly differ depending on the effective
operations of the Group’s IT controls.
Working with our IT specialists we challenged the
design of General IT controls and sample tested the
operation of key controls (in relation to financial
accounting and reporting systems) including:
• Change management control operation: Inspected
the Group’s change management policies and for a
sample of system changes during the year, checked
the consistency of the system changes to the
Group’s policy.
70
47
• The potential for legal proceedings and external
reviews leading to a wider range of estimation
outcomes for us to consider.
The Group uses a complex model to estimate the
amount which may be paid in future periods. The
model is manually developed and uses a range of
internal and external sources as inputs to the
assumptions. Complex modelling, using forward-
looking assumptions, tends to be prone to greater
risk for potential bias, error and inconsistent
application. These conditions necessitate additional
scrutiny by us, to address the objectivity of sources
used for assumptions, and their consistent
application.
We involved regulatory specialists to supplement
our senior audit team members in assessing this key
audit matter.
committees, and attended the Company’s Audit
Committee and Risk and Compliance Committee
meetings.
• We inspected correspondence with regulatory
bodies and reports from management’s experts to
the Group.
• We assessed the scope, objectivity and
competency of management’s experts engaged by
the Group.
• We challenged the Group’s basis for recognition of
a provision and associated costs against the
requirements of the accounting standards. We did
this by understanding the provisioning
methodologies and challenging underlying
assumptions including expected average
remediation payments and related costs.
• We tested a sample of customer files to assess the
accuracy of the Group’s expected number of
affected customers included in the provisions and
where required detriment calculations.
• We assessed the appropriateness of the Group’s
conclusions against the requirements of the
accounting standards where estimates were
unable to be reliably made for a provision to be
recognised.
• We assessed the disclosures in the financial report
using our understanding obtained from our testing,
discussions with management and the Board and
against the requirements of the accounting
standards.
Information Technology related controls
The key audit matter
How the matter was addressed in our audit
The Information Technology (IT) related controls are
a key audit matter as the Group’s key financial
accounting and reporting processes are highly
dependent on the automated controls over the
Group’s IT systems. There is a risk that gaps in the
change management, segregation of duties or user
access management controls (in relation to key
financial accounting and reporting systems) may
undermine our ability to place some reliance
thereon in our audit. Our audit approach could
significantly differ depending on the effective
operations of the Group’s IT controls.
Working with our IT specialists we challenged the
design of General IT controls and sample tested the
operation of key controls (in relation to financial
accounting and reporting systems) including:
• Change management control operation: Inspected
the Group’s change management policies and for a
sample of system changes during the year, checked
the consistency of the system changes to the
Group’s policy.
48
We involved IT specialists to supplement our senior
audit team members in assessing this key audit
matter.
•
Segregation of duties control operation: Sample
tested key automated controls designed to enforce
segregation of duties.
• User access management controls operation: We
assessed the Group’s evaluation of the user access
rights, including privileged user access rights
granted to application systems. We checked for
evidence of resolution of exceptions. We also
assessed the operating effectiveness of
management approval controls over the granting
and removal of access rights, including privileged
access rights.
Accounting for Business Combinations
Refer to Note 6-4 Acquisition of subsidiary to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group completed the acquisition of National
Australia Bank’s wealth management business (MLC
Wealth) for a total consideration of $1,440 million.
The purchase price accounting for this acquisition
was provisional at the date of authorisation of the
financial report.
In addition, the Group finalised the accounting for
the previous year’s acquisition of ANZ’s Pension and
Investments business (Ex-ANZ Wealth).
We determined that the accounting for business
combinations was a key audit matter due to the
financial significance of the purchase price
considerations, net assets acquired and resultant
goodwill arising on the acquisitions, as well as the
judgement involved in the preliminary Purchase
price allocation (“PPA”) calculations.
Our procedures in relation to the acquisition of MLC
Wealth included:
• We inspected the sale and purchase agreement
(“SPA”) between the relevant parties to assess
whether the basis and composition of the
purchase consideration in the executed contracts
were consistent with the Group’s accounting for
the acquisition.
• We tested the initial consideration paid for the
acquisition to the bank statements and SPA and
assessed the impact of funding the acquisition on
the Group’s compliance with covenants.
•
We assessed the Group’s provisional estimate of
the fair value of assets and liabilities acquired
including the Group’s basis for determination of
goodwill.
•
We assessed the business combination disclosures
in the financial report using our understanding
obtained from our testing, discussions with
management and the Board and against the
requirements of the accounting standards.
Working with our valuation specialists, for the Ex- ANZ
Wealth acquisition, which was finalised in the current
year, we performed the following procedures:
IOOF Annual Report 2021 71
49
•
Agreed the fair value of assets and liabilities
acquired to valuation reports prepared by the
Group’s valuation expert.
•
Assessed the valuation of customer relationship
intangible assets recognised as part of the PPA
calculations.
•
Assessed the mathematical accuracy of the
Group’s calculation of the resulting goodwill arising
on the PPA calculations.
•
We assessed whether the PPA disclosures in the
financial statements were complete and accurate,
and in line with our understanding of the business.
Other Information
Other Information is financial and non-financial information in IOOF Holdings Ltd’s annual reporting which is
provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the
Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report and the
Remuneration Report. The remaining other information is expected to include: About IOOF, Our Diversified
Business Model, Chairman’s Commentary, CEO and Managing Directors Commentary, 2021 Results At A
Glance, 2021 Strategic Priorities, Environmental, Social & Governance Report, IOOF Foundation and
Shareholder Information and is expected to be made available to us after the date of the Auditor’s Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and will
not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and
based on the work we have performed on the Other Information that we obtained prior to the date of this
Auditor’s Report we have nothing to report.
72
49
• Agreed the fair value of assets and liabilities
acquired to valuation reports prepared by the
Group’s valuation expert.
• Assessed the valuation of customer relationship
intangible assets recognised as part of the PPA
calculations.
• Assessed the mathematical accuracy of the
Group’s calculation of the resulting goodwill arising
on the PPA calculations.
• We assessed whether the PPA disclosures in the
financial statements were complete and accurate,
and in line with our understanding of the business.
Other Information
Other Information is financial and non-financial information in IOOF Holdings Ltd’s annual reporting which is
provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the
Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report and the
Remuneration Report. The remaining other information is expected to include: About IOOF, Our Diversified
Business Model, Chairman’s Commentary, CEO and Managing Directors Commentary, 2021 Results At A
Glance, 2021 Strategic Priorities, Environmental, Social & Governance Report, IOOF Foundation and
Shareholder Information and is expected to be made available to us after the date of the Auditor’s Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and will
not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and
based on the work we have performed on the Other Information that we obtained prior to the date of this
Auditor’s Report we have nothing to report.
50
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
•
implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error
•
assessing the Group and Company’s ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend to
liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
•
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of the
Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf.
This description forms part of our Auditor’s Report.
IOOF Annual Report 2021 73
51
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report of
IOOF Holdings Ltd for the year ended 30 June
2021, complies with Section 300A of the
Corporations Act 2001.
Directors’ responsibilities
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report in
accordance with Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in the
Directors’ report for the year ended 30 June 2021.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
KPMG
Chris Wooden
Maria Trinci
Partner
Partner
Melbourne
Melbourne
26 August 2021
26 August 2021
74
Consolidated statement of comprehensive income
For the year ended 30 June 2021
2021 2020**
Note $m $m
Revenue 2-3 1,332.4 1,078.6
Expenses 2-4 (1,4 47.5) (985.2)
Share of losses of associates accounted for using the equity method 4-1 (1.0) (0.5)
Finance costs (11.1) (14.2)
(Loss)/Prot before tax (127. 2) 78.7
Income tax expense 2-6 (16.3) (25.9)
Statutory fund
Statutory fund revenue* 5-1 73.8 21.7
Statutory fund expenses* 5-1 (28.2) (31.7)
Income tax (expense)/benet – statutory* 5-1 (45.6) 10.0
Statutory fund contribution to prot, net of tax – –
(Loss)/Prot after tax for the year from continuing operations (143.5) 52.8
Discontinued operations
Prot after tax for the year from discontinued operations 2-2 – 89.8
(Loss)/Prot after tax for the year (143.5) 142.6
Other comprehensive (loss)/income – items that will not be reclassied to prot or loss
Net change in fair value of nancial assets through other comprehensive income (27.9) 95.7
Remeasurements of dened benet asset 0.8 –
Income tax (expense)/benet on other comprehensive income 8.3 (28.7)
(18.8) 67.0
Other comprehensive (loss)/income – items that may be reclassied to prot or loss
Exchange dierences on translating foreign operations 0.2 (0.1)
Income tax (expense)/benet on other comprehensive income (0.1) –
0.1 (0.1)
Other comprehensive (loss)/income for the year, net of income tax (18.7) 66.9
Total comprehensive (loss)/income for the year (162.2) 209.5
(Loss)/Prot attributable to:
Owners of the Company (143.5) 141.2
Non-controlling interest – 1.4
(Loss)/Prot for the year (143.5) 142.6
Total comprehensive (loss)/income attributable to:
Owners of the Company (162.2) 208.1
Non-controlling interest – 1.4
Total comprehensive (loss)/income for the year (162.2) 209.5
Earnings per share – continuing and discontinued operations:
Basic earnings per share (cents per share) 2-8 (24.4) 40.3
Diluted earnings per share (cents per share) 2-8 (24.4) 40.2
Earnings per share – continuing operations:
Basic earnings per share (cents per share) 2-8 (24.4) 15.1
Diluted earnings per share (cents per share) 2-8 (24.4) 15.1
Notes to the consolidated nancial statements are included on pages 80 to 138.
* A subsidiary of the Company, IOOF Ltd, is a friendly society in accordance with the Life Insurance Act 1995. The funds operated by IOOF Ltd, and any trusts controlled
by those funds, are treated as statutory funds in accordance with the Life Insurance Act 1995. These statutory funds are required to be consolidated in accordance with
accounting standards.
** Restated – refer to note 7-3.
51
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report of
IOOF Holdings Ltd for the year ended 30 June
2021, complies with Section 300A of the
Corporations Act 2001.
Directors’ responsibilities
The Directors of the Company are responsible for the
preparation and presentation of the Remuneration Report in
accordance with Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in the
Directors’ report for the year ended 30 June 2021.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
KPMG
Chris Wooden
Maria Trinci
Partner
Partner
Melbourne
Melbourne
26 August 2021
26 August 2021
IOOF Annual Report 2021 75
Consolidated statement of nancial position
As at 30 June 2021
2021 2020*
Note $m $m
Assets
Cash 1-1(d) 670.7 374.7
Receivables 1-1(d) 666.7 579.9
Other nancial assets 1-1(d) 1,391.6 1,116 . 8
Current tax assets 1.8 23.6
Prepayments 20.0 16.1
Deferred acquisition costs 0.8 1.0
Net dened benet asset 6-8 17. 2 –
Associates 4-1 37.6 12.9
Property and equipment 4-5 145.8 134.4
Deferred tax assets 2-6 114. 2 –
Intangible assets 4-2 505.5 525.1
Goodwill 4-3 2,137.9 1,465.5
Total assets 5,709.8 4,250.0
Liabilities
Payables 1-1(d) 238.7 120.5
Other nancial liabilities 1-1(d) 1,303.1 1,065.4
Borrowings and lease liabilities 3-2 773.5 572.3
Provisions 4-4 901.5 733.1
Deferred tax liabilities 2-6 – 20.3
Deferred revenue liability 0.9 0.9
Total liabilities 3, 217.7 2,512.5
Net assets 2,492.1 1,737. 5
Equity
Share capital 3-3 2,996.0 1,965.8
Reserves 3-5 3.8 91.3
Accumulated losses (507.5) (319.4)
Total equity attributable to equity holders of the Company 2,492.3 1,737.7
Non-controlling interest (0.2) (0.2)
Total equity 2,492.1 1,737. 5
Notes to the consolidated nancial statements are included on pages 80 to 138.
*Restated – refer to note 7-3.
76
Consolidated statement of changes in equity
For the year ended 30 June 2021
For the year ended
30 June 2021
Ordinary
shares
Treasury
shares
Reserves Accumulated
losses
Total Non–
controlling
interest
Total
equity
$m $m $m $m $m $m $m
Balance at 1 July 2020 1,970.8 (5.0) 91.3 (319.4) 1,737.7 (0.2) 1,737.5
Total comprehensive loss for
the year
Loss for the year attributable to
owners of the Company
– – – (143.5) (143.5) – (143.5)
Other comprehensive (loss)/
income for the year, net of
incometax
– – (19.3) 0.6 (18.7) – (18.7)
Total comprehensive loss for
the year
– – (19.3) (142.9) (162.2) – (162.2)
Transactions with owners,
recorded directly in equity
Contributions by and (distributions
to) owners
Issue of shares 1,043.9 – – – 1,043.9 – 1,043.9
Transaction costs of issuing new
shares (net of tax)
(14.3) – – – (14.3) – (14.3)
Dividends paid – – – (115. 0) (115.0) – (115. 0)
Share-based payments expense – – 2.2 – 2.2 – 2.2
Transfer from employee equity-
settled benets reserve on
exercise of performance rights
0.6 – (0.6) – – – –
Treasury shares transferred to
recipients during the year
(0.4) 0.4 – – – – –
Transfer of lapsed performance
rights to retained earnings
– – (0.4) 0.4 – – –
Transfer from revaluation of
nancial assets reserve to
retained earnings, net of tax
– – (69.4) 69.4 –
– –
Total transactions with owners 1,029.8 0.4 (68.2) (45.2) 916.8 – 916.8
Balance at 30 June 2021 3,000.6 (4.6) 3.8 (507.5) 2,492.3 (0.2) 2,492.1
Notes to the consolidated nancial statements are included on pages 80 to 138.
IOOF Annual Report 2021 77
Consolidated statement of changes in equity (cont’d)
For the year ended 30 June 2021
For the year ended
30 June 2020*
Ordinary
shares
Treasury
shares
Reserves Accumulated
losses
Total Non–
controlling
interest
Total
equity
$m $m $m $m $m $m $m
Balance at 1 July 2019 1,971.0 (7.9) 25.2 (339.1) 1,649.2 7.7 1,656.9
Total comprehensive income
for the year
Prot for the year attributable
toowners of the Company
– – – 141.2 141.2 1.4 142.6
Other comprehensive income
for the year, net of income tax
– – 66.9 – 66.9 – 66.9
Total comprehensive income
forthe year
– – 66.9 141.2 208.1 1.4 209.5
Transactions with owners,
recorded directly in equity
Contributions by and (distributions
to) owners
Dividends paid – – – (122.5) (122.5) – (122.5)
Share-based payments expense – – 2.9 – 2.9 – 2.9
Transfer from employee equity-
settled benets reserve on
exercise of performance rights
2.7 – (2.7) – – – –
Treasury shares transferred
torecipients during the year
(2.9) 2.9 – – – – –
Transfer of lapsed performance
rights to retained earnings
– – (1.0) 1.0 – – –
Divestment of non-controlling
interest
– – – – – (9.3) (9.3)
Total transactions with owners (0.2) 2.9 (0.8) (121.5) (119.6) (9.3) (128.9)
Balance at 30 June 2020* 1,970.8 (5.0) 91.3 (319.4) 1,737.7 (0.2) 1,737. 5
Notes to the consolidated nancial statements are included on pages 80 to 138.
*Restated – refer to note 7-3.
78
2021 2020
Note $m $m
Cash ows from operating activities
Receipts from customers 1,406.1 1,322.7
Non-recurring BT settlement fee 80.0 –
Payments to suppliers and employees (1,139.9) (1,124.1)
Transformation and integration costs (45.9) (26.6)
Dividends from associates 0.2 0.4
Legal settlements paid (21.5) (5.6)
Legal settlements recovered – 3.3
Remediation costs (103.1) (15.8)
Coupon interest received on debt note – 9.4
Income taxes paid – corporate (39.0) (42.7)
Receipts from customers – statutory 3.4 2.6
Payments to suppliers and employees – statutory (8.6) (10.3)
Contributions received – statutory 135.0 119.0
Withdrawal payments – statutory (130.4) (117. 6)
Dividends and distributions received – statutory 1.7 1.8
Proceeds from divestment of nancial instruments – statutory 148.9 150.4
Payments for nancial instruments – statutory (134.5) (125.8)
Amounts advanced to other entities – statutory (15.5) (17.0)
Income taxes paid – statutory 0.9 (5.2)
Net cash provided by operating activities 2-5 137.8 118.9
Cash ows from investing activities
Dividends and distributions received 0.4 1.5
Interest received 3.5 4.4
Interest and other costs of nance paid ( 7.4) (10.1)
Redemption of debt note – 800.0
Proceeds on divestment of subsidiaries – 93.0
Acquisition of subsidiary, net of cash acquired (857. 2) (678.8)
Net proceeds on purchase and divestment of nancial and other assets 102.2 84.5
Net proceeds from/(payment for) nancial instruments 28.7 (30.2)
Payments for property and equipment (9.3) (8.2)
Payments for intangible assets (7.1) (13.1)
Repayment of loan principal (related parties) – 7.3
Net cash (used in)/provided by investing activities (746.2) 250.3
Cash ows from nancing activities
Borrowings repaid (575.0) (85.0)
Drawdown of borrowings 591.0 115. 0
Proceeds from issue of shares 3-3 1,043.9 –
Transaction costs of issuing new shares (20.4) –
Repayment of lease liabilities (21.7) (14.3)
Dividends paid to owners of the Company (115.0) (122.5)
Net cash provided by/(used in) nancing activities 902.8 (106.8)
Net increase/(decrease) in cash and cash equivalents 294.4 262.4
Cash and cash equivalents at the beginning of year 374.7 97.4
Cash divested classied in assets held for sale at the beginning of the year
– 15.0
Eects of exchange rate changes on cash and cash equivalents 1.6 (0.1)
Cash and cash equivalents at the end of year 670.7 374.7
Notes to the consolidated nancial statements are included on pages 80 to 138.
Consolidated statement of cash ows
For the year ended 30 June 2021
IOOF Annual Report 2021 79
Notes to the nancial statements
For the year ended 30 June 2021
IOOF Holdings Ltd (the Company or Parent) is a listed public company incorporated in Australia. The IOOF Group comprises
theCompany and its subsidiaries, and the consolidated Group’s interest in associates.
Section 1 – Financial instruments and risk management
The IOOF Group’s activities expose it to a variety of nancial and non-nancial risks. Financial risks include market risks
(including price risk, currency risk, and cash ow and interest rate risks), credit risk, statutory fund risk and liquidity risk.
The nature of the nancial risk exposures arising from nancial instruments, the objectives, policies and processes for
managing these risks, and the methods used to measure them are detailed below. Key non-nancial exposures, such
as operational risk and a failure to meet regulatory compliance obligations, are discussed in detail in the Operating
andFinancial Review included within the Directors’ Report.
1-1 Risk management
IOOF Risk Management Framework
Risk is dened as the chance of an event occurring that will
have an impact on the strategic or business objectives of
the IOOF Group, including a failure to realise opportunities.
The IOOF Group’s risk management process involves the
identication of material risks, assessment of consequence
and likelihood, implementation of controls to manage
risks, and continuous monitoring and improvement of the
procedures in place.
The IOOF Group’s objective is to satisfactorily manage its
risks in line with the IOOF Group’s Risk Management Policy
set by the Board, and this aligns to International Standard
ISO 31000. The IOOF Group’s Risk Management Framework
manages the risks faced by the IOOF Group, with approaches
varying depending on the nature of the risk, through the risk
management policies, Risk Appetite Statement, and tolerances
set, approved and monitored by the Board. The IOOF Group
maintains a framework to ensure regulatory compliance
obligations are managed in accordance with Australian
Standard 3806 Compliance Programs. The IOOF Group’s
exposure to all material risks is monitored by the Enterprise
Risk and Compliance Team and this exposure, and emerging
risks, are regularly reported to the Risk and Compliance
Committee and the Board.
The IOOF Group’s income and operating cash ows are
indirectly impacted by changing market conditions. Its
exposure is through the impact of market changes on the
level of FUMA, and consequently management fee and service
fee revenue. Information has been provided below only on
the direct impact of changing market conditions to the IOOF
Group’s income and operating cash ows.
Liquidity risk relates to the IOOF Group having insucient
liquid assets to cover cash ow requirements. The Group
manages liquidity risk by maintaining sucient liquid assets
and an ability to access a committed line of credit. The liquidity
requirements for the Group’s licensed entities are regularly
reviewed and carefully monitored in accordance with their
licence requirements.
Management continues to monitor the impact of the
COVID-19 pandemic on the business environment including
ongoing assessment of market risk, credit risk and liquidity
riskassociated with the business.
Impact of COVID-19 on nancial reporting
In preparing the nancial report the Group has considered
the ongoing impact of COVID‐19 in its adoption of signicant
assumptions and market inputs used in:
• valuing the Group’s nancial instruments; and
• preparing disclosures for the fair value of nancial assets
and liabilities and nancial risk management.
The Group’s nancial instruments include xed income
securities measured at fair value through prot and loss, and
values may have been impacted by a variety of factors arising
from changed business conditions. As a general principle,
quoted prices in active markets provide the best available
evidence of fair value. The Group’s nancial instruments are
valued using directly observable inputs as at the reporting
date and these are considered to be the most reliable and
appropriate evidence of fair value.
We have reviewed the appropriateness of inputs to the
valuation of nancial instruments and the disclosures
forthefair value of nancial instruments.
Non-nancial risks emerging from global movement
restrictions including remote working for sta, counterparties
and service providers have been identied, assessed, managed
and governed through timely application of the Company’s
risk management policies.
80
Management has determined that there is no material
uncertainty that casts doubt on the Group’s ability to continue
as a going concern.
Financial risk
The nancial risk management objectives, policies and
processes and the quantitative data about the exposure to
risk at the reporting date, as set out in the remainder of this
note, includes the benet funds and the controlled trusts. The
risks associated with nancial instruments held by the benet
funds and controlled trusts are borne by the policyholders and
members of those funds and trusts, and not the shareholders
of the IOOF Group. There is no direct impact on the net prot
or the equity of the IOOF Group as a consequence of changes
in markets as they apply to nancial instruments held by those
funds and trusts at the reporting date. Further information
in relation to the benet funds is included in Section 5
Statutory funds.
Similarly, the objectives, policies and processes for managing
the risks of the IOOF Group are separate and distinct from
those for the benet funds and trusts. The funds and trusts
are managed under extensive regulatory requirements,
and in accordance with specic investment guidelines, risk
management strategies, risk management plans and product
disclosure statements.
Information in relation to nancial risks associated with the
benet funds and controlled trusts is available in their Product
Disclosure Statements and the individual annual nancial
reports of those trusts.
Further information in relation to the Australian Accounting
Standards requirement to consolidate the benet funds and
controlled trusts in the consolidated nancial statements of the
IOOF Group is available in Note 7-3(b) Basis of consolidation.
(a) Market risk
(i) Price risk
Price risk is the risk that the fair value or future earnings
ofanancial instrument will uctuate because of changes
inmarket prices (other than from interest rate risk or currency
risk, as described later). The nancial instruments managed
by the IOOF Group that are impacted by price risk consist
ofinvestment units held in trusts, nancial instruments
measured at fair value through the prot and loss (FVTPL)
andnancial assets measured at fair valuethrough
othercomprehensive income (FVOCI).
Financial instruments measured at fair value are exposed
to price risk as the market price uctuates. The price risk
associated with the units held in trusts is that the fair value of
those units will uctuate with movements in the redemption
value of those units, which in turn is based on the fair value
ofthe underlying assets held by the trusts.
IOOF Group sensitivity
At 30 June 2021, had the price of the units or underlying equity
exposure held by the IOOF Group in nancial instruments
measured at FVTPL increased/decreased by 5% (2020: 5%)
with all other variables held constant, gains/losses recorded
through prot or loss would increase/decrease by $37.9 million
(2020: $32.4 million), and nancial assets at FVOCI reserves
would increase/decrease by $0.3 million (2020: $4.9 million).
(ii) Currency risk
The IOOF Group’s exposure to foreign exchange risk
in relation to the nancial instruments of its foreign
activities is immaterial.
(iii) Cash ow and interest rate risk
Interest rate risk is the risk to the IOOF Group’s earnings and
capital arising from changes in market interest rates. The
nancial instruments held that are impacted by interest rate
risk consist of interest-bearing nancial assets measured at
FVTPL and borrowings.
Short- and long-term investments and loans to related entities
are inuenced by liquidity policy requirements. Interest rates
(both charged and received) are based on market rates and
are closely monitored by management. They are primarily
atvariable rates of interest and expose the IOOF Group
tocashow interest rate risk.
Management regularly assesses the appropriateness
ofthe investment of surplus funds with the objective
ofmaximising returns.
IOOF Group sensitivity
For interest-bearing nancial assets measured at FVTPL, a +/-
50 basis points change in the interest rate at the reporting date
would have decreased/increased post-tax prot by $2.8 million
(2020: nil), with all other variables held constant. Equity would
have been lower/higher by the same amount.
At 30 June 2021, if interest rates on borrowings had changed
by +/- 50 basis points (2020: +/- 50 basis points) from the year-
end rates with all other variables held constant, post-tax prot
for the year would have increased/decreased by $1.9 million
(2020: $1.6 million). Equity would have been higher/lower
bythe same amount.
IOOF Annual Report 2021 81
Notes to the financial statements
For the year ended 30 June 2021
(b) Credit risk
Credit risk refers to the risk that a counterparty will fail to meet
its contractual obligations resulting in nancial loss to the IOOF
Group. Credit risk arises for the IOOF Group from cash, debt
note, nancial assets at FVTPL, receivables and loans.
The IOOF Group mitigates its credit risk by ensuring cash
deposits are held with high credit quality nancial institutions
and other highly liquid investments are held with trusts
operated by the IOOF Group. Where investments are held
in units in a trust operated by the IOOF Group, that trust
issubject to the rules of the trust deed and the investment
inunderlying assets is subject to asset allocation guidelines.
Receivables consist of management fees receivable, service
fees receivable and other amounts receivable from related
parties. These counterparties generally do not have an
independent credit rating, and the IOOF Group assesses the
credit quality of the debtor taking into account its nancial
position, past experience with the debtor, and other available
credit risk information. In relation to management fees
receivable, the IOOF Group is contractually entitled to deduct
such fees from investors’ account balances, in accordance
with the Product Disclosure Statements, and pass the fees
tothe Responsible Entity or Trustee. Due to this pass-through
process the embedded credit risk is considered minimal. Other
receivables are regularly monitored by line management.
The maximum exposure to credit risk at the reporting date
is the carrying value of the nancial assets as summarised
in the table included in the note below. The IOOF Group
does not hold any signicant collateral as security over its
receivables and loans, apart from its recourse to certain shares
in subsidiaries in relation to loans to executives of subsidiaries.
Expected credit loss assessment
As at 30 June 2021, $10.6 million trade receivables of
the IOOFGroup were past due but not impaired (2020:
$9.8million). Theamount ofthe impairment provision was
$0.4million (2020: $0.4 million).
Collectability of trade receivables is reviewed on an ongoing
basis. The IOOF Group recognises loss allowances for expected
credit losses on nancial assets measured at amortised cost.
When determining whether the credit risk of a nancial asset
has increased signicantly since initial recognition and when
estimating expected credit losses, the IOOF Group considers
reasonable and supportable information that is relevant and
available without undue cost or eort. This includes both
quantitative and qualitative information and analysis, based
on the IOOF Group’s historical experience and informed credit
assessment and including forward-looking information.
The IOOF Group considers a nancial asset to be in default
when the borrower is unlikely to pay its credit obligations
tothe IOOF Group in full, without recourse by the IOOF Group
toactions such as realising security, or the nancial asset is
more than 90 days past due. The maximum period considered
when estimating expected credit losses is the maximum
contractual period over which the IOOF Group is exposed
tothe credit risk.
Expected credit losses are a probability-weighted estimate
ofcredit losses. Credit losses are measured as the present value
of all cash shortfalls (i.e. the dierence between the cash ows
due to the entity in accordance with the contract and the
cash ows that the IOOF Group expects to receive). Expected
credit losses are discounted at the eective interest rate of the
nancial asset. Loss allowances for nancial assets measured
at amortised cost are deducted from the gross carrying
amount of the assets.
Impaired receivables
The amount of the impairment loss is recognised in prot
orloss within other expenses. When a trade receivable
for which an impairment allowance has been recognised
becomes uncollectible in a subsequent year, it is written
oagainst the allowance account. Subsequent recoveries
of amounts previously written o are credited against other
expenses inprot or loss.
Movements in the provisions
for impairment of trade
receivables are as follows:
2021 2020
$m $m
Carrying value at 1 July 0.4 0.6
Provision for impairment
provided/(written back)
duringthe year
0.0 (0.2)
Carrying value at 30 June 0.4 0.4
Ageing of trade receivables
that were not impaired
at30June
Neither past due nor impaired 139.6 69.4
Past due 31–60 days 5.8 4.5
Past due 61-90 days 3.7 3.5
Past due 91–120 days 1.2 1.8
150.3 79.2
82
(c) Statutory fund risk
Financial risks are monitored and controlled by selecting
appropriate assets to back policy liabilities. The assets
are regularly monitored by the Investment Management
Committee to ensure there are no material exposures and
that liability mismatching issues and other risks such as
liquidity risk and credit risk are maintained within acceptable
limits. The Investment Management Committee is chaired
byan independent expert and its membership is drawn
from appropriately skilled senior management. There are
twoNon-Executive Directors on this Committee.
The IOOF Group’s friendly society operations are subject
toregulatory capital requirements that prescribe the
amountof capital to be held depending on the type, quality
and concentration of investments held. Procedures are
in place to monitor compliance with these requirements.
RefertoSection 5 – Statutory funds for further details.
These funds are not available to shareholders. Balances
relatingto statutory funds in the contractual maturity table
below are disclosed inclusive of amounts collected/receivable
from orpaid/payable to IOOF Group entities.
(d) Liquidity risk
Liquidity risk relates to the IOOF Group having insucient
liquid assets to cover current liabilities and unforeseen
expenses. The IOOF Group maintains a prudent approach
tomanaging liquidity risk exposure by maintaining sucient
liquid assets and an ability to access a committed line of credit.
It is managed by continuously monitoring actual and forecast
cash ows and by matching the maturity proles of nancial
assets and liabilities. Temporary surplus funds are invested
inhighly liquid, low-risk nancial assets.
The IOOF Group had access to undrawn bank borrowing
facilities at the balance date, on the terms described and
disclosed in note 3-2 Borrowings and lease liabilities. The
liquidity requirements for licensed entities in the IOOF Group
are regularly reviewed and carefully monitored in accordance
with those licence requirements. The IOOF Group continuously
monitors actual and forecast nancial results to determine
compliance with banking covenants.
Maturities of nancial liabilities
The tables below analyse the IOOF Group’s nancial liabilities
into relevant maturity groupings based on the remaining
years at the balance date to the contractual maturity
date. The amounts disclosed therein are the contractual
undiscounted cash ows.
IOOF Annual Report 2021 83
Notes to the financial statements
For the year ended 30 June 2021
2021 Carrying amount Contractual cash ows
Current Non-
Current
Total 1 year or
less
1–5
years
5+
years
Total
$m $m $m $m $m $m $m
Financial liabilities
Payables – corporate 231.7 1.2 232.9 231.7 1.2 – 232.9
Payables – statutory 5.8 – 5.8 5.8 – – 5.8
Total payables 237.5 1.2 238.7 237. 5 1.2 – 238.7
Provisions
Advice remediation provisions
(1)
360.0 17. 2 37 7. 2 360.0 17. 2 – 377. 2
Product remediation provisions
(1)
223.1 58.6 281.7 223.1 58.6 – 281.7
Other provisions 27.4 – 27.4 27.4 – – 27.4
Total provisions 610.5 75.8 686.3 610.5 75.8 – 686.3
Other nancial liabilities – corporate
Ex-ANZ Advice licensee remediation
settlement
110 .4 – 110.4 110.4 – – 110.4
Deferred purchase consideration 15.2 7.9 23.1 15.2 7.9 – 23.1
Derivatives – corporate 0.1 40.7 40.8 0.1 36.5 4.2 40.8
Other nancial liabilities – statutory
Insurance contract liabilities 171.8 – 171.8 171.8 – – 171.8
Investment contract liabilities 957.0 – 957.0 957. 0 – – 957.0
Total other nancial liabilities 1,254.5 48.6 1,303.1 1,254.5 44.4 4.2 1,303.1
Borrowings – corporate –
648.6 648.6 – 648.6 – 648.6
2,102.6 774.2 2,876.7 2,102.6 770.0 4.2 2,876.7
Financial assets available to meet the above nancial liabilities
Cash
Cash – corporate 501.2 – 501.2 501.2 – – 501.2
Cash restricted ORFR
(2)
164.9 – 164.9 164.9 – – 164.9
Cash – statutory 4.6 – 4.6 4.6 – – 4.6
Total cash 670.7 – 670.7 670.7 – – 670.7
Receivables – corporate
Trade receivables (net of provisions) 149.9 – 149.9 149.9 – – 149.9
Other receivables 186.1 3.1 189.3 186.1 3.1 – 189.3
Ex-ANZ AL remediation indemnity 285.5 – 285.5 285.5 – – 285.5
Security bonds – 0.3 0.3 – – 0.3 0.3
Receivables – statutory
Trade receivables 0.5 – 0.5 0.5 – – 0.5
Other receivables 1.5 – 1.5 1.5 – – 1.5
Dividends and distributions 39.7 – 39.7 39.7 – – 39.7
Total receivables 663.3 3.4 666.7 663.3 3.1 0.3 666.7
Other nancial assets
Fixed income – corporate
(2)
60.5 177. 0 237.5 60.5 97.9 79.1 237.5
Derivatives – corporate
(3)
0.4 9.9 10.3 0.4 2.4 7.5 10.2
Unlisted unit trusts – corporate
– 9.3 9.3 – 9.3 – 9.3
Unlisted unit trusts – statutory 1,058.4 – 1,058.4 1,058.4 – – 1,058.4
Equity investments at FVOCI – 9.4 9.4 – – 9.4 9.4
Loans to policyholders – statutory 66.7 – 66.7 66.7 – – 66.7
Total other nancial assets 1,186.0 205.6 1,391.6 1,186.0 109.6 96.0 1,391.6
2,520.0 209.0 2,729.0 2,520.0 112.7 96.3 2,729.0
Net nancial assets/(liabilities) 417.4 (565.2) (147.7) 417.4 (657. 3) 92.1 (147.7)
(1) Maturity of remediation provisions is not based on contractual maturity but rather expected payment dates.
(2) ORFR nancial assets – not available to shareholders.
(3) Includes $0.3 million current derivative assets held for ORFR purposes and not available to shareholders.
84
2020 Carrying amount Contractual cash ows
Current Non-
Current
Total 1 year or
less
1–5
years
5+
years
Total
$m $m $m $m $m $m $m
Financial liabilities
Payables – corporate 118 .7 0.1 118 . 8 118.7 0.1 – 118 . 8
Payables – statutory 1.7 – 1.7 1.7 – – 1.7
Total payables 120.4 0.1 120.5 120.4 0.1 – 120.5
Provisions
Advice remediation provisions
(1)
220.9 211. 8 432.7 220.9 211. 8 – 432.7
Product remediation provisions
(1)
107.5 67. 2 174.7 107.5 67. 2 – 174.7
Other provisions 56.2 – 56.2 56.2 – – 56.2
Total provisions 384.6 279.0 663.6 384.6 279.0 – 663.6
Other nancial liabilities – corporate
Ex-ANZ AL remediation settlement 31.0 17.0 48.0 31.0 17.0 – 48.0
Deferred purchase consideration 5.6 1.2 6.8 5.6 1.2 – 6.8
Other nancial liabilities – statutory
Insurance contract liabilities 187.1 – 187.1 187.1 – – 187.1
Investment contract liabilities 823.5 – 823.5 823.5 – – 823.5
Total other nancial liabilities 1,047.2 18.2 1,065.4 1, 0 47. 2 18.2 – 1,065.4
Borrowings – corporate – 457.9 457.9 – 457.9 – 457.9
1,552.3 755.1 2, 307.4
1,552.3 755.1 – 2, 307.4
Financial assets available to meet the above nancial liabilities
Cash
Cash – corporate 225.4 – 225.4 225.4 – – 225.4
Cash restricted ORFR
(2)
145.6 – 145.6 145.6 – – 145.6
Cash – statutory 3.7 – 3.7 3.7 – – 3.7
Total cash 374.7 – 374.7 374.7 – – 374.7
Receivables – corporate
Trade receivables (net of provisions) 78.5 – 78.5 78.5 – – 78.5
Other receivables 201.1 3.8 204.9 201.1 3.8 – 204.9
Ex-ANZ AL remediation indemnity 161.9 101.8 263.7 161.9 101.8 – 263.7
Security bonds – 0.3 0.3 – – 0.3 0.3
Receivables – statutory
Trade receivables 0.3 – 0.3 0.3 – – 0.3
Other receivables 8.9 – 8.9 8.9 – – 8.9
Dividends and distributions 23.3 – 23.3 23.3 – – 23.3
Total receivables 474.0 105.9 579.9 474.0 105.6 0.3 579.9
Other nancial assets
Fair value through prot or loss
Unlisted unit trusts – corporate – 0.9 0.9 – 0.9 – 0.9
Unlisted unit trusts – statutory 925.3 – 925.3 925.3 – – 925.3
Equity investments at FVOCI – 139.4 139.4 – – 139.4 139.4
Loans and other receivables
Loans to policyholders – statutory 51.2
– 51.2 51.2 – – 51.2
Total other nancial assets 976.5 140.3 1,116. 8 976.5 0.9 139.4 1,116 . 8
1,825.2 246.2 2,071.4 1,825.2 106.5 139.7 2,071.4
Net nancial assets/(liabilities) 273.0 (508.9) (236.0) 273.0 (648.6) 139.7 (236.0)
(1) Maturity of remediation provisions is not based on contractual maturity but rather expected payment dates.
(2) ORFR nancial assets – not available to shareholders.
IOOF Annual Report 2021 85
Notes to the financial statements
For the year ended 30 June 2021
(e) Accounting policies and fair value estimation
The fair values of nancial assets and liabilities are equal to the
carrying amounts shown in the statement of nancial position.
Osetting assets and liabilities
Financial assets and liabilities are oset and the net amount
presented in the statement of nancial position when, and
only when, the IOOF Group has a legal right to oset the
amounts and intends either to settle on a net basis or to realise
the asset and settle the liability simultaneously.
Financial assets
The IOOF Group initially recognises loans and receivables and
deposits on the date that they are originated. All other nancial
assets (including assets designated at FVTPL) are recognised
initially on the date at which the IOOF Group becomes a party
to the contractual provisions ofthe instrument.
The IOOF Group derecognises a nancial asset when the
contractual rights to the cash ows from the asset expire,
orittransfers the rights to receive the contractual cash ows
on the nancial asset in a transaction in which substantially
all the risks and rewards of ownership of the nancial asset
are transferred. Any interest in transferred nancial assets
that is created or retained by the IOOF Group is recognised
asaseparate asset or liability.
The IOOF Group has the following nancial assets:
• cash;
• nancial assets at FVTPL;
• nancial assets at fair value through other
comprehensive income; and
• loans and receivables.
Cash
Cash includes cash on hand, deposits held at call with nancial
institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily
convertible to known amounts of cash.
Restricted ORFR cash relates to cash for the operating risk
nancial reserves acquired with the ex-ANZ P&I and MLC
Wealth acquisitions. This cash is not available to shareholders.
Financial assets at FVTPL
Financial assets at FVTPL include derivative assets (futures,
interest rate derivatives and foreign exchange rate derivatives),
investments in xed income and investments in unlisted unit
trusts. A nancial asset is classied as FVTPL if the associated
cash ows are not solely payments of principal and interest.
Financial assets at FVTPL also include nancial assets acquired
principally for the purpose of selling or repurchasing in the
near term or managed as part of a portfolio where there
isevidence ofshort-term prot taking.
Upon initial recognition, attributable transaction costs are
recognised in prot or loss when incurred. Financial assets
at FVTPL are measured at fair value, and changes therein
arerecognised in prot or loss.
The fair value of nancial instruments traded in active
markets is based on quoted market prices at the reporting
date. The quoted market price used for nancial assets
isthe closing price.
For investments in xed income and derivative assets
where no quoted prices in an active market exist,
valuation techniques using observable market inputs for
nancial assets with similar credit risk, maturity and yield
characteristics are used.
Units in unlisted trusts are measured at the redemption price.
Equity investments at fair value through other
comprehensive income
Equity investments at FVOCI are non-derivative assets
comprising principally marketable equity securities that are
either designated in this category or are not classied in any
oftheother categories ofnancial instruments.
Equity investments at FVOCI are recognised initially at fair
value plus any directly attributable transaction costs, and
arerevalued through other comprehensive income (OCI)
eachreporting period. Dividends are recognised in prot
orloss unless it clearly represents a recovery of part of the cost
of the investment. Other net gains and losses are recognised
inOCI and are never reclassied to prot or loss.
Loans and receivables
Loans and receivables are non-derivative nancial assets with
xed or determinable payments that are not quoted on an active
market. They arise when the IOOF Group provides money, assets,
or services directly to a debtor with no intention of selling the
receivable. Subsequent to initial recognition, loans and receivables
are measured at amortised cost using the eective interest
method if it is held to collect contractual cash ows and its
contractual terms give rise to cash ows that are solely payments
of principal and interest on the principal amount outstanding.
Certicates of deposit
Certicates of deposit held during the year include deposits
with original maturities of more than three months.
Financial liabilities
The IOOF Group initially recognises nancial liabilities on
the date at which the IOOF Group becomes a party to the
contractual provisions of the instrument. The IOOF Group
derecognises a nancial liability when its contractual
obligations are discharged, cancelled or expire.
86
The IOOF Group has the following nancial liabilities:
• payables;
• borrowings and lease liabilities;
• nancial liabilities at FVTPL; and
• other nancial liabilities.
Other than nancial liabilities at FVTPL, nancial liabilities are
recognised initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition these
nancial liabilities are measured at amortised cost using
theeective interest method.
Payables
The carrying value of payables are assumed to approximate
their fair values due to their short-term nature.
Borrowings and lease liabilities
Borrowings and lease liabilities are further explained in note
3-2 Borrowings and lease liabilities.
Financial liabilities at fair value through prot or loss
Financial liabilities at FVTPL include interest rate and foreign
exchange rate derivatives, issued investment protection
derivatives and a compound embedded derivative. The
IOOF Group uses valuation techniques to estimate the fair
value of nancial liabilities where no quoted prices in an
active market exist.
Issued investment protection derivatives are term-based
investment protection products issued by an IOOF Group
company. These products provide protection to investors over
the investors’ capital or a minimum level of income each year
for a term of 10 or 20 years. This is further discussed in note 1-2
Financial instruments and note 3-1 Capital management.
The compound embedded derivative is associated with the
Subordinated Loan Notes and is discussed in detail in note
3-2 Borrowings and lease liabilities. Its fair value is determined
using a Monte Carlo simulation to simulate dierent scenarios
of the underlying equity prices.
Contingent consideration
The contingent consideration amounts payable can rise and
fall depending on performance hurdles achieved during the
deferral period specic to each agreement, which may include
revenue targets, gross margin targets and/or funds under
management, administration, advice and supervision (FUMAS)
retention requirements.
Where contingent consideration is due for payment after
12 months, the estimated amounts payable are discounted.
Assumptions used include pre-tax discount rates in the range
of 3–4%, which were based on market interest rates upon
acquisition of related intangibles.
Assets and liabilities relating to statutory funds
Assets held in the statutory funds (including the benet
funds) are subject to the distribution and transfer restrictions
and other requirements of the Life Insurance Act 1995. Monies
held in the benet funds and controlled trusts are held for
thebenet of the members of those funds, and are subject
tothe constitution and rules of those funds.
Accordingly, with the exception of permitted prot
distributions, the investments held in the statutory funds
arenot available for use by other parties of the IOOF Group.
Assets relating to statutory funds
The IOOF Group has determined that all nancial assets held
within its reported statutory funds (including the benet
funds, which are treated as statutory funds) represent the
assets backing policy liabilities and are measured at FVTPL.
Other than loans and receivables held by the IOOF Group
and its controlled entities, assets backing policy liabilities
have been designated at FVTPL as the assets are managed
onafair value basis.
Liabilities relating to statutory funds
Policy liabilities have been determined in accordance with
applicable accounting standards. Policy liabilities for life
insurance contracts are valued in accordance with AASB 1038,
whereas life investment contracts are valued in accordance
with AASB 9 and AASB 15. There are dierences between the
valuation requirements of the accounting standards and those
of the Life Insurance Act 1995.
Contract classication relating to statutory funds
The accounting treatment of certain transactions varies
depending on the nature of the contract underlying the
transaction. The major contract classications are insurance
contracts and investment contracts.
(i) Insurance contracts
Insurance contracts with a discretionary participation feature
(DPF) are those containing signicant insurance risk at the
inception of the contract, or those where at the inception
ofthe contract there is a scenario with commercial substance
where the level of insurance risk may be signicant. The
signicance of insurance risk is dependent on both the
probability of an insured event and the magnitude of its
potential eect. Life insurance contract liabilities are calculated
in accordance with actuarial standards.
Once a contract has been classied as an insurance contract,
itremains an insurance contract for the remainder of its
lifetime, even if the insurance risk reduces signicantly
during the year.
IOOF Annual Report 2021 87
Notes to the financial statements
For the year ended 30 June 2021
(ii) Investment contracts
Contracts not considered insurance contracts are classied
as investment contracts. The accounting treatment of
investment contracts depends on whether the investment
has a DPF. ADPF represents a contractual right to receive,
as a supplement to guaranteed benets, additional
benets that are:
• likely to be a signicant portion of the total benets;
• distributed at the discretion of the insurer; and
• are based on the performance of a specied pool of assets.
Deposits collected and benets paid under investment
contracts with DPF are accounted for through prot or loss.
The gross change in the liability to these policyholders for
the year, which includes any participating benets vested
in policyholders and any undistributed surplus attributed
topolicyholders, is also recognised in prot or loss.
Deposits collected and withdrawals processed for investment
contracts without DPF are accounted for directly through
the statement of nancial position as a movement in the
investment contract liability. Distributions on these contracts
are charged to prot or loss as an expense.
Where contracts contain both an investment component and
an insurance component and the deposit component can be
separately measured, the underlying amounts are unbundled.
Premiums relating to the insurance component are accounted
for through prot or loss and the investment component is
accounted for as a deposit through the statement of nancial
position as described above.
1-2 Financial Instruments
Fair value hierarchy
The fair values of nancial assets and liabilities are equal to the carrying amounts shown in the statement of nancial position.
Thetable below analyses nancial instruments carried at fair value, by valuation method.
Level 1 Level 2 Level 3 Total
30 June 2021 $m $m $m $m
Financial assets measured at fair value
FVOCI – corporate 9.4 – – 9.4
Fixed income – corporate – 237.5 – 237.5
Derivatives – corporate 0.4 9.9 – 10.3
Unlisted unit trusts – corporate – 9.3 – 9.3
Unlisted unit trusts – statutory – 1,058.4 – 1,058.4
9.8 1,315.1 – 1,324.9
Financial liabilities measured at fair value
Derivatives – corporate – 31.8 9.0 40.8
Deferred purchase consideration – corporate – – 23.1 23.1
– 31.8 32.1 63.9
30 June 2020
Financial assets measured at fair value
FVOCI – corporate 139.4 – – 139.4
Unlisted unit trusts – corporate – 0.9 – 0.9
Unlisted unit trusts – statutory – 925.3 – 925.3
139.4 926.2 – 1,065.6
Financial liabilities measured at fair value
Deferred purchase consideration – corporate – – 6.8 6.8
– – 6.8 6.8
88
The denitions of each level and the valuation techniques used are as follows:
• Level 1: quoted closing prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included with Level 1 that are observable for the asset or liability, either directly
(i.e.asprices) or indirectly (i.e. derived from prices). Fair values are derived from published market indices and include adjustments
totake account of the credit risk of the IOOF Group entity and counterparty; and
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The IOOF Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting year during
which the transfer has occurred. There were no transfers between Level 1 to Level 2 of the fair value hierarchy during the year
ended 30 June 2021.
Reconciliation of movements in Level 3
nancial instruments
Issued investment
protection derivatives
Debt note Deferred purchase
consideration
2021
$m
2020
$m
2021
$m
2020
$m
2021
$m
2020
$m
Opening balance as at 1 July – – – 800.0 6.8 0.8
Acquisition through business combination 8.5 – – – – –
Redemption of debt note – – – (800.0) – –
Take up of deferred consideration liability – – – – 19.3 6.8
Fair value movement 0.5 – – – (0.2) –
Settlement of contingent consideration – – – – (2.8) (0.8)
Closing balance as at 30 June 9.0 – – – 23.1 6.8
There were no transfers into or out of Level 3 of the fair value hierarchy during the year ended 30 June 2021.
Level 3 nancial assets consist of:
• a debt note carried at fair value in the prior year. The debt note was valued via a discounted cash ow, which incorporates
unobservable inputs such as discount rates, counterparty credit, and probability-adjusted revenues expected to be received under
the arrangement. An increase in the discount rate used in isolation would result in a decrease to the fair value of the debt note.
Anincrease in the probability-adjusted revenues in isolation would result in an increase in the fair value of the debt note. The debt
note was redeemed on 31 January 2020 to fund the acquisition of the Pensions and Investments (P&I) businesses from ANZ.
Level 3 nancial liabilities consist of:
• deferred purchase consideration in respect of client lists purchased by the IOOF Group, which is valued at best estimate of the
amount payable under the relevant contracts. The amount of deferred consideration payable is linked to the retention of clients,
which is an unobservable input and may decrease the value of the liability; and
• issued investment protection derivatives. These derivatives are measured using market standard valuation models and
assumptions. Signicant unobservable inputs include the underlying investments’ growth rate and the risk-free interest
rate assumptions.
A 1% (-1%) increase (decrease) in the underlying investments’ growth rate assumption would result in a decrease (increase) in
fair value by $0.1 million (2020: nil), holding all other variables constant. A 1% (-1%) increase (decrease) in the risk-free interest rate
assumption would result in a decrease (increase) in fair value by $6.7 million (2020: nil), holding all other variables constant.
IOOF Annual Report 2021 89
Notes to the financial statements
For the year ended 30 June 2021
Section 2 – Results for the year
This section focuses on the results and performance of the IOOF Group. On the following pages, you will nd disclosures
explaining the IOOF Group’s results for the year, segment information, taxation and earnings per share.
Where an accounting policy is specic to a single note, the policy is described in the note to which it relates.
2-1 Operating segments
The IOOF Group has the following seven divisions, which are
its reportable segments. All segments’ operating results are
regularly reviewed by the IOOF Group’s Chief Executive Ocer
to make decisions about resources to be allocated to the
segment and assess its performance, and for which discrete
nancial information is available.
Financial advice
This is the provision of nancial planning advice and
stockbroking services supported by services such as
investment research, training, compliance support and access
to nancial products. Advice operations acquired with the
MLC Wealth transaction are included in the nancial advice
segment. MLC advisers transitioned to IOOF AFSLs upon
acquisition, and results are included in this segment for the
period 1 June 2021 to 30 June 2021.
Portfolio and estate administration
This is the provision of administration and management
services through master trust platforms, which oer a single
access point to a range of investment products.
Investment management
This is the management and investment of monies on behalf
of corporate, superannuation, institutional clients and private
individual investor clients.
Ex-ANZ wealth management advice licensees
These are the ex-ANZ Wealth Management Advice Licensees
(ex-ANZ ALs) acquired from ANZ during 2019, which provide
nancial planning advice services.
Ex-ANZ pensions and investments
Ex-ANZ P&I businesses that have platform businesses across
retail and corporate. These businesses were acquired from
1 February 2020. This is also inclusive of the debt note revenue
up until its redemption on31 January 2020.
MLC Wealth
MLC Wealth businesses that have platform and asset
management businesses servicing retail corporate and
institutional clients. The MLC Wealth businesses were
acquiredfrom 31 May 2021.
Corporate and other
Corporate and other costs include those of a strategic,
shareholder or governance nature incurred in carrying on
business as a listed entity managing multiple business units.
Information regarding the results of each reportable
segment (excluding the benet funds) is included below.
Performance ismeasured based on segment underlying
prot before income tax as management believes that such
information isthe most relevant in evaluating the results of
certain segments relative to other entities that operate within
these industries.
Segment disclosures have been prepared on an underlying net
prot after tax (UNPAT) basis as discussed in the Operating and
Financial Review section of the Directors’ Report. Comparatives
have been restated to be on a comparable basis.
The signicant accounting policies that apply to the major
revenue and expense items below follow each of the notes.
More general information on how these are recognised/
measured can be found in note 7-2 Basis of preparation.
90
2021 Financial
advice**
Portfolio
and estate
admin-
istration
Investment
management
Ex-ANZ
ALs
Ex-ANZ
P&I
MLC
Wealth*
Corporate
and other
Total
2021
$m
2021
$m
2021
$m
2021
$m
2021
$m
2021
$m
2021
$m
2021
$m
Management and service fees
revenue
306.7 216.4 96.5 190.7 319.9 77.7 – 1, 207.9
External other fee revenue 17.4 8.7 5.0 9.3 7.7 1.2 0.2 49.5
Service fees and other
directcosts
(172.6) (24.3) (35.0) (188.0) (57.8) (16.6) (0.1) (494.4)
Deferred acquisition costs – (0.2) – – – – – (0.2)
Gross margin 151.5 200.6 66.5 12.0 269.8 62.3 0.1 762.8
Stockbroking revenue 3.3 – – – – – – 3.3
Stockbroking service fees
expense
(1.0) – – – – – – (1.0)
Stockbroking net contribution 2.3 – – – – – – 2.3
Inter-segment revenue
(1)
3.1 5.5 – 1.2 1.5 – 1.0 12.3
Inter-segment expenses
(1)
(1.8) (6.1) (2.0) – (2.4) – – (12.3)
Net operating revenue 155.1 200.0 64.5 13.2
268.9 62.3 1.1 765.1
Other revenue 1.7 – – 1.9 – 1.1 0.2 4.9
Finance income 0.1 – – – 1.0 0.7 3.0 4.8
Share of (loss)/prots
ofassociates
(1.4) – – – – 0.4 – (1.0)
Operating expenditure (116 . 2) (123.8) (13.5) (41.0) (150.6) (34.5) (46.9) (526.5)
Share-based payments expense (0.4) (0.9) (0.3) (0.1) – – (0.5) (2.2)
Finance costs (0.5) – – – (0.5) (0.1) (10.0) (11.1)
Depreciation of property &
equipment
(8.4) (9.3) (1.3) (1.4) ( 7.9) (0.8) – (29.1)
Amortisation of intangible assets
– IT development
– (0.8) – – – – – (0.8)
Income tax benet/(expense) (9.9) (20.1) (14.9) 8.2 (33.3) (8.6) 22.3 (56.3)
UNPAT from continuing
operations
20.1 45.1 34.5 (19.2) 77. 6 20.5 (30.8) 147.8
UNPAT from continuing
operations
147.8
Impairment losses recognised
inprot or loss
(199.9) – – – – – – (199.9)
Other UNPAT adjustments from
continuing operations***
3.0 (42.3) (2.1) (10.6) (25.9) (0.2) (13.3) (91.4)
NPAT from continuing
operations
(176. 8) 2.8 32.4 (29.8) 51.7 20.3 (4 4.1) (143.5)
NPAT from continuing
operations
(143.5)
(1) Segment revenues, expenses and results include transfers between segments. Such transfers are priced on a commercial basis and are eliminated on consolidation.
* Represents results for the period 1 June 2021 to 30 June 2021.
** Advice operations acquired with the MLC Wealth transaction are included in the nancial advice and distribution segment. MLC advisers transitioned to IOOF AFSLs
upon acquisition, and results are included in this segment for the period 1 June 2021 to 30 June 2021.
*** UNPAT adjustments are described in the Key performance indicators section of the Directors Report.
IOOF Annual Report 2021 91
Notes to the financial statements
For the year ended 30 June 2021
2020 Financial
advice
Portfolio
and estate
admin-
istration
Investment
management
Ex-ANZ
ALs
Ex-ANZ
P&I*
MLC
Wealth
Corporate
and other
Total
2020** 2020** 2020** 2020** 2020** 2020** 2020** 2020**
$m $m $m $m $m $m $m $m
Management and service fees
revenue
351.0 240.0 98.3 198.5 114 . 2 – – 1,002.0
External other fee revenue 17. 3 8.7 7. 3 14.8 3.0 – 0.2 51.3
Service fees and other direct
costs
(195.2) (33.8) (36.6) (198.1) (12.3) – – (476.0)
Deferred acquisition costs – (0.1) – – – – – (0.1)
Gross margin 173.1 214.8 69.0 15.2 104.9 – 0.2 577.2
Stockbroking revenue 3.3 – – – – – – 3.3
Stockbroking service fees
expense
(1.2) – – – – – – (1.2)
Stockbroking net contribution 2.1 – – – – – – 2.1
Inter-segment revenue
(1)
5.0 7.2 – 5.2 0.1 – 0.7 18.2
Inter-segment expenses
(1)
(0.7) (10.7) (2.6) – (4.2) – – (18.2)
Net operating revenue 179.5 211.3 66.4 20.4
100.8 – 0.9 579.3
Other revenue 3.4 – – 2.9 0.6 – 1.0 7.9
Finance income 0.1 – – 0.2 10.2 – 2.1 12.6
Share of (loss)/prots of
associates
(0.5) – – – – – – (0.5)
Operating expenditure (103.5) (115. 0) (10.5) (49.9) (64.0) – (41.3) (384.2)
Share-based payments expense (1.0) (1.1) (0.6) (0.1) – – (0.1) (2.9)
Finance costs (0.7) – – – (0.3) – (13.3) (14.3)
Depreciation of property &
equipment
(8.7) (9.5) (1.3) (1.0) (2.7) – – (23.2)
Amortisation of intangible
assets– IT development
– (0.8) – – – – – (0.8)
Non-controlling interest – – – 0.2 – – – 0.2
Income tax benet/(expense) (20.2) (26.9) (16.4) 8.2 (13.4) – 18.6 (50.1)
UNPAT from continuing
operations
48.4 58.0 37. 6 (19.1) 31.2 – (32.1) 124.0
Discontinued operations 4.8
UNPAT 128.8
Impairment losses recognised
inprot or loss
(4.3) – – – – – – (4.3)
Other UNPAT adjustments from
continuing operations
(19.5) (15.0) (2.1) (10.6) (24.0) – 4.5 (66.7)
NPAT from continuing
operations
24.6
43.0 35.5 (29.7) 7. 2 – (27. 6) 53.0
UNPAT adjustments from
discontinued operations
83.4
NPAT from discontinued
operations
– – – – – – – 88.2
NPAT 141.2
(1) Segment revenues, expenses and results include transfers between segments. Such transfers are priced on a commercial basis and are eliminated on
consolidation.
* Represents results for the period 1 February 2020 to 30 June 2020.
** Restated – refer to note 7-3.
92
2-2 Discontinued operations
The following operations of the IOOF Group were divested
inthe prior year.
(a) Ord Minnett business
On 27 June 2019, the Directors announced the divestment
ofthe Group’s 70% holding in Ord Minnett Holdings Pty Ltd
(OrdMinnett). The disposal is consistent with the Group’s
long-term strategy to focus on its core wealth management
capabilities. The Group entered into a contract with a
consortium of private investors led by current Ord Minnett
management to dispose of its stake in Ord Minnett for sale
consideration of $115 million, $10 million of which was received
in the previous nancial year as a non-refundable deposit.
TheGroup recognised a post-tax prot on sale of $83.7 million
in respect of the Ord Minnett business upon completion
of the transaction. Completion of the sale occurred on
24 September 2019.
(b) Investment in Perennial Value Management
On 10 October 2019, the IOOF Group divested its equity-
accounted investment in Perennial Value Management Limited
(PVM). The book value of the Group’s investment in PVM
was$7.8 million at the time of divestment.
(c) IOOF New Zealand business
On 16 April 2020, the IOOF Group announced that IOOF
New Zealand Ltd had entered into an agreement to sell
allclient rights relating to the IOOF Integral Master Trust to
Britannia Financial Services Limited. IOOF New Zealand Ltd
closed eective 15 April 2020.
(d) Analysis of prot for the year from
discontinued operation
Revenue, expenses and associated income tax in the nancial
statements and notes have been restated to a continuing basis,
where applicable, and therefore exclude the below results
ofthe discontinued operations.
Year ended
30 June 2021
Year ended
30 June 2020
$m $m
Results of discontinued operations
Revenue – 49.7
Expenses – (42.0)
Results from operating activities – 7.7
Income tax – (2.2)
Results from operating activities, net of tax – 5.5
Gain on sale of discontinued operation – 83.6
Income tax on gain on sale of discontinued operation – 0.7
Gain on disposal of discontinued operation, net of tax – 84.3
Prot for the period – 89.8
Prot for the period attributable to:
Owners of the entity – 88.2
Non-controlling interest – 1.6
Prot for the period – 89.8
Basic earnings per share (cents per share) – 25.2
Diluted earnings per share (cents per share) – 25.1
Cash ows from discontinued operations
Net cash provided by/(used in) operating activities – 59.5
Net cash (used in)/provided by investing activities – (0.8)
Net cash ow for the period – 58.7
Prot for the period from discontinued operations – 88.2
Underlying net prot after tax pre-amortisation (UNPAT) adjustments:
Amortisation of intangible assets – 0.4
Termination payments – 0.5
Prot on divestment of assets – (83.6)
Impairment of non-current assets – 0.1
Unwind of deferred tax liability recorded on intangible assets – (0.1)
Income tax attributable – (0.7)
UNPAT from discontinued operations – 4.8
IOOF Annual Report 2021 93
Notes to the financial statements
For the year ended 30 June 2021
2-3 Revenue
Policy
note
2021 2020*
$m $m
Management and service fees revenue (i)
Financial planning revenue 469.9 477.8
Management fees 662.6 462.0
Other management and service fees revenue 75.4 62.2
1, 207.9 1,002.0
Stockbroking revenue (ii) 3.3 3.3
External other fee revenue (ii) 49.5 51.3
Finance income (iii)
Interest income on loans to related entities – 0.1
Interest income on nancial assets measured at fair value 0.3 –
Interest income from non-related entities 3.5 11. 2
Dividends and distributions received 0.7 1.4
Net fair value gains/(losses) on other nancial assets at FVTPL 0.3 (0.1)
4.8 12.6
Other revenue
BT settlement income (iv) 58.8 –
Sundry income 4.9 7.9
Other 3.2 1.5
66.9 9.4
Total revenue 1,332.4 1,078.6
*Restated – refer to note 7-3.
Accounting policies
Revenue is measured based on the consideration
specied in acontract with a customer. The IOOF Group
recognises revenue when it transfers control over a good
orservice to a customer.
(i) Management and service fees revenue
The IOOF Group provides management services to unit trusts
and funds operated by the IOOF Group at normal commercial
rates. Management and service fees earned from the unit
trusts and funds are calculated based on an agreed percentage
of the respective FUMA as disclosed in the respective product
disclosure statements and are recognised as performance
obligations that are satised over time.
Revenue from the provision of nancial planning services
together with revenue from the rendering of services
are recognised as performance obligations that are
satised over time.
(ii) Stockbroking revenue and external other
feerevenue
Other fee revenue and stockbroking revenue from the
rendering of services are recognised as performance
obligations that are satised over time.
(iii) Finance income
Finance income comprises interest income on funds invested
(including nancial assets measured at fair value), dividend
income, gains on the divestment of nancial assets, and
changes in the fair value of nancial assets and nancial
liabilities at FVTPL. Interest income is recognised as it accrues
in prot or loss, using the eective interest method. Dividend
income is recognised in prot or loss on the date that the IOOF
Group’s right to receive payment is established, which in the
case of quoted securities is the ex-dividend date.
(iv) BT settlement income
One-o settlement income in connection with the termination
of the platform relationship with BT Portfolio Services Ltd, net
of debtors previously recognised.
94
2-4 Expenses
Note 2021 2020
$m $m
Service fees and other direct costs (i)
Service and marketing fees expense 444.7 439.7
Stockbroking service fees expense 1.0 1.2
Other direct costs 49.8 36.3
495.5 477. 2
Operating expenditure
Salaries and related employee expenses (excluding superannuation) (ii) 389.1 266.7
Employee dened contribution plan expense (ii) 24.3 18.5
Information technology costs 44.5 39.8
Professional fees 24.4 17.3
Marketing 6.1 9.3
Oce support and administration 28.0 21.3
Occupancy-related expenses 9.4 6.8
Travel and entertainment 0.4 4.5
Other 0.3 –
526.5 384.2
Other expenses
Share-based payments expense (iii) 2.2 2.9
Transformation and integration costs 50.2 19.7
Legal provision 24.3 –
Advice 2.0 costs 1.3 –
Evolve costs 12.6 11. 4
Termination payments (iv) 1.1 2.9
Depreciation of property and equipment 29.1 23.2
Amortisation of intangible assets (v) 58.9 44.8
Amortisation of intangible assets – IT development (v) 0.8 0.8
Deferred acquisition costs (vi) 0.2 0.1
Non-recurring professional fees 10.0 6.4
Governance uplift 1.2 4.5
Remediation costs 28.2 1.5
Impairment of goodwill (v), 4-3 199.9 4.3
Unrealised loss on revaluation of embedded derivative 5.0 –
Other 0.5 1.4
425.5 123.9
Total expenses 1,4 47.5 985.2
IOOF Annual Report 2021 95
Notes to the financial statements
For the year ended 30 June 2021
Accounting policies
Expenses are recognised at the fair value of the consideration
paid or payable for services received. Further specic expense
policies are listed below.
(i) Service fees and other direct costs
Service fees and other direct costs include amounts paid to
advisers, dealer groups and other suppliers in the course of
operating and marketing products and services of the IOOF
Group. Examples of direct costs include custodian fees, audit
services and the printing and mailing of client statements and
other communications. The values are recognised at the fair
value of the consideration paid or payable for the goods or
services received.
(ii) Salaries and related employee expenses
These entitlements include salaries, wages, superannuation,
bonuses, overtime, allowances, annual and long service leave,
but exclude share-based payments. The accounting policies
for the four major expense categories under this denition
are as follows.
Short-term employee benets
Short-term employee benet obligations are measured
on an undiscounted basis and are expensed as the related
service is provided.
A liability is recognised for the amount expected to be paid
ifthe IOOF Group has a present legal or constructive obligation
to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
Short-term incentive plans
A provision for employee benets in the form of an incentive
plan is recognised when there is no realistic alternative
but to settle the liability and at least one of the following
conditions is met:
• there are formal terms in the plan for determining the
amount of the benet;
• the amounts to be paid are determined before the time
ofcompletion of the nancial report; or
• past practice gives clear evidence of the amount
ofthe obligation.
Annual and long service leave benets
The IOOF Group’s net obligation in respect of long-term
employee benets is the amount of future benet that
employees have earned in return for their service in the current
and prior years plus related on-costs.
Liabilities for long-term benets that are expected to be
settled beyond 12 months are discounted using rates attaching
to high-quality corporate bonds that most closely match the
terms of maturity of the related liabilities at balance date.
In determining the liability for employee entitlements,
consideration is given to future increases in wage and
salary rates, experience with employee departures and
years of service.
Employee dened contribution plan expense
A dened contribution plan is a post-employment benet plan
under which an entity pays xed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to dened
contribution plans are recognised in prot or loss in the years
during which services are rendered by employees. Prepaid
contributions are recognised as an asset to the extent that
acash refund or a reduction in future payments is available.
(iii) Share-based payments expense
The grant date fair value of share-based payment awards
granted to employees is recognised as a share-based payment
expense, with a corresponding increase in the share-
based payments reserve over the year that the employees
unconditionally become entitled to the awards. The amount
recognised as an expense is adjusted to reect the number
ofawards for which the related service and non-market vesting
conditions are expected to be met, such that the amount
ultimately recognised as an expense is based on the number
of awards that meet the related service and non-market
performance conditions at vesting date.
96
The fair value at grant date is independently determined
whereconsidered appropriate.
Shares held by the IOOF Equity Plans Trust will contribute
tothe employee allocation of shares on satisfaction of vesting
performance hurdles. The IOOF Group has no right to recall
placed shares. However, a subsidiary company acts as the
Trustee of the Trust and can direct the voting rights of shares
held and strategic direction.
Further information is included in Note 6-2.
(iv) Termination payments
Termination benets or redundancy costs are recognised as
an expense when the IOOF Group is committed demonstrably
to a formal detailed plan without possibility of withdrawal,
or providing termination benets as a result of an oer made
toencourage voluntary redundancy.
(v) Amortisation and impairment
The value of intangible assets, with the exception of goodwill
and brand names with indenite useful lives, reduces over
the number of years the IOOF Group expects to use the
asset, the useful economic life, via an annual amortisation
charge to prot and loss. The values and useful lives
ascribed are reective of arms-length transactions and
independent expert advice.
Where there has been a technological change or decline in
business performance, among other impairment indicators,
management reviews the value of assets to ensure they have
not fallen below their carrying value. Should an asset’s value
fall below its carrying value an additional one-o impairment
charge is made against prot.
(vi) Deferred acquisition costs
Deferred acquisition costs relate to service fees paid and are
deferred as an asset in recognition that they relate to a future
economic benet. Deferred acquisition costs are initially
measured at historical cost and are written down immediately
to their recoverable amount if the carrying amount is greater
than its estimated recoverable amount.
Deferred acquisition costs are progressively amortised in
prot or loss by a systematic allocation over the years the
future economic benets are expected to be received.
Theamortisation period is between ve and seven years.
IOOF Annual Report 2021 97
Notes to the financial statements
For the year ended 30 June 2021
2-5 Net cash provided by operating activities
Cash includes cash on hand, deposits held at call with nancial institutions, and other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash.
This note reconciles the operating prot to the cash provided by operating activities per the cash ow statement.
2021 2020
$m $m
(Loss)/Prot after tax for the year (143.5) 142.6
Depreciation of property and equipment 29.2 24.5
Amortisation of intangible assets 59.6 45.9
Impairment of goodwill 199.9 4.3
Impairment of other non-current assets – 0.6
Prot on divestment of assets (0.4) (0.1)
Prot on divestment of subsidiary – (84.3)
Interest and other costs of nance 11.1 14.3
Interest received and receivable (3.5) (1.9)
Dividends and distributions received and receivable (0.4) (1.5)
Dividends received from associates 0.2 0.4
Share of prots of associates accounted for using the equity method 1.0 (0.5)
Share-based payments expense 2.2 2.9
Other 2.9 (0.7)
Changes in net operating assets and liabilities:
(Increase)/decrease in receivables 41.7 (84.6)
(Increase)/decrease in other assets 6.4 (0.9)
(Increase)/decrease in other nancial assets (160.0) 21.0
(Increase)/decrease in deferred acquisition costs 0.2 0.2
Increase/(decrease) in payables (1.4) 13.3
Increase/(decrease) in deferred revenue liabilities (0.1) (0.2)
Increase/(decrease) in provisions (49.3) 66.3
Increase/(decrease) in income tax payable (0.4) (10.6)
Increase/(decrease) in policyholder liabilities 118 . 3 (12.2)
Increase/(decrease) in deferred taxes 24.2 (19.9)
Net cash provided by operating activities 137.8 118.9
98
2-6 Income taxes
2021 2020
$m $m
Current tax expense
Current year 25.2 42.9
Adjustment for prior years (4.9) (0.6)
Taxable losses not recognised – 0.1
20.3 42.4
Deferred tax expense
Origination and reversal of temporary dierences (7. 5) (16.9)
Adjustments recognised in the current year in relation to the deferred tax of prior years 3.5 0.4
(4.0) (16.5)
Total income tax expense 16.3 25.9
Income tax recognised directly in equity 2021 2020
$m $m
Equity raising costs
Before tax (20.5) –
Tax benet 6.1 –
Net of tax (14.4) –
Income tax recognised in other
comprehensive income
2021 2020
$m $m
Before
tax
Tax
expense
Net of
tax
Before
tax
Tax
expense
Net of
tax
Financial assets through OCI (27.9) 8.5 (19.4) 95.7 (28.7) 67.0
Remeasurement of dened benet asset 0.8 (0.2) 0.6 – – –
Exchange dierences on translating foreign operations 0.2 (0.1) 0.1 (0.1) – (0.1)
(26.9) 8.2 (18.7) 95.6 (28.7) 66.9
2021 2020
% $m % $m
Reconciliation of eective tax rate
(Loss)/Prot before tax from continuing operations (127. 2) 78.7
Tax (benet)/expense using the IOOF Group’s domestic tax rate 30.0% (38.2) 30.0% 23.6
Tax eect of:
Share of tax credits with statutory funds 1.4 1.5
(Non-assessable income)/non-deductible expenses 3.1 0.7
Capital loss not previously recognised (6.7) –
Impairment of goodwill 60.0 1.3
Share of net prots of associates 0.3 0.2
Assessable associate and subsidiary dividends (0.6) 0.2
Revenue loss not recognised – 0.1
Imputation and foreign tax credits (0.3) (0.6)
Other (1.3) (0.9)
Under/(over) provided in prior years (1.4) (0.2)
16.3 25.9
IOOF Annual Report 2021 99
Notes to the financial statements
For the year ended 30 June 2021
For statutory reporting purposes, IOOF Group had an eective tax rate of negative 12.8% on its continuing operations for the
year ended 30 June 2021 (2020: 32.9%) compared to a statutory corporate tax rate of 30%. This rate dierence is primarily due
toimpairment of goodwill, tax benet on prior year capital losses not previously recognised, research and development (R&D) tax
osets, non-deductible subsidiary acquisition costs, prior period amendments, and the transfer of deductions to the statutory funds
in accordance with the Taxation of Insurance Companies. For the year ended 30 June 2020, the rate dierence was primarily due to
similar factors, with the exception of subsidiary acquisition costs and prior year capital losses. Excluding these items the IOOF Group’s
eective tax rate would be 30.4% and 29.7% respectively.
2021 2020
$m $m
Deferred tax assets and liabilities
Deferred tax asset balance comprises temporary dierences attributable to:
Salaries and related employee expenses 61.8 20.8
Provisions, accruals and creditors 211.6 200.0
Carry forward capital and revenue losses 0.2 9.9
Lease liability 35.9 32.7
Other 9.1 1.5
Deferred tax asset balance as at 30 June 318.6 264.9
Set-o of deferred tax liabilities pursuant to set-o provisions (204.4) (264.9)
Net deferred tax asset balance as at 30 June 114 . 2 –
Deferred tax liability balance comprises temporary dierences attributable to:
Unrealised gains – corporate 41.5 23.3
Unrealised gains – statutory* (6.7) 8.6
Customer relationships 117. 8 133.5
Property and equipment (5.5) 28.3
Customer remediation indemnity 55.3 64.7
Other 2.0 26.8
Deferred tax liability balance as at 30 June 204.4 285.2
Set-o of deferred tax assets pursuant to set-o provisions (204.4) (264.9)
Net deferred tax liability balance as at 30 June – 20.3
Reconciliation of movements
Net carrying amounts at the beginning of the year (20.3) (5.9)
Acquisitions and divestments 122.2 (5.3)
Credited to prot or loss 4.0 16.5
(Charged)/credited to prot or loss – statutory* (35.2) 15.4
Temporary dierences directly attributable to equity 43.5 (28.8)
Discontinued operations – (12.2)
Carrying amount at the end of the year 114. 2 (20.3)
Unrecognised deferred tax assets
Tax losses 10.1 5.3
Potential tax benet at the Australian tax rate of 30% 3.0 1.6
* A subsidiary of the Company, IOOF Ltd, is a friendly society in accordance with the Life Insurance Act 1995. The funds operated by IOOF Ltd, and any trusts controlled
by those funds, are treated as statutory funds in accordance with the Life Insurance Act 1995. These statutory funds are required to be consolidated in accordance
withaccounting standards.
100
Accounting policies
Income tax
Income tax comprises current and deferred tax. Current
and deferred tax are recognised in prot or loss except
to the extent that it relates to a business combination,
or items recognised directly in equity or in other
comprehensive income.
Current tax
Current tax is the expected tax payable or receivable on
the taxable income for the year, using tax rates enacted
or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.
Currenttax also includes any tax arising from dividends.
Current tax assets and liabilities are oset only if certain
criteria are met.
Deferred tax
Deferred tax is recognised in respect of temporary dierences
between the carrying amounts of assets and liabilities for
nancial reporting purposes and the amounts used for
taxation purposes. Deferred tax is not recognised for:
• temporary dierences on the initial recognition of assets or
liabilities in a transaction that is not a business combination
and that aects neither accounting nor taxable
prot or loss;
• temporary dierences related to investments in subsidiaries
and associates to the extent that the IOOF Group is able
to control the timing of the reversal of the temporary
dierences and it is probable that they will not reverse
inthe foreseeable future; and
• taxable temporary dierences arising on the initial
recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary dierences when they reverse, based
on the laws that have been enacted or substantively enacted
by the reporting date.
Deferred tax assets and liabilities are oset when there is
a legally enforceable right to oset current tax assets and
liabilities and when deferred tax balances relate to the same
taxation authority.
Tax consolidation
IOOF Holdings Ltd and its wholly owned Australian resident
entities (including IOOF Ltd benet funds) are part of
atax-consolidated group under Australian taxation law.
Asaconsequence, all members of the tax-consolidated
groupare taxed as a single entity.
Tax transparency
The IOOF Group is committed to tax transparency
and integrity. It has been a signatory to the Board of
Taxation’s Voluntary Tax Transparency Code (the Code)
since January 2017.
The Code is a set of principles and ‘minimum standards’
toguide disclosure of tax information by businesses,
encourage those businesses to avoid aggressive tax planning,
and to help educate the public about their compliance with
Australia’s tax laws.
The IOOF Group provides a reconciliation of accounting prot
to tax expense, and to income tax paid/payable, including
identication of material temporary and non-temporary
dierences, and accounting eective company tax rates
fortheIOOF Group’s Australian and global operations.
Information about international related party
dealings
The IOOF Group largely conducted all activities in Australia
forthe current nancial year. Minor operations were acquired
in foreign jurisdictions on 31 May 2021 and each of those
entities is subject to the local tax regime. The eective tax
rates for these entities will be disclosed with the IOOF Group’s
eective tax rate from next year. Related party dealings
between the IOOF Group’s Australian and foreign jurisdictions
are supported by transfer pricing documentation.
Approach to tax strategy and governance
Tax governance is part of the IOOF Group‘s overall risk
management framework, as well as being part of an overall
tax strategy. The overall tax strategy drives the IOOF Group’s
approach to tax risk management and is aimed at good
corporate tax compliance and reporting, ability to meet
and beprepared for regulatory changes, and in ensuring
shareholder value. Tax governance is continuously monitored
and in line with the IOOF Group‘s strategy. The IOOF Group
regards its relationship with the ATO as eective and open,
thereby maintaining transparency and collaboration.
IOOF Annual Report 2021 101
Notes to the financial statements
For the year ended 30 June 2021
Tax contribution analysis
The IOOF Group contributed a total of $140.9 million in taxes
tothe Australian governments (state and federal) in the 2021
tax year. The below table provides an analysis of the types
oftaxes the IOOF Group is liable for.
Further taxes paid by the IOOF Group on behalf of others,
including employees and members, are not directly
borne by the Group. These include income tax, GST, pay-
as-you-earn withholding taxes, and local duties, which
totalafurther$410.8 million (2020: $94.9 million).
2021 tax
contribution
by type (total
$140.9m)
Income tax 64.8m
GST $57.2m
Payroll tax $17.8m
Fringe benets tax
$1.4m
Other $0.1m
2-7 Dividends
After 30 June 2021, the following fully franked dividends were declared by the Directors. The dividends have not been provided
forand there are no income tax consequences.
Cents per
share
Total Date of payment Franked/
unfranked
$m
Final 2021 dividend 9.5 61.7 22 September 2021 Franked
Special 2021 dividend 2.0 13.0 22 September 2021 Franked
2021 2020
$m $m
Dividend franking account
30 per cent franking credits available to shareholders of IOOF Holdings Ltd
for subsequent nancial years
74.3 73.3
The above available amounts are based on the balance of the dividend franking account at year end adjusted for:
• franking credits that will arise from the payment of the current tax liabilities; and
• franking credits that the IOOF Group may be prevented from distributing in subsequent years.
The ability to utilise the franking credits is dependent upon there being sucient available prots to declare dividends. The impact
onthe dividend franking account of dividends declared after the balance date but not recognised as a liability is to reduce it by
$32.0 million (2020: $17.3 million).
The following dividends were declared and paid by the IOOF Group during the current and preceding nancial year.
Cents per
share
Total Date of
payment
Franked/
unfranked
$m
2021
Interim 2021 dividend 8.0 51.9 18-Mar-21 Franked
Special 2021 dividend 3.5 22.7 18-Mar-21 Franked
Final 2020 dividend 11. 5 40.4 22-Sep-20 Franked
23.0 115.0
2020
Interim 2020 dividend 16.0 56.2 16-Mar-20 Franked
Special 2020 dividend 7.0 24.6 27-Sep -19 Franked
Final 2019 dividend 12.0 42.1 27-Sep-19 Franked
35.0 122.9
The total dividends declared relating to earnings for the year ended 30 June 2021 amounted to 23.0 cents per share (2020:
34.5cents per share).
Franked dividends declared or paid during the year were franked at the tax rate of 30%.
Dividend amounts shown are inclusive of any dividends paid on treasury shares.
102
2-8 Earnings per share
2021 2020
Cents per
share
Cents per
share
Basic earnings per share
From continuing operations (24.4) 15.1
From discontinued operations – 25.2
Total basic earnings per share (24.4) 40.3
Diluted earnings per share
From continuing operations (24.4) 15.1
From discontinued operations – 25.1
Total diluted earnings per share (24.4) 40.2
Basic and diluted earnings per share
The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share (EPS)
are as follows.
2021 2020
$m $m
Prot/(Loss) for the year attributable to owners of the Company (143.5) 141.2
Earnings used in the calculation of basic and diluted (EPS) (143.5) 141.2
Prot for the year from discontinued operations used in the calculation of basic and diluted EPS from
discontinued operations
– 88.2
Earnings used in the calculation of basic and diluted EPS from continuing operations (143.5) 53.0
2021 2020
No. (m) No. (m)
Weighted average number of ordinary shares
Weighted average number of ordinary shares (basic) 589.3 350.1
Eect of unvested performance rights 1.3 0.7
Weighted average number of ordinary shares (diluted) 590.6 350.8
Accounting policies
The IOOF Group presents basic and diluted earnings per share for its ordinary shares. Basic earnings per share is calculated by
dividing the prot or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares
outstanding during the year, adjusted for treasury shares held.
Diluted earnings per share is determined by adjusting the basic earnings per share for the eects of all dilutive potential ordinary
shares, which comprise performance rights granted to employees.
At 30 June 2021, there were no options outstanding (2020: nil).
The average market value of the Company’s shares for purposes of calculating the dilutive eect of performance rights was based
onquoted market prices for the year.
IOOF Annual Report 2021 103
Notes to the financial statements
For the year ended 30 June 2021
Section 3 – Capital management and nancing
This section outlines how the IOOF Group manages its capital structure and related nancing costs, including its balance
sheet liquidity and access to capital markets.
The IOOF Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so
that it can continue to provide returns to shareholders and benets to other stakeholders, and to maintain an optimal
structure to reduce the cost of capital.
3-1 Capital management
In order to maintain or adjust the capital structure, the
IOOF Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, buy back its
shares on market, issue new shares, sell assets, or otherwise
adjust debt levels.
The IOOF Group monitors capital on the basis of investment
capital, working capital and regulatory capital.
Investment capital is the IOOF Group’s capital that is not
required for regulatory and working capital requirements
ofthe business. The investment capital is invested in:
• bank deposits and debt note;
• subsidiaries;
• nancial assets at FVOCI;
• unit trusts, as investments; and
• IOOF Group – operated unit trusts, as seed capital.
Investment capital
The investment capital is available to support the organic
development of new businesses and products and to respond
to investment and growth opportunities such as acquisitions,
as they arise. Seed capital is primarily available to support
the business in establishing new products and is also used to
support capital adequacy requirements of the benet funds.
Working capital
Working capital is the capital that is required to meet the
day-to-day operations of the business.
Regulatory capital
Regulatory capital is the capital the IOOF Group holds to meet
minimum legislative and regulatory requirements in respect
ofits friendly society, issued term-based investment protection
products and Australian nancial services (AFS) licensed
operations. During the year, the IOOF Group has complied
withall externally imposed capital requirements.
The Board of each operational subsidiary manages its own
capital required to support planned business growth and meet
regulatory requirements. Australian Prudential Regulation
Authority (APRA) regulated subsidiaries have their own capital
management plan, which specically addresses the regulatory
requirements of that entity and sets a target surplus over
minimum regulatory requirements.
As part of the MLC Wealth acquisition discussed in note 6-4,
the IOOF Group acquired a number of MLC Wealth subsidiaries
with externally imposed regulatory capital requirements.
These include the capital requirements for Registrable
Superannuation Entities licensees and AFS licensees.
In addition, capital is held for risks relating to the term-
based investment protection products issued by one of the
MLC subsidiaries.
2021 2020
$m $m
Capital requirements
on issued investment
protection products
Regulatory capital
requirement
22.1 –
Cash available to meet the
capital requirement
36.8 –
Cash surplus 14.7 –
Regular monitoring of regulatory requirements ensures
sucient capital is available and appropriate planning is
made to retain target surpluses to reduce the risk of beaching
regulatory capital requirements. IOOF Holdings Ltd is
primarily the provider of equity capital to its subsidiaries. Such
investment is funded by IOOF Holdings Ltd’s own investment
capital, through capital issues, prot retention and, in some
instances, by debt.
Subsidiary capital generated in excess of planned requirements
is returned to IOOF Holdings Ltd, usually by way of dividends.
A standby facility is in place as a safeguard against a temporary
need for funds and to provide a short-term funding facility
that allows the business to take advantage of acquisition
opportunities as they arise. The weighted average cost of
capital (WACC) is regularly monitored. Funding decisions
take into consideration the cost of debt versus the cost
of equity with emphasis on the outcome that is best for
shareholder interests.
The IOOF Group’s capital risk management strategy was not
changed during the year.
104
Further information in relation to capital adequacy requirements
imposed by the Life Insurance Act 1995 is provided in note 5-4
Capital adequacy position.
3-2 Borrowings and lease liabilities
This note provides information about the contractual terms
of the IOOF Group’s interest-bearing liabilities, which are
measured at amortised cost.
2021 2020
$m $m
Cash advance and working
capital facility
474.5 457.9
Subordinated Loan Notes
(SLNs)
174.1 –
Total borrowings 648.6 457.9
Lease liabilities 124.9 114. 4
Total borrowing and lease
liabilities
773.5 572.3
For more information about the IOOF Group’s exposure to
interest rate and liquidity risk, see note 1-1 Risk management.
On 27 November 2020, the IOOF Group entered into an
additional accommodation agreement to provide an
additional $250 million cash advance under the Syndicated
Facility Agreement (SFA) for the acquisition of MLC Wealth.
Theamended SFA consists of the following facilities:
• $240 million revolving cash advance facility with a four-
year repayment term from 27 September 2018 (being the
SFAeective date);
• $625 million revolving cash advance facility with a ve-year
repayment term from the SFA eective date;
• multi-option facility with a three-year repayment term
from the SFA eective date, comprising a contingent
liability facility; and
• The SFA facilities have a debt duration prole of
approximately 2.0 years (calculated on a facility limit basis)
(30 June 2020: 2.5 years).
On 31 May 2021, the IOOF Group issued $200 million SLNs
tofund the acquisition of MLC Wealth. Key terms are:
• the SLNs are unsecured subordinated debt
obligations of IOOF;
• a 1% per annum coupon payable semi-annually. Step up
to 4% per annum if the noteholders request redemption
more than 42 months after the issue date and IOOF
does not redeem;
• ve-year term with an early redemption start period
of42months from completion (31 May 2021);
• equity-linked redemption linked to any uplift in notional
securities over a reference price (being a 15% premium
to the theoretical ex rights price for the equity oer) and
subject to adjustment; and
• IOOF permitted to accelerate redemption after three
yearsif the volume-weighted average price is at least 150%
of the reference price or in case of certain tax changes.
The holder is permitted to accelerate redemption at
any time commencing 42 months after the issue date,
subject toissuer consent, or upon change in control
(acquisition byaperson of benecial ownership of 50% or
more oftheordinary voting power of outstanding voting
sharesor delisting or 15 trading day suspension).
For nancial reporting purposes, these SLNs contain ahost
contract and a compound embedded derivative that
isrequired to be recognised separately. The host contract
isinitially recognised at fair value and subsequently measured
atamortised cost, and it will accrete to the face value of
the notes using the eective interest rate. The compound
embedded derivative is measured at fair value and is included
in other nancial liabilities.
The net debt to equity ratio stood at 18.9% at 30 June 2021
(30 June 2020: 24.8%) reecting net borrowings of
$469.7 million (30 June 2020: $430.9 million), principally
$476.0 million under the SFA (30June 2020: $460.0 million).
Allbanking covenants were metat 30 June 2021.
(a) Cash advance and working capital facility
The unsecured cash advance facilities and working capital
facility are provided under an Australian dollar line of credit
facility, to which unrestricted access was available at balance
date as follows.
2021 2020
$m $m
Total facilities 865.0 615.0
Used at 30 June 476.0 460.0
Unused at 30 June 389.0 155.0
The nancial liability under the facility has a fair value equal to
its carrying amount.
2021 2020
$m $m
Revolving cash advance
facility
Opening balance 1 July 457.9 426.5
Net drawdowns 16.0 30.0
Amortised capitalised
establishment fees
0.6 1.4
Closing balance 30 June* 474.5 457.9
* Facilities were repaid in full during the year and redrawn for the purposes
ofthe MLC Wealth acquisition.
IOOF Annual Report 2021 105
Notes to the financial statements
For the year ended 30 June 2021
(b) Lease liabilities
The Group initially adopted AASB 16 Leases from 1 July 2019. AASB 16 introduced signicant changes to the lessee accounting
byrequiring the recognition of a right-of-use asset and a lease liability at commencement for all leases, except for short-term leases
and leases of low-value assets.
2021 2020
$m $m
Lease liabilities
Opening balance 1 July 114.4 –
Lease liabilities recognised on adoption of AASB 16 – 81.8
Net lease liabilities acquired 13.5 35.4
Interest charge (3.0) (2.8)
Closing balance 30 June 124.9 114.4
(c) Other facilities
In addition to the revolving cash advance and working capital facilities, the IOOF Group has additional contingent liability facilities.
Theaggregate of the contingent liability facilities is $55.0 million (2020: $55.0 million) of which $30.6 million was used at 30 June 2021
(30June 2020: $51.9 million).
(d) Reconciliation of movements of liabilities to cash ows from nancing activities
Borrowings Lease liabilities
2021 2020 2021 2020
$m $m $m $m
Opening balance 1 July 457.9 426.5 114.4 –
Changes from nancing cash ows
Repayment of borrowings (575.0) (85.0) – –
Drawdowns and issuance 591.0 115.0 – –
Repayment of lease liabilities – – (21.7) (14.3)
Total changes from nancing cash ows 16.0 30.0 (21.7) (14.3)
Other changes
SLNs issuance (net settled) 174.1 – – –
Interest expenses and borrowing costs 0.6 1.4 3.0 2.8
Lease liabilities recognised on adoption of AASB 16 – – – 81.8
Net leases acquired – – 29.2 44.2
Closing balance 30 June 648.6 457.9 124.9 114.4
Accounting policies
Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of nancial
assets at FVTPL, and impairment losses recognised on nancial assets.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised
inprot or loss using the eective interest method.
106
3-3 Share capital
The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully paid. The holders
of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings
ofthe Company. All shares rank equally with regard to the Company’s residual assets.
2021 2020
$m $m
649,324,356 fully paid ordinary shares (2020: 351,076,027) 3,000.6 1,970.8
792,719 treasury shares (2020: 861,715) (4.6) (5.0)
2,996.0 1,965.8
2021 2020
No. (m) $m No. (m) $m
Ordinary shares
On issue at 1 July 351.1 1,970.8 351.1 1,971.0
Issue of shares 298.2 1,043.9 – –
Transaction costs of issuing new shares (net of tax) – (14.3) – –
Transfer from employee equity-settled benets reserve on exercise of
performance rights
– 0.6 – 2.7
Treasury shares transferred to recipients during the year – (0.4) – (2.9)
On issue at 30 June 649.3 3,000.6 351.1 1,970.8
Treasury shares
On issue at 1 July (0.9) (5.0) (1.2) (7.9)
Treasury shares transferred to recipients during the year 0.1 0.4 0.4 3.6
Treasury shares returned from recipients during the year – – (0.1) (0.7)
On issue at 30 June (0.8) (4.6) (0.9) (5.0)
648.5 2,996.0 350.2 1,965.8
Capital raise
In September 2020, the IOOF Group completed a capital raising for the purposes of the acquisition of the MLC Wealth businesses.
Thecapital raising consisted of a fully underwritten institutional placement and accelerated non-renounceable entitlement oer,
aretail entitlement oer, and a non-underwritten share purchase plan. Under these oers, the Group raised total additional capital
of$1,043.9 million, representing 298,248,329 ordinary shares, and incurred transaction costs of $20.4 million ($14.3 million net of tax).
Accounting policies
Ordinary shares
Ordinary shares are classied as equity. Incremental costs directly attributable to the issue of new shares and share options are shown
in equity as a deduction, net of any tax eects.
Treasury shares
Shares in the Company that are purchased on-market by the IOOF Equity Plans Trust are classied as treasury shares and are deducted
from share capital. Treasury shares are excluded from the weighted average number of ordinary shares used in the earnings per share
calculations. The IOOF Equity Plans Trust is controlled by the IOOF Group and is therefore consolidated. Dividends received on treasury
shares are eliminated on consolidation.
IOOF Annual Report 2021 107
Notes to the financial statements
For the year ended 30 June 2021
3-4 Capital commitments and contingencies
The only capital commitments entered into by the IOOF
Group are operating lease commitments disclosed in
section 4-6 Leases.
Other commitments
2021 2020
$m $m
Guarantees and
underwriting commitments
Rental bond guarantees 22.0 18.3
Other guarantees 0.4 0.4
22.4 18.7
Contingent liabilities
Contingent liabilities of the IOOF Group exist in relation to
claims and/or possible claims which, at the date of signing
these accounts, have not been resolved. An assessment of the
likely loss to the Company and its controlled entities has been
made in respect of the identied claims, on a claim by claim
basis, and specic provision has been made where appropriate.
The IOOF Group does not consider that the outcome of any
other current proceedings, either individually or in aggregate,
is likely to materially aect its operations or nancial position.
Buyer of Last Resort Facility
Two subsidiaries of the IOOF Group have contractual
agreements with its planners to provide a put option
‘Buyer ofLast Resort Facility’ should a planner wish to sell
their business and on the satisfaction of certain specic
requirements. The terms and conditions provide that where
the specic requirements have been met, a predetermined
purchase price will be payable for the business as agreed
by allparties over a predetermined period. Where certain
terms and conditions have not been met, the predetermined
purchase price will be discounted accordingly. As at 30 June
2021, the IOOF Group had received requests from planners
that satised requirements to exercise its obligation. The resale
value of such businesses purchased may dier from the cost
to the IOOF Group. Where conrmation notices have been
received, the IOOF Group has a xed obligation to purchase
the businesses at market value. The aggregate value of this
xed obligation is $4.78 million (2020: $5.32 million).
Class actions and potential regulatory investigations
Contingent liabilities of the IOOF Group exist in relation to
claims and/or possible claims which, at the date of signing
these accounts, have not been resolved. For example, the IOOF
Group is currently defending a number of class actions in the
Federal and Supreme Courts of Australia. An assessment of the
likely loss to the Company and its controlled entities has been
made in respect of the identied claims, on a claim-by-claim
basis, and specic provision is made where appropriate.
Based on the current information available, the IOOF Group
does not consider that the outcome of any other current
proceedings, either individually or in aggregate, is likely
tomaterially aect its operations or nancial position.
Other remediation matters
There are a number of remediation matters under
investigation. The potential outcomes and total costs
associated with these matters remain uncertain.
3-5 Reserves
2021 2020
$m $m
Equity investment revaluation
reserve
(1)
2.4 91.3
Business combinations
reserve
(2)
(0.3) (0.3)
Foreign currency translation
reserve
(3)
0.2 –
Operating risk nancial
reserve
(4)
2.7 2.6
Share-based payments
reserve
(5)
(1.2) (2.3)
3.8 91.3
Nature and purpose of reserves
(1) The equity investment revaluation reserve comprises the cumulative net
change in fair value of equity securities designated at FVOCI, net of tax.
(2) The business combinations reserve reects historic acquisitions of non-
controlling interests, net of tax.
(3) The foreign currency translation reserve comprises foreign currency
dierences arising from the translation of the nancial statements of the
IOOF Group’s foreign operations, net of tax.
(4) The operating risk nancial reserve is held for certain superannuation
products that were previously held under Australian Executor Trustees
Limited and have been transferred to I.O.O.F. Investment Management
Limited as Superannuation Trustee in the prior year. Other similar reserves
exist within the IOOF Group; however, these are generally held by the
relevant funds.
(5) The share-based payments reserve arises on the grant of performance
rights and share options to executives and senior employees under the
employee share plan. Amounts are transferred out of the reserve and into
issued capital when the shares are transferred to employees.
108
Section 4 – Operating assets and liabilities
This section shows the assets used to generate the IOOF Group’s trading performance and the liabilities incurred
asaresult. Liabilities relating to the IOOF Group’s nancing activities are addressed in Section 3.
4-1 Associates
Associates are those entities over which the IOOF Group has signicant inuence, but not control, over the nancial and
operating policies.
Details of the IOOF Group’s material associates at the end of the reporting period are as follows.
Associate Year end Country of
incorporation
Ownership interest Carrying value Share of prot/(loss)
2021 2020 2021 2020 2021 2020
% % $m $m $m $m
Intermede Investment Partners
Limited
31-Dec UK 40.0 – 15.1 – 0.5 –
JANA Investment Advisers
PtyLtd
30-Sep Australia 45.0 – 9.1 – 0.5 –
Other associates 13.4 12.9 (2.1) (0.5)
37.6 12.9 (1.0) (0.5)
The IOOF Group’s investments in Intermede Investment Partners Limited (Intermede) and JANA Investment Advisers Pty Ltd (JANA)
were acquired with the MLC Wealth acquisition, eective 31 May 2021. Intermede is an institutional global equity fund manager
focused on global equity strategy. JANA is an Australian-based investment consulting company, which provides investment
consulting services to institutional clients including corporate, industry and public sector superannuation funds as well as charities,
insurers, foundations and endowment funds.
The following table summarises the 2021 nancial information of the IOOF Group’s material associates. All fair values and accounting
policies of the associates are consistent with those of the IOOF Group.
Intermede JANA
2021 2020 2021 2020
$m $m $m $m
Benecial ownership interest 40% 0.0% 45% 0.0%
Current assets 20.5 – 15.2 –
Non-current assets 0.6 – 4.5 –
Current liabilities (8.2) – (13.2) –
Non-current liabilities – – (2.1) –
Net assets (100%) 12.8 – 4.4 –
IOOF Group’s share of net assets (40%/45%) 5.1 – 2.0 –
Intangibles on investment 10.0 – 7.1 –
Carrying value of interest in associates 15.1 – 9.1 –
Revenue (100%) 2.6 – 4.6 –
Prot and total comprehensive income (100%) 1.2 – 1.1 –
Prot and total comprehensive income (40%/45%) 0.5 – 0.5 –
Total prot and total comprehensive income (40%/45%) 0.5 – 0.5 –
None of the IOOF Group’s equity-accounted investees are publicly listed entities and consequently do not have published
price quotations.
IOOF Annual Report 2021 109
Notes to the financial statements
For the year ended 30 June 2021
Dividends received from associates
During the year, the IOOF Group has received dividends of $0.2 million (2020: $0.4 million) from its associates.
Accounting policies
Interests in associates are accounted for using the equity method. They are initially recognised at cost, which includes any transaction
costs. Subsequent to initial recognition, the consolidated nancial statements include the IOOF Group’s share of the prot or loss and
other comprehensive income of the associates, until the date on which signicant inuence ceases.
Impairment
An impairment loss in respect of an associate is measured by comparing the recoverable amount of the investment with its
carrying amount. The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in
use, the estimated future cash ows are discounted to their present value using a pre-tax discount rate that reects current market
assessments of the time value of money and the risks specic to the asset for which the estimates of future cash ows have not been
adjusted. Animpairment loss is recognised in prot or loss and is reversed if there has been a favourable change in the estimates used
todetermine the recoverable amount.
4-2 Intangible assets (other than goodwill)
2021 2020*
$m $m
Cost 896.6 856.7
Accumulated amortisation (391.1) (331.6)
505.5 525.1
*Restated – refer to note 7-3.
IT develop
-ment
Computer
software
Customer
relationships
Brand
names
Other
intangibles
Total
$m $m $m $m $m $m
Carrying value at 1 July 2019 2.2 3.3 294.3 59.4 5.6 364.8
Acquisition through business
combination*
– 2.0 192.1 – – 194.1
Additions 1.5 – – – 10.9 12.4
Impairment – – (0.4) – (0.2) (0.6)
Amortisation expense attributable to
continuing operations
(0.8) (1.1) (41.5) (0.8) (1.4) (45.6)
Carrying value at 30 June 2020 2.9 4.2 444.5 58.6 14.9 525.1
Acquisition through business
combination
– 30.5 4.0 – – 34.5
Additions 1.1 – – – 4.5 5.6
Amortisation expense (0.8) (3.3) (52.5) (0.8) (2.3) (59.7)
Carrying value at 30 June 2021 3.2 31.4 396.0 57. 8 17.1 505.5
*Restated – refer to note 7-3.
Accounting policies
Intangible assets are non-physical assets used by the IOOF Group to generate revenues and prots. These assets include brand
names, software, customer and adviser relationships. The cost of these assets is the amount that the IOOF Group has paid or, where
there has been a business combination, the fair value of the specic intangible assets that could be sold separately or which arise
from legal rights.
110
The value of intangible assets, with the exception of goodwill and brand names with indenite useful lives, reduces over the number
of years the IOOF Group expects to use the asset, the useful economic life, via an annual amortisation charge to prot and loss.
Thevalues and useful lives ascribed are reective of arms-length transactions and independent expert advice. Where there has been
atechnological change or decline in business performance, management reviews the value of assets to ensure they have not fallen
below their carrying value. Should an asset’s value fall below its carrying value, an impairment charge is recognised inprot or loss.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benets embodied in the specic asset to which
itrelates. All other expenditure, including expenditure on brands, is recognised in prot or loss as incurred.
Amortisation
Amortisation is charged to the income statement over the estimated useful lives of intangible assets unless such lives are judged
tobe indenite. Indenite life assets are not amortised but are tested for impairment at each reporting date. The estimated useful
livesare as follows:
• brand names 20 years;
• IT development 3–5 years;
• computer software 2.5–10 years;
• other intangibles 5–10 years; and
• customer relationships 10–20 years.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Impairment testing for cash-generating units containing indenite life intangible assets
For the purposes of impairment testing, indenite life intangibles are allocated to the IOOF Group’s operating divisions, or CGUs,
whichrepresent the lowest level within the IOOF Group at which intangible assets are monitored for internal management purposes.
Each CGU is not higher than the IOOF Group’s operating segments as reported in Note 2-1 Operating segments.
In 2020, impairment was recognised in relation to certain customer relationships and other intangible assets. Reduced cash ows
associated with the customer relationships and other intangible assets led to their expected value in use and fair value less costs
tosell declining to below the carrying value of the intangible assets. No such impairment was required in 2021.
Indenite life intangible assets (other than goodwill)
The indenite life intangible assets (other than goodwill) relate to brand names. The table below excludes $6.3 million (2020: $7.1
million) of intangibles, which have a nite life. The aggregate carrying amounts of indenite-life intangible assets allocated to each
CGU are as follows.
2021 2020
$m $m
Shadforth 51.0 51.0
Lonsdale 0.5 0.5
51.5 51.5
In designating brand names as indenite life, consideration was given to the length of time the brand names have been in existence
and it was determined that there is no foreseeable limit to the years over which the brand names are expected to generate net cash
inows for the IOOF Group.
For the purposes of impairment testing, indenite life intangible assets are allocated to the IOOF Group’s CGUs. These represent
the lowest level within the IOOF Group at which the assets are monitored for internal management purposes. The calculation
incorporates estimated costs of brand maintenance. The post-tax discount rate of 10.4% (Shadforth) (2020: 10.0%) and 12.0% (Lonsdale)
(2020: 10.0%) used reects the IOOF Group’s post-tax nominal WACC for the relevant CGU. Management’s assessment of value in use
for each CGU supports the value of the intangible asset allocated to the CGU. Any reasonably possible changes to assumptions used
inmanagement’s assessment is not expected to result in impairment.
IOOF Annual Report 2021 111
Notes to the financial statements
For the year ended 30 June 2021
4-3 Goodwill
2021 2020
$m $m
Cost
(1)
2,435.5 1,563.2
Accumulated impairment (297. 6) (97.7)
Net carrying value of goodwill 2,137.9 1,465.5
Carrying value at 1 July 1,465.5 936.9
Acquisition through business combination 872.3 532.9
Impairment of goodwill (199.9) (4.3)
Carrying value at 30 June 2,137.9 1,465.5
(1) Purchase price allocation has not been completed for the acquisition of the MLC Wealth businesses. The net asset adjustment and purchase price allocation are still
being nalised in connection with this acquisition. Therefore, the goodwill acquired in this transaction is provisional.
Impairment of $199.9 million has been recognised in 2021 in connection with goodwill allocated to the Shadforth Financial Group,
DKNFinancial Group and Bridges Financial Services Group CGUs. The impairment primarily reects reduced protability due to the
termination of the platform relationship with BT Portfolio Services Ltd and the cessation of grandfathered revenue in the advice
business. Impairment of $4.3 million was recognised in 2020 in relation to goodwill allocated to the Consultum CGU. Reduced
protability from lower revenue led to its expected fair value less costs to sell andvalue in use declining to below the carrying
valueofthe goodwill balance.
Accounting policies
Goodwill represents the future economic benets that arise from assets that are not capable of being individually identied and
separately recognised. Its cost is the amount the IOOF Group has paid in acquiring a business over and above the fair value of the
individual assets and liabilities acquired. The value of goodwill is an ‘intangible’ value that comes from, for example, a uniquely
strong market position and the productivity of its employees. The goodwill recognised by the IOOF Group has all arisen as a result
ofbusiness combinations.
For the measurement of goodwill at initial recognition, see note 7-3(b)(i) Business combinations.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, the carrying amount
ofgoodwill is included in the carrying amount of the investment. Any impairment loss is allocated to the carrying amount of the
equity-accounted investee as a whole and recognised through the IOOF Group’s share of prot or loss of the associate.
Impairment testing for cash-generating units containing goodwill
For the purposes of impairment testing, goodwill is allocated to the IOOF Group’s CGUs. These represent the lowest level within
theIOOF Group at which the goodwill is monitored for internal management purposes. Assets that cannot be tested individually
aregrouped together into the smallest group of assets that generates cash inows from continuing use that are largely independent
ofthe cash inows from continuing use of other assets or groups of assets (the CGU).
These CGUs are not higher than the IOOF Group’s operating segments as reported in 2-1 Operating segments.
112
The aggregate carrying amounts of goodwill allocated to each CGU are as follows:
Value in use element
2021 2020 Cash
inows
Cash
outows
Post-tax
discount rate
Cash ows –
perpetuity
yrs 1–5 yrs 1–5
$m $m
MLC Wealth
(1)
859.7 – C C – –
Ex-ANZ Wealth 529.2 529.2 A A 10.4% 2.0% growth from yr 5
Shadforth 316.0 431.2 A A 10.4% 2.0% growth from yr 5
Platform
(2)
347. 5 347.5 A A 10.4% 2.0% growth from yr 5
Investment management
(2)
39.7 39.7 A A 10.4% 2.0% growth from yr 5
DKN 1.5 80.4 A A 12.0% 2.0% growth from yr 5
IOOF Ltd 12.0 12.0 B B 12.0% 2.0% growth from yr 5
Bridges 7.9 5.7 A A 12.0% 2.0% growth from yr 5
Australian Executor Trustees 19.8 19.8 A A 12.0% 2.0% growth from yr 5
Wealth Central 4.6 – D D D 2.0% growth from yr 6
2,137.9 1,465.5
(1) Purchase price allocation has not been completed for the acquisition of the MLC Wealth businesses. The net asset adjustment and purchase price allocation are still
being nalised in connection with this acquisition. Therefore, the goodwill acquired in this transaction is provisional.
(2) In the current period, the Portfolio and estate administration CGU has been renamed to Platform, and the multi-manager CGU has been renamed to Investment
management to better reect the Group operations.
A 2022–24 budget, inated thereafter, holding the budgeted growth rate from 2023 to 2024 (year 3) consistent for years 4 and 5.
B 2021 actual cash ows used to forecast 2022 cash ows, inated over the forecast period at the observed Australian friendly
societies’ annual compounding growth for March 2015 to March 2020.
1
C Cost used as an approximation of fair value given the proximity of the transaction to reporting date.
D Acquired goodwill has been allocated to CGUs based on adviser numbers and tested at the CGU level in line with A above.
The growth rates applied do not exceed the long-term average growth rate for businesses in which each CGU operates. The post-tax
discount rate identied above (2020: 10.0% for all CGUs) reects the IOOF Group’s pre-tax nominal WACC.
Sensitivity
Due to current year impairment recognised in relation to the Shadforth CGU, any future adverse movement in assumptions may result
in additional impairment.
Management has identied that, in relation to the Platform CGU, a change in three key assumptions could cause the carrying amount
to exceed the recoverable amount. The following table shows the amount by which these three assumptions would need to change
individually for the estimated recoverable amount to be equal to the carrying amount.
Change required for carrying amount to equal recoverable amount 2021
%
Discount rate 0.14
Terminal growth rate (0.19)
Revenue growth rate (0.56)
1 Source – ABS 5655.0 Managed Funds Australia.
IOOF Annual Report 2021 113
Notes to the financial statements
For the year ended 30 June 2021
4-4 Provisions
2021 2020
$m $m
Employee entitlements 215.2 69.5
Advice remediation provisions 377. 2 432.7
Product remediation provisions 281.7 174.7
Other provisions 27.4 56.2
901.5 733.1
Employee
entitlements
Advice
remediation
(1)
Product
remediation
Other
provisions
Total
$m $m $m $m $m
Balance at 1 July 2019 59.3 392.0 – 2.0 453.3
Acquisition through business combination 7.3 – 180.0 0.6 187.9
Provisions made/(reversed) during the year 35.1 80.4 (1.2) 55.8 170.0
Provisions utilised during the year (32.2) (39.7) (4.1) (2.2) (78.1)
Balance at 30 June 2020 69.5 432.7 174.7 56.2 733.1
Acquisition through business combination 91.1 – 164.5 22.3 277.9
Provisions made/(reversed) during the year 85.2 58.0 12.6 5.2 161.0
Provisions utilised during the year (30.6) (113.5) (70.1) (56.3) (270.5)
Balance at 30 June 2021 215.2 377.2 281.7 27.4 901.5
(1) Provisions totalling $168.1 million were recognised in respect of the ex-ANZ ALs acquired on 1 October 2018. These provisions relate to customer remediation during
the period that the relevant entities were owned by ANZ. The sale agreement indemnied the acquired entities in relation to customer remediation and, accordingly,
acorresponding receivable from ANZ has been recognised.
Accounting policies
A provision is recognised if, as a result of a past event, the IOOF Group has a present legal or constructive obligation that can be estimated
reliably, and it is probable that an outow of economic benets will be required to settle the obligation. Provisions are determined
bydiscounting the expected future cash ows at a pre-tax rate that reects current market assessments of the time value of money.
Advice remediation provision
In 2019, the IOOF Group engaged an expert consultant to design the review methodology and estimate nancial compensation
relating to client remediation in line with observed industry practice. This was in response to ASIC’s investigation as part of its Wealth
Management Project conducting investigations into nancial advice fees paid pursuant to ongoing service arrangements. While IOOF
Group was not issued a notice under this review, the Group has a signicant number of self-employed and salaried nancial advisers
and is voluntarily undertaking its own review. The review determines whether fee-paying clients under its licences were: a) provided
with agreed services and/or advice; b) supported with documentation evidencing appropriate provision of service and/or advice;
andc) received advice appropriate to their circumstances.
Where client compensation is probable and able to be reliably estimated, provisions are raised. Compensation costs include return
ofservice fees, estimated client loss as a result of inappropriate advice, interest for time value of money at ASIC’s directed rate of the
RBA cash rate + 6% and committed costs to resource the compensation program.
As at 30 June 2021, the IOOF Group has provisions of $377.2 million (2020: $432.7 million) in respect of advice remediation and related
costs. Ofthis amount, $175.1 million is indemnied by the ANZ Banking Group (2020: $215.8 million) and an osetting receivable has
also been recognised. The provision was reduced by client remediation payments and program costs paid throughout the year.
114
Product remediation provision
During the nancial year, the IOOF Group acquired product
remediation provisions along with the MLC entities. These
remediation projects were commenced under NAB ownership
and are a component of the completion net asset process with
NAB pursuant to the Share Sale & Purchase Agreement.
The purchase price allocation relating to the ex-ANZ P&I
business was nalised during the year, resulting in a reduction
to remediation provisions of $23.2 million. This adjustment has
been recognised as if the accounting hadbeen completed
atthe acquisition date, and therefore theamount presented
inthe prior period has been restated.
As at 30 June 2021, the IOOF Group has provisions of
$281.7 million (2020: $174.7 million) in respect of product
remediation and related costs. The provision was reduced
by client remediation payments and program costs paid
throughout the year.
Determining the amount of the provision, which represents
management’s best estimate of the costs ofsettling
theidentied matters, requires the exercise of signicant
judgement. It will often be necessary to form a view
on anumber of dierent assumptions, including the
number ofimpacted clients, the average refund per client,
and associated remediation costs. Consequently, the
appropriateness of the underlying assumptions is reviewed
ona regular basis against actual experience and other relevant
evidence, and adjustments are made to the provisions
where appropriate.
Employee entitlements
The provision for employee benets includes provisions for
remuneration in the form of incentive plans and expected
leave benets that employees have earned in return for their
service in the current and prior years plus related on-costs.
A provision for employee benets in the form of an incentive
plan is recognised when there is no realistic alternative
but to settle the liability, and at least one of the following
conditions is met:
• there are formal terms in the plan for determining
theamount of the benet;
• the amounts to be paid are determined before the time
ofcompletion of the nancial report; or
• past practice gives clear evidence of the amount
ofthe obligation.
A provision for restructuring is recognised when the IOOF
Group has approved a detailed and formal restructuring
plan, and the restructuring either has commenced or has
been announced publicly. Future operating losses are
not provided for.
Liabilities for incentives are expected to be settled within
12months and are measured at the amounts expected
tobepaid when they are settled.
Other provisions
Other provisions have been made for the present value
ofmanagement’s best estimates of legal settlements. The
information usually required by AASB 137 Provisions, Contingent
Liabilities and Contingent Assets, is not disclosed on the grounds
that it can be expected to prejudice the outcome of certain
other litigation.
IOOF Annual Report 2021 115
Notes to the financial statements
For the year ended 30 June 2021
4-5 Property and equipment
2021 2020
$m $m
Cost 260.6 217.4
Accumulated depreciation (114.8) (83.0)
145.8 134.4
Oce
equipment
Leasehold
improve-
ments
IT assets Land and
buildings
Right-of-use
assets -
premises
Total
$m $m $m $m $m $m
Balance at 1 July 2019 3.2 11.7 19.6 1.5 – 36.0
Recognition on initial application
ofAASB 16
– – – – 76.0 76.0
Additions 0.6 1.4 6.0 – 39.0 47. 0
Disposals – (0.1) – – – (0.1)
Reduction in right-of-use asset upon
sublease of property
– – – – (1.1) (1.1)
Depreciation expense (0.8) (1.8) (4.8) – (15.8) (23.2)
Depreciation expense attributable
todiscontinued operations
– – – – (0.1) (0.1)
Impairment expense attributable
todiscontinued operations
– – – – (0.1) (0.1)
Balance at 30 June 2020 3.0 11. 2 20.8 1.5 97.9 134.4
Acquisition through business
combination
0.4 – 0.5 – 1.4 2.3
Additions 0.3 – 9.0 – 30.3 39.6
Disposals – – – – (1.3) (1.3)
Depreciation expense (0.5) (2.0) (5.8) – (20.9) (29.2)
Balance at 30 June 2021 3.2 9.2 24.5 1.5 107.4 145.8
(i) Recognition and measurement
Property and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses.
Costincludes expenditure that is directly attributable to the acquisition of the asset.
The gain or loss on divestment of an item of property and equipment is determined by comparing the proceeds from divestment
with the carrying amount of the property and equipment and is recognised net within other income/other expenses in prot or loss.
(ii) Subsequent costs
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
itisprobable that future economic benets associated with the item will ow to the IOOF Group. Repairs and maintenance costs
arecharged to prot or loss as they are incurred.
(iii) Depreciation
Depreciation is recognised in prot or loss on a straight-line basis over the estimated useful lives of each component of an item of
property and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably
certain that the IOOF Group will obtain ownership by the end of the lease term.
Items of property and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally
constructed assets, from the date that the asset is completed and ready for use.
The estimated useful lives for the current and comparative year are as follows:
• oce equipment: 3–10 years; and
• leasehold improvements and right-of-use assets: 3–10 years.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
116
4-6 Leases
The Group has recognised right-of-use assets for operating leases, except for short-term leases.
Operating lease commitments
Prior to the recognition of lease assets and liabilities on the balance sheet, the Group disclosed commitments in relation to operating
leases contracted for at the reporting date, but not recognised as liabilities. In 2021, commitments relate to short-term leases.
Thosecommitments are payable as follows.
30 June 2021 30 June 2020
$m $m
Within one year 13.4 0.2
Later than one year but not later than ve years – –
Later than ve years – –
13.4 0.2
Amounts recognised in the statement of nancial position
The statement of nancial position shows the following amounts relating to leases.
30 June 2021 1 July 2020
$m $m
Right-of-use assets – premises
(1)
107.4 97.9
Lease liabilities – current
(2)
(21.4) (18.7)
Lease liabilities – non-current
(2)
(103.5) (95.7)
(124.9) (114.4)
(1) Right-of-use assets are presented within Property and equipment in the statement of nancial position.
(2) Lease liabilities are presented within Loans and borrowings in the statement of nancial position.
The following table sets out a maturity analysis of lease liabilities, showing the undiscounted lease payments to be made after the
reporting date.
30 June 2021 30 June 2020
$m $m
Within one year 26.0 21.5
Later than one year but not later than ve years 88.0 76.4
Later than ve years 21.6 22.4
135.6 120. 3
Amounts recognised in the prot or loss
The statement of comprehensive income shows the following amounts relating to leases.
30 June 2021 30 June 2020
$m $m
Income from subleasing right-of-use assets 0.5 0.5
Interest charge 3.0 2.8
Depreciation charge 20.9 15.8
Lease expense – short-term leases 1.8 0.9
25.7 19.5
IOOF Annual Report 2021 117
Notes to the financial statements
For the year ended 30 June 2021
The Group assesses whether a contract is or contains a lease
at inception of the contract. The Group recognises a right-of-
use asset and a corresponding lease liability with respect to
all lease arrangements in which it is the new lessee, except
for certain short-term leases (dened as leases with a lease
term of 12 months or less) and leases of low-value assets. For
these leases, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative
ofthe time pattern in which economic benets from the
leased assets are consumed.
The lease liability is initially measured at the present value
ofthe lease payments that are not paid at the commencement
date, discounted by using the rate implicit in the lease.
Ifthis rate cannot be readily determined, the Group uses
itsincremental borrowing rate. The incremental borrowing
rateisdetermined with reference to the following factors:
• length of the lease;
• lessee-specic credit risk; and
• secured borrowings adjustment.
The lease liability is subsequently measured by increasing the
carrying amount to reect interest on the lease liability (using
the eective interest method) any by reducing the carrying
amount to reect the lease payments made. The Group
remeasures the lease liability (and makes a corresponding
adjustment to the related right-of-use asset) whenever:
• the lease term has changed or there is a change in the
assessment of exercise of a purchase option, in which case
the lease liability is remeasured by discounting the revised
lease payments using a revised discount rate;
• the lease payments change due to changes in an index
or rate or a change in expected payment under a
guaranteed residual value, in which cases the lease liability
is remeasured by discounting the revised lease payments
using the initial discount rate (unless the lease payments
change is due to a change in the oating interest rate, in
which case a revised discount rate is used); and
• a lease contract is modied and the lease modication
isnot accounted for as a separate lease, in which case the
lease liability is remeasured by discounting the revised lease
payments using a revised discount rate.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before
the commencement day and any initial direct costs. They are
subsequently measured at cost less accumulated depreciation
and impairment losses.
Right-of-use assets are depreciated over the shorter period of
the lease term and useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reects that the Group expects to exercise
apurchase option, the related right-of-use asset is depreciated
over the useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.
118
Section 5 – Statutory funds
A subsidiary of the Company, IOOF Ltd, is a friendly society in accordance with the Life Insurance Act 1995. Balances
below are disclosed inclusive of amounts collected/receivable from or paid/payable to IOOF Group entities.
Details of the assets and liabilities of the statutory funds are included in Section 1. Statutory funds are not available
to shareholders.
5-1 Statutory fund contribution to prot or loss, net of tax
Statutory
2021 2020
$m $m
Statutory fund revenue
Interest income 0.7 0.9
Dividends and distributions received 50.8 37.4
Net fair value gains/(losses) on other nancial assets designated as FVTPL 114.1 (54.7)
Investment contracts with DPF
Contributions received – investment contracts with DPF 3.4 5.2
Decrease in DPF policyholder liability 15.3 15.4
(Decrease)/increase in non-DPF policyholder liability (112.9) 14.9
Other fee revenue 2.4 2.6
Total statutory fund revenue 73.8 21.7
Statutory fund expenses
Service and marketing fees expense 8.2 10.4
Investment contracts with DPF
Benets and withdrawals paid 19.9 21.2
Interest 0.1 0.1
Total statutory fund expenses 28.2 31.7
Income tax expense/(benet) 45.6 (10.0)
Statutory fund contribution to prot or loss, net of tax – –
Accounting policies
Investment contracts with discretionary participation feature
The value of these liabilities changes in relation to the change in unit prices for unit-linked contracts, and are decreased by
management fee charges. In accordance with the rules of the funds, any remaining surplus is attributed to the policyholders.
Adjustments to the liabilities at each reporting date are recorded in prot or loss.
Other investment contracts
The value of these liabilities changes in relation to the change in unit prices for unit-linked contracts, and are decreased by
management fee charges. In accordance with the rules of the funds, any remaining surplus is attributed to the members of the fund.
Amounts distributable to members are recorded in prot or loss as an expense.
There is no claims expense in respect of life investment contracts. Surrenders and withdrawals that relate to life investment contracts
are treated as a movement in life investment contract liabilities. Surrenders are recognised when the policyholder formally noties
oftheir intention to end the policy previously contracted.
IOOF Annual Report 2021 119
Notes to the financial statements
For the year ended 30 June 2021
Insurance contract liabilities and claims expense
A claims expense is recognised when the liability to the
policyholder under the policy contract has been established,
or upon notication of the insured event. Withdrawal
components of life insurance contracts are not expenses and
are treated as movements in life insurance contract liabilities.
5-2 Actuarial assumptions and methods
The eective date of the actuarial report on the policy liabilities
and capital adequacy reserves is 30 June 2021. The actuarial
report for IOOF Ltd was prepared by Mr Andrew Mead, FIAA,
and was dated 12 August 2021. The actuarial report indicates
that Mr Mead is satised as to the accuracy of the data upon
which the policy liabilities have been determined.
Actuarial methods
Policy liabilities have been calculated in accordance
with relevant actuarial guidance issued by APRA under
the Life Insurance Act 1995. Policy liabilities are based on
asystematic release of planned margins as services are
provided to policyholders and premiums are received.
Key assumptions
Mortality and morbidity
All mortality and morbidity risk is fully reinsured and the gross
risk to the IOOF Group is low. The mortality and morbidity
assumptions have been taken to be equal to the reinsurer’s
mortality and morbidity assumptions.
Other assumptions
In adopting the accumulation method to assess the policy
liabilities, one material assumption is required. It is assumed
that the future overall experience of expense levels, surrender/
lapse rates and discount rates will likely remain within a
satisfactory range so that the policies produce future prots
for the business. In which case, there is no need to set aside
provisions, in addition to the accumulation amounts, for
future losses (i.e. there are no loss recognition concerns for the
business). This assumption has been adopted on the basis that,
based on the current actual experience of the business, the
policies are producing satisfactory prots for the business and
there are no circumstances known that would indicate that the
current position (i.e. general experience levels and ongoing
protability) will not continue into the future.
Sensitivity analysis
The policy liabilities are not sensitive to changes in variables
within a moderate range. Increases in mortality and morbidity
assumptions will result in an increase in gross policy liabilities
for IOOF Group. However, as the mortality and morbidity risk
is fully reinsured any change in these assumptions would
be consistent with the reinsurer’s assumptions and the net
changein policy liabilities would be nil.
5-3 Disclosures on asset restrictions,
managed assets and trustee activities
(i) Restrictions on assets
Investments held in life statutory funds can only be used in
accordance with the relevant regulatory restrictions imposed
under the Life Act and associated rules and regulations. The
main restrictions are that the assets in a life statutory fund can
only be used to meet the liabilities and expenses of that life
statutory fund, to acquire investments to further the business
of the life statutory fund or as distributions when capital
adequacy and other regulatory requirements are met.
(ii) Managed funds and other duciary duties
Entities in the IOOF Group, including the IOOF Ltd benet
funds, hold controlling investments in managed funds.
Asubsidiary of the Company is the Responsible Entity for these
managed funds and has a duciary responsibility for managing
these trusts. Arrangements are in place to ensure that such
activities are managed separately from the other activities
ofthe IOOF Group.
120
5-4 Capital adequacy position
Capital adequacy reserves are required to meet the prudential standards determined in accordance with Prudential Standard LPS
110 Capital Adequacy issued by APRA under paragraph 230A(1)(a) of the Life Insurance Act 1995. Capital adequacy reserves provide
additional protection to policyholders against the impact of uctuations and unexpected adverse circumstances on the Company.
The gures in the table below represent the number of times coverage of the aggregate of all benet funds and statutory funds
inIOOF Ltd over the prescribed capital amount.
Statutory
2021 2020
$m $m
(a) Capital base 15.1 15.1
(b) Prescribed capital amount 6.1 6.7
Capital in excess of prescribed capital amount = (a) – (b) 9.0 8.4
Capital adequacy multiple (%) (a)/(b) 249% 226%
Capital base comprises:
Net assets 15.1 15.1
Regulatory adjustment applied in calculation of Tier 1 Capital – –
(A) Common Equity Tier 1 Capital 15.1 15.1
(B) Total Additional Tier 1 Capital – –
Tier 2 Capital – –
Regulatory adjustment applied in calculation of Tier 2 Capital – –
(C) Total Tier 2 Capital – –
Total capital base 15.1 15.1
For detailed capital adequacy information on a statutory fund basis, users of this annual nancial report should refer to the nancial
statements prepared by IOOF Ltd.
IOOF Annual Report 2021 121
Notes to the financial statements
For the year ended 30 June 2021
Section 6 – Other disclosures
6-1 Parent entity nancials
As at and throughout the nancial year ended 30 June 2021, the parent entity of the IOOF Group was IOOF Holdings Ltd.
2021 2020
$m $m
Result of the parent entity
Prot for the year 60.9 160.8
Total comprehensive income for the year 60.9 160.8
Financial position of parent entity at year end
Current assets 6.5 29.4
Total assets 3,704.8 2,479.0
Current liabilities 35.0 7.9
Total liabilities 714.6 465.9
Total equity of the parent entity comprising:
Share capital 3,000.6 1,970.8
Share-based payments reserve 3.1 1.9
(Accumulated losses)/retained earnings (13.5) 40.3
Total equity 2,990.2 2,013.1
Parent entity contingent liabilities
Contingent liabilities of IOOF Holdings Ltd exist in relation to claims and/or possible claims which, at the date of signing these
accounts, have not been resolved. An assessment of the likely loss to the Company and its controlled entities has been made in
respect of the identied claims, on a claim-by-claim basis, and specic provision has been made where appropriate. IOOF Holdings Ltd
does not consider that the outcome of any other current proceedings, either individually or in aggregate, is likely to materially aect
itsoperations or nancial position.
2021 2020
$m $m
Guarantees and underwriting commitments
Rental bond guarantees 1.6 1.6
122
6-2 Share-based payments
The IOOF Group operates a number of employee share and option schemes operated by the IOOF Equity Plans Trust (the Trust).
Theemployee share option plans were approved by the Board of Directors.
IOOF Executive and Employee Share Option Plan
The IOOF Group has an ownership-based compensation scheme for executives and senior employees.
Selected employees may be granted options that entitle them to purchase ordinary fully paid shares in the Company at a price xed
at the time the options are granted. Voting and dividend rights will be attached to the unissued ordinary shares when the options
have been exercised. Options may be exercised at any time from the date of vesting to the date of their expiry.
Options granted under the plan carry no dividend or voting rights. All plans are equity-settled. There were no options granted
in2021 (2020: nil).
IOOF Executive Performance Rights Plan
The IOOF Executive Performance Rights Plan is the vehicle used to deliver equity-based incentives to executives and senior employees
of the IOOF Group.
Each employee receives ordinary shares of the Company on vesting of the performance rights. No amounts are paid or payable by the
recipient on receipt of the performance rights or on vesting. The performance rights carry neither rights to dividends nor voting rights
prior to vesting. All plans are equity-settled.
A mandatory deferral period exists relating to Executive STIs awarded in 2019. On vesting of performance rights, ordinary shares are
transferred to the employee’s name or held in trust. The employee receives all dividends on the ordinary shares while held in trust.
Performance
rights
Deferred
shares
Total
Rights Shares Rights and
shares
No. No. No.
Opening balance at 1 July 2020 843,370 177, 0 81 1,020,451
Forfeited or lapsed during the year (94,041) – (94,041)
Exercised or transferred during the year (68,996) (119,4 89) (188,485)
Granted during the year 1,239,810 – 1,239,810
Outstanding at 30 June 2021 1,920,143 57,592 1,97 7,735
Exercisable at 30 June 2021 – – –
IOOF Annual Report 2021 123
Notes to the financial statements
For the year ended 30 June 2021
Disclosure of share-based payment plans
Series – Recipient Exercise
price
Opening
balance
1 July 2020
Granted Forfeited
or lapsed
Exercised Closing
balance
30 June 2021
Performance rights
2018-01 Executives nil 110,000 – (55,000) (55,000) –
2018-04 Other employees nil 13,996 – – (13,996) –
2019-01 Executives nil 174,000 – – – 174,000
2019-04 Other employees nil 45,117 – (3,346) – 41,771
2019-05 Other employees nil 140,000 – (5,000) – 135,000
2020-02 Executives and others nil 329,000 – (15,000) – 314,000
2020-03 Other employees nil 31,257 – (2,957) – 28,300
2021-01 Other employees nil – 69,517 – – 69,517
2021-02 Other employees nil – 283,781 (12,738) – 271,043
2021-03 Executives and others nil – 886,512 – – 886,512
843,370 1,239,810 (94,041) (68,996) 1,920,143
Deferred shares
2018-06 Executives nil 77,469 – – (7 7,4 69) –
2019-02 Other employees* nil 42,020 – – (42,020) –
2020-01 Other employees* nil 57,592 – – – 57, 592
17 7, 0 81 – – (119,489) 57, 592
1,020,451 1,239,810 (94,041) (188,485) 1,977,735
* Upon vesting, shares are held in trust for 18 months and may be forfeited in the event of compliance breaches.
There are no options outstanding at 30 June 2021.
Inputs for measurement of grant date fair values granted during the nancial year
The grant date fair values of share-based payment plans granted during the year were measured based on a binomial options pricing
model for non-market performance conditions and a Monte Carlo simulation model for market performance conditions. Expected
volatility is estimated by considering historic average share price volatility. The inputs used in the measurement of the fair values
atgrant date of the share-based payment plans are the following:
Series Fair
value
Grant date
share price
Expected
volatility
Expected life
(years)
Dividend
yield
Risk-free
interest rate
2021-01 Other employees $3.18 $3.80 56% 3 6.90% 0.19%
2021-02 Other employees $2.43 $3.80 56% 3 6.90% 0.19%
2021-03 Executives and others $2.29 $3.64 50% 4 7.21% 0.22%
124
The following share-based payment arrangements were in existence during the current and comparative reporting years:
Performance rights series – Recipient Exercise
price
Earliest
vesting
date
Last tranche
vesting date
Performance
-related
vesting
conditions
2021-03 Executives and other employees nil 30-Jun-24 30-Jun-24 TSR
2021-02 Other employees nil 30-Jun-23 30-Jun-23 TSR
2021-01 Other employees nil 30-Jun-23 30-Jun-23 n/a
2020-03 Other employees nil 30-Jun-22 30-Jun-22 n/a
2020-02 Executives and other employees nil 30-Jun-22 30-Jun-22 TSR
2020-01 Other employees* nil 8-Apr-20 8-Apr-20 n/a
2019-06 Other employees nil 20-Sep-19 20 -Sep-19 n/a
2019-05 Other employees nil 30-Jun-21 30-Jun-21 TSR
2019-04 Other employees nil 30-Jun-21 30-Jun-21 n/a
2019-02 Other employees* nil 24-Apr-19 24-Apr-19 n/a
2019-01 Executives nil 30-Jun-21 30-Jun-21 TSR
2018-04 Other employees nil 30-Jun-20 30-Jun-20 n/a
2018-01 Executives nil 30-Jun-20 30-Jun-20 TSR
* Shares are held in trust for 18 months and may be forfeited in the event of compliance breaches.
The breakdown of share-based payments expense for the year by recipient is as follows. This represents the expense recorded to date
and does not reect the opportunity to transfer to retained prots the value of those legacy series that will lapse.
Recipient 2021 2020
$m $m
Chief Executive Ocer 0.4 0.3
Executives 0.6 0.4
Other employees* 1.2 2.2
2.2 2.9
* Other key stakeholders include other Group employees.
Accounting policies
The grant date fair value of share-based payment awards granted to employees is recognised as a share-based payment expense,
witha corresponding increase in the share-based payments reserve, over the years that the employees unconditionally become
entitled to the awards. The amount recognised as an expense is adjusted to reect the number of awards for which the related service
and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on
the number of awards that meet the related service and non-market performance conditions at vesting date.
The fair value at grant date is independently determined where considered appropriate. The option pricing model used takes into
account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility
ofthe underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.
Shares held by the Trust will contribute to the employee allocation of shares on satisfaction of vesting performance hurdles. The IOOF
Group has no right to recall placed shares. However, a subsidiary company acts as the Trustee of the Trust and can direct the voting
rights of shares held.
Shares in the Company held by the Trust are classied and disclosed as treasury shares, and deducted from share capital. Dividends
received by the Trust are recorded as dividend income in the nancial statements of the Trust and are eliminated on consolidation.
IOOF Annual Report 2021 125
Notes to the financial statements
For the year ended 30 June 2021
6-3 IOOF Group subsidiaries
Set out below is a list of material subsidiaries of the IOOF Group.
Country of
incorporation
Ownership interest
2021 2020
% %
Parent entity
IOOF Holdings Ltd Australia
Material subsidiaries
Australian Executor Trustees Limited Australia 100 100
Bridges Financial Services Pty Limited Australia 100 100
Consultum Financial Advisers Pty Ltd Australia 100 100
I.O.O.F. Investment Management Limited Australia 100 100
IOOF Ltd Australia 100 100
IOOF Equity Plans Trust Australia 100 100
IOOF Service Co Pty Ltd Australia 100 100
IOOF Investment Services Ltd Australia 100 100
Lonsdale Financial Group Limited Australia 100 100
SFG Australia Limited Australia 100 100
Financial Acuity Limited Australia 100 100
Shadforth Financial Group Limited Australia 100 100
Actuate Alliance Services Pty Ltd Australia 100 100
Millennium 3 Financial Services Pty Ltd Australia 100 100
OnePath Custodians Pty Limited Australia 100 100
OnePath Administration Pty Limited Australia 100 100
OnePath Investment Holdings Pty Limited Australia 100 100
Oasis Asset Management Limited Australia 100 100
Oasis Fund Management Limited Australia 100 100
Mercantile Mutual Financial Services Pty Limited Australia 100 100
Global One Alternative Investments Management Pty Ltd Australia 100 100
OnePath Funds Management Limited Australia 100 100
MLC Wealth Limited Australia 100 –
Antares Capital Partners Ltd Australia 100 –
MLC Asset Management Pty Limited Australia 100 –
MLC Asset Management Services Limited Australia 100 –
MLC Investments Limited Australia 100 –
Navigator Australia Limited Australia 100 –
NULIS Nominees (Australia) Limited Australia 100 –
126
Unconsolidated structured entities
The IOOF Group has interests in various structured entities
that are not consolidated. An ‘interest’ in an unconsolidated
structured entity is any form of contractual or non-contractual
involvement that exposes the IOOF Group to variability of
returns from the performance of that entity. Such interests
include holdings of seed capital for the purpose of supporting
the establishment of new products.
The IOOF Group has investments in managed investment
funds through its asset management subsidiaries. Control
ofthese managed investment funds may exist since the
IOOFGroup has power over the activities of the fund.
However, these funds have not been consolidated because
the IOOF Group is not exposed to signicant variability
inreturns from the funds. The IOOF Group earns management
fees from the management of these investment funds,
which are commensurate with the services provided and are
reported in external management and service fees revenue
in note 2-2. Management fees are generally based on the
value of the assets under management. Therefore, the fees
earned are impacted by the composition of the assets under
management and uctuations in nancial markets.
Investment funds are investment vehicles that consist of
a pool of funds collected from several investors for the
purpose of investing in securities such as money market
instruments, debt securities, equity securities and other similar
assets. For all investment funds, the IOOF Group’s maximum
exposure to loss is equivalent to the carrying amount of the
investment in the fund.
6-4 Acquisition of subsidiary
MLC Wealth acquisition
Completion of the acquisition of MLC Wealth occurred
on31 May 2021. The purchase price allocation has not been
completed for the acquisition. The net asset adjustment
isstillbeing negotiated in connection with this acquisition.
In the period from acquisition to 30 June 2021, MLC
Wealth contributed revenue of $80.9 million and a
prot of $15.3 million to the IOOF Group’s results. This
excludes acquisition-related costs of$34.3 million incurred
during the year.
If the acquisition had occurred on 1 July 2020, management
estimates that the consolidated revenue from continuing
operations for the Group would have been $2,429.7 million
and consolidated loss from continuing operations for the year
would have been $179.5 million. The loss is primarily driven
by remediation expenses, and MLC Wealth’s proforma UNPAT
for the 12 months ended 30 June 2021 is $81.0 million. In
determining these amounts, management has assumed that
the fair value adjustments, determined provisionally, that arose
on the date of acquisition would have been the same if the
acquisition had occurred on 1 July 2020.
Prior year acquisition
The purchase price allocation for the ANZ P&I businesses
acquired on 31 January 2020 was nalised during the
current nancial year. The result of this was a net decrease in
receivables, an increase in identied intangibles acquired, the
reallocation of goodwill to identied intangibles, recognition
of amortisation on identied intangibles, and a reduction in
remediation provisions and related interest charges. Related
income tax balances have also been adjusted.
Specically, the purchase price allocation resulted in adecrease
to goodwill of $130.6 million. In addition, $189.1 million
ofthepreliminary goodwill value was reallocated to
identied intangibles. In accordance with relevant accounting
standards, the adjustments required have been recognised
retrospectively, with adjustments made to provisional amounts
recognised at the acquisition date. Further information on
the impact of these adjustments on the nancial statements
isdisclosed at note 7-3.
In the period from acquisition to 30 June 2020, the ex-ANZ
P&I businesses contributed revenue of $128.1 million and a
prot of $31.2 million to the IOOF Group’s UNPAT results. This
excludes integration preparation costs of $25.0 million incurred
during the year.
If the acquisition had occurred on 1 July 2019, management
estimates that the consolidated revenue from continuing
operations for the Group for the prior year would have been
$1,353.8 million and consolidated prot from continuing
operations for the prior year would have been $101.8 million.
Indetermining these amounts, management has assumed that
the fair value adjustments, determined provisionally, that arose
on the date of acquisition would have been the same if the
acquisition had occurred on 1 July 2019.
IOOF Annual Report 2021 127
Notes to the financial statements
For the year ended 30 June 2021
Consideration transferred
The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities
assumed at the acquisition date.
Consideration transferred 2021
MLC Wealth
2020
ANZ P&I
Note $m $m
Cash 1,240.0 774.3
Non-cash consideration
SLNs issued 3-2 200.0 –
Liabilities assumed 6.0 –
Total consideration 1,446.0 774.3
Cash balances acquired (367.7) (214.0)
Purchase consideration, net of cash acquired 1,078.3 560.3
The impact on cash ows for the IOOF Group for the year was an outow of $872.3 million (2020: $560.3 million).
Acquisition-related costs
The IOOF Group has incurred acquisition-related costs of $34.3 million (2020: $31.0 million) in the nancial year in relation to the
acquisition ofthese businesses. These costs have been included in the transformation and integration expenses in note 2-4.
Identiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition.
2021
MLC Wealth*
2020
ANZ P&I
$m $m
Cash 367.7 214.0
Receivables 139.1 3.2
Other nancial assets 323.5 974.2
Fixed assets 1.7 –
Intangibles 5.3 –
Deferred tax assets 122.3 64.1
Payables (132.4) (938.7)
Provisions (241.0) (204.5)
Total identiable net assets acquired 586.3 112. 3
* Purchase price allocation has not been completed for the acquisition of the MLC Wealth businesses. The net asset adjustment is still being negotiated in connection
with this acquisition.
Goodwill and intangibles
Goodwill and intangibles have been recognised as a result of the acquisition as follows.
2021
MLC Wealth*
2020
ANZ P&I
$m $m
Total consideration 1,446.0 774.3
Fair value of assets assumed (586.3) (112. 3)
Goodwill and intangibles acquired 859.7 662.0
* Purchase price allocation has not been completed for the acquisition of the MLC Wealth businesses. The net asset adjustment is still being negotiated in connection
with this acquisition. Associated goodwill and intangibles acquired are still provisional balances.
128
6-5 Remuneration of auditors
Auditors’ remuneration paid or payable by members of the IOOF Group to the auditors of the corporate entities in relation to audit
services of the corporate entities and products operated by the IOOF Group during the year and for the prior year is as follows.
2021 2020
$ $
Audit services
Auditors of the Company – KPMG Australia
Audit and review of nancial reports 5,281,041 4,460,243
Other regulatory audit services 2,713,134 1,759,440
7,9 9 4,175 6,219,683
Other services
Auditors of the Company – KPMG Australia
Taxation services 93,288 336,232
Transaction advisory services 874,698 590,948
Debt advisory 236,000 71,518
Risk and compliance review – 204,930
Other services* 87,4 45 272,636
1,291,431 1,476,265
9,285,606 7,695,9 4 8
* Other non-audit services include remuneration advisory services as well as minor other non-audit services provided during 2021 and 2020.
All amounts payable to the auditors of the Company were paid by an IOOF Group company.
6-6 Key management personnel
2021 2020
$ $
Short-term employee benets 5,642,937 4,804,751
Post-employment benets 192,030 201,070
Share-based payments 1,013,205 704,279
Termination benets – 967,689
6,848,172 6, 677,789
Key management personnel compensation reconciles to disclosures in the remuneration report as follows.
2021 2020
$ $
Executive key management personnel 5,945,672 5,580,543
Non-executive Directors 902,500 1,097, 24 6
Total 6,848,172 6, 677,789
Individual Directors’ and executives’ compensation disclosures
Information regarding individual Directors’ and executives’ compensation and equity instruments disclosures as required by
Corporations Regulation 2M.3.03 is provided in the Remuneration report section of the Directors’ Report. No Director has entered
into a material contract with the IOOF Group since the end of the prior nancial year and there were no material contracts involving
Directors’ interests existing at year end.
IOOF Annual Report 2021 129
Notes to the financial statements
For the year ended 30 June 2021
6-7 Related party transactions
(a) Ultimate parent entity
IOOF Holdings Ltd is the ultimate parent entity in the IOOF Group.
(b) Loans to related entities
Financial
year
Opening
balance
Closing
balance
Interest paid/
payable
during year
Highest
balance
during year
1 July 30 June
$ $ $ $
Interest free loans
Perennial Value Management Limited 2021 – – – –
2020 1,944,381 – – 1,944,381
Interest-bearing loans
Perennial Value Management Limited 2021 – – – –
2020 5,794,350 – 69,442 5,836,966
The amounts above were advanced by Perennial Investment Partners Pty Ltd and I.O.O.F. Investment Management Limited for the specic
purpose of assisting executives to acquire an equity interest in subsidiaries and associates of the Company. Secured interest-bearing
loans made on commercial terms and conditions and unsecured interest free loans were repaid during the prior year.
(c) Investment in related entities
Through one of its subsidiaries, the IOOF Group (excluding benet funds) holds investments in managed investment schemes that
meet the denition of related parties.
2021 2020
$ $
Investment in related party schemes 457, 687 263,583
(d) Transactions with key management personnel
(i) Key management personnel compensation
Details of key management personnel compensation are disclosed in section 6-6 to the nancial statements and in the
Remuneration Report.
(ii) Loans to key management personnel
There are no loans between the IOOF Group and key management personnel.
(iii) Other transactions with key management personnel of the IOOF Group
There were no other transactions with key management personnel of the IOOF Group during the 2021 and 2020 nancial years.
130
6-8 Dened benet plan
The IOOF Group contributes to a post-employment dened benet plan, the National Wealth Management Superannuation Plan
(the plan). The plan entitles employees to receive certain retirement benets based on a xed percentage of each employee’s annual
remuneration and years of service.
The plan is a sub-plan of the MLC Super Fund. The Trustee of the MLC Super Fund, NULIS Nominees (Australia) Limited, is a subsidiary
of the IOOF Group. The Trustee of the MLC Super Fund is required by law to act in the best interests of the plan participants and
isresponsible for setting certain policies of the fund.
The dened benet plan exposes the IOOF Group to actuarial risks, such as investment risk, salary growth risk, liquidity risk,
sequencing risk (due to the plan being closed to new dened benet members) and legislative risk.
The amount included in the statement of nancial position arising from the IOOF Group’s obligation in respect of its dened benet
retirement benet plan is as follows.
2021 2020
$m $m
Present value of dened benet obligation (30.8) –
Fair value of plan assets 48.0 –
Net surplus arising from dened benet obligation 17. 2 –
Amounts recognised in prot or loss in respect of these dened benet plans are as follows.
2021 2020
$m $m
Current service cost (0.1) –
(0.1) –
Amounts recognised in other comprehensive income are as follows.
2021 2020
$m $m
Actuarial gains and losses arising from experience adjustments 0.7 –
Movement in contribution tax adjustment 0.1 –
0.8 –
Funding
The plan is fully funded by MLC Wealth Limited (a subsidiary of the Company). In Australia, superannuation is regulated by APRA.
APRA’s Prudential Standard SPS 160 Dened Benet Matters requires the plan’s vested benet index (plan’s assets divided by vested
benets) to be no less than 100%. The Trustee of the plan is required to ensure that a formal actuarial investigation is completed
at least every three years using the projected unit credit method and updated on an annual basis for material movements in the
plan position.
Based on the strong nancial position of the plan and the actuary’s recommendation, the IOOF Group does not expect to pay
contributions to its dened benet plan in 2022.
IOOF Annual Report 2021 131
Plan assets
Plan assets comprise the following.
2021 2020
$m $m
Cash and cash equivalents 2.4 –
Equity instruments 34.1 –
Debt instruments 7.2 –
Real estate investment funds 4.3 –
Fair value of plan assets 48.0 –
Plan assets are invested into a managed investment portfolio. These investments do not have a quoted market price in
an active market.
Movements in the fair value of the plan assets in the year were as follows.
2021 2020
$m $m
Opening fair value of plan assets – –
Acquisition through business combination 47. 2 –
Actuarial gains arising from experience adjustments 0.7 –
Movement in contribution tax adjustment 0.1 –
Closing fair value of plan assets 48.0 –
Dened benet obligation
Movements in the present value of the dened benet obligation in the year were as follows.
2021 2020
$m $m
Opening dened benet obligation – –
Acquisition through business combination (30.7) –
Current service cost (0.1)
Closing dened benet obligation (30.8) –
The principal assumptions used for the purposes of the actuarial valuations were as follows.
2021 2020
Discount rate 1.4% –
Expected rate of salary increase 3.0% –
Expected future lifetime at the age of 60
Male 22.6 years –
Female 26.0 years –
At 30 June 2021, the weighted-average duration of the dened benet obligation was ve years. Based on the current assumptions,
benet payments of approximately $5.0 million are expected in 2022 followed by further benets of approximately $11.0 million over
the next four years.
Reasonable possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant,
would have aected the dened benet obligation by the amounts shown below.
2021 2021 2020 2020
Increase
$m
Decrease
$m
Increase
$m
Decrease
$m
Discount rate (1% movement) (1.6) 1.6 – –
Compensation rate (1% movement) 1.5 (1.5) – –
Mortality rate (10% movement) 0.3 (0.3) – –
Although the analysis does not take account of the full distribution of cash ows expected under the plan, it does provide an
approximation of the sensitivity of the assumptions shown.
Notes to the financial statements
For the year ended 30 June 2021
132
Section 7 – Basis of preparation
This section sets out the IOOF Group’s accounting policies that relate to the nancial statements as a whole. Where
an accounting policy is specic to a single note, the policy is described in the note to which it relates. This section
also shows new accounting standards, amendments and interpretations, and whether they are eective in 2021
orlater years. The expected impact of these changes to the nancial position and performance of the IOOF Group
isexplained in this section.
7-1 Reporting entity
The Company is a public company listed on the Australian
Stock Exchange (trading under the symbol ‘IFL’), domiciled
in Australia. The consolidated nancial statements of the
Company as at and for the year ended 30 June 2021 comprise
the Company and its controlled entities and the IOOF Group’s
interests in associates.
The IOOF Group is a for-prot entity and is primarily involved
inthe provision of wealth management services.
The Company’s registered oce and its principal place
ofbusiness are Level 6, 161 Collins Street, Melbourne.
7-2 Basis of preparation
(a) Statement of compliance
These general purpose nancial statements have been
prepared in accordance with Australian Accounting Standards
(AASBs) adopted by the Australian Accounting Standards
Board (AASB) and the Corporations Act 2001. The consolidated
nancial statements comply with International Financial
Reporting Standards (IFRS) adopted by the International
Accounting Standards Board.
The annual nancial report was approved by the Board
ofDirectors on 26 August 2021.
(b) Basis of measurement
The consolidated nancial statements have been prepared on
the historical cost basis except for the following material items
in the statement of nancial position:
• nancial instruments at FVTPL aremeasured
atfair value; and
• equity investments at FVOCI are measured at fair value.
The statement of nancial position is presented
inorder of liquidity.
(c) Functional and presentation currency
These consolidated nancial statements are presented in
Australian dollars, which is the Company’s functional currency.
All amounts have been rounded to the nearest thousand
unless otherwise stated.
(d) Rounding of amounts
The Company is a company of the kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports) Instrument
2016/191, dated 24 March 2016, and in accordance with that
instrument amounts in the nancial report are rounded
o to the nearest one hundred thousand dollars, unless
otherwise stated.
(e) Use of estimates and judgements
To comply with AASBs, management is required to make
judgements, estimates and assumptions that aect the
application of accounting policies and the reported amounts
of assets, liabilities, income and expenses. Actual results may
dier from these estimates.
Estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the year in which the estimates are revised
andin any future years aected.
Information about critical judgements in applying accounting
policies, assumptions and estimation uncertainties that may
have a signicant eect on the amounts recognised in the
nancial statements is included in the following notes:
• note 1-1 – Issued investment protection products and
deferred purchase consideration valuation;
• note 3-4 – Contingencies;
• note 4-2 – Intangible assets (other than goodwill);
• note 4-3 – Goodwill;
• note 4-4 – Provisions;
• note 6-2 – Share-based payments;
• note 6-4 – Acquisition of subsidiary; and
• note 6-8 – Dened benets plan.
IOOF Annual Report 2021 133
7-3 Other signicant accounting policies
Signicant accounting policies have been included in the
relevant notes to which the policies relate. Other signicant
accounting policies are listed below.
Certain comparative amounts have been reclassied
toconform with the current year’s presentation.
(a) Changes in accounting policies
In the current year, the IOOF Group has reassessed the manner
in which adviser service fees are treated in the Group nancial
statements. Historically, some entities within the Group
recognised these costs in service and marketing fees expense.
After standardising accounting policies across the Group, the
relationship is now assessed as agency and the fees are now
recognised as a reduction to management and service fees
revenue. The impact of this change is disclosed in note 7-3(f).
Aside from this change, the IOOF Group has consistently
applied the accounting policies to all years presented in these
consolidated nancial statements.
(b) Basis of consolidation
The consolidated nancial statements incorporate the assets
and liabilities of all subsidiaries of the Company as at 30 June
2021 and the results of all controlled subsidiaries for the year
then ended. This includes the benet funds of its subsidiary,
IOOF Ltd, and any controlled trusts.
The benet funds, and any trusts controlled by those funds, are
treated as statutory funds in accordance with the Life Insurance
Act 1995. These statutory funds, in addition to the statutory
funds of the life insurance business conducted by the IOOF
Group, are shown separately from shareholder funds in the
notes to the nancial statements.
Refer to note 1-1 Assets and liabilities relating to statutory
funds for information in relation to the dierent accounting
treatment of investment contracts with discretionary
participating features.
(i) Business combinations
The IOOF Group accounts for business combinations using
the acquisition method when control is transferred. The
consideration transferred in the acquisition is generally
measured at fair value, as are the identiable net assets
acquired. Any goodwill that arises is tested annually for
impairment. Transaction costs are expensed as incurred,
except if related to the issue of debt or equity securities.
Any contingent consideration payable is recognised at fair
value at the acquisition date. If the contingent consideration
is classied as equity, it is not remeasured and settlement is
accounted for within equity. Otherwise, subsequent changes
to the fair value of the contingent consideration are recognised
in prot or loss.
When share-based payment awards (replacement awards) are
required to be exchanged for awards held by the acquiree’s
employees (acquiree’s awards) and relate to past services, then
all or a portion of the amount of the acquiree’s replacement
awards is included in measuring the consideration transferred
in the business combination. This determination is based on
the market-based value of the replacement awards compared
with the market-based value of the acquiree’s awards and the
extent to which the replacement awards relate to past and/or
future service.
(ii) Non-controlling interests (NCIs)
NCIs are measured at their proportionate share of the
acquiree’s identiable net assets at the acquisition date.
Changes in the IOOF Group’s interest in a subsidiary that
do not result in a loss of control are accounted for as
equity transactions.
(iii) Subsidiaries
Subsidiaries are entities controlled by the IOOF Group. The
IOOF Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to aect those returns through its power
over the entity. The nancial statements of subsidiaries are
included in the consolidated nancial statements from the
date on which control commences until the date on which
control ceases.
(iv) Loss of control
When the IOOF Group loses control over a subsidiary,
itderecognises the assets and liabilities of the subsidiary,
and any related NCIs and other components of equity.
Anyresulting gain or loss is recognised in prot or loss.
Anyinterest retained in the former subsidiary is measured
atfair value when control is lost.
(v) IOOF Equity Plans Trust (the Trust)
The IOOF Group has formed a trust to administer the
IOOF Group’s employee share schemes. The Trust is
consolidated, asthe substance of the relationship is that
the Trust is controlled by the IOOF Group. Shares held by
the Trust are disclosed astreasury shares and are deducted
from share capital.
Notes to the financial statements
For the year ended 30 June 2021
134
(vi) Transactions eliminated on consolidation
Intra-IOOF Group balances and transactions, and any
unrealised income and expenses arising from intra-IOOF Group
transactions, are eliminated in preparing the consolidated
nancial statements. Unrealised gains arising from transactions
with equity-accounted investees are eliminated against the
investment to the extent of the IOOF Group’s interest in
the investee. Unrealised losses are eliminated in the same
way as unrealised gains, but only to the extent that there
isnoevidence of impairment. Dividends paid to the Trust
arealso eliminated.
(c) Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated at the foreign
exchange rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated to Australian
dollars at the foreign exchange rate prevailing at that date.
Foreign exchange dierences arising on translation are
recognised in prot or loss. Non-monetary assets and liabilities
that are measured in terms of historical cost in a foreign
currency are translated using the exchange rate at thedate
ofthe transaction.
Foreign operations
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation,
are translated to Australian dollars at foreign exchange
rates prevailing at the balance sheet date. The revenue and
expenses of foreign operations are translated to Australian
dollars at rates approximating the foreign exchange
rates prevailing at the dates of the transactions. Foreign
currency dierences are recognised in the foreign currency
translation reserve.
(d) Impairment
Non-derivative nancial assets
A nancial asset not measured at FVTPL is assessed at each
reporting date to determine whether there is objective
evidence that it is impaired. A nancial asset is impaired if
objective evidence indicates that a loss event has occurred
after the initial recognition of the asset, and that the loss event
had a negative eect on the estimated future cash ows of
that asset that can be estimated reliably.
Objective evidence that nancial assets (including equity
securities) are impaired can include default or delinquency
bya debtor, restructuring of an amount due to the IOOF Group
on terms that the IOOF Group would not consider otherwise,
indications that a debtor or issuer will enter bankruptcy,
adverse changes in the payment status of borrowers or
issuers in the IOOF Group, economic conditions that correlate
with defaults or the disappearance of an active market of a
security. In addition, for an investment in an equity security,
asignicant or prolonged decline in its fair value below its cost
is considered objective evidence of impairment.
Financial assets and liabilities at fair value
throughOCI
Impairment losses on equity investments at fair value through
OCI are recognised by reclassifying the losses accumulated
in the investment revaluation reserve to prot or loss. The
cumulative loss that is reclassied from equity to prot or
loss is the dierence between the acquisition cost, net of
any principal repayment and amortisation, and the current
fair value, less any impairment loss previously recognised
inprot or loss.
Changes in impairment provisions attributable to application
of the eective interest method are reected as a component
of interest income. If, in a subsequent year, the fair value
of an impaired debt investment at fair value through OCI
increases and the increase can be related objectively to
anevent occurring after the impairment loss was recognised
in prot or loss, then the impairment loss is reversed, with the
amount of the reversal recognised in prot or loss. However,
any subsequent recovery in the fair value of an impaired debt
investment at fair value through OCI is recognised in other
comprehensive income.
Non-nancial assets
The carrying amounts of the IOOF Group’s non-nancial
assets, other than deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication
of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated. For goodwill, and intangible
assets that have indenite useful lives or that are not yet
available for use, the recoverable amount is estimated each
year at the same time.
An impairment loss is recognised if the carrying amount
ofanasset or its related CGU exceeds itsestimated
recoverable amount.
IOOF Annual Report 2021 135
The recoverable amount of an asset or CGU is the greater of
its value, in use and its fair value less costs to sell. In assessing
value in use, the estimated future cash ows are discounted
totheir present value using a pre-tax discount rate that reects
current market assessments of the time value of money and
the risks specic to the asset. Subject to an operating segment
ceiling test, for the purposes of goodwill impairment testing,
CGUs to which goodwill has been allocated are aggregated so
that the level at which impairment is tested reects the lowest
level at which goodwill is monitored for internal reporting
purposes. Goodwill acquired in a business combination is
allocated to groups of CGUs that are expected to benet from
the synergies of the combination.
Impairment losses are recognised in prot or loss. Impairment
losses recognised in respect of CGUs are allocated rst to
reduce the carrying amount of any goodwill allocated to the
units, and then to reduce the carrying amounts of the other
assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed.
Inrespect of other assets, impairment losses recognised
in prior years are assessed at each reporting date for any
indications that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been a change
inthe estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount
that would havebeen determined, net of depreciation or
amortisation, ifno impairment loss had been recognised.
Goodwill that forms part of the carrying amount of an
investment in an associate is not recognised separately, and
therefore is not tested for impairment separately. Instead, the
entire amount of the investment in an associate is tested for
impairment as a single asset when there is objective evidence
that the investment in an associate may be impaired.
(e) Goods and service tax (GST)
Revenues, expenses and assets (excluding receivables) are
recorded net of GST. GST input tax credits are initially recorded
as an asset and GST collected as a liability. These balances
are oset as at the reporting date and recognised as either
an amount receivable or payable to the Australian Taxation
Oce. The GST portion relating to nancial supplies and non-
deductible expenditure, for which aninput tax credit cannot
be claimed, is expensed or is recognised as part of the cost
ofacquisition of an asset.
Receivables and payables are stated inclusive of the amount
ofGST receivable or payable. The net amount of GST recoverable
from, orpayable to, the Australian Taxation Oce is included
with other receivables or payables in the statement of
nancial position.
Cash ows are presented in the statement of cash ows on
agross basis. The GST components of cash ows arising from
investing ornancing activities that are recoverable from,
or payable to, the Australian Taxation Oce are presented
asoperating cash ows.
(f) Restatement of prior year information
As described in note 6-4, the purchase price allocation for the
ANZ P&I businesses acquired on 31 January 2020 was nalised
during the current nancial year. The table on next page shows
the impact of the adjustments on the 30 June 2020 statement
ofnancial position and statement of comprehensive income.
Notes to the financial statements
For the year ended 30 June 2021
136
The impact of the change in accounting policy described in note 7-3(a) is also disclosed.
Statement of comprehensive income 2020 2020 2020 2020
Previously
reported
$m
PPA
adjustment*
$m
Adviser fee
adjustment
$m
Revised
$m
Revenue 1,168.9 – (90.3) 1,078.6
Expenses (1,067.5) (8.0) 90.3 (985.2)
Share of losses of associates (0.5) – – (0.5)
Finance costs (14.2) – – (14.2)
Prot/(loss) before tax 86.7 (8.0) (0.0) 78.7
Income tax (expense)/benet (28.2) 2.3 (25.9)
Prot/(loss) from continuing operations after tax 58.5 (5.7) (0.0) 52.8
* Prot impact of the purchase price allocation (PPA) adjustment represents amortisation of intangible assets acquired.
Statement of nancial position 2020 2020 2020
Previously
reported
$m
PPA
adjustment*
$m
Revised
$m
Assets
Cash 374.7 – 374.7
Receivables** 612.8 (32.9) 579.9
Other nancial assets 1,116 . 8 – 1,116 . 8
Current tax assets** – 23.6 23.6
Prepayments 16.1 – 16.1
Deferred acquisition costs 1.0 – 1.0
Associates 12.9 – 12.9
Property and equipment 134.4 – 134.4
Deferred tax assets 49.8 (49.8) –
Intangible assets 344.0 181.1 525.1
Goodwill 1,596.1 (130.6) 1,465.5
Total assets 4,258.6 (8.6) 4,250.0
Liabilities
Payables 120.5 – 120.5
Other nancial liabilities 1,065.4 – 1,065.4
Borrowings and lease liabilities 572.3 – 572.3
Provisions 756.3 (23.2) 733.1
Deferred tax liabilities – 20.3 20.3
Deferred revenue liability 0.9 – 0.9
Total liabilities 2,515.4 (2.9) 2,512.5
Net assets 1,743.2 (5.7) 1,737.5
Equity
Share capital 1,965.8 – 1,965.8
Reserves 91.3 – 91.3
Accumulated losses (313.7) (5.7) (319.4)
Total equity attributable to equity holders of the Company 1,743.4 (5.7) 1,737.7
Non-controlling interest (0.2) – (0.2)
Total equity 1,743.2 (5.7) 1,737. 5
* Prot impact of PPA adjustment represents amortisation of intangible assets acquired.
** Current tax assets were included within other receivables at 30 June 2020. They have been split out and presented separately in the 30 June 2020 balance sheet.
Thisdoes not relate to an acquisition accounting adjustment.
IOOF Annual Report 2021 137
7-4 Adoption of new and revised standards
New and amended standards that are eective
for the current year
The IOOF Group has adopted the following new or amended
standards in preparing these consolidated nancial statements.
Software-as-a-Service (SaaS) arrangements
The International Financial Reporting Standards Interpretations
Committee (IFRIC) has issued two nal agenda decisions that
impact SaaS arrangements:
• Customer’s right to receive access to the supplier’s software
hosted on the cloud (March 2019) – this decision considers
whether a customer receives a software asset at
the contract commencement date or a service over
the contract term.
• Conguration or customisation costs in a cloud computing
arrangement (April 2021) – this decision discusses whether
conguration or customisation expenditure relating to SaaS
arrangements can be recognised as an intangible asset and
if not, over what time period the expenditure is expensed.
The IOOF Group’s accounting policy has historically been to
capitalise all costs related to SaaS arrangements as prepaid
assets in the statement of nancial position. The adoption
of the above agenda decisions has therefore not resulted
in any change to the way in which SaaS arrangements
are accounted for.
New and revised standards in issue but not
yeteective
At the date of authorisation of these nancial statements, the
IOOF Group has not applied the following new and revised
IFRS Standards that have been issued but are not yet eective:
New standards or amendments Eective rst
nancial
year ending
AASB 17 Insurance Contracts 30 June 2024
AASB 101 Classication of Liabilities as Current
or Non-Current (Amendments toIAS 1)
30 June 2024
AASB 2020-3 Amendments to Australian
Accounting Standards – Annual Improvements
2018-2020 and Other Amendments
30 June 2023
The Directors do not expect that the adoption of the standards
listed above will have a material impact on the nancial
statements of the IOOF Group in future periods, except
as noted below.
AASB 17 Insurance Contracts
AASB 17 replaces AASB 4 Insurance Contracts and similarly
applies to insurance contracts. The classication of insurance
contracts is similar to AASB 4 Insurance Contracts; however,
unbundling rule changes may mean some contract
components now need to be measured under AASB 17.
The new standard contains a lower level of aggregation/
smaller portfolios; changes to contract boundaries and
valuation approaches; the application of contractual service
margins to policies valued under certain methodologies;
changes in treatment to reinsurance; and an ability to use other
comprehensive income for changes in asset values. The new
standard also changes corresponding disclosure requirements.
The IOOF Group is in the process of assessing the potential
impact on its consolidated nancial statements and the
impact has not yet been determined. However, it will be
relevant for IOOF Ltd. The IOOF Group plans to adopt AASB
17 in the consolidated nancial statements for the year
ending 30 June 2024.
7-5 Subsequent events
The Directors have declared the payment of a nal dividend
of 9.5 cents per share and a special dividend of 2.0 cents per
share, both franked to 100% based on tax paid at 30%, to be
paid on 22 September 2021.
The Directors are not aware of any other matter or
circumstance not otherwise dealt with in this report, or the
accompanying nancial statements and notes thereto, that has
arisen since 30 June 2021 that has signicantly aected, or may
signicantly aect:
• the IOOF Group’s operations in future nancial years; or
• the results of those operations in future nancial years; or
• the IOOF Group’s state of aairs in future nancial years.
Notes to the financial statements
For the year ended 30 June 2021
138
Shareholder information
Share capital
IOOF has on issue 649,324,356 fully paid ordinary shares held by 58,271 holders as at 30 September 2021.
Voting rights
IOOF’s fully paid ordinary shares carry voting rights of one vote per share.
Twenty largest shareholders as at 30 September 2021
The following table sets out the top 20 registered holders of shares.
Rank Holder Name Balance as at
30 Sept 2021
% of issued
capital
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 146,156,737 22.51%
2 CITICORP NOMINEES PTY LIMITED 106,236,088 16.36%
3 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED 70,662,987 10.88%
4 THE TRUST COMPANY (AUSTRALIA) LIMITED <MR BRUCE WILLIAM NEILL A/C> 24,414,295 3.76%
5 NATIONAL NOMINEES LIMITED 20,650,290 3.18%
6 BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C> 17,143, 321 2.64%
7 BNP PARIBAS NOMS PTY LTD <DRP> 15,880,246 2.44%
8 AIGLE ROYAL SUPERANNUATION PTY LTD <A POLI SUPER FUND A/C> 7,000,000 1.08%
9 CITICORP NOMINEES PTY LIMITED <COLONIAL FIRST STATE INV A/C> 6,4 67,18 8 0.99%
10 MILTON CORPORATION LIMITED 3,303,924 0.51%
11 NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C> 3,258,906 0.50%
12 MR BRUCE WILLIAM NEILL 2,376,428 0.36%
13 SAM GANNON PTY LTD <THE J B GANNON FAMILY A/C> 2,265,506 0.35%
14 MR CON ZEMPILAS 2,140,000 0.33%
15 THANECORP AUSTRALIA PTY LTD <CFK RETIREMENT FUND A/C> 2,060,705 0.32%
16 MRS SALLY KELAHER 1,928,518 0.30%
17 MR IAN GREGORY GRIFFITHS 1,750,419 0.27%
18 AUSTRALIAN EXECUTOR TRUSTEES LIMITED <IPS SUPER A/C> 1,724,044 0.27%
19 BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD <DRP A/C> 1,691,256 0.26%
20 POWERWRAP LIMITED <SCHEME - IML TRADES A/C> 1,536,512 0.24%
Total Securities of Top 20 Holdings 438,647,370 67. 55%
Total of Securities 649,324,356
IOOF Annual Report 2021 139
Distribution of members and their holdings
The following table summarises the distribution of our listed shares as at 30 September 2021.
Range No of holders No of units % issued capital
1–1,000 31,931 12,219,264 1.88
1,001–5,000 18,432 44,812,851 6.90
5,001–10,000 4,568 33,864,748 5.22
10,001–100,000 3,150 72,777,845 11. 21
100,001–9,999,999,999 190 485,649,648 74.79
Totals 58,271 649,324,356 100.00%
There were 3,371 shareholders holding less than a marketable parcel of shares based on a market price of $4.31 at the close of trading
on 30 September 2021 and there were 18% of shareholders with registered addresses outside Australia.
Substantial shareholdings
Substantial shareholders as at 30 September 2021 are shown below, with the date of their last notice lodged in accordance with
section 671B of the Corporations Act:
Holder name Date of
last notice
No of
ord shares
% of issued share capital
as at date of last notice
Yarra Management Nominees Pty Ltd ACN 616 681 068 TA Universal
Investment Holdings (Universal)
12/4/2021 62,731,874 9.66%
Franklin Resources, Inc. and its aliates 26/8/2021 38,325,996 5.90%
Share register and other enquiries
If you have any questions in relation to your shareholding, share transfers or dividends, please contact our share registry.
Boardroom Pty Limited
ABN: 14 003 209 836
Level 7, 411 Collins Street
Melbourne VIC 3000
and
Grosvenor Place
Level 12, 225 George Street
Sydney NSW 2000
Post: GPO Box 3993. Sydney NSW 2001.
Phone: 1300 737 760 (Australia only)
Phone: +61 3 9492 9204
Fax: +61 2 9290 9655
Website: www.boardroomlimited.com.au
Please include your shareholder reference number (SRN) or holder identication number (HIN) in all correspondence to the
share registry.
Shareholder information (cont’d)
140
Directors
Mr Allan Griffiths
B.Bus, DipLi
Chairman
Mr Renato Mota
B.Com (Hons), B.Bus
CEO
Mr Andrew Bloore
Ms Elizabeth Flynn
LLB, Grad Dip App Corp Gov, FAICD, FFin, FGIA, FCG
Mr John Selak
Dip Acc, FCA, FAICD
Ms Michelle Somerville
B.Bus (Accounting), MApp Finance, FCA, GAICD
Company Secretary
Ms Adrianna Bisogni
B.A LL.B (Hons) GAICD
Notice of Annual General Meeting
In light of the current restrictions on public gatherings,
and in line with the extension of temporary amendments
to the Corporations Act in response to the coronavirus
pandemic, this year’s Annual General Meeting will be
conducted as a virtual meeting on Thursday, 25 November
2021 at 9:30am (AEDT). Further information and guidance
on how shareholders may participate in this year’s virtual
AGM will be available with the Notice of Meeting and
onIOOF’swebsite: www.ioof.com.au/agm
A formal notice of meeting is available on our website.
Principal registered oce inAustralia
Level 6, 161 Collins Street
Melbourne, VIC 3000
(03) 8614 4400
Share registry
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
Auditor
KPMG
Tower Two, Collins Square, 727 Collins Street
Docklands VIC 3008
Securities exchange listing
IOOF Holdings Ltd shares are listed on the
AustralianSecuritiesExchange
(ASX: IFL)
Website address
www.ioof.com.au
Corporate directory As at 30 September 2021
CRA-8781 (51492) 0921
ioof.com.au